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BMY | Bristol Myers Squibb BMY Stock Moves 0 26 What You Should Know | Bristol Myers Squibb BMY closed the most recent trading day at 45 77 moving 0 26 from the previous trading session This move was narrower than the S P 500 s daily loss of 0 48 Elsewhere the Dow lost 0 43 while the tech heavy Nasdaq lost 0 78
Coming into today shares of the biopharmaceutical company had lost 0 56 in the past month In that same time the Medical sector gained 4 88 while the S P 500 gained 5 97
Investors will be hoping for strength from BMY as it approaches its next earnings release which is expected to be July 25 2019 In that report analysts expect BMY to post earnings of 1 05 per share This would mark year over year growth of 3 96 Our most recent consensus estimate is calling for quarterly revenue of 5 98 billion up 4 82 from the year ago period
For the full year our Zacks Consensus Estimates are projecting earnings of 4 17 per share and revenue of 23 89 billion which would represent changes of 4 77 and 5 88 respectively from the prior year
Investors might also notice recent changes to analyst estimates for BMY These recent revisions tend to reflect the evolving nature of short term business trends As such positive estimate revisions reflect analyst optimism about the company s business and profitability
Based on our research we believe these estimate revisions are directly related to near team stock moves To benefit from this we have developed the Zacks Rank a proprietary model which takes these estimate changes into account and provides an actionable rating system
The Zacks Rank system which ranges from 1 Strong Buy to 5 Strong Sell has an impressive outside audited track record of outperformance with 1 stocks generating an average annual return of 25 since 1988 Within the past 30 days our consensus EPS projection has moved 0 24 lower BMY is currently a Zacks Rank 4 Sell
Valuation is also important so investors should note that BMY has a Forward P E ratio of 11 01 right now This represents a discount compared to its industry s average Forward P E of 14 78
Also we should mention that BMY has a PEG ratio of 2 15 This popular metric is similar to the widely known P E ratio with the difference being that the PEG ratio also takes into account the company s expected earnings growth rate Large Cap Pharmaceuticals stocks are on average holding a PEG ratio of 2 14 based on yesterday s closing prices
The Large Cap Pharmaceuticals industry is part of the Medical sector This group has a Zacks Industry Rank of 91 putting it in the top 36 of all 250 industries
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
Make sure to utilize Zacks Com to follow all of these stock moving metrics and more in the coming trading sessions |
BMY | Targovax Full Focus On ONCOS Platform And Fresh Data | Targovax LON 0RIS recently announced a strategic decision to focus on the clinical development of its ONCOS programmes and to discontinue clinical development of its TG platform citing the need to reallocate resources as the main reason The news was followed by the release of interim data from the Phase I melanoma study which was encouraging After the latest events we have removed TG02 colorectal cancer asset from our model although out licensing is still a possibility and increased the likelihood of success from ONCOS 102 in melanoma Our Targovax valuation is lower at NOK1 2bn or NOK18 9 share vs NOK1 46bn or NOK27 7 share before Our new more detailed look into the investigator led trials with ONCOS 102 reveals the potential for oncolytic virus platform expansion not yet reflected in our rNPV model
Exclusively focusing on ONCOS development
The company has announced that clinical development of the TG platform is being halted including TG02 development in colorectal cancer The company believes that despite the positive final three year overall survival results from the Phase I II study with TG01 in pancreatic cancer the next step in this programme would be a large randomised however this is too costly for a small biotech company Instead Targovax will focus on its oncolytic virus platform which it perceives to be in a leading position within mesothelioma and overall a programme with interesting data readouts in the near future Recent M A activity in the oncolytic virus space Exhibit 2 suggests this could be the more attractive technology for partners
Data from Part 1 Phase I melanoma study
Targovax announced ORR and immune activation data from the Part 1 of the ONCOS 102 Phase I study with patients with advanced unresectable melanoma who progressed on anti PD1 treatment Patients received ONCOS 102 injections and were again treated with the anti PD1 Keytruda Three of nine patients demonstrated an ORR of 33 while immunogenicity and tumour biopsy results showed that ONCOS 102 was capable of inducing a cancer specific response and that the intratumoural injection can translate into a systemic response
Valuation NOK1 20bn or NOK18 9 share
Our Targovax valuation is NOK1 20bn or NOK18 9 share compared to NOK1 46bn or NOK27 7 share This was mainly the result of removing the TG02 colorectal cancer asset from our model which was partially offset by the increased ONCOS 102 success probability in melanoma The dilution from the recent fundraise results in a relatively larger decrease in our valuation per share
Business description
Targovax is an immuno oncology company headquartered in Oslo Norway with an oncolytic virus platform ONCOS ONCOS 102 is currently prioritised in several indications including mesothelioma and melanoma Targovax is also working on next generation oncolytic viruses in its preclinical R D pipeline
Targeting collaborations for TG platform with promising final Phase I II data in pancreatic cancer
Three year data from the TG01 Phase I II trial in resected pancreatic cancer n 32 was recently announced showing a median overall survival of 33 3 months and a three year survival rate of 38 Two year data was released on 24 May 2018 see our note and showed a two year overall survival rate of 68 4 in the first cohort 13 19 and 77 in the second cohort 10 13
As we described these results compare well with historical comparisons However citing the fact that further development of the TG platform would be too costly Targovax has decided to fully focus on its oncolytic virus platform Management still expects to extract some value from the TG platform for example out licensing the technology Targovax has already done this to some extent for example it has set up a collaboration with the Parker Institute for Cancer Immunotherapy and the Cancer Research Institute relating to the TG platform and Zelluna Immunotherapy acquired a freedom to operate licence to Targovax s mutant RAS T cell receptor technology The potential value of the deal with Zelluna is NOK100m in milestones and annual fees in addition to royalties and sub licensing revenues
Several readouts in the near term with ONCOS
Targovax has focused its resources on clinical development of ONCOS 102 in mesothelioma and melanoma as well as the preclinical ONCOS assets There are now four ongoing clinical trials with ONCOS including collaborator sponsored trials
Fresh data from the Phase I melanoma study Part 1
As expected Targovax has announced the overall response rate and immune activation data from the Part 1 of the Phase I study with patients with advanced unresectable anti PD1 refractory melanoma n 9 The trial is testing ONCOS 102 in combination with checkpoint inhibitor CPI pembrolizumab Keytruda Merck Co The patients who were treated with CPIs before and then relapsed were given three intratumoural injections of ONCOS 102 and then received up to eight infusions of Keytruda The results include
The treatment was reported as well tolerated
3 9 patients demonstrated clinical response ie a 33 overall response rate RECIST1 1 and irRECIST
one patient had a completed response two patients had partial responses
Immunogenicity data showed that ONCOS 102 induces a cancer specific response with systemic increases in pro inflammatory cytokines observed in all nine patients
Tumour biopsies showed increased infiltration of CD8 T cells in eight of nine patients
Cases of increased T cell infiltration into lesions not injected with ONCOS 102 were also observed indicating an abscopal effect In addition T cells recognising specific tumour antigens were found in circulation in four patients Together these findings suggest that the intratumoural injection of ONCOS 102 can cause systemic anti tumour immune responses
The rationale of the study was to prime the immune system with a virus to generate a cancer specific response and then release the brakes with checkpoint inhibitors The initial data look promising in our view and support the hypothesis of the trial In total 33 of patients 3 9 who relapsed after checkpoint inhibitor treatment responded to it again after being treated with ONCOS 102 These were a hard to treat patient population and if such results were confirmed in a large randomised trial it would be perceived as very strong
In our initiation report we described Australian biotech Viralytics as peer to Targovax Viralytics developed Cavatak a wild type oncolytic coxsackievirus A21 In February 2018 Merck Co acquired Viralytics for A 502m Before that the company published interim results from several Phase I trials Interim data from one Phase Ib study where melanoma patients were treated with Cavatak and Yervoy ipilimumab anti CTLA 4 Bristol Myers Squibb NYSE BMY showed that ORR was 29 2 7 in patients who had failed prior single line anti PD1 L1 checkpoint therapy The comparison is somewhat limited by the fact that Yervoy is an anti CTLA 4 antibody however still same class of immunotherapy Another biotech company Checkmate Pharmaceuticals is developing TLR 9 agonist which is a class of immunotherapy drugs that are also being tested in combinations with CPIs Toll like receptors or TLRs are activated downstream upon infection of tumour cells with oncolytic viruses Checkmate Pharmaceuticals is conducting a Phase Ib study of intratumoral administration of their lead product CMP 001 in combination with pembrolizumab in patients with advanced melanoma who are anti PD1 refractory Interim data not complete published include an ORR rate of 22 15 69
Due to the small number of patients definitive conclusions or comparisons between the ONCOS and other trials cannot be made as this time but the Targovax data seems encouraging at the moment Part 2 of the trial is currently enrolling patients where the safety and efficacy of a prolonged more intensive treatment regimen of 12 ONCOS 102 injections will be evaluated
Phase Ib II mesothelioma study
The ONCOS 102 Phase Ib II mesothelioma study is now fully enrolled n 31 with results expected in around new year 2020 This is the most advanced indication currently and a significant catalyst for the share price The results from the safety part of the Phase Ib were already reported as described in our June 2018 note which also included initial efficacy results The randomised Phase II part of the trial finished enrolling all patients and the goal is to assess safety and tolerability immunological activation and the six month overall response rate ORR of the combination of ONCOS 102 and standard of care chemotherapy pemetrexed and cisplatin compared to standard of care chemotherapy alone
Preclinical study shows ONCOS abscopal effect
Recently Targovax published results from a preclinical study that demonstrated an abscopal effect reducing the size of tumours situated away from the injected site with an ONCOS 102 and Keytruda combination in a humanised mouse melanoma model The significance of these findings comes from the fact that oncolytic viruses are not suitable for systemic administration If an abscopal effect is proven in humans even non injected tumour lesions can be expected to be controlled for example if they are inaccessible for injection
M A activity in the oncolytic virus space
In general oncolytic viruses are generating more interest in treating cancers and as immune primers are increasingly being explored as compatible combination partners for immunotherapies such as checkpoint inhibitors priming the immune system with a cancer specific response using the virus and then releasing the brakes from the T cells to attack the tumour The field of oncolytic viruses saw an uptick in M A activity in 2018 In May 2018 Janssen agreed to pay 140m upfront to acquire private company BeneVir Biopharm which is developing oncolytic viruses to treat solid tumours based on its T Stealth platform currently in preclinical stage In February 2018 Merck Co announced its acquisition of Viralytics with the lead product Cavatak Merck Co agreed to pay A 502m which was in line with our valuation of Viralytics of A 469m published in December 2017 plus a A 29 6m placement by Viralytics in January 2018 This represented a 178 premium to Viralytics prior day closing share price In our view these deals confirm interest in the technology field and in the application to solid tumour therapy
Investigator led trial outcomes could translate into new commercial opportunities
In light of the recent move to focus on ONCOS we have re examined the collaborator trials summarised in Exhibit 3 in more detail to evaluate the potential in these indications
The Phase I II trial in collaboration with the Ludwig Institute for Cancer Research and the Cancer Research Institute is being conducted in patients with peritoneal disease who have failed prior standard chemotherapy and have histologic confirmation of epithelial ovarian cancer or metastatic colorectal cancer CRC ONCOS 102 is being studied in combination with MedImmune s checkpoint inhibitor durvalumab In our view this collaboration is the most likely of the two ONCOS 102 collaborations to translate into a commercial opportunity in the near term for several reasons
Area of unmet need these patients have a poor prognosis and are very difficult to treat
It is a fairly large trial for Phase I II n 78
The study is being conducted by high profile research institutions in the US
There is a strong scientific rationale for combining an oncolytic virus eg ONCOS 102 and a checkpoint inhibitor eg durvalumab as discussed in our initiation report and Targovax is already exploring this combination in its Phase I melanoma study Keytruda
The ONCOS 102 administration route is intraperitoneal Patients with peritoneal metastasis can be uniquely treated with peritoneal chemotherapy and since ONCOS 102 is administered locally there is a strong rationale for intraperitoneal administration
The peritoneum is a tissue membrane that lines organs in the abdominal cavity Due to its proximity to several other organs a primary tumour in these organs can easily metastasise to the peritoneum Primary tumours can also originate in the peritoneum but this is very rare Colorectal cancer and ovarian cancer are common primary tumours that are known to metastasise to the peritoneum Although survival rates have improved somewhat with the introduction of new treatments the prognosis of these patients is still very poor due to the advanced stage Specific treatments for peritoneal metastases are cytoreductive surgery and hyperthermic intraperitoneal chemotherapy but patients will likely be receiving additional treatments for their primary tumours
Potentially large patient population
Epithelial ovarian cancer is the most common type of ovarian cancer making up around 90 of cases cancer org The majority of patients who are diagnosed have advanced disease around 87 Narod 2016 where the tumour has spread beyond the pelvic tissues for example to the lymph nodes or peritoneum stage III or further to liver or spleen parenchyma stage IV Most patients with advanced disease have peritoneal metastases one study found this to be 76 of patients and it is ultimately regarded as part of the disease
Colorectal peritoneal metastases are not as common as in ovarian cancer Around 16 of metastatic colorectal cancer cases have peritoneal metastases Treatment with cytoreductive surgery and hyperthermic intraperitoneal chemotherapy can improve survival from around five months untreated to 12 18 months Koumpa et al 2019
Given the early stage of the study it is too early to estimate the potential precise positioning of ONCOS 102 for treatment of patients with peritoneal metastasis but our initial evaluation reveals a relatively large accessible patient population given the rather specific peritoneal chemotherapy approach Exhibit 4 We estimate that the number of patients with advanced ovarian cancer having peritoneal metastases to be around 13k in US and 19k in Europe Applying the same pricing as we have done for ONCOS 102 in other indications 75k in US and 52 5k in Europe would indicate a potential market of 1bn in the US and the same in Europe assuming 100 penetration We estimate the number of patients with colorectal peritoneal metastases to be lower around 4k in the US and 5k in Europe which would translate into an addressable market of around 300m in US and the same in Europe
Collaborator Medimmune AstraZeneca is already active in the ovarian cancer space with its marketed PARP inhibitor Lynparza but is not currently in the colorectal cancer space Durvalumab Imfinzi is not yet approved in ovarian cancer or colorectal cancer but is approved in several other cancers including bladder cancer head and neck liver cancer melanoma non small cell lung and small cell lung cancers
Valuation
Our updated valuation is NOK1 20bn or NOK18 9 share compared to NOK1 46bn or NOK27 7 share previously which is based on a risk adjusted NPV analysis using a 12 5 discount rate including NOK166 8m net cash The dilution from the recent fundraise was the main reason for the relatively larger decrease in our valuation per share We now include NOK6 0m in financial leases as required under IFRS 16 We continue to exclude from our valuation other long term debt of NOK53 1m in Finnish government grants as repayment is needed only if the products are sold or launched
We have previously removed the pancreatic cancer indication Now we have also removed the TG02 colorectal cancer asset from our model as a result of the recent strategic decision regarding the TG platform TG02 was being explored in a Phase Ib trial where colorectal patients received TG02 in combination with a checkpoint inhibitor Targovax stopped the trial without waiting for the data but as this was mainly a safety and immunogenicity study the immediate termination of the trial is rational in our view from an R D portfolio management perspective In our last report this indication had a value of NOK9 2 share out of the total rNPV of NOK27 7 share This removal was partially offset by the increase in success probability of ONCOS 102 in melanoma from 10 to 15 following the interim data announcement
We keep other assumptions relating to the clinical trials in our rNPV model unchanged described in our initiation report For the time being we do not include in our valuation the potential of ONCOS 102 in the indications being explored by the partners peritoneal metastasis or prostate cancer This is mainly because these trials are still being led by the partners and Targovax cannot control the trial design Depending on the results multiple outcomes are possible such as advanced stage trials which could lead to a formal licensing deal or Targovax itself could decide to invest in these indications We will revisit these programs once more details are revealed
Upcoming near term catalysts are
Preclinical data on new ONCOS oncolytic viruses expected H219 and
ONCOS 102 mesothelioma Phase I interim data expected in Q120
Financials
As Targovax s Q119 results were in line with our expectations and we made no major changes to our estimates The Q119 operating loss was NOK39 6m with external R D expenses accounting for NOK19 4m The company is stopping all clinical R D activities for its TG platform but we expect it will increase clinical activities for ONCOS so we leave the total operating loss estimate for 2019 unchanged at NOK140m
The cash position of NOK172m gross at end Q119 plus NOK1 0m gross from a subsequent repair offering should reach well into 2020 which is in line with Targovax s guidance Q320 According to management there was strong interest from existing shareholders and new institutional investors in Norway and the US in the private placement that Targovax undertook in March 2019
As the R D pipeline matures several projects should reach mid stage around 2021 which is when we expect another substantial increase in R D spend The required additional funding for 2020 is reflected in our model as a long term debt of NOK51m as per our research principles
Targovax has changed the way it accounts for leases under the new IFRS 16 rules It now records remaining financial leases excluding short term leases of less than 12 months and low value leases in the balance sheet as long term liabilities SEK5 9m as of end Q119 This was balanced with a corresponding increase in long term assets The net effect on the P L was minor |
C | European stocks fall ahead of EU finance meeting DAX down 0 18 | Investing com European stock markets were broadly lower on Monday ahead of a meeting of euro zone finance ministers in Brussels while markets in the U S were to remain closed for a holiday During European morning trade the EURO STOXX 50 slumped 0 46 France s CAC 40 dropped 0 35 while Germany s DAX was down 0 18 Later in the day European finance ministers were to meet in Brussels to discuss an increase in the effective lending capacity of the euro zone s bailout fund the European Financial Stability Facility Shares in the financial sector performed poorly with shares in France s second largest lender Societe Generale tumbling 2 32 Spain s second biggest bank BBVA saw shares plunge 1 79 while shares in British banking giant Barclays dropped 2 06 Elsewhere shares in Spain s largest lender Banco Santander plummeted 2 87 after Spanish newspaper El Mundo reported that the bank s chief executive Alfredo Saenz may have to leave his current position following a ruling by Spain s Supreme Court According to the report the court has barred Saenz from working for a bank after he was found guilty of fraud while at a previous role as chairman of Banco Espanol de Credito Meanwhile shares in Swiss pharmaceutical giant Roche Holding climbed 1 27 after it announced that its chief financial officer would step down at the end of March and be replaced by ThyssenKrupp s CFO Alan Hippe Shares in ThyssenKrupp fell 1 32 following the news In London the commodity heavy FTSE 100 shed 0 18 as crude oil and metal prices were pressured lower after China tightened monetary policy on Friday Shares in the world s largest mining group BHP Billiton slumped 1 40 silver producer Fresnillo saw shares plunge 4 33 while shares in copper producer Xstrata tumbled 1 91 However shares in oil giant British Petroleum jumped 1 66 after it agreed to swap a USD7 8 billion stake in the company for a 9 5 share of Russian oil major Rosneft Meanwhile shares in the London Stock Exchange Group dropped 1 47 after Citigroup downgraded the stock to sell In the U S markets were to remain closed in observance of Martin Luther King Day |
C | Europe stocks advance on earnings DAX up 0 12 | Investing com European stock markets posted modest gains on Wednesday as upbeat corporate earnings results lifted market sentiment while U S futures indexes pointed to a mixed open on Wall Street During European morning trade the EURO STOXX 50 climbed 0 11 France s CAC 40 was up 0 07 while Germany s DAX added 0 12 Shares in the financial sector performed strongly after Spain s second largest lender BBVA reported a 96 jump in fourth quarter profit The banking giant said fourth quarter earnings totaled EUR939 million compared to EUR31 million a year earlier when bad loans weighed on financial results BBVA saw shares gain 0 75 Shares in Italy s largest lender Unicredit jumped 2 24 Europe s largest banking group BNP Paribas saw shares rise 1 33 while shares in rival Credit Agricole added 1 47 Meanwhile shares in Europe s largest solar energy producer Renewable Energy Corporation surged 10 32 after it said fourth quarter profit rose to EUR224 million exceeding market expectations for profit of EUR164 million Elsewhere shares in German automaker Daimler climbed 0 48 after Citigroup recommended buying the stock citing continued strong industry fundamentals In London the commodity heavy FTSE 100 was up 0 64 as raw material stocks led gains after metal prices advanced Shares in the world s largest mining group BHP Billiton jumped 2 14 rival Rio Tinto saw shares gain 1 72 while shares in copper producer Xstrata surged 2 31 after copper prices rose to an all time high on Tuesday Meanwhile shares in the world s fourth largest tobacco group Imperial Tobacco rallied 5 13 after it posted a 5 increase in first quarter revenue The company reaffirmed its full year earnings outlook as emerging market revenues from Eastern Europe Africa and the Middle East were strong The outlook for U S equity markets meanwhile was mixed ahead of earnings reports from the world s second largest entertainment conglomerate Time Warner and from media giant News Corp The Dow Jones Industrial Average futures pointed to a gain of 0 11 S P 500 futures indicated a rise of 0 03 while the Nasdaq 100 futures pointed to a drop of 0 09 Later in the day the U S was to publish private sector employment data compiled by payroll processing company ADP |
C | U S stocks post modest losses after the open Dow Jones sheds 0 04 | Investing com U S stocks posted modest losses after the open on Wednesday a day after closing at the highest level in 28 months as a string of downbeat corporate earnings results overshadowed better than expected U S employment data During early U S trade the Dow Jones Industrial Average shed 0 04 the S P 500 index slumped 0 15 while the Nasdaq Composite index dipped 0 10 Earlier in the day payroll processing firm ADP said non farm private employment rose by a seasonally adjusted 187K in January after rising by a revised 247K in December beating expectations for an increase of 150K Meanwhile shares in the world s largest home appliance maker Whirlpool dropped 4 89 after it reported fourth quarter earnings of USD171 million falling short of expectations for earnings of USD191 million The company said that sales in North America dipped 1 to USD2 6 billion Shares in pharmaceutical giant Hospira tumbled 9 14 after it said that its fourth quarter profit plunged 37 to USD60 6 million compared to USD96 7 million a year earlier Revenue in the quarter declined 6 to USD992 1 million as margins tightened and research costs rose Elsewhere shares in semiconductor manufacturer Broadcom sank 7 91 after Citigroup downgraded the stock citing worries about rising operating expenses Also Wednesday the second largest U S bookstore chain Borders saw shares plummet 25 53 following media reports that the company may file for bankruptcy as soon as next week However shares in the second largest U S video game maker Electronic Arts rallied 13 3 after it announced a better than expected earnings outlook for the current quarter as well as a share buyback plan worth USD600 million The world s second largest entertainment conglomerate Time Warner saw shares add 4 32 after it reported fourth quarter net income jumped by 22 to USD769 million Revenue in the quarter rose by 8 5 to USD7 81 billion beating expectations for revenue of USD7 47 billion Meanwhile shares in the largest U S chocolate producer Hershey saw shares climbed 1 76 after announcing a 9 increase in fourth quarter profit to USD135 5 million as results were boosted by strong holiday sales and accelerated growth in emerging markets Across the Atlantic European stock markets were mixed The EURO STOXX 50 shed 0 11 France s CAC 40 dipped 0 34 Germany s DAX was down 0 07 while Britain s FTSE 100 climbed 0 46 Earlier in the day German Deputy Finance Minister Joerg Asmussen rejected the idea of creating a euro zone bond and reaffirmed that revisions to the existing euro zone fiscal rescue facility were likely to require concessions from governments such as deficit reduction |
C | A Hidden Surprise In The U S Employment Report | Today s employment report brought with it all sorts of negative economic surprises creating a sharp drop in the Citi Economic Surprise Index The Citigroup Economic Surprise Index for the U S which measures how much data is missing or beating the median estimates in Bloomberg surveys fell to minus 53 6 the lowest since September It turned negative this year in April after remaining above zero since October The Federal Reserve announced a program dubbed Operation Twist to boost growth on September 21 2011 four months after the index turned negative One of the worst surprises buried in the report however was the fact that all the job growth came from increases in part time jobs The number of full time jobs actually declined significantly the job growth is coming entirely from workers getting part time jobs The number of Americans working full time fell by 266 000 in May erasing all the gains of the past three months The total employment figure only rose because 618 000 more people got part time jobs Many of those people would rather be working full time The number of people classified as part time for economic reasons meaning they re working part time because they can t find a full time job rose by 245 000 to 8 1 million |
C | Metal Prices And Debt Yields | Friday s U S jobs report was a game changer as far as the gold market is concerned Jobs growth in May was just 69 000 well below economists expectations of 150 000 gains while April s payroll number was revised down from 115 000 to just 77 000 The unemployment rate also increased from 8 1 to 8 2 troubling news for President Obama as his presidential election campaign shifts up a gear Gold and silver both shot up on the news which seemed to indicate the Federal Reserve will resort to more quantitative easing June Comex gold settled 57 90 higher an impressive 3 7 intraday move while silver for delivery in the same month gained 2 7 to close at 28 50 Platinum recorded a more modest 1 1 gain while palladium recorded barely any gains on the day as the more industrially orientated precious metals lagged gold on account of the bearish news swamping the global economy at the moment The Dow lost 2 2 while the yield on 10 Year Treasuries fell another 10 basis points to 1 46 Yields are even lower on equivalent German debt 1 16 and Japanese 0 81 while lending money to the Swiss government for 10 years currently yields a whopping 0 48 Governments Steer CreditInvestors quest for safety is undoubtedly part of the reason why yields on government debt are so low Aggressive buying by central banks whether in the form of quantitative easing or the Fed s current Operation Twist scheme is also a factor However analysis from Citigroup shows that U S and European regulators are essentially forcing banks to buy government debt While obviously a good way for governments to keep funding themselves what happens in the event of sovereign defaults Moreover channelling money to the government comes at the expense of loans to the private sector How is healthy economic growth to return if credit is being steered away from private enterprise 1 625 is the next important resistance point for gold this marking the metal s 50 day moving average and the point at which it ran into resistance on Friday Beyond that 1 650 and 1 680 are the next two resistance points worth noting |
C | U S Markets Better Bend Than Break | In looking at the daily charts of the Dow Jones Industrial Average Nasdaq Composite Russell 2000 and S P there is not a single reason to believe that there might be a bounce or a rally similar to 3 4 sideways slop move up that started two weeks ago that captured the hearts of bulls everywhere and something that was labeled a Dead Cat Bounce here as it turned out to be Rather the chart of the S P above and a good representation of the other indices shows a clearly fulfilling Bear Pennant that carries a target of 1162 with Friday s close near the low boding bearishly for the S P and the other indices Such a potential outcome is supported by the chart of the VIX that is showing a bullish candle for Friday that promises to take the VIX up near 30 and toward the 30 to 32 target range of its Symmetrical Triangle Even bigger picture in those charts of the S P and the VIX though are the Rising and Falling Wedges respectively that have been discussed here for months as in starting last year and those are good patterns to be pay attention to with the S P s Rising Wedge carrying a target of 1075 and the VIX s Falling Wedge carrying a target of 48 As has been made clear here in those many months of writing and discussing these hard to track patterns due to each being comprised of a trend opposite to its objective each is very likely to fulfill at some point this year and probably in Q2 for a flash correction as occurred in Citigroup and some of the other financials starting in April or in Q3 for more of a standard slow motion correction Based on the daily charts shown above it would seem that the former or the flash correction is on the come but two weeks ago the daily charts provided no hint of that Dead Cat Bounce and so the possibility should be entertained and particularly with the intraday charts of the equity indices not the VIX showing various intraday gaps on Friday s open These gaps may try to close at some point today in relief of something unclear to me even though such a potential attempt may not be successful due to the combination of the likely Descending Trend Channel and the clearly fulfilling Bear Pennant It is the chart of EURUSD and DXY though that suggest the intraday gap closing attempt could find success to begin fulfilling a new possible Bull Wedge or more likely to form yet another Bear Pennant as occurred in the chart of crude last week Irrespective any such potential upside trading is sideways slop trading to be avoided on the long side in respect of the severe 1 month downtrends plaguing the equity indices with the 3 4 gain of the last two weeks on the formation of the last Bear Pennant erased entirely in one day on the confirmation of those Bear Pennants and this holds true even if a potential Dead Cat Bounce now was significantly bigger Put otherwise stick with the trend and this means a severe near term downtrend on a reversing intermediate term uptrend within the top of a long term sideways trend and all of this is bearish irrespective of what sort of dwarfed kickback rally in the form of a head faking whipsaw might take hold today or this week should this occur at all In the end better bend than break and this means going with the trend |
C | The Dictator | The action in the U S Dollar Index will generally dictate every stock market move during the course of the trading day Monday when the U S Dollar Index futures ES M2 started to trade higher the major stock indexes have turned lower The SPDR S P 500 Index ETF NYSEARCA SPY traded as high as 134 25 a share at the start of the day The SPY traded negative in the early session and lower by 0 04 cents to 133 08 a share What is the cause for the decline in the major stock indexes It is simply the stronger U S dollar When the dollar inflates the major stock indexes will deflate and trade lower The opposite is true when the U S Dollar Index declines the major stock indexes will inflate and trade higher Some leading equities that have reversed early gains today due to the strong dollar include Cliffs Natural Resources Inc NYSE CLF Citigroup Inc NYSE C and the SPDR Dow Jones Industrial Average ETF NYSEARCA DIA Remember all of these equities are likely to bounce higher if the U S Dollar Index declines or pulls back throughout the trading day |
JPM | U S seeks JPMorgan communications with China s Quishan in hiring probe WSJ | WASHINGTON Reuters U S regulators have subpoenaed JPMorgan Chase Co N JPM for all of its communications related to 35 Chinese officials including anti corruption chief Wang Qishan as part of an ongoing probe into the bank s hiring practices the Wall Street Journal reported on Wednesday The newspaper which reviewed a copy of the subpoena said it was issued by the Securities and Exchange Commission in late April Citing people familiar with the matter it said prosecutors at the U S Justice Department had also requested information about Wang
U S authorities are investigating the Asian hiring practices of JPMorgan to determine whether the bank gave jobs to Chinese government officials children in return for lucrative banking assignments the newspaper has reported |
C | European stocks rise on China comments DAX up 0 61 | Investing com European stocks advanced on Tuesday as markets shrugged off news that Portugal s sovereign credit rating was put on review while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 surged 0 73 France s CAC 40 climbed 0 62 while Germany s DAX added 0 61 Markets took in stride news that ratings agency Moody s placed Portugal s A1 sovereign credit rating on review for possible downgrade Earlier in the day Chinese Vice Premier Wang Qishan said that China supported the measures taken by the EU and the International Monetary Fund to bail out certain European countries and stabilize the financial markets In the financial sector shares were broadly higher Italy s largest lender Unicredit saw shares jump 2 19 shares in Spain s second largest bank BBVA surged 1 67 while shares in the Royal Bank of Scotland soared 2 34 Meanwhile shares in the world s largest maker of vitamins Royal DSM jumped 1 34 after it agreed to acquire Martek Biosciences a U S maker of nutritional ingredients for baby food for approximately USD 1 09 billion Elsewhere shares in luxury automaker Rolls Royce jumped 2 04 after the stock was upgraded by Citigroup Within the sector shares in Europe s largest automaker Volkswagen gained 1 11 while Renault saw shares climb 1 32 In London the commodity heavy FTSE 100 added 0 68 as miners led gains after metal prices advanced Shares in the world s third largest mining group Rio Tinto jumped 2 13 silver producer Fresnillo saw shares rally 3 46 while copper producer Xstrata saw shares surge 2 37 after copper prices rose to a 31 month high The outlook for U S equity markets meanwhile was upbeat ahead of earnings reports from the world s largest cruise vacation company Carnival Corporation and from athletic apparel giant Nike The Dow Jones Industrial Average futures pointed to a gain of 0 33 S P 500 futures indicated a rise of 0 36 and Nasdaq 100 futures pointed to an increase of 0 25 Earlier in the day data showed that the Gfk index of German consumer confidence slipped slightly lower in December following a substantial rise the previous month |
C | European stocks rise on global growth outlook DAX up 0 68 | Investing com European stocks were up on Thursday as market sentiment was boosted by hopes of an improving economic environment while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 gained 0 56 France s CAC 40 jumped 0 56 while Germany s DAX added 0 68 Shares in automakers were broadly higher amid expectations that a global economic recovery would lead to increased auto sales in 2011 Shares in the world s fourth largest automaker Renault jumped 3 29 rival Peugeot saw shares surge 1 60 while the world s largest manufacturer of commercial vehicles Daimler saw shares add 1 38 Meanwhile shares in the largest Dutch technical services company Imtech leaped 2 97 after the company said its order book increased by 10 in 2010 to EUR5 2 billion The company affirmed its outlook saying it s well positioned for 2011 Elsewhere shares in the world s third largest brewer Heineken jumped 2 23 after Citigroup recommended buying the stock while rival AB InBev saw shares add 1 78 In London the commodity heavy FTSE 100 climbed 0 45 as metal and crude oil prices rebounded Shares in copper producer Xstrata jumped 2 49 the world s second largest mining group Rio Tinto saw shares climb 1 32 while shares in gold producer Randgold Resources surged 4 67 after the stock was upgraded by CitigroupMeanwhile shares in British Petroleum rallied 1 92 after the publication of a report by President Obama s National Oil Spill Commission revealed that the oil giant was not alone in lax practices that caused the Gulf of Mexico oil leak Elsewhere shares in Arm Holdings the designer of chips that power Apple s iPhone rallied 7 13 after Microsoft announced overnight that it would use ARM chip designs in a new version of the Windows operating system The outlook for U S equity markets meanwhile was upbeat The Dow Jones Industrial Average futures pointed to a rise of 0 12 S P 500 futures indicated a gain of 0 12 and Nasdaq 100 futures pointed to an increase of 0 09 Later in the day the U S was to publish official data on initial jobless claims |
C | Can The Yuan Replace The USD As Reserve Currency | As China s hegemony grows it s faced with an interesting dilemma concerning its currency manipulation policies The Chinese government has long kept the value of the yuan at artificially low levels to give its exports a significant competitive advantage in their host countries a development that has helped catalyze the rise of China as the world s top exporter However the hubris and increasing confidence with which the Chinese government is beginning to assert its power has led to a growing conundrum Chinese leaders have recently shown desire to implement policies that would aim to eventually turn the yuan into the world s reserve currency This development contrasts completely with China s existing currency policy in order for the yuan to displace the dollar as the world s reserve currency it needs to become convertible Currency convertibility leads to looser government controls which in turn erases much of the advantage of the artificially low yuan on the international stagePolicy Of DevaluationChina s currency policy of artificial devaluation has proven over the years to be extremely successful This devaluation allows Chinese goods a competitive advantage in the area of affordability an attractive advantage that has lured consumers in these times of economic hardship Moreover the affordability of Chinese products and labor has attracted billions of dollars to China in terms of direct foreign investment In 2009 the total amount of FDI used in China topped 90 billion while the total amount of accumulated FDI between 1979 and 2007 hit 943 billion Huge conglomerates like Wal Mart NYSE WMT depend on Chinese labor and suppliers to keep their products cheap while corporations such as Apple NASDAQ AAPL depend on the labor and suppliers to keep their profit margins wide In fact over 60 of Chinese exports are produced by foreign invested enterprises producing in China a phenomenon made possible in large part by the yuan s weakness China as a communist country has the ability to control its currency to an extent that is unparalleled by the other G8 members However despite China s stringent currency control and frequent rhetoric from the U S and other countries lambasting China s currency manipulation China has started to subtly shift its yuan policy promoting a stronger yuan Some analysts say this is due to the success of increasing pressure on China to appreciate its currency However the true catalyst behind the yuan s strength is due to the Chinese government s loosening of controls on the currency which it views as necessary to achieve its ultimate goal seeing the yuan replace the U S dollar as the international reserve currency of choice Five Year PlanRecently China s central bank allowed the yuan to reach a record high on April 27 while in mid April Chinese officials pledged in a five year plan running through 2015 to keep loosening controls on currency flows The objective of the five year plan is to eventually transform the yuan into a convertible currency one that can be readily bought or sold without government restrictions Moreover Chinese regulators recently raised quotas for foreigners buying on shore stocks and bonds to 80 billion from 30 billion increased the amount of yuan held off shore that can be invested locally and lifted a 6 5 year ban on locals holding long positions on the yuan On April 14 China also widened the trading band for the yuan to 1 from 0 5 which allows the yuan increased flexibility to fluctuate and is considered a major step toward paving the way for the yuan to eventually float freely The shifting policies of the Chinese government have strengthened the yuan relative to most other currencies This strength is apparent when the performance of China s yuan is analyzed compared to the currencies of its top 6 import export partners the EU USA Japan ASEAN Hong Kong and South Korea We can expect the euro the U S dollar the Japanese yen the Hong Kong dollar and the South Korea won to most accurately reflect the impact of China s currency policies for the sake of comparison ASEAN is excluded because it has no universally accepted currency From a 1 year time span the yuan has increased 14 13 against the euro 2 89 against the U S dollar 2 16 against the yen 8 94 against the South Korean won and 2 81 against the Hong Kong dollar Much of the gains may not seem extraordinary but they are significant considering the tight control the Chinese government exerts over the yuan s performance Strong Yuan Would Hurt Foreign ConglomeratesIf the Chinese government has indeed started to shift to advocacy of a stronger yuan international conglomerates such as Walmart and Apple with significant operations in China will definitely feel the pinch As noted the main attraction of maintaining factories in China is inexpensive labor If the yuan gets stronger then operations in China will undoubtedly become more expensive Thus this shift in yuan policy is counterintuitive to the FDI appeal of China as companies will start to search for more inexpensive alternatives to continuing their operations in China There are several avenues for investors to profit in light of China s recent policies For one the Guggenheim Yuan Bond ETF AMEX RMB follows the AlphaShares China Yuan Bond Index and also holds bonds in yuan denomination PowerShares Chinese Yuan Dim Sum Bond AMEX DSUM is also a similar ETF that invests in yuan denominated bonds and tracks the Citigroup Dim Sum Bond Index Finally the WisdomTree Dreyfus Chinese Yuan ETF AMEX CYB seeks to achieve total return reflective of both money market rates in China available to foreign investors and changes in value of the Chinese yuan relative to the U S dollar These three ETFs have direct exposure to yuan fluctuations and will be positively affected by the strengthening of the yuan to its true value which in turn will be catalyzed by increased convertibility I heavily recommend investors keep a close eye on these ETFs as well as the Chinese government s continually evolving yuan policy |
C | Valuation And Risk On Off | There must be a huge Risk On Off track switch out there Whenever it is flipped on the S P 500 s P E moves higher along with commodity prices and most foreign currencies When it is in the off position money stops streaming down the fast track Instead it gets diverted into safe assets like the government bonds of the US Germany and Sweden It also tends to jump off commodity currencies and hitch a ride on the US dollar The big switch was flipped to the off position following the May 6 French and Greek elections which could upend all the bailout deals and fiscal pacts worked out by European leaders over the past two years Such an outcome could push Europe deeper into a recession and weaken global economic activity In other words Risk On tends to be associated with widespread confidence in the outlook for global economic growth while Risk Off indicates widespread fears that the global economy will sputter To track the switch from Risk On to Risk Off we ve compiled a series of charts in a publication titled S P 500 P E and Risk On Off So far this year the S P 500 s forward P E peaked at 12 9 during the week of March 18 It was down to 11 9 during the week of May 18 Most of that decline occurred during the first two weeks of May following the unsettling European election results However the sharp drop in the Citigroup Economic Surprise Index has also contributed to the weakness in the P E Prior to the financial crisis that started in 2007 falling bond yields tended to be associated with rising valuation multiples in the stock market The relationship has been reversed since then Over the past five years there has been a very high correlation between the S P 500 s forward P E and the 10 year US Treasury bond yield The valuation multiple is also highly correlated with inflationary expectations embodied in the spread between the nominal and TIPS 10 year yields There is also a strong correlation between commodity prices and the P E A weaker euro and a stronger dollar tend to be associated with lower stock market valuations Today s Morning Briefing Train Spotting 1 Train wreck spotting in Europe 2 Happier tracks in the US 3 Coal loadings are down while other loadings are mostly up 4 More autos are riding the rails 5 Another green light for housing starts 6 Intermodal loadings on schedule to pick up steam soon 7 Q1 earnings growth rate was 8 9 quadrupling expectations 8 Q2 estimates are going down setting stage for another up quarter 9 Lots of NERIs turned positive in May 10 A Risk On Off primer |
C | What I m Buying | We re inching ever closer to an official market correction The S P 500 is down almost 10 from its recent peak which means we ll soon hear that phrase bandied about in the financial media These pullbacks are painful but bring a silver lining good companies see their stocks pushed down to levels that create even deeper bargains for investors I ve been scanning the market in search of these newly uncovered bargains but am also keeping an eye on the stocks I know best the ones in my 100 000 Real Money Portfolio These are my top stock ideas and though I could add a fresh stock pick to this portfolio I d rather own even more of my favorite stocks especially now that external events have forced them down along with this market An Excuse To Sell There are only two kinds of stock market environments The first is in which any news is seen in a positive light when a company can deliver bad news and not see its stock punished The second is when investors fail to respond positively to good news and instead look for reasons to sell a stock sometimes sharply That s where we are right now It s no fun thinking about buying stocks in such an environment but it s that contrarian positioning that allows you to outperform the market over the long haul The trading action in Cree Inc Nasdaq CREE is instructive The company s chief financial officer CFO announced plans to leave the firm pushing shares down 9 on Tuesday May 22 and down nearly 20 in the past two weeks Any time you see an executive leave a company especially the person in charge of finances you should take note This can be a red flag that accounting troubles are brewing Yet in this case there is a far more prosaic explanation Cree s CFO is anxious to take on a greater management role which he will soon have with a new employer The fact that he plans to stick around as a consultant until mid June tells you he s not leaving a house on fire This stock is now down to levels not seen since early February and it s too much for me to pass up Even as I expect more choppy results in the next few quarters which could push the stock even lower I also keep sight of the fact that Cree s long term outlook is very bright Ignoring The Good News We learned this week that bond rating agency Moody s has boosted Ford Motor s NYSE F debt to investment grade The fact that the upgrade comes during a tough stretch for the global economy tells you just how healthy Ford is And the move isn t just symbolic An investment grade rating gives Ford even greater financial flexibility and should allow it to swap out high yield debt for lower yielding debt saving millions in borrowing costs And after Ford has shored up its pension fund the company will have a much freer hand to initiate a major stock buyback or dividend boost Even as Ford s stock got a modest pop on the news investors are still largely avoiding this stock as it hovers near its lows for 2012 Guilt By Association Even when companies deliver no news their stock can still get punished The trading debacle at JP Morgan NYSE JPM has put fresh pressure on all banking stocks including Citigroup NYSE C which is now down nearly 25 since the middle of April More than 25 billion in market value has simply vanished The fact that shares now trade for roughly half of their projected year end tangible book value is simply stunning I ve always known this stock will hit speed bumps on its way to a much higher share price but the current valuations strike me as absurd Taking Action In response to the ever lower share prices for these companies I am playing offense First I am adding 100 shares to my current 300 share position in Cree That s a possibly risky move in light of the fact that this company is struggling to meet quarterly forecasts right now but my 1 2 year time horizon makes me less concerned Second I am adding 100 shares to my 300 share position in Citigroup This stock is roughly 20 lower than where I first bought it even though Citigroup s longer term prospects remain quite bright Lastly I am not adding to my 1 090 share position in Ford It s already my largest holding and it would be unwise to have even greater portfolio concentration in this stock It s a bummer because shares of Ford below 10 50 are a compelling value in light of the company s current balance sheet and projected mid decade income statement Risks to Consider I m wise enough to know that a bottom may not be in for this market These buys might be premature But I need to pounce on value and not act as a market timer Action to Take As noted I will buy 100 additional shares of both Cree and Citigroup Please also note that I may send out a short e mail in coming days announcing plans to sell my 300 shares of the Direxion Daily Small Cap Bear 3X ETF NYSE TZA The current wave of selling may soon exhaust itself and I d like to free up that cash for fresh buys BY David Sterman |
C | NFP Preview Expecting A Slight Beat But Will That Be Good News | For American investors Friday will be the big data day which features the Non Farm Payroll release The last two NFP numbers have been below expectations Looking ahead to Friday however I think that it is likely to come in either in line or slightly above consensus expectations for a couple of reasons First the which measures high frequency economic numbers is steadying after falling below the zero line which indicates more negative than positive surprises The rate of deterioration has been halted which is mildly positive for the economic outlook In addition does an employment tracking poll and Gallup forecasts a slight downtick in the unemployment figure in May I hate NFP days because the number is so volatile and the error term is so large In the last two months I would have taken the under expectations bet if someone put a gun to my head and forced me to make a forecast This month I am taking the over because I am expecting a slight beat by 10K or less Will good news really be good news If I am right the stock market will likely rally if NFP beats expectations But will this kind of good news be actually positive for stocks An employment number that slightly beats expectations which would be my forecast would not be positive enough to significantly light a rocket under the growth outlook but would be positive enough to keep the Fed from engaging in quantitative easing for the June FOMC meeting After the June meeting the Fed will not have the political cover for QE for the rest of 2012 because of the election unless the economy really craters I agree with Tim Duy in his post emphasis added Bottom Line The data flow is soft but Dudley indicates it is not soft enough to ease And while some are pointing to falling TIPS derived inflation as given the Fed room to move they have traditionally delayed until conditions are more dire they are not exactly prone to overshooting in the first place The Fed doesn t think they will ease further they think their next move will be to tighten Which means that financial conditions will need to deteriorate dramatically to prompt action in June So if you are looking for the Fed to ease in just four weeks you are looking for financial markets to turn very very ugly Lehman ugly And I wish that I could say that it won t happen but European policymakers are hell bent to push their economies to the wall while worshipping at the alter of moral hazard The Bernanke Put may still live but the deductible on that insurance will be a lot higher for the remainder of 2012 Disclosure Cam Hui is a portfolio manager at Qwest This article is prepared by Mr Hui as an outside business activity As such Qwest does not review or approve materials presented herein The opinions and any recommendations expressed in this blog are those of the author and do not reflect the opinions or recommendations of Qwest None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument Nothing in this article constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives financial situation or particular needs of any specific recipient Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions Past performance is not indicative of future results Either Qwest or Mr Hui may hold or control long or short positions in the securities or instruments mentioned |
C | World Concerns Are Back | Political events in Europe have once again plunged investors into uncertainty Instead of advancing toward a lasting solution the situation has deteriorated The Greek election results show the extent to which hard times have undermined popular support for austerity The same phenomenon is illustrated by French voters replacement of their government even though its austerity had been less drastic As if this were not enough the global economy while still in expansion has recently disappointed The downside surprise of recent global indicators is visible in the path of the Citigroup economic surprise indexes For the G10 modest expectations have not been met And in contrast to a year ago emerging economies have also disappointed Brazil for example has hit a soft patch Its production declined 0 35 in March leaving first quarter output up only 1 1 from a year earlier well below trend Chinese indicators also show weakness Exports industrial production retail sales and credit expansion all fell short of expectations in April Although disappointing the global economy is still growing as evidenced by the latest data from the CPB on industrial production and global trade Industrial production was up 0 2 in March a 6th consecutive monthly increase For the quarter as a whole it was up 1 6 an acceleration compared to the 0 5 observed in 2011T4 The acceleration is generalized since only emerging Europe is decelerating During the quarter global trade increased also 1 6 indicating that what s produced is being shipped and not piling in inventories Global growth extended into 2012T2 based on the global PMI index which remained above the threshold of 50 in April But among the disappointments is a sharp April slowdown in services whose index fell to a five month low The manufacturing index on the other hand is at a 10 month high The U S PMI was among the most buoyant in April and Brazil China India Japan and the U K all showed expansion Apart from Australia the sharpest drag on the global economy comes from the eurozone GDP for the eurozone as a whole after contracting in Q4 beat the consensus expectation in Q1 by coming in flat However the resulting avoidance of two straight quarters of contraction the technical definition of recession gives little comfort As is the case for public debt and fiscal deficits which may seem manageable for the zone as a whole the devil is in the details Q1 beat expectations because of the standout 2 0 annualized expansion of the German economy The absence of fiscal integration in the monetary union means that Germany s strong showing will not resolve the crisis One upshot is that the German economy has been made much more competitive by the euro weakness On the whole the Q1 GDP numbers depict a fourth straight quarter in which most euro economies show no growth The third and fourth largest of them in fact show sharp contractions Italy 3 8 Spain 1 2 France came in no better than flat in Q1 More worrisome for the zone s second largest economy is that its purchasing manager index fell to 45 6 in April signalling deterioration in Q2 Italy 42 7 and Spain 42 0 also showed sharp deterioration in April The reading for Germany 50 5 signals output no better than flat Furthermore the flash estimate for May indicate the worst downturn for the euro area since mid 2009 The new business index is at a similar depressed level extending the gloom in the months ahead Until now the path chosen by the peripheral countries of the zone has been to reduce their deficits as fast as possible Greece Portugal and Ireland are required to do so by their respective bailout plans For Italy and Spain accelerated debt reduction is aimed at avoiding the need for a bailout The fiscal contraction has thrown these economies into recession and many workers out of jobs The unemployment rate of the euro countries as a whole rose to 10 9 in March the highest since the single currency was adopted In Spain the jobless rate is a catastrophic 24 1 in Greece it is 21 7 Ultimately a surplus of workers should deflate wages solving the other problem of these economies their lack of competitiveness Before monetary union a country facing a crisis in its public finances could regain its competitive position by drastically devaluing its currency Since a euro country cannot devalue its currency a restoration of competitive position requires a decline of wages a course for which political acceptance is much harder to come by Among the 16 euro countries for which labour cost indexes are available four are down from a year earlier those of Slovenia Portugal Ireland and Greece For Greece entering its fifth straight year of recession the 12 month decline is a drastic 7 5 and it follows a 6 4 drop in the previous 12 months The political unacceptability of austerity in such conditions is not hard to imagine The recent elections have only increased Greece s political disarray leaving no party or group of parties able to form a government Apart from wage deflation a much broader deflation is currently under way in the OECD countries According to the latest data home prices remained depressed in most countries on a sequential basis in Q1 2012 This marked the fourth consecutive quarter during which our diffusion index for nominal home prices was below 50 No less than four of the G7 economies reported price declines during the quarter U S Japan France and Italy The current economic backdrop in the matured economies of the OECD is therefore characterized by a deleveraging process of governments and financial institutions while household net worth is negatively impacted by falling home prices These conditions are hardly auspicious for strong economic growth in the medium term The recent waning in economic momentum suggests that further stimulus by central banks may yet be required So while we still expect the developed countries as a whole to continue growing over the coming quarters albeit weakly the political developments of recent weeks have revived fears of a financial crisis that could send the global economy back into recession In particular a Greek exit from the monetary union could send shock waves through the euro countries The prices of five year credit default swaps show the market giving odds of default by four other countries higher than they were for Greece in April 2010 The odds given for Spain are at an all time high of 40 For France a core country of the monetary union they are almost 20 In short restoring confidence in the European project remains a great challenge for the governments of the continent U S A Soft PatchRecoveries tend to be uneven and the first half of 2012 seems to be a case in point There are indications that the US economy has hit a soft patch with a deceleration in growth and employment creation We see this as temporary and anticipate a pickup helped by industrial production buoyed by domestic demand and exports and a slow recovery in housing The necessary condition of course is that financial markets remain functional in the face of the ongoing European crisis The world s largest economy continued to expand in the first quarter of 2012 albeit at a more modest pace of about 2 0 annualized That said the composition of growth in Q1 was better than in the prior quarter with more vigour in consumption spending The 2 9 increase in personal consumption which accounted for over 90 of the GDP increase in Q1 was the best quarterly performance by consumers since 2010 Preliminary indicators however suggest that consumers are taking a breather in the current quarter April s marginal gains leave real retail spending tracking growth of roughly 2 annualized in Q2 compared to 5 5 in Q1 The deceleration isn t entirely unexpected given the Q1 drop in the savings rate and the apparent softening of the labour market Both employment reports nonfarm payrolls and the household survey were disappointing in April Payrolls showed a gain of only 115 000 jobs the lowest since last October The private sector gain was 130 000 also a multi month low The household survey showed a second consecutive drop in employment although that didn t stop the unemployment rate from dropping to 8 1 in April That s because there were fewer people looking for work with the participation rate falling to 63 6 the lowest in 31 years The outlook for the next few months isn t particularly bullish given that the online help wanted index seasonally adjusted which leads job creation by roughly three months showed its biggest decline in April since 2010 But there is good news too for the U S economy The housing market seems to have stabilized with residential construction up in Q1 for a fourth consecutive quarter That trend seems to have continued in Q2 judging by a further ramp up in housing starts in April and a rise of the homebuilder confidence index to a five year high in May Another piece of good news was a 10 month high in both the April manufacturing ISM and its new orders subindex The ramp up at U S factories was confirmed by the month s industrial production report which showed a sharp increase in manufacturing output in addition to strong gains in energy production Industrial capacity utilization rose to 79 2 the highest in 4 years That suggests potential for bottlenecks in production further ahead As a result forward looking corporations are likely to deploy their record cash positions and make the most of government incentives to boost investment Though uncertainty seems to be delaying these necessary outlays the potential for an investment boom is real While new technology such as fracking has spurred energy output the manufacturing renaissance has been driven by auto production and exports The latest trade data show record exports of manufactured goods despite curtailment of demand by eurozone recession Productivity enhancements have helped US exporters but so has a highly competitive dollar which remains near historic lows in real terms Despite the Fed s loose monetary policy inflation hasn t spiralled out of control The annual CPI inflation rate fell to 2 3 in April the lowest in more than a year So the real dollar exchange rate is set to remain highly competitive for now That s crucial for US growth given that exports now account for roughly 14 of GDP the highest on record Canada Condo BoomJust like that Canada s employment is back to trend after an inexplicable slump in Q4 last year and the start of this year That would normally have raised odds of a rate hike by a hawkish sounding Bank of Canada particularly given the ongoing boom in the condo market But caution has been urged on the BoC by other developments a hugely disappointing February GDP report and deterioration of the eurozone economy and financial position We had been quite skeptical of the soft Labour Force Survey results of the October February period given the coinciding strength of other economic indicators We questioned the Quebec employment slump in particular which contrasted with healthy consumption related data such as auto sales and housing The LFS now seems to have self corrected with a stunning 140 000 net job gains over the past two months putting employment back on its pre October trend Quebec has recovered all of its reported job losses of recent months Economic growth meanwhile has been weaker than the employment rebound would suggest First quarter GDP growth wasn t available at this writing but various monthly indicators suggest a print of around 2 annualized February s surprising GDP contraction did much of the damage in restraining Q1 growth so much so that the output gap is now unlikely to close over the Bank of Canada s forecast horizon assuming no change to post Q1 Monetary Policy Report projections Little wonder that markets have pared down expectations of rate hikes this year While that doesn t mean there won t be any odds are the Bank of Canada will stand pat until next year The annual inflation rate remains close to its 2 target In addition to softer than expected domestic demand external factors such as the possibility of a European implosion remain a clear and present danger for the Canadian economy Moreover the household debt accumulation that the BoC sees as the biggest domestic risk is now being addressed by households themselves Year on year growth in consumer credit is now at its lowest in almost two decades That said Canada s love affair with real estate continues unabated thanks to record low mortgage rates which have kept residential credit growth elevated So much so that some segments of our real estate are showing clear signs of overheating The Toronto condo market is a case in point As a share of total housing starts multiple units which include condos hit a record high in April The increased activity in Toronto might be a reflection of a high level of pre sales in large multi unit projects As potential buyers are priced out activity will eventually be curtailed in those currently hot markets It s not just residential construction that contributed to Q1 GDP Machinery and equipment import volumes suggest that business investment picked up in the first quarter However we re not expecting a stellar result here Post Q1 the investment outlook is unclear True investment intentions were strong in the Bank of Canada s Business Outlook Survey but corporations may remain on the sidelines until uncertainty dissipates somewhat That s one channel through which a prolonged European drama could weigh on domestic demand Financial contagion is another channel through which European woes could affect our domestic economy But at this point Canadian financial markets seem well shielded by a relatively solid banking sector and orderly public finances Fortunately for Canadian trade it s the U S that matters not Europe The continued expansion stateside allowed our export volumes to grow at a solid annualized pace of 10 in the first quarter despite the challenges brought by a strong Canadian dollar Strong U S demand for autos in particular is boosting Canadian exports of autos and parts US auto assemblies were up a stunning 46 annualized in Q1 and the ramp up in auto production extended into Q2 based on April data |
C | C Flash Correction Coming In The DJT And DJIA | This is one of the more unusual ways to look at the charts right now but sometimes certain pattern set ups really standout and this is the case with what may be going on in the Dow Transports with a pattern scenario that took shares of Citigroup down 30 over the last six weeks and a set up that appears to be budding in the Dow itself to follow both Citigroup and the Transports potentially Let s start with the connecting chart link between Citigroup and the Dow though and that is with the chart of the Dow Transports with what had been a promising Bear Pennant in grey trade up into what appears to be a Bear Wedge in blue The Bear Wedge carries a target of 4865 and a level that would confirm the Bear Pennant for its target of 4369 and well below the objective of the Triple Top pattern at 4668 with the three bearish aspects supporting each other and particularly in the context of that bearish Rising Wedge that looks set to fulfill any day now toward its target of 3951 Now let s rewind a bit and take a look at Citigroup s chart and its own Bear Pennant into a Bear Wedge pattern combination back in April and the technical cause of that 30 drop as helper patterns to the H S pattern Clearly it s not a pattern set up to be messed with on the hope of making a quick buck on some sort of rally or Dead Cat Bounce and particularly with both sitting on the right sides of serious topping patterns with Citigroup s H S fulfilled but with the Triple Top in the Transports out there still in a scary bear sort of way Connecting these two charts to the chart of the Dow and it looks as though this index could toy with minor trading to the upside a bit more to create a Bear Wedge of sorts before its Bear Pennant might confirm at 12312 for a target of 11285 even though quite frankly its Bear Pennant looks good to go now and the reason it is in blue and the hard to see Bear Wedge beginnings in grey Such a pop and what could turn into a real fally should not be discounted however in looking at the Dow s similar pattern set up to last year and one that nearly suggests the Dow s current sideways trading is the equivalent of what happened last June before a brief pop into a dangerous Double Top that led to a flash correction Such a potential evasion of that Bear Pennant into a Bear Wedge then would just be a matter of prolonging the pain with that Broadening Top ready to take the Dow down toward 12000 to give the Rising Wedge a shot at 10405 whether this starts in earnest next week or in eight weeks And this sort of sideways trading takes us back to Citigroup because it is worth noting that Citigroup s newest Bear Pennant and one that is perfect right now on confirmation of 25 75 for a target of about 17 50 and a level that suggests another correction is ahead for Citigroup whether flash or otherwise and this will probably hold true even if its current Bear Pennant transforms briefly into a head faking Bear Wedge Something about that Bear Pennant looks pretty solid on its own however with Citigroup in a different stage of decline than the Transports and the Dow and primarily a later stage with its initial crash correction for the year out of the way with the next big drop seemingly on the come for what could become a 50 drop this year s peak Understanding that Citigroup is not a component of either the Transports or the Dow its chart from February through late April appears to be paving the path for each with that uncanny Bear Pennant into a Bear Wedge set up that was successful in late April into May as the Transports and Dow were buffered by a bit of sideways slop When this buffering comes to a bearish end whether this quarter or next it will have been Citigroup s chart to warn of a flash correction in the Transports and the Dow |
C | Forget Facebook This Social Media Stock Is Ready To Break Out | They need to get rid of Zuckerberg Facebook may have a chance if a talented leader is appointed otherwise it s a no go The guy is a master at the start up but he needs to turn the reigns over to someone else to run the company exclaimed an under the radar Internet insider I recently chatted with in South Florida His words proved semi prescient as the heavily anticipated Facebook Nasdaq FB IPO has gone down in history as providing the worst return of any large IPO in the past decade The massive 16 billion IPO was fraught with issues from its launch on May 18 A lack of communication at Nasdaq appears to be the initial trigger of the strife causing the IPO to be delayed and some investors complained that their orders weren t being filled or that they were getting shares at a much higher price than they wanted The confusion resulted in about 115 million in losses for the four major market makers in the IPO Knight Capital Group Citigroup s Automated Trading Desk Citadel Securities and UBS AG The exact steps taken by Nasdaq officials on the IPO s first day are still unclear However the losses suffered by investors and the market makers are very real This has triggered a rash of shareholder lawsuits against the social media behemoth Obviously it wasn t Zuckerberg who caused the initial confusion But time will tell if he can help solve the problems or if a new leader needs to take over Either way it looks like it s going to be a long and revealing road to get to the bottom of exactly what went wrong with the IPO But one thing is for certain Facebook s flop pulled down the entire social media sector potentially setting up a great buying opportunity for savvy investors The Facebook of China While the lawyers are sorting out Facebook s troubles otherwise successful social media companies have been knocked down into bargain territory One of these is RenRen Inc Nasdaq RENN The so called Facebook of China nearly doubled in 2012 prior to the Facebook flop As you can see shares plunged into the 4 range in sympathy with the Facebook sell off However the price appears to have stabilized and may be beginning to climb higher Since shares are below the 200 day simple moving average this stock does not qualify for my value zone buying system However it is a classic break out buy at 5 The fundamentals look solid The company is sitting on 1 04 billion in net cash This works out to be 2 65 per share This cash can be used to start a stock buyback program or pay a dividend which would push the shares higher It may also be used as it has been previously to buy out smaller social media start ups in China One never knows if one of these start ups could have cracked the code taking Renren down an entirely different and lucrative social media avenue Another solid positive is that the company is aggressively pursuing partnerships with major technology companies Renren will partner with Intel Nasdaq INTC for network assistance as well as Japan s popular photo app SnapDish This willingness to work with others unmistakably signals that further deals may be pending And obviously Renren could provide any large western company the perfect marketing gateway to reach the Chinese masses Partnerships of this sort could easily send shares into the stratosphere Risks to Consider Although Renren looks appealing both technically and fundamentally there are certain risks to investing in the Chinese ADR American depository receipt Namely political and macroeconomic risk factors are my primary concern As you know China is far different than the United States when it comes to politics both corporate and national not to mention contract law and disclosure In addition the latest economic numbers may be signaling a significant slowdown in Chinese economic growth However it s critical to note that the economy is still growing like gangbusters the growth has just missed the consensus estimates Due to these unknown factors it is critical that investors position size accordingly and always use stop loss orders Renren has set up to be a classic break out play Start to build a position by buying on a break out above the 5 level and then add to the position on a break above the 200 day moving average Other knocked down social media companies such as Quepasa Nasdaq QPSA and even micro cap IZEA IZEA PK although not as appealing as Renren should also be watched for potential momentum buy opportunities BY Dave Goodboy |
JPM | Big Bank Think Tank | By
JPMorgan Chase Co NYSE JPM would like the world to know it s not just in the business of making loans taking deposits and navigating the waters of high finance With the launch Thursday of the JPMorgan Chase Institute the bank adds a new facet to its brand think tank The institute aims to use real time big data analytics for the benefit of policymakers businesses and the wider public JPMorgan CEO Jamie Dimon has said the think tank is out to educate the world As its inaugural report s conclusions show perhaps unsurprisingly the greater good might just be served through Chase s own banking products The institute isn t your typical corporate stab at social responsibility It has access to a uniquely vast trove of customer data Chase s checkings and savings accounts Moored to the largest American bank by assets the think tank says it can put the broad spectrum of data within the firm to use for the public good The institute s opening comes as major financial institutions try to burnish public reputations still damaged from the fallout of the financial crisis and subsequent scandals Just a day before the JPMorgan Chase Institute announced itself to the world the bank pleaded guilty with several other firms to criminal antitrust violations related to foreign exchange rigging In its first publication the institute measured the volatility of Americans personal finances using data culled from 100 000 Chase customers bank accounts credit card records mortgages and home equity loans According to the institute the data was stripped of personally identifiable information In their most salient finding the authors wrote that the average household didn t have the savings necessary to withstand the unpredictable ups and downs in personal income and consumption The researchers estimated that the typical household needs a cushion of 4 800 to withstand unexpected financial blows like a medical bill or sudden job loss The average family however falls 1 800 short of that mark A financial buffer is a more important consideration for individuals across the entire income spectrum than is generally understood the authors wrote But the recommendations outlined at the end of the report might sound familiar to Chase employees some of whom contributed to the research According to the authors solutions could include new savings insurance and credit products as well as more technical banking tools many of which Chase already offers In a letter celebrating the opening of the institute Dimon emphasized the way the company and think tank could work together toward similar ends The private sector has a role to play in addressing big societal challenges such as economic opportunity |
BMY | Mallinckrodt Presents Encouraging Data On Acthar Gel For RA | Mallinckrodt plc NYSE MNK announced positive results from its phase IV study on lead drug Acthar Gel at the European Congress of Rheumatology 2019 EULAR The phase IV multicenter study assessed the efficacy and safety of Acthar Gel in patients with persistently active rheumatoid arthritis RA who were previously treated with disease modifying anti rheumatic drugs DMARDs and corticosteroids The primary endpoint of the study was the proportion of patients reaching low disease activity LDA at 12 weeks The part 1 of the study was an open label period n 259 After 12 weeks of treatment with Acthar Gel patients were evaluated for treatment response In part 2 of the study n 154 participants who achieved LDA of DAS28 ESR of less than 3 2 at week 12 in part 1 entered a double blind withdrawal period These patients were then randomized in a 1 1 ratio to receive either Acthar Gel or matching placebo for an additional 12 weeks As previously announced both parts of the multicenter study are now complete The study met all primary and secondary outcome measures with 63 of patients suffering from persistently active RA achieving LDA as assessed by DAS28 ESR at week 12 In the Acthar arm 86 of patients had sustained LDA at week 24 as defined by Clinical Disease Activity Index compared with 66 in the placebo arm Results from the withdrawal phase of the study showed that 62 of patients with persistently active RA who met rigorous response criteria at week 12 maintained LDA results when treated with Acthar as compared to 43 with placebo treatment at week 24 We note that Acthar is approved by the FDA as adjunctive therapy for short term administration in RA including juvenile RA The results reinforce Acthar s efficacy in treating RA patients who were treated previously with multiple standard therapies but continued to have active disease The drug generated sales of 223 9 million in the first quarter Mallinckrodt s stock has plunged 37 7 in the year so far compared with the s decline of 17 3 Shares have crashed in recent times as the company has been embroiled in various litigations Mallinckrodt recently reached an agreement in principle with the U S Department of Justice DOJ in relation with the Questcor litigation The company has reached an agreement to resolve the previously disclosed government investigation of Questcor s legacy sales and marketing activities but it is still subject to the finalization of certain terms Mallinckrodt expects to pay 15 4 million related to legacy Questcor activities per the civil False Claims Act settlement Shares also crashed last month after the company filed suit in federal district court against the U S Department of Health and Human Services HHS and Centers for Medicare and Medicaid Services CMS to protect Medicaid patient access to Acthar The lawsuit was filed against the agency s decision which required Mallinckrodt to change the base date average manufacturer price AMP used to calculate Medicaid drug rebates for Acthar Zacks Rank and Stocks to ConsiderMallinckrodt currently has a Zacks Rank 3 Hold Some better ranked stocks are Bristol Myers Squibb Co NYSE BMY Roche OTC RHHBY and Celgene Corp NASDAQ CELG While Bristol Myers sports a Zacks Rank 1 Strong Buy the other two carry a Zacks Rank 2 Buy You can see Bristol Myers earnings per share estimates have increased from 4 79 to 5 03 for 2020 in the past 60 days Roche s earnings per share estimates have increased from 2 35 to 2 41 for 2019 in the past 60 days Celgene s earnings estimates have moved up by a cent to 10 72 over the past 60 days
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BMY | Bristol Myers BMY Upgraded To Buy What Does It Mean For The Stock | Bristol Myers Squibb BMY could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank 2 Buy An upward trend in earnings estimates one of the most powerful forces impacting stock prices has triggered this rating change
The Zacks rating relies solely on a company s changing earnings picture It tracks EPS estimates for the current and following years from the sell side analysts covering the stock through a consensus measure the Zacks Consensus Estimate
The power of a changing earnings picture in determining near term stock price movements makes the Zacks rating system highly useful for individual investors since it can be difficult to make decisions based on rating upgrades by Wall Street analysts These are mostly driven by subjective factors that are hard to see and measure in real time
Therefore the Zacks rating upgrade for Bristol Myers basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price
Most Powerful Force Impacting Stock Prices
The change in a company s future earnings potential as reflected in earnings estimate revisions has proven to be strongly correlated with the near term price movement of its stock That s partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company s shares An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock and institutional investors typically buy or sell it Their transaction of large amounts of shares then leads to price movement for the stock
For Bristol Myers rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company s underlying business And investors appreciation of this improving business trend should push the stock higher
Harnessing the Power of Earnings Estimate Revisions
Empirical research shows a strong correlation between trends in earnings estimate revisions and near term stock movements so it could be truly rewarding if such revisions are tracked for making an investment decision Here is where the tried and tested Zacks Rank stock rating system plays an important role as it effectively harnesses the power of earnings estimate revisions
The Zacks Rank stock rating system which uses four factors related to earnings estimates to classify stocks into five groups ranging from Zacks Rank 1 Strong Buy to Zacks Rank 5 Strong Sell has an impressive externally audited track record with Zacks Rank 1 stocks generating an average annual return of 25 since 1988 You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
Earnings Estimate Revisions for Bristol Myers
This biopharmaceutical company is expected to earn 4 21 per share for the fiscal year ending December 2019 which represents a year over year change of 5 8
Analysts have been steadily raising their estimates for Bristol Myers Over the past three months the Zacks Consensus Estimate for the company has increased 1 1
Bottom Line
Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations the Zacks rating system maintains an equal proportion of buy and sell ratings for its entire universe of more than 4000 stocks at any point in time Irrespective of market conditions only the top 5 of the Zacks covered stocks get a Strong Buy rating and the next 15 get a Buy rating So the placement of a stock in the top 20 of the Zacks covered stocks indicates its superior earnings estimate revision feature making it a solid candidate for producing market beating returns in the near term
You can learn more about the Zacks Rank here
The upgrade of Bristol Myers to a Zacks Rank 2 positions it in the top 20 of the Zacks covered stocks in terms of estimate revisions implying that the stock might move higher in the near term |
C | U S stocks post sharp gains after the open Dow Jones jumps 1 03 | Investing com U S stocks posted sharp gains after the open on Wednesday as upbeat corporate earnings reports and better than expected data on initial jobless claims overshadowed concerns over euro zone sovereign debt contagion During early U S trade the Dow Jones Industrial Average jumped 1 03 the S P 500 index climbed 1 05 while the Nasdaq Composite index soared 1 51 Earlier in the day official data showed that the number of people who filed for unemployment assistance in the U S last week fell to the lowest level since July 2008 boosting optimism in the U S economic recovery Meanwhile in earnings news shares in luxury goods retailer Tiffany Co surged 4 24 after it said third quarter net income jumped 27 to USD 55 1 million The luxury jeweler said that sales in the quarter climbed by 14 to USD 681 7 million beating analyst expectations for sales of USD 650 3 million Shares in the world s largest manufacturer of agricultural equipment Deere Company leaped 1 06 after it said fourth quarter net earnings rose to USD 457 million compared to a loss of USD 223 million as sales rose by 35 to USD 7 2 billion Elsewhere U S listed shares of automaker Porsche jumped 5 82 after it said third quarter net earnings jumped by 86 to USD 528 million as sales in the quarter surged 80 to USD 2 79 billion But shares in the financial sector declined amid lingering fears over euro zone sovereign debt contagion after Standard and Poor s downgraded its sovereign rating on Ireland and as Portugal experienced its biggest labor strike in 22 years Global financial service provider JP Morgan Chase saw shares fall 0 37 rivals Citigroup saw shares decline 0 22 while U S listed shares of Bank of Ireland plummeted 12 94 amid reports that the Irish government would take a majority stake in the lender Meanwhile shares in the world s largest maker of business application software SAP fell 1 31 after a U S federal jury said the company must pay USD 1 3 billion to rivals Oracle for copyright infringement Shares in Oracle added 2 06 following the news Across the Atlantic meanwhile European stock markets were up the EURO STOXX 50 gained 0 79 France s CAC 40 rose 0 60 Germany s DAX soared 1 68 while Britain s FTSE 100 jumped 1 24 Earlier Wednesday official data showed that both U S core durable goods orders and durable goods orders which include transportation items plunged unexpectedly in October Meanwhile a separate report showed that personal income rose more than expected while personal spending rose less than expected in October Later in the day the U S was to release data on new home sales as well as revised data on consumer sentiment and inflation expectations |
C | U S stocks advance after the open on jobs data Dow Jones up 0 09 | Investing com U S stocks were up after the open on Thursday as better than expected data on initial jobless claims and housing starts boosted market sentiment but gains were limited after FedEx reported lower than expected earnings During early U S trade the Dow Jones Industrial Average added 0 09 the S P 500 index climbed 0 20 while the Nasdaq Composite index jumped 0 29 Earlier in the day official U S data showed that the number of individuals filing for initial jobless benefits in the week ending December 11 fell unexpectedly while a separate report showed that housing starts in the U S rose for the first time in three months Meanwhile shares in the financial sector were mixed as markets focused on a 2 day summit of EU Leaders in Brussels gathering to discuss the next step in dealing with the euro zone s debt crisis and how to stop it from spreading Shares in global financial service provider Goldman Sachs slumped 0 74 rivals Citigroup saw shares climb 0 88 while U S listed shares of Bank of Ireland plunged 2 53 Meanwhile in earnings news shares in the world s second largest package delivery company FedEx slumped 0 89 after it said its fiscal second quarter profit tumbled by 17 to USD 283 million The package delivery giant reported that revenue in the quarter totaled USD 9 63 billion falling short of analyst expectations for revenue of USD 9 78 billion Shares in home furnishings retailer Pier 1 Imports jumped 1 16 after it reported that revenue in the third quarter rose by 8 to USD 353 8 million up from USD 323 1 million a year earlier Elsewhere shares in Wynn Resorts soared 4 01 after the stock was upgraded to overweight at JPMorgan Chase Meanwhile shares in the world s largest coffeehouse company Starbucks jumped 2 15 after Goldman Sachs recommended buying the stock Across the Atlantic European stock markets were down The EURO STOXX 50 slumped 0 30 France s CAC 40 fell 0 15 Germany s DAX declined 0 08 while Britain s FTSE 100 eased down 0 04 Later in the day the U S was to produce official data on manufacturing activity in Philadelphia |
C | Financial Stocks Lead The Rally | On Friday morning all of the leading financial stocks were catching a bid higher This was the first real bounce for this important sector in about a week The most important financial stock in the market is J P Morgan Chase Co NYSE JPM This leading financial stock is is trading higher by 0 68 cents to 41 30 a share Short term traders should watch for intra day resistance around the 41 50 and 42 00 levels Some of the other leading financial stocks that are inflating higher today include Citigroup Inc NYSE C Wells Fargo Co NYSE WFC and Credit Suisse Group NYSE CS Usually the major stock indexes will hold up when the financial stocks are strong The financial sector accounts for roughly 14 0 percent of the S P 500 Index |
C | After Taking Out A Major Rival This Stock Could Finally Double | It s a classic conundrum What do you do with a well run company in a very tough industry Do you focus more on the company s solid balance sheet and growth opportunities or focus on the key issues beyond the company s control That s been the biggest challenge facing investors in Micron Technology NYSE MU This past September I laid out why I think this company is poised for a great future And for a while there the broader investment community was in agreement The stock s rebound began in December after a favorable legal verdict which I discussed And shares kept on rallying as prices for DRAM dynamic random access memory what s used to store and retrieve data in computers firmed up Yet as DRAM prices have slipped anew shares have given back the recent gains That s why a soon to be released announcement from Micron is so important The company is hammering out the final details of a major acquisition that should help control the industry supply of DRAM enabling producers to steadily garner firmer prices for their products A glut will soon end Japan s Elpida was like the unwanted neighbor that shows up at your parties The DRAM producer kept flooding the market with its DRAM chips even though it was losing gobs of money All that Micron and rival Samsung could do was hope that demand would outstrip all that supply which has rarely been the case in recent years Elpida s money losing ways finally forced it in to bankruptcy and after protracted negotiations Micron has apparently agreed to take over the struggling firm for around 2 5 billion to get Elpida s assets which is likely 500 million or even 1 billion more than it had initially hoped to pay And Micron will likely spend another 1 billion to shore up the acquired manufacturing plants But the stiff price will still be worth it At that price Micron is getting Elpida s assets at 0 30 on the dollar if the company were to make similar capacity enhancements on its own Elpida s Hiroshima plant is said to be worth 3 billion and the Rexchip plant another 5 billion And the purchase price is still less than half of Elpida s 5 4 billion debt load when it skidded into bankruptcy More importantly a field of four major players has just been reduced to three Samsung has around 45 market share and Micron and Hynix will each have around 25 That sets the stage for more controlled industry output as the industry s loose cannon Elpida will no longer be flooding the market In fact Micron is likely to shut off some of Elpida s capacity simply to make sure industry supply will be in sync with demand What s the eventual payoff Well analysts are just starting to do the math Credit Suisse for example thinks the deal in a best case scenario could add 0 70 in earnings per share EPS to Micron or 720 million in cash flow Most of those gains would come from further price hikes in DRAM In an absolute worst case scenario they see the move as neither helpful nor hurtful They re splitting the difference on the range of assumptions and have come up with a 12 price target the stock currently trades for a little more than 6 right now Analysts at Citigroup have a similar take We view this deal favorably given it is consolidation in a commodity industry is cheap relative to replacement cost and strengthens MU s relationship with Apple Nasdaq AAPL Apple was Elpida s largest customer and apparently lobbied for Micron to gain control of Elpida Citigroup s 12 target assumes shares will trade past the current 8 in tangible book value and move up to 1 5 times that figure As noted earlier slumping DRAM prices have been a recent impediment for this stock but help is on the way according to Goldman Sachs Earlier this week the firm issued an updated industry forecast noting that the market will likely remain oversupplied in the current quarter move into balance in the third quarter with the potential for meaningful undersupply in 4Q12 Their key takeaway Given a tightening supply demand balance we believe pricing is likely to continue moving slowly higher over the coming quarters Risks to Consider To pay for the Elpida deal Micron will be issuing fresh debt and the interest rates it will have to pay will help determine how strong a payback it can expect from the purchase It will take several quarters for all of this to play out Indeed the agreement in place may still fall apart before the paperwork is signed But assuming the deal gets done analysts will increasingly start to see what this industry will look like in a year or two as industry supply gets rationalized That should push this stock which already trades at a sharp discount to tangible book value back on to Wall Street s buy lists And if the analyst price targets I mentioned earlier are indeed where this stock is headed then we re talking about a double BY David Sterman |
C | Prepare For Volatility | Last week I wrote to expect a short term rally which was a tactical trading call see The Merde rally but I wasn t convinced that any rally would be the start of an intermediate term move upward for stocks My inner trader wants to buy risk in anticipation of an oversold rally My inner investor tells me to watch the market action in likely ensuing rally to gauge the strength of the bulls as this is just another phase in the choppy up and down market action that we have been witnessing in the past few weeks The market action on Thursday and Friday makes me more unconvinced that this is the start of either a sustained bull or bear move We have a lot of macro cross currents between now and year end and navigating them will be a challenge for any investor In some cases we have economies that appear to be outperforming but likely to start to underperform later in the year In other cases you have the reverse economies burdened with negative news but whose headlines are likely to improve later The difficulty is that the timing of all these twists and turns will be highly uncertain Moreover it is unclear which headline the markets will focus on during this period of uncertainty To summarize my outlook I use my framework of the Three Axis of Growth namely Europe China and the United States I preface my analysis with the comment that as an investor I am agnostic on the question of whether an economic policy is the correct one or not Rather I focus on the likely effects of that policy on the markets Europe News flow and headlines are negative and likely to get more negative However investors shouldn t discount the effect of a political response which would serve to kick the can down the road yet one more time and the markets would rally in relief China Uncertainty reigns but the market perception of the likelihood of a hard landing is receding at least for now The change in leadership later this year is likely to usher in a period of stimulus which would provide a bullish impetus to the markets US American equities remain the global leadership for now but economic momentum is faltering and the Fed may not have the political capital to act between now and the November elections Moreover the US faces a fiscal cliff in 2013 Markets typically look ahead six months or more When does the markets start to discount the negative effects of that fiscal cliff Another European summer of discontent After the positive news about a fiscal compact and LTRO which saved the eurozone from disaster late last year the headlines from Europe are starting a negative cycle The equity markets are reflecting that heightened anxiety as a glance at the DJ Euro STOXX 50 shows that it is in a well defined downtrend The bad news for investors is that the negative news isn t so bad that we are poised for a rebound I would wait until the index declined into the support zone before nibbling away at positions Across the English Channel the FTSE 100 is declined and is now testing the 200 day moving average I interpret this as another sign of market stress over the eurozone Jeff Miller put some perspective on why you shouldn t blindly react to the headlines and panic over Europe emphasis added Most of the commentary we see has three steps 1 Some problem in Europe 2 Cockroach contagion domino 3 Disaster for the world This type of commentary ignores any policy reaction and also often insults the leadership of European nations the IMF and the ECB snip I suggest that investors read very critically when a story suggests causal relationships that lack specificity or quantification Be even more suspicious when the story ignores policy responses And finally how about some quantification concerning Europe s impact on the US economy My own conclusion familiar to regular readers is that the European story is an ongoing process of bargaining and compromise US observers are far too ready to impose their own value judgments on other countries and cultures The exact trade off of austerity bank recapitalization central bank intervention and rescue funds is a work in progress The exact nature will change and I still expect new entrants Marc Chandler at Brown Brothers Harriman wrote an excellent piece entitled 10 points on the comity of Europe that made a similar point The article is well worth reading in its entirety but here are some highlights 1 EMU itself is a culmination of two trends 1 the integration of western Europe since the 1950s and 2 efforts to keep Germany wedded to the fortunes of Europe The elite and it is an elite project knows no alternative strategy 2 Because there is no Plan B there is no mechanism to formally eject Greece or any other member Polls indicate a majority of Greeks want to stay in EMU 5 EMU is an institutional expression of the comity of Europe These nation states have lived with each other for longer than the US has been around It is very much like a family even if dysfunctional what family isn t They did not get to chose each other Their histories are intertwined There is a great desire for peace and prosperity It is difficult to prove that integration has made peace on the continent but is sure looks that way Miller and Chandler make the point that the European elites will find a way to defuse the crisis because of the long history of Europe and the political commitment involved Already the consensus is starting to shift 6 The ECB s Draghi and EC s Rehn came out in favor of a growth investment pact prior to this past weekend s election results This changed the political discussion German officials recognize the shift and have sought to get ahead of the curve Some suggest that this is always what was intended Austerity was phase 1 and growth investment was phase 2 The debate is now really over the content of a growth investment pact not whether one will be forthcoming While European stocks are reflecting the anxiety about another eurozone crisis the bond market isn t overly concerned Consider for example the yield on the Italian 5 year note Yields are below the crisis levels of last October and November and below the heightened anxiety levels of last summer indicating that the bond market is not worried about contagion from Greece and Spain The yield on 5 year Irish paper shows a similar picture No anxiety at all The yield on Spanish paper has risen but they are at levels below the high anxiety days of last October and November Trust the bond market over the stock market The bond market has to finance the European sovereigns and their banks and signs of stress will show up there first Don t extrapolate the effects of the dire headlines in a straight line The bears should be aware of policy reactions That s why I believe that while the headlines are headed south they will reverse course in a few months and start to go north again For investors timing that turn will be a challenge Is China stabilizing Moving eastward there seems to be some degree of stabilization in China The Shanghai Composite staged a brief but unconfirmed breakout from a wedge which would be bullish Although the were highly disappointing the market reaction which saw the Shanghai Composite close flat and marginally up on the day was gratifying for the bulls Next door in Hong Kong the picture looks less bright The Hang Seng Index has violated an important technical support level Friday I would wait for signs of follow through before turning overly bearish however To understand China you also have to understand the concept of how important face is to the Chinese China s political leadership is scheduled for the change that occurs every 10 years late this year The new leaders will loathe to step into a situation where the political and economic outlook are rapidly deteriorating they will lose face Expect a substantial stimulus package later this year to boost the economy Already the authorities are taking steps in that direction as As with Europe timing that turn will be a challenge When will Americans realize they face a fiscal cliff Moving the spotlight across the Pacific to America US equities today remain the global leaders The chart below of the SPX against ACWI MSCI All Country World Index shows that US equities continue to outperform other global bourses Not all is well in America I wrote about the prospect of a short term bounce last week but the rally has been rather weak JPM s problems notwithstanding I believe that the rally will still materialize The two things I will watch for in US equities are the ability of the SPX to hold support in the current support zone and for the index to rally above its 50 day moving average Moreover the US faces a fiscal cliff There have been many warnings such as this from The Economist Here is some analysis from on the reasons behind the fiscal cliff 1 The Alternative Minimum Tax AMT currently at 28 for those filing jointly with incomes of 74K or greater will drop down to 45K That means that middle class families making over 45K will not be able to use deductions medical etc to pay less than 28 in taxes a substantial tax increase on the middle class 2 The so called doc fix provision which is currently keeping the government from implementing a 25 cut on physician payments by Medicare will expire unless Congress acts 3 The payroll tax cut will expire at the end of 2012 increasing from 4 2 back to 6 2 4 The Super Committee s inability to reach a decision last year will force mandatory cuts sequester in the US government s discretionary spending A great deal of that will hit the defense industry 5 Unemployment benefits for workers who have exhausted the standard 26 weeks of benefits will be phased out 6 Numerous temporary research and development tax benefits to corporations will expire 7 The 2001 and 2003 tax cuts are set to expire This includes tax rates on those making over 250K as well as qualified dividends and in particular the 15 rate on long term capital gains People are wondering why we are having a string of large IPOs this year including may private equity backed IPOs even in a less than friendly IPO environment Part of the reason is that the current cap gains tax rate may be the lowest that the owners will be paying in the foreseeable future 8 At the end of the year the infamous debt limit will hit again potentially forcing further cuts To give you some sense of how steep the the fiscal cliff is it could amount to as much as 600 billion or 4 of GDP According to Goldman Sachs the total of amount of dollars the US government will be taking out of the economy is about 600 billion Clearly some of these provisions may be modified or extended But given the sharply divided Congress and the contentious election year the political impasse is likely to continue A large portion of these tax increases and austerity measures may take effect These changes will potentially be a positive for the US budget deficit but for an economy that is still fragile and somewhat dependent on government stimulus it will certainly generate a material drag on the GDP growth A 1 2 GDP contraction amounts to a run of the mill recession A 4 contraction puts the economy into economic depression territory When does the stock market start to discount these risks Can the Fed ride to the rescue Moreover high frequency economic data is going south as exemplified by the last two disappointing NFP releases Take a look at the which charts the degree that economic data come in at above or below expectations The index peaked in January and February and has been falling ever since and has fallen below the zero line which is the level where economic releases come in at expectations Moreover If the economy is deteriorating What about QE3 Don t forget that this is an election year The Fed will hesitate to intervene unless there is unequivocal evidence that the economy is falling apart e g the stock market craters by 20 So don t count on the Fed to be proactive and ride to the rescue Yes the Bernanke Put still lives but this insurance policy has a rather high deductible at the moment In short while the US market is still the leadership right now and global investors should give their US allocations the benefit of the doubt the outlook will deteriorate into year end Timing that turn will be another challenge Prepare for volatility aheadSo where does that leave us for the rest of 2012 In one word Volatility I wrote last week that I expected a short term rally This was a tactical trading call for a rally that was likely to last 2 4 days Currently the relative performance of SPY equities against TLT US long Treasury bonds shows that stocks have violated a relative support level against bonds but look highly oversold The relative performance of the defensively oriented Utilities sector XLU against the market shows a similar bearish picture but the sector appears to be extended on a short term basis and ripe for a consolidation pullback Longer term we are faced with huge cross currents from around the world Investors have to contend with the following questions going forward When do some of these trends reverse and turn around Given all these cross currents which headline will the financial markets focus on These are the challenges we face Be prepared for greater volatility and more choppiness in the markets Disclosure and Disclaimer Cam Hui is a portfolio manager at Qwest This article is prepared by Mr Hui as an outside business activity As such Qwest does not review or approve materials presented herein The opinions and any recommendations expressed in this blog are those of the author and do not reflect the opinions or recommendations of Qwest None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument Nothing in this article constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives financial situation or particular needs of any specific recipient Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions Past performance is not indicative of future results Either Qwest or Mr Hui may hold or control long or short positions in the securities or instruments mentioned |
C | One Of My Favorite Latin American Stocks Is Now a Bargain | Over the past few years I ve been imploring investors to boost their exposure to the more dynamic economies and regions of the world Simply put Latin America Asia and even Africa are poised to grow at a stronger pace in the next few decades than the United States and Europe This view stems from the steady expansion of a middle class in each of these regions As people move up from the lower income strata they spend money on appliances homes vehicles fast food and many other typical consumer items This creates a virtuous cycle whereby a range of industries sprout up to support this demand and they in turn create many more middle class jobs Of course there s a good time and a bad time to load up on stocks and funds for these dynamic markets I m a huge fan of countries like Brazil Turkey Colombia and Indonesia just to name a few But these countries economies and markets haven t fully decoupled from the United States and Europe It s an ongoing process and troubles here still affect these emerging markets from time to time Instead of focusing on these markets I m spending more time looking at specific companies that directly benefit from rising consumer incomes in these regions I recently focused on home builder Gafisa NYSE GFA which continues to trade poorly but offers the potential for significant upside if the Brazilian housing market firms up Is a housing stock too risky for you After all you need to accept the busts with the booms that come with this kind of stock How about a company that makes money every quarter posts solid top line gains and is becoming the go to provider for middle class consumers in Latin America seeking a fast food meal I m taking about Arcos Dorados Nasdaq ARCO which currently sits in the investor doghouse and now looks quite inexpensive in the context of long term regional growth The name means Golden Arches in Spanish Arcos Dorados is the leading franchiser of McDonald s NYSE MCD restaurants in Latin America This stock wasn t always in the doghouse It had been one of the hottest IPOs of 2011 eventually approaching almost 30 this past fall Now it trades for half of that peak Reality sets in It s a bit unclear in hindsight why this was one of the hottest IPOs of 2011 for awhile at least Investors clearly got carried away in their anticipation of super strong growth in a fast growing region In reality this is a company that expands its 1 800 stores base by 5 to 10 every year and generates modest same store sales gains But these numbers are a bit deceiving as growth had been aided by a rapid build up in the store base in recent years And as the table above shows growth slowed to a crawl in 2009 when the global recession took hold Even as sales growth resumed in 2010 operating income growth stalled as currency effects and other costs constrained results Fast forward to the first quarter of 2012 and the same thing is happening again A slump in the Brazilian real shaved several percentage points of growth forcing Arcos Dorados to earn six cents less than the 0 18 a share consensus estimate Make no mistake despite the near term speed bumps this remains a solid long term growth story Even as the Brazilian economy currently Arcos Dorados largest market is expected to post modest 3 gross domestic product growth this year sales are still expected to rise 10 to 4 billion thanks in part to new store openings The International Monetary Fund says Brazilian economic growth will likely move back up by 4 in 2013 which is why analysts say the country s sales could grow roughly 15 to 4 6 billion This isn t just a play on Big Macs and French fries Management has developed a range of menu items in each country that cater to local taste so families have a diversity of options Analysts at Brazil s Itau BBV have a 25 target price noting that they remain confident in management s ability to leverage on the aspirational appeal of McDonald s brand and develop local innovations for consumers for a wide range of income levels benefiting from the structural growth in demand in its core markets Risks to Consider Arcos Dorados is on the cusp of a strong expansion in Mexico where McDonald s had lacked focus and rival Burger King was able to take solid market share Also Brazilian inflation is high but falling though any uptick in inflation as the economy rebounds could deter Brazilian consumer spending And there is foreign exchange risk As analysts at Citigroup note the aggressive monetary easing in Brazil although accelerating economic growth could translate to a weaker exchange rate complicating ARCO s US dollar results This stock traded for more than 30 times next year s earnings this past summer which is a bit absurd Now that the forward multiple has been cut by half investors can now see this stock as a long term growth platform with reasonable valuation Shares also trade at less than nine times projected 2013 EBITDA a fair price to pay for a company positioned for sustained long term growth BY David Sterman |
JPM | France s Sarkozy attracts mockery with Twitter chat | PARIS Reuters Former French president Nicolas Sarkozy drew a wave of mocking comments about his judicial woes when he launched a rare question and answer session on Twitter NYSE TWTR on Friday During the near 1 1 2 hour session followers learned that he has both a cat and a dog and loved the third season of TV show Homeland but most of the questions on the NSDIRECT feed focused elsewhere In a sign that the judicial investigations surrounding himself and former advisers could cloud his comeback Sarkozy faced a deluge of tweets on cases including Bygmalion an events organization company judges suspect of over billing in order to raise covertly money for his election campaigning As soon as the Q A session was announced dozens took to Twitter to question him on issues such as his decision to rename the conservative party The Republicans and the financing of his political campaigns The public response was such that some local media branded the PR operation a failure before Sarkozy even started answering the questions with one tweet showing a picture of someone looking for a needle in a haystack with the headline Someone in NicolasSarkozy s team has just found a tweet he can answer Live Twitter Q A sessions can be a tricky exercise JPMorgan Chase Co NYSE JPM had to cancel a session in 2013 after being flooded with insults highlighting the risks companies and politicians take as they experiment with social media marketing Sarkozy who retired from politics after losing the 2012 presidential election to Socialist Francois Hollande returned last year to take the helm of the main opposition conservative party French magistrates ruled last week that authorities had acted legally in tapping his phone as part of an investigation into allegations of influence peddling in a potential blow to his hopes to run for president in 2017 He has denied any wrongdoing in these various cases Sarkozy s answers focused on the less contentious questions Asked to comment in one word on the feud between far right Front National party leader Marine Le Pen and her father FN party founder Jean Marie he said Pathetic In contrast to judicial matters and questions about which TV shows he likes he s a bit behind on the latest season of Game of Thrones his teenage son Louis took to Twitter in the NSDIRECT session to ask him for a bigger TV set in his bedroom
Sarkozy said yes as long as his son stops being so addicted to his laptop |
JPM | Global shares struggle after data raises more questions on U S economy | By Hideyuki Sano TOKYO Reuters Asian shares slipped on Monday and the dollar stayed near a four month low against a basket of major currencies after soft data raised doubts over whether the U S economy has been growing despite U S share prices standing at historic highs MSCI s broadest index of Asia Pacific shares outside Japan MIAPJ0000PUS fell 0 4 percent although Japan s Nikkei share average N225 edged up just 0 4 percent thanks to some companies move to boost shareholder returns U S industrial production unexpectedly fell for a fifth straight month in April while consumer confidence dropped to a seven month low in early May data showed on Friday pushing down the dollar and U S bond yields Coming on the heels of weak retail sales and producer inflation data the reports stoked concerns that the U S economy is hardly gaining momentum after disappointing 0 2 percent annualized growth in January March Questions have arisen over whether the economy grew at all in the last quarter U S GDP will likely be revised down in the next update to show a contraction We estimate the U S economy shrank 0 9 percent said Shuji Shirota head of macro economics strategy group at HSBC in Tokyo While many investors stick to the view that the U S economy will accelerate later this year signs of weakness are a source of concerns given many investors counted on U S growth to lead the global economy as China slows down and many other major economies are in the doldrums Share prices in Europe China and Japan have risen already so far this year so the market needs confirmation that the economy and corporate earnings will be improving said Yoshinori Shigemi global market strategist at JPMorgan NYSE JPM Asset Management Wall Street shares also stood near record highs with S P 500 SPX closing at record high for a straight session on Friday at 2 122 73 U S shares were helped by the weak data to some extent as it reinforced expectations the Federal Reserve will wait for longer before raising interest rates U S interest rate futures priced in a rate hike toward the end of 2015 The 10 year U S Treasuries yield fell almost 10 basis points to 2 140 percent US10YT RR on Friday compared to six month high of 2 366 percent set on Tuesday It last stood at 2 152 percent The dollar index stood at 93 435 USD rising slight in early Asian trade on Monday but was still near the four month low of 93 133 hit on Thursday The euro traded at 1 1428 near a three month high of 1 1468 hit on Friday Rises in euro zone debt yields which make euro zone bonds more attractive have supported the common currency The yen was little changed at 119 27 to the dollar while sterling was off Thursday s six month high of 1 5815 changing hands at 1 5733 The New Zealand dollar fell 0 4 percent to 0 7443 after the government announced on Sunday a new capital gains tax on residential property investments to cool soaring prices in Auckland The move raised speculation that the central bank could cut interest rates in coming months
Oil prices held firm on supply concerns in the Middle East following fighting in Iraq and Yemen with Brent futures standing at 66 84 per barrel |
JPM | JPMorgan executive pay wins slim support from shareholders | DETROIT Reuters The 2014 Compensation of JPMorgan Chase Co N JPM CEO Jamie Dimon and other top bank executives won support from only 61 percent of shareholder votes cast at the company s annual meeting on Tuesday according to a preliminary tally The vote followed a recommendation by Institutional Shareholder Services the most influential of the advisory services that shareholders not endorse the compensation practices because the board decides how much cash and stock to pay without consistent reasons that would link pay to performance and shareholder interests Lead independent director Lee Raymond said at the meeting that the board s method of setting pay properly aligns incentives for executives But Raymond said the board is mindful of other opinions and is looking for ways to improve its practices |
BMY | Sanofi SNY In Focus Stock Moves 5 5 Higher | Sanofi PA SASY NASDAQ SNY was a big mover last session as the company saw its shares rise nearly 6 on the day The move came on solid volume too with far more shares changing hands than in a normal session The stock picked up sharply from the near flat trend of 40 43 to 42 28 in the past one month time frame The company has seen no estimate revisions over the past few weeks while the Zacks Consensus Estimate for the current quarter remained unchanged The recent price action is encouraging though so make sure to keep a close watch on this firm in the near future Sanofi currently has a Zacks Rank 3 Hold while its is 0 00 Sanofi Price A better ranked stock in the Large Cap Pharmaceuticals industry is Bristol Myers Squibb Company NYSE BMY which currently carries a Zacks Rank 1 Strong Buy You can see the complete list of today s Zacks 1 Rank stocks here Is SNY going up Or down Predict to see what others think Up or DownBreakout Biotech Stocks with Triple Digit Profit Potential The biotech sector is projected to surge beyond 775 billion by 2024 as scientists develop treatments for thousands of diseases They re also finding ways to edit the human genome to literally erase our vulnerability to these diseases Zacks has just released Century of Biology 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance Our recent biotech recommendations have produced gains of 98 119 and 164 in as little as 1 month The stocks in this report could perform even better |
BMY | Insys Down On Bankruptcy News Amid Increasing Legal Expenses | Shares of Insys Therapeutics NASDAQ INSY have plummeted 51 4 after it filed for bankruptcy protection under Chapter 11 of the U S Bankruptcy Code in the U S Bankruptcy Court in the District of Delaware Insys Therapeutics Inc Price
The protection will enable the company to facilitate the sale of substantially all of its assets and address its legacy legal liabilities
Insys has been embroiled in various litigations in recent times amid allegations of fuelling the ongoing opioid endemic in the United States The company has also been accused of bribing doctors to prescribe its lead drug Subsys to patients
Subsys is a proprietary sublingual fentanyl spray indicated for the management of breakthrough cancer pain in patients aged 18 years or older who are already receiving and are tolerant to around the clock opioid therapy for their underlying persistent cancer pain
The company has experienced recurring and increasing losses from operations over the last 18 months due to significant declines in the Transmucosal immediate release fentanyl TIRF market and considerable legal expenses resulting from the DOJ Investigation and other significant litigation matters The company had earlier stated of a possible bankruptcy given its limited cash balance
This month Insys signed a settlement with the United States formalizing its previously announced settlement relating to certain civil statutory claims As part of this agreement the company agreed to pay 195 million
Meanwhile Insys intends to utilize existing cash in hand and operating cash flows to support its continued operations including payment of all employee wages and benefits without interruption and continuing programs offered to customers
As of Mar 31 2019 the company recorded assets of 172 6 million and 262 3 million in liabilities Zacks Rank Stocks to Consider
Insys currently carries a Zacks Rank 3 Hold Some better ranked stocks are Bristol Myers Squibb Co NYSE BMY Roche OTC RHHBY and Celgene Corp NASDAQ CELG While Bristol Myers sports a Zacks Rank 1 Strong Buy the other two carry a Zacks Rank 2 Buy You can see
Bristol Myers earnings per share estimates have increased from 4 79 to 5 03 for 2020 in the past 60 days
Roche s earnings per share estimates have increased from 2 35 to 2 40 for 2019 in the past 60 days
Celgene s earnings estimates have moved up by a cent to 10 72 over the past 60 days
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BMY | Bristol Myers Squibb BMY Is A Top Dividend Stock Right Now Should You Buy | Getting big returns from financial portfolios whether through stocks bonds ETFs other securities or a combination of all is an investor s dream But for income investors generating consistent cash flow from each of your liquid investments is your primary focus
Cash flow can come from bond interest interest from other types of investments and of course dividends A dividend is the distribution of a company s earnings paid out to shareholders it s often viewed by its dividend yield a metric that measures a dividend as a percent of the current stock price Many academic studies show that dividends account for significant portions of long term returns with dividend contributions exceeding one third of total returns in many cases
Bristol Myers Squibb in Focus
Bristol Myers Squibb BMY is headquartered in New York and is in the Medical sector The stock has seen a price change of 9 83 since the start of the year The biopharmaceutical company is currently shelling out a dividend of 0 41 per share with a dividend yield of 3 5 This compares to the Large Cap Pharmaceuticals industry s yield of 3 04 and the S P 500 s yield of 1 96
Taking a look at the company s dividend growth its current annualized dividend of 1 64 is up 2 5 from last year Bristol Myers Squibb has increased its dividend 5 times on a year over year basis over the last 5 years for an average annual increase of 2 49 Future dividend growth will depend on earnings growth as well as payout ratio which is the proportion of a company s annual earnings per share that it pays out as a dividend Right now Bristol Myers s payout ratio is 40 which means it paid out 40 of its trailing 12 month EPS as dividend
Looking at this fiscal year BMY expects solid earnings growth The Zacks Consensus Estimate for 2019 is 4 18 per share representing a year over year earnings growth rate of 5 03
Bottom Line
Investors like dividends for many reasons they greatly improve stock investing profits decrease overall portfolio risk and carry tax advantages among others However not all companies offer a quarterly payout
High growth firms or tech start ups for example rarely provide their shareholders a dividend while larger more established companies that have more secure profits are often seen as the best dividend options Income investors must be conscious of the fact that high yielding stocks tend to struggle during periods of rising interest rates That said they can take comfort from the fact that BMY is not only an attractive dividend play but also represents a compelling investment opportunity with a Zacks Rank of 1 Strong Buy |
C | European stocks open lower on Phillips miners DAX down 0 08 | Investing com European stocks eased down after the open on Monday as shares in electronics manufacturer Philips tumbled meanwhile U S futures indexes pointed to a lower open on Wall Street During European morning trade the EURO STOXX 50 was down 0 16 France s CAC 40 shed 0 27 and Germany s DAX fell 0 08 Philips Electronics saw shares tumble 4 12 after the company said its outlook for fourth quarter sales remained cautious despite posting better than expected third quarter net profits In the financial sector shares in London based financial service provider BlueBay Asset Management soared 29 89 after it agreed to be bought by the Royal Bank of Canada in a deal worth approximately GBP 963 million In London the commodity heavy FTSE 100 dropped 0 13 as miners led declines amid retreating metal prices Shares in silver producer Fresnillo plunged 2 42 while shares in Xstrata tumbled 2 82 after its stocks were downgraded by HSBC Holdings Meanwhile shares in BHP Billiton the world s largest mining company plunged 1 55 while rivals Rio Tinto plummeted 2 34 after the mining giants abandoned plans for an iron ore joint venture in Australia The outlook for U S equity markets meanwhile was pessimistic ahead of earnings reports from Citigroup Apple and International Business Machines Dow Jones Industrial Average futures indicated a drop of 0 45 S P 500 futures pointed to a loss of 0 49 and Nasdaq 100 futures indicated a decrease of 0 31 Later in the day the U S was to releases official data on TIC long term purchases as well as data on the capacity utilization rate and industrial production |
C | Europe stocks end higher on financials DAX gains 0 42 | Investing com European stocks reversed early losses to end higher on Monday as strong earnings from U S bank Citigroup lifted European financial stocks higher At the close of European trade the EURO STOXX 50 was up 0389 France s CAC 40 rose 0 23 the FTSE 100 increased 0 73 while Germany s DAX gained 0 42 Financial stocks outperformed after the second largest U S bank Citigroup reported better than expected third quarter earnings on Wall Street earlier in the day Shares in French financial service provider Societe Generale soared 3 08 German based Deutsche Bank climbed 1 89 while Lloyds Banking Group stocks jumped 3 99 Elsewhere in the financial sector shares in London based financial service company BlueBay Asset Management soared 29 62 after it agreed to be bought by the Royal Bank of Canada in a deal worth approximately GBP 963 million But shares in Philips Electronics tumbled 4 27 after the company said its outlook for fourth quarter sales remained cautious despite posting better than expected third quarter net profits Meanwhile shares in BHP Billiton the world s largest mining company fell 0 58 while rivals Rio Tinto tumbled 1 43 after the mining giants abandoned plans for an iron ore joint venture in Australia Across the Atlantic U S markets were mixed the Dow Jones Industrial Average rose 0 35 the S P 500 index gained 0 17 while the Nasdaq Composite index slipped 0 19 Earlier Monday official data showed industrial production in the U S fell unexpectedly in September the first drop after six months of gains while the capacity utilization rate remained unchanged during the month Meanwhile a separate report showed that U S Treasury International Capital purchases rose unexpectedly in August |
C | U S stocks higher after the open Dow Jones rises 0 78 | Investing com U S stocks were higher after the open on Monday as strong corporate earnings reports boosted sentiment on Wall Street and led markets higher During early U S trade the Dow Jones Industrial Average rose 0 78 the S P 500 index gained 0 72 while the Nasdaq Composite index was up 0 77 In earnings news office supplies retailer Office Depot saw its shares soar 9 94 after it announced better than expected preliminary third quarter earnings ahead of the release of its full third quarter earnings report on Wednesday The retailer also said that chief executive officer Steve Odland who last week settled improper disclosure charges with U S regulators was to step down as of November 1 Meanwhile shares in the third largest U S tobacco company Lorillard Inc jumped 2 06 after it said third quarter net profit increased 17 from a year earlier rising to USD 274 million Elsewhere shares in the second largest U S bank Citigroup rose 2 55 after global investment bank Goldman Sachs upgraded the stock and added it to their conviction buy list But shares in electronics retailer RadioShack plunged 6 05 despite seeing profits rise 23 from a year earlier after the company reported that third quarter sales of core electronics fell more than expected Semiconductor manufacturer Texas Instruments and Amgen the world s largest independent biotech firm were to release their earnings reports after the closing bell Meanwhile across the Atlantic European stock markets were up France s CAC 40 climbed 0 42 Germany s DAX gained 0 76 Britain s FTSE 100 gained 0 63 and the EURO STOXX 50 was up 0 20 Earlier in the day industry data showed that U S existing home sales rose more than expected in September while a separate report showed that industrial new orders in the euro zone rose significantly more than expected in August |
C | Economic Surprise Index Eerily Reminiscent Of Last Year | The Citigroup is now clearly in the negative territory in a trend reminiscent of last year s decline The Citigroup Economic Surprise Index for the U S a gauge of how much reports differ from economists estimates in Bloomberg surveys turned negative on April 25 and fell May 3 to the lowest level since September Last year the gauge sank below zero for the first time in five months on May 2 the day when the S P 500 began a 19 percent drop Given the rising concerns out of Europe today there is a strong possibility we may be looking at sharply higher market volatility As discussed back in March the VIX futures curve steepness earlier in the year seemed to be a good predictor of uncertainties in the post LTRO environment |
C | Greek Option NOT Growth Vs Austerity | Growth vs austerity Who would not choose to increase economic growth as the path to future economic prosperity The election results in France and Greece over the weekend were a clear repudiation of the austerity packages negotiated earlier this year as the precursor for further German support and the European Central Bank s LTRO long term repo operation That financing directed at European banks was little more than another version of the shell game that has been orchestrated by Bernanke and Geithner on this side of the pond With the election results over the weekend and the social pressures sent along with them the stakes are raised and the day of reckoning for the EU and the euro would seem to have been moved up German Prime Minister Angela Merkel has been swift in stating that the austerity packages as negotiated must be upheld Clearly the electorates in Greece and France and soon elsewhere as well have little appetite for those austerity measures The pressure increases The question begs who will pick up the EU s enormous bill To think that growth is easily accomplished is naive Let s not forget that the ratings agencies will be compelled to downgrade the sovereign credit rating of certain of these countries if they think they can increase deficit spending Not that interest rates in the weaker EU nations are not already high but further downgrades would only push them higher Higher rates do not exactly do a lot for those hoping for growth The simple fact is without the assistance of the European Central Bank and accompanying swap lines from the Federal Reserve these countries would be capital starved as it is Will France Greece and other nations within the EU throw in the towel and look to nationalize some of their banking institutions and default on their bank debts in the process No doubt the electorates in these nations look at that option as appealing Screw the bondholders and their crony capitalist partners who plundered the nations finances over the last few decades Seems all so easy right The waves from that tsunami would roll across derivatives markets and swamp many banking institutions around the globe As such central bankers are under enormous pressure to keep the zombie banks alive at least in form and function What is behind door number 3 for certain nations especially Greece Leave the euro and devalue a newly launched currency Will it happen What are the ramifications Citigroup projects the chances of Greece taking this path at 75 within the next 18 months The stakes are raised The standoff continues The pressure within the EU cauldron is rising ever higher At some point that pressure will boil over Where and how it spills out will have enormous implications within the EU and the global economic landscape However you slice it though economic uncertainty does little for economic growth in the EU and the world Bloomberg provides further insights on the chances and implications of a Greek exit from the euro in this 3 minute clip Those within central banks have been playing the kick the can we will pay you later charade for the last 4 years Well later in Greece is now and it s right around the corner Navigate accordingly Below You May Find The Video |
C | Goldman Sachs Is The Bank And The Sector Heading Toward Recovery | Of all the US banks that have been negatively affected by the economic crisis Goldman Sachs NYSE GS arguably dealt with this better and more effectively than any other within the industry The banking industry was the major victim of the 2008 global financial crisis and Goldman Sachs was able to weather the storm whilst other financial giants like WaMU Bear Stearns and Lehman Brothers could not albeit with a little help from the Us Government under the Troubled Assets Relief Program TARP As anticipated the 2011 full year results of Goldman Sachs were not particularly pleasing to investors All the financials were in the red with total equity revenue operating income and net income all dropping substantially Return on equity which was previously at 27 prior before the global financial crisis is now at a mere 9 9 These figures along with the lack of sympathy for poor risk management and banking frailties has put tremendous pressure on the management of the bank with shareholders employee unions religious institutions and union pension funds all pressing for sweeping changes to the way the bank is run The unfortunate recent comments included in the resignation letter of the former head of Goldman Sachs Equity Derivatives business alleged that executives of the bank commonly referred to clients as muppets and that colleagues commonly made comments about ripping their clients off did nothing to help the fortunes and public image of the bank At a time when attracting clients to use its services was critical this was particularly damaging and has added to the negative sentiment held by investors towards all banking stock The result of this negative sentiment has been a consistent drop in the share price of Goldman Sachs stock from a 52 week high of just under 157 to just above 115 per share The first quarter earnings reports on the 17th of April announced a 23 fall in profits as the bank lagged behind JPMorgan Chase JPM and Citibank C in their trading departments Whilst the underlying figures are not looking good for the bank they did beat analysts expectations on the earnings per share at 3 92 and surprised investors with a 46 cent dividend the first since 2006 Looking at the actions taken prior to the report announcement it is clear to see that there are several issues going behind the scenes Firstly the damage control mechanism of the bank is in full gear with the slashing of the pay to Chairman CEO Lloyd Blankfein who now earns a conservative 11m which is a far cry from the 50m he was earning just before the global financial crisis Other top bank executives have also had their pay packages slashed in what the bank says is in pursuance of its say for pay policy where performance was the indicator to justify the level of financial compensation to bank executives Secondly the bank had succeeded in striking out three of six major shareholder demands in the proxy statement heading into the earnings call The management of the bank is advising shareholders to defeat the proposals when they come up for voting Shareholders are asking for a slash in the lobbying expenditure of the bank splitting of the Chairman CEO portfolio of Blankfein and forcing bank executives to hold on to their stock holdings until 3 years after they have left office recall that former CEO Henry Paulson sold off all his holdings after leaving the position and effectively lost nothing when share prices tumbled in late 2008 This will the bank hopes enforce a more responsible attitude from its employees and reflect a more accountable ethos to potential investors Thirdly the bank has made moves in cutting costs by laying off 2 400 workers in 2011 as well as reducing operating costs by close to 14 Although controversial in terms of the social costs of such mass unemployment the bank is displaying to its shareholders that it is serious about austerity within the company However despite Goldman Sachs beating analyst expectations the relative performance of the bank shows that there are currently several better options available within the industry Both Citigroup and JP Morgan currently represent more profitable and perhaps more solid options for investors Goldman Sachs still has to prove that its austerity measures and company ethos have improved the profitability of the bank Having said this the bank lost 46 of its stock value in 2011 and so far it has gained around 30 this year On this basis it would appear that a slow but steady recovery may be underway not only for the individual bank but the entire sector itself |
C | Global Equities Tumble On Spanish Debt Fears | EquitiesAsian markets tumbled on Wednesday as hopes for another round of easing by the Fed faded The Nikkei tanked 2 3 to 9820 its steepest drop in 5 months The Kospi slumped 1 to 2019 while the ASX 200 managed to ease just 1 as a slide in the Australian dollar helped exporters In China the Shanghai Composite and Hang Seng were closed for a holiday Selling pressure intensified in Europe following a weak Spanish bond auction The DAX plunged 2 8 the CAC40 tumbled 2 7 and the FTSE skidded 2 3 Spain sold just 2 6 billion euros in short term debt an amount which was at the bottom of its target range and yields on Spanish 10 year notes climbed to 5 61 US stocks fared modestly better but still closed sharply lower The Dow dropped 125 points to 13075 the S P 500 fell 1 to 1399 and the Nasdaq shed 1 5 to 3068 CurrenciesThe US dollar benefited from the shift away from risk climbing 7 against the euro Swiss franc and Australian dollar The yen climbed 5 to 82 42 as traders unwound carry trade positions The Canadian dollar declined 6 to 9966 while the pound eased 2 to 1 5888 Economic OutlookThe ADP payroll report indicated the economy added 209K jobs last month slightly more than forecast but a smaller gain than last month s 230K jump On Friday the government will release the official nonfarm payroll report which is expected to show a gain of 211K jobs ISM non manufacturing PMI slid to 56 0 from 57 2 slightly below forecasts US Weekly Jobless Claims Continue To DropEquitiesChina s Shanghai Composite returned from a 3 day holiday to rally 1 7 while most Asian markets traded lower The Hang Seng fell 1 the Nikkei slid 5 and the ASX 200 declined 3 Sharp gains in car makers lifted the Kospi 5 as Hyundai Motors rallied more than 4 European markets recovered from early losses after the weekly US jobless claims report showed modest progress The FTSE gained 4 the CAC40 rose 2 while the DAX lagged behind easing 1 US stocks closed mixed after a quiet session The Dow slipped 15 points to 13060 the S P 500 eased 1 point to 1398 while the Nasdaq gained 4 to 3081 The VIX rose 1 6 to 16 70 up 7 8 for the week Volatile Week Ends On A Quiet NoteOn the earnings front beverage maker Constellation Brands tumbled 12 5 after lowering its outlook while Bed Bath Beyond jumped 8 5 after beating earnings forecasts CurrenciesEuropean currencies retreated as the euro skidded 6 to 1 3067 while the pound and Swiss franc declined 4 The Australian dollar and Canadian dollar both rose 3 and the yen inched up 1 to 82 36 Economic OutlookWeekly unemployment claims declined by 6000 to 357K slightly weaker than the 355K forecast by analysts Overseas Canada s payroll report showed the economy staged a sharp upswing last month adding 82 3K jobs The figure blew past forecasts for a modest 11 3K Western Markets Tumble As Data DisappointsEquitiesAsian markets gained on Friday as investors disregarded a North Korean rocket launch and disappointing growth data from China GDP data from the first quarter showed the Chinese economy grew at 8 1 down from 8 9 in the previous quarter The Shanghai Composite rose 4 amid hopes that signs of a slowdown will prompt more easing from the government The Hang Seng jumped 1 8 to 20701 the ASX 200 climbed 1 and the Nikkei advanced 1 2 to 9638 Korea s Kospi snapped a 3 day losing streak bouncing 1 1 Meanwhile European markets tanked amid growing debt concerns and selling accelerated in the afternoon after US consumer sentiment data disappointed The CAC40 sank 2 5 the DAX slumped 2 4 while the FTSE fell 1 Markets in Spain and Italy plunged more than 3 after data showed Spanish banks were borrowing extensively from the ECB France s CAC40 Tumbles 2 5 US markets closed at the low of the session dropping more than 1 The Dow shed 137 points to 12850 the Nasdaq declined 1 5 to 3011 and the S P 500 fell 1 3 to 1370 CurrenciesThe US dollar benefited from the switch to risk off mode particularly against its European counterparts The euro fell 8 to 1 3078 the Swiss franc skidded 9 to 1 0877 and the pound dropped 6 to 1 5856 The Canadian dollar declined 5 to 9996 and the Australian dollar lost 6 to 1 0378 The yen eased fractionally to 80 93 Economic OutlookConsumer sentiment data from the University of Michigan disappointed unexpectedly sliding to 75 7 from last month s 76 2 reading CPI data showed prices rose 3 above forecasts but the less volatile core CPI was in line with estimates rising 2 Spanish Debt Fears Grow As Yields Cross 6 EquitiesAsian markets skidded on Monday following Friday s slide in the West The Nikkei tanked 1 7 to 9471 the Kospi dropped 8 and the ASX 200 declined 5 In greater China the Hang Seng fell 4 and the Shanghai Composite eased 1 ending a 4 day winning streak European markets rebounded from early losses thanks to strong US sales data The DAX advanced 6 CAC40 gained 5 and the FTSE rose 3 Yields on 10 year Spanish debt crossed above 6 hitting their highest level this year and the cost to insure Spanish debt spiked to a record high US stocks ended mixed as the Dow climbed 72 points to 12921 while the Nasdaq slumped 8 to 2988 and the S P 500 eased less than 1 point to 1370 Apple Shares Drop For 5 Straight DaysToy maker Mattel Corp tumbled 9 1 after earnings fell short of forecasts CurrenciesThe euro briefly fell below the 1 30 mark but recovered to close up 3 to 1 3116 The pound rose 2 to 1 5887 the Swiss franc gained 3 to 1 0877 and the yen climbed 6 to 80 46 The Australian dollar dropped 4 to 1 0333 and the Canadian dollar settled down fractionally at 1 0001 Economic OutlookMonday s economic data was mixed Retail sales blew past forecasts rising 8 vs forecasts for a 4 gain On the negative side the Empire State manufacturing index tumbled to 6 6 from 20 1 way below estimates The NAHB housing market index unexpectedly fell to 25 from 28 the first drop in 7 months European And US Stocks SoarEquitiesAsian markets continued to slide on Tuesday as concerns over Spain s debt burden escalated The Nikkei eased 1 to 9465 the Kospi fell 4 and the ASX 200 declined 3 China s Shanghai Composite slumped 9 and the Hang Seng slipped 2 as Chinese financial shares struggled European markets soared as a dose of good economic data and a successful Spanish debt auction triggered a buying spree The DAX and CAC40 surged 2 7 and the DTSE climbed 1 8 European banks led the gains as the sector jumped 4 1 Germany s ZEW economic sentiment index climbed to its highest level since June 2010 blowing past analyst forecasts US stocks advanced as well but the gains were slightly less impressive The Nasdaq spiked 1 8 to 3043 the S P 500 rallied 1 6 to 1391 and the Dow rocketed up 194 points to 13116 Nasdaq Soars 1 8 Apple shares jumped 5 1 snapping a 5 day losing streak Citigroup climbed 3 2 after earning an upgrade from Meredith Whitney CurrenciesThe dollar traded mostly lower on Tuesday as money flowed back into risk The Canadian dollar jumped 9 to 9903 the pound rose 2 to 1 5934 and the Australian dollar gained 4 to 1 0394 The euro and Swiss franc closed flat while the yen declined 6 to 80 90 Economic OutlookBuilding permits rose to 75M up from 72M last month hitting their highest level since September 2008 but housing starts unexpectedly dropped to 65M from last month s 69M |
BMY | Infinity INFI Up 6 Since Last Earnings Report Can It Continue | A month has gone by since the last earnings report for Infinity Pharmaceuticals INFI Shares have added about 6 in that time frame outperforming the S P 500
Will the recent positive trend continue leading up to its next earnings release or is Infinity due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts Infinity Earnings and Sales Miss Estimates in Q1Infinity reported a loss of 24 cents in the first quarter of 2019 wider than a loss of 18 cents in the year ago quarter Loss was also wider than the Zacks Consensus Estimate of a loss of 5 cents Revenues in the first quarter were 2 1 million which mainly relates to the achievement of a 2 million milestone from PellePharm for the initiation of a phase III study investigating patidegib a hedgehog pathway inhibitor in patients with Gorlin Syndrome The company did not realize any revenues in the year ago quarter Revenues missed the Zacks Consensus Estimate of 10 million Infinity recognized the 30 million gross proceeds from the Copiktra royalty monetization as a liability net of transaction costs as of Mar 31 2019 The company is amortizing the liability to non cash interest expenses and will continue to recognize the royalty revenues that Verastem pays to HealthCare Royalty Partners III L P HCR as non cash royalty revenues 2019 OutlookThe company expects net loss for 2019 to range from 40 million to 50 million including the Copiktra royalty monetization updated from the previous guidance of 30 40 million Infinity expects its existing cash cash equivalents and available for sale securities to be adequate to satisfy the company s capital needs in the second half of 2020 Pipeline UpdatesThe company announced that it will initiate MARIO 3 a phase II study of novel triple combination front line therapy in clinical collaboration with Roche Genentech The data that will be generated in the front line with MARIO 3 will complement the data that will be generated in the second line with MARIO 275 MARIO 275 being conducted in collaboration with Bristol Myers Squibb NYSE BMY is a phase II study evaluating the combination of IPI 549 and Opdivo nivolumab in immuno oncology naive patients with urothelial cancer The study will be initiated in the second quarter of 2019 The company expects to complete enrollment in MARIO 1 combination expansion cohorts including augmented melanoma expansion cohort and TNBC expansion cohort in the second half of 2019 In the second half of 2019 the company will also initiate a study in collaboration with Arcus BioSceinecs Inc to evaluate IPI 549 combined with the latter s adenosine inhibitor AB928 and Abraxane in patients with previously treated advanced TNBC
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates The consensus estimate has shifted 6 67 due to these changes
VGM Scores
At this time Infinity has a poor Growth Score of F a grade with the same score on the momentum front Following the exact same course the stock was allocated a grade of F on the value side putting it in the bottom 20 quintile for this investment strategy
Overall the stock has an aggregate VGM Score of F If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift Notably Infinity has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
BMY | Mallinckrodt Down After Agreement With DOJ For Litigation | Shares of Mallinckrodt plc NYSE MNK were down 7 9 after the company announced that it reached an agreement in principle with the U S Department of Justice DOJ in relation with the Questcor litigation
The company has reached an agreement to resolve the previously disclosed government investigation of Questcor s legacy sales and marketing activities but it is still subject to the finalization of certain terms
Mallinckrodt expects to pay 15 4 million relating to legacy Questcor activities per the civil False Claims Act settlement
We remind investors that the company was in the news last month as there were allegations against Acthar s previous owner Questcor for conducting illegal sales and marketing activities related to the drug Per the company the original action was filed in 2012 prior to Mallinckrodt s ownership of Acthar Gel and consisted of two complaints filed by former Questcor employees Mallinckrodt acquired Questcor in August 2014
The U S Department of Justice DOJ elected to join an existing civil False Claims Act case against the company the government is seeking to recover unspecified monetary damages for alleged violations of the False Claims Act and the Anti Kickback Statute
Nevertheless the company denies any wrongdoing on the part of Questcor during the relevant period and plans to defend itself in this matter
Mallinckrodt s stock has plunged 43 4 in the year so far compared with the s decline of 13 8
Shares also crashed significantly last week after the company filed suit in federal district court against the U S Department of Health and Human Services HHS and Centers for Medicare and Medicaid Services CMS to protect Medicaid patient access to Acthar
The lawsuit was filed against the agency s decision which required Mallinckrodt to change the base date average manufacturer price AMP used to calculate Medicaid drug rebates for Acthar The drug generated sales of 223 9 million in the first quarter
Meanwhile the company has decided that it will spin off a new company consisting of the Specialty Generics Active Pharmaceutical Ingredients Specialty Generics business The company had announced in December 2018 that the new Specialty Generics company would include constipation medicine Amitiza lubiprostone
However given the strong return to growth performance of the Specialty Generics business it was decided that the Amitiza product will remain with the Specialty Brands company Per the company retaining the Amitiza product will better serve the needs of the Specialty Brands company providing revenue diversification and stronger cash flows to enable debt reduction
Zacks Rank and Stocks to Consider
Mallinckrodt currently has a Zacks Rank 3 Hold
Some better ranked stocks are Bristol Myers Squibb Co NYSE BMY Roche OTC RHHBY and Celgene Corp NASDAQ CELG While Bristol Myers sports a Zacks Rank 1 Strong Buy the other two carry a Zacks Rank 2 Buy You can see the complete list of today s Zacks 1 Rank stocks here Bristol Myers earnings per share estimates have increased from 4 78 to 5 03 for 2020 in the past 60 days
Roche s earnings per share estimates have increased from 2 35 to 2 40 for 2019 in the past 60 days
Celgene s earnings estimates have moved up by a cent to 10 74 over the past 30 days
Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
C | U S stocks slump on Europe fears Dow Jones falls below 10 000 | Investing com U S stocks slumped on Tuesday ahead of a key report on U S consumer confidence and amid fears over the euro zone sovereign debt crisis and rising political tensions on the Korean peninsula During early U S trade the Dow Jones Industrial Average was down 2 23 breaking below the key psychological level of 10 000 to hit 9 842 49 the S P 500 index shed 2 32 and the Nasdaq Composite index was down 2 59 Financial stocks were among the worst performers with Citigroup Inc shedding 3 44 and JP Morgan Chase dropping 1 97 The losses came on the heels of reports that the North Korean leader Kim Jong Il ordered his military to be on combat alert shortly after South Korea officially blamed his regime for sinking of one of its warships in March Earlier in the day the IMF urged Spain to press on with a major restructuring of its economy including an overhaul of union dominated labor markets and banking system and progress on slashing budget deficits Across the Atlantic stock markets also tumbled France s CAC 40 slipped 3 33 Germany s DAX shed 2 66 Britain s FTSE 100 was down 2 48 and the EURO STOXX 50 slipped 3 Later Tuesday a research group the Conference Board was set to publish a closely watched report on U S consumer confidence The data which is based on a survey of about 5 000 households is an important signal of consumer spending |
C | Europe stocks advance on banks utilities DAX gains 0 27 | Investing com European stocks advanced on Monday extending gains from Friday s session as stocks in the financial and utilities sectors led gains Meanwhile U S Markets were closed for the Labor Day holiday During European afternoon trade the EURO STOXX 50 advanced 0 28 France s CAC 40 increased 0 33 while Germany s DAX gained 0 27 Stocks in the financial sector led gains across European markets as shares in French banker BNP Paribas advanced 0 95 stocks in Dutch insurer ING Groep increased 0 96 and Deutsche Bank shares gained 0 58 Elsewhere stocks in French investment bank Natixis soared 6 74 after reports said the investment bank was to be included in the French benchmark CAC 40 index Several utilities stocks also advanced on Monday after the German government agreed to a two tier extension of the lifespans of German nuclear power plants on Sunday Following the news shares in German power and gas giant E On soared 3 27 stocks in German electricity and gas company RWE jumped 2 86 Elsewhere in the utilities sector French energy firm Veolia Environnement gained 2 28 after Citigroup upgraded its stock to buy from sell citing better than expected profit estimates In London the commodity heavy FTSE 100 was up 0 36 as miners led gains Shares in mining giant BHP Billiton gained 0 53 Rio Tinto stocks increased 0 41 while British Petroleum jumped 1 41 after it was reported that the oil giant had revived plans to sell part of its stake in an oil field in Prudhoe Bay Alaska Crude oil prices declined 0 07 to hit USD 74 28 a barrel Earlier in the day market research group Sentix said its index of investor confidence in the euro zone declined unexpectedly to 7 6 in September after rising to a revised 8 2 in August Any level above 0 0 in the index indicated optamism below indicates pessimism Meanwhile markets in the U S were closed for the Labor Day holiday |
C | Get These 3 Stocks For Less Than What Insiders Paid | When executives of a company step in and buy its stock it can provide a glimpse into an overlooked or misunderstood value opportunity Sadly these insiders are often lousy market timers They tend to acquire shares after a stock has lost a lot of value even as they think the company s operating outlook remains bright In many instances the selling pressure isn t yet finished and these insiders simply jumped in too soon The good news you can profit from their bad timing by picking up shares at lower prices than what insiders paid for them You can find a clear example of this with advertising firm MDC Partners Nasdaq MDCA which is a member of my Insiders have been buying this stock for an extended period even as it has drifted ever lower I think this stock is a deep bargain for its own intrinsic reasons and those rounds of insider buying at much higher levels give me that much more confidence Here are three other attractively valued stocks that are now much cheaper than what insiders paid for them 1 Halozyme Therapeutics Nasdaq HALO I wrote about this stock in mid April right after it was crushed Halozyme is pursuing a range of drug development opportunities with major pharmaceutical firms so the recent pullback could present a solid buying opportunity Randal Kirk who usually knows when to buy low and sell high had been buying all the way He picked up stock last summer when it was trading at 6 then in November 2011 when it moved up to 8 and then made his largest purchase yet 1 36 million shares when the stock had moved past 10 in February Shares are now right back at 8 though as I mentioned a few weeks ago it s far too soon to write this company off 2 Titanium Metals NYSE TIE Harold Simmons has never been shy about spending large sums of money to gain control of companies He s now chairman of Valhi NYSE VHI NL Industries NYSE NL Kronos Worldwide NYSE KRO and Titanium Metals That s the title they give you when you own a lot of company stock In the past two years he s been a steady buyer of all four companies boosting his stakes even more Only Titanium Minerals has been a losing recent investment for him He started buying in late 2010 when shares were trading above 17 He bought hundreds of thousands more shares at that price last spring when shares were stuck in the 17 range By the time shares fell below 17 last June he was still buying And he s been buying ever since even though shares are now around 14 50 Why is Simmons so keen to own millions of shares of Titanium Metals Because he knows the commodity plays a key role in the generation of fuel efficient airplanes And though global titanium production is fairly constant demand is set to rise Aircraft build rates provide visibility on a likely titanium market tightening in 2013 Investors may be wary of titanium stocks following multi year 787 and A380 delays but accelerating deliveries of these planes should be a catalyst for specialty metals stocks note analysts at Citigroup They add that because the company mills raw titanium and then modifies it into key shapes for customers it can maintain low costs and high profit spreads That s why TIE has significant leverage to anticipated demand growth and the highest projected EBITDA margins of the group that also includes RTI International Metals NYSE RTI Carpenter Technology NYSE CRS and Allegheny Technologies NYSE ATI Citigroup s analysts have a current 17 price target but note further upside if the global economy and titanium demand get stronger This stock currently trading around 14 50 hit 35 back in 2007 when industry conditions were aligned Harold Simmons is well aware of that as he continues to but this stock at ever lower levels 3 Pizza Inn Holdings Nasdaq PZZI This Texas based restaurant chain has been a sleepy operator of eponymously named pizzerias During the past year management has been seeking to boost results by trying out a new style of eatery called Pie Five Pizza The twist this chain offers a range of toppings and crusts and will have your food in front of you in five minutes The half dozen Pie Five stores have delivered fairly solid early returns in terms of sales and profits though they still constitute just a fraction of the total store base More importantly insiders jumped the gun They bought more than 80 000 worth of stock during the winter at an average price of around 5 a share Shares have dropped 30 since then pushing the stock even deeper into micro cap territory It s unclear if the Pie Five concept will succeed but at least investors are now paying a lot less to find out Risks to Consider These stocks have stumbled after insiders were bullish so it pays to deeply research what has transpired since to ensure that the insider induced investment thesis still applies Many stocks move higher after insiders file their transactions with the Securities and Exchange Commission It often pays to let the insider inspired bump pass and see if shares pull back Indeed it s rarely wise to pay more for a stock than insiders did as they may end up being sellers by the time you re ready to buy Conversely when shares slump after insiders buy your purchase may be followed by more buying from those insiders You may find that following this path for any of the three stocks I mentioned above pays off with substantial gains by David Sterman |
C | Best And Worst ETFs And Mutual Funds All Cap Blend | The all cap blend style ranks third out of the twelve fund styles as detailed in my style roadmap It gets my Neutral rating which is based on aggregation of ratings of 32 ETFs and 607 mutual funds in the all cap blend style as of April 24 2012 Figures 1 and 2 show the five best and worst rated ETFs and mutual funds in the style The best ETFs and mutual funds allocate more value to Attractive or better rated stocks than the worst which allocate too much value to Neutral or worse rated stocks To identify the best and avoid the worst ETFs and mutual funds within the all cap blend style investors need a predictive rating based on 1 stocks ratings of the holdings and 2 the all in expenses of each ETF and mutual fund Investors need not rely on backward looking ratings My fund rating methodology is detailed Investors seeking exposure to the all cap blend style should buy one of the Attractive or better rated ETFs or mutual funds from Figures 1 and 2 Figure 1 ETFs with the Best Worst Ratings Top 5 Best ETFs exclude ETFs with less NAV s less than 100 million Sources New Constructs LLC and company filingsPowerShares XTF Dynamic OTC Portfolio PWO is excluded from Figure 1 because its total net assets TNA are below 100 million and do not meet our liquidity standards Figure 2 Mutual Funds with the Best Worst Ratings Top 5Best mutual funds exclude funds with NAV s less than 100 million Sources New Constructs LLC and company filingsPowerShares Buyback Achievers PKW is my top rated all cap blend ETF and SunAmerica Focused Series Inc Focused Dividend Strategy Portfolio FDSTX is my top rated all cap blend mutual fund Both earn my Attractive rating Guggenheim Wilshire 4500 Completion ETF EXSP is my worst rated all cap blend ETF and ProFunds Banks ultra Sector ProFund BKPSX is my worst rated all cap blend mutual fund Both earn a Dangerous or worse rating Figure 3 shows that 540 out of the 2883 stocks 47 of the total net assets held by all cap blend ETFs and mutual funds get an Attractive or better rating To earn an attractive or better rating funds must overweight attractive or better rated stocks Its obvious fund managers are failing to do this since only 4 ETFs and 17 mutual funds in the style earn an Attractive rating The takeaway is mutual fund managers allocate too much capital to low quality stocks Figure 3 All cap Blend Style Landscape For ETFs Mutual Funds StocksSources New Constructs LLC and company filings ConocoPhillips COP is one of my favorite stocks held by all cap blend ETFs and mutual funds and earns my Attractive rating I m not a fan of most Energy stocks which is why I m bearish on Energy sector funds but COP is a diamond in the rough COP s valuation 72 33 implies that profits will permanently decrease by 50 With a push toward green energy it is possible that COP will see a decrease in profits but I m skeptical that we ll see a 50 decrease The upside to COP s current valuation is profits can decrease up to 49 and the stock will beat market expectations which will lead to price appreciation COP offers investors great risk reward Citigroup Inc C is one of my least favorite stocks held by all cap blend ETFs and mutual funds and earns my Very Dangerous rating In general I recommend investors avoid Financials stocks ETFs and mutual funds and Citi is a prime example why Citi reported earnings are misleading which means they report positive and rising accounting earnings while their economic earnings are actually negative and decreasing This accounting window dressing is not doing Citi nor the financial industry as a whole any favors when it comes to building back the trust lost during the financial crisis To justify its current stock price 33 25 Citi must grow profits by 11 8 annually for 25 years These are lofty expectation considering that Citi has seen negative profit growth in four of the past five years I suggest investor look elsewhere if they re seeking exposure to a Financial stock The fund industry offers many cheap funds but very few funds with high quality stocks or with what I call good portfolio management Figures 4 and 5 show the rating landscape of all all cap blend ETFs and mutual funds Investors need to tread carefully when considering all cap blend ETFs and mutual funds as 28 of the 32 ETFs and 590 of the 607 mutual funds in the all cap blend style are not worth buying Our style roadmap report ranks all styles and highlights those that offer the best investments Figure 4 Separating the Best ETFs From the Worst Funds Sources New Constructs LLC and company filingsFigure 5 Separating the Best Mutual Funds From the Worst FundsSources New Constructs LLC and company filings Disclosure I own COP I receive no compensation to write about any specific stock sector style or theme |
C | The Most Hated Stock On The Market 60 Upside | For a few years this stock was the best investment in clean energy according to many investors and analysts Bar none The company boasted intriguing technology stunning sales growth and robust profits Now by one measure it s the single worst clean energy investment on the planet In fact over the past two years the company lost investors nearly 15 billion in what must rank as the most stunning implosions investors have ever seen Normally a stock chart like this comes along when a company has committed fraud or otherwise taken steps to mislead shareholders in effect running a house of cards designed to steal money from an unwitting public Yet in this company s case it was primarily a victim of circumstance I m talking about First Solar Nasdaq FSLR A promising feature Just a few years ago solar power appeared to have the backing of many governments and businesses leading First Solar to beef up research and development spending and quickly expand manufacturing capacity As we now know that industry support proved fleeting once government budgets became constrained and traditional fuel sources like natural gas plunged in value And First Solar like every other industry player is struggling to adapt to a smaller market opportunity and profound industry pricing pressure Most analysts yes the same ones that recently had 150 or even 200 price targets now suggest you steer clear Most have price targets in the low 20s or teens and rate the stock as Neutral or Sell The dislike for this company is nearly universal Whenever you see a crowd that agrees on a stock it often pays to listen to the contrarian Indeed it d been useful to hear from bearish analysts on this stock when it was soaring toward the 200 mark Now that it s in the teens it s time to take a close look at a recent upgrade from Merrill Lynch In mid April the firm boosted its rating on First Solar to a Buy with a 30 price target representing more than a 60 upside Finally waking up Merrill s upgrade came after the company belatedly announced plans to cut manufacturing capacity Merrill correctly notes that demand for solar power equipment hasn t disappeared Instead supply is the real challenge after three straight years of capacity expansion from nearly every major player A plunge in pricing is now leading to the end of any further industry expansion plans and in some cases companies are cutting capacity Lower costs should have a tangible impact on First Solar s income statement according to some analysts Their 2013 EPS forecast just rose from 2 80 to 3 40 And while EPS was expected to slump to 2 30 by 2014 First Solar should now earn closer to 3 by then That forecast bakes in more tough times as industry pricing keeps falling The fact that the consensus 2014 EPS forecast remains above 4 50 reveals that many analysts aren t paying attention to their earnings models Merrill Lynch acknowledges that this former technology leader is becoming a technology laggard The company s solar equipment based on so called thin film technology can t generate as much juice as traditional solar panels but was so much cheaper that First Solar could offer a compellingly lower total cost of ownership Not anymore Traditional solar panel makers have made so much progress on cost that they now offer a better return on investment for most customers Merrill Lynch concedes that this issue remains a long term concern We think that traditional crystalline solar cell prices could be in the low to mid 0 70s by mid 2013 and it s not yet clear how FSLR intends to cope with that Yesterday s cost cutting move might best be described as taking the pressure off for the intermediate term fundamental problems remain Yet here s the takeaway as far as Merrill Lynch is concerned Even with all the current and future headwinds in place First Solar remains nicely profitable And the plunge in the stock below 20 is simply too much punishment Merrill s 30 price target reflects a multiple of 10 on projected 2014 earnings Details to ComeFor my purposes I need a bit more to go on than that Which is why I ll be listening closely to tomorrow s conference call when First Solar releases quarterly results Specifically I want to hear about the company s technology roadmap Management must make the case for its ability to re take leadership on cost per kilowatt And they need to restore confidence that expectations have come down far enough for 2013 and beyond and that there is now a bias for better than expected growth and margins in the quarters ahead Not worse than expected as many now fear Still Merrill s call is grounds enough for contrarian investors to revisit this hated stock On a broader level the brutal supply and demand dynamics that have beset the solar power industry may be slowly turning According to Citigroup analysts demand in a number of European countries has started to rebound in the past few weeks leading the firm to upgrade several solar stocks but not First Solar And Citi adds that demand in China and the United States represent ongoing drivers of demand with Japan emerging as a major new source of demand in coming quarters as the country tries to wean itself from nuclear power Improving investor sentiment toward the solar sector would surely provide a boost to First Solar s shares Risks to Consider First Solar has been spending heavily on R D and will need to come up with an even more compelling technology roadmap if it is to start boosting profits through the middle of the decade Action to Take First Solar has missed EPS forecasts by at least 15 for three straight quarters Many likely expect that to happen again this Thursday Take this time to brush up on its business model and numbers because if the quarter and outlook are not as bad as feared then a relief rally could ensue That calls for quick action after the numbers are out before analysts have time to change their target prices That said there s no need to move to buy shares BEFORE the quarterly results are announced |
C | A Weak Economy Remains Gold s Best Friend | It was Bob Prechter of Elliott Wave fame likely among others who noted that correlations between all asset classes are quite strong during a Depression This is true in a cyclical sense but not in a structural sense Stocks tumbled in the 1929 1941 period while commodities led by gold and gold producers increased in value We ve experienced similar phenomena in the past 12 years Cyclically there has been a correlation between these asset classes Structurally stocks have been in a bear market and the resource sector has been in a bull market The driving forces have been a weak economy and bear market which usually leads to more inflationary policy which in turn benefits the resource sector Are we soon to see a replay of this scenario Despite unprecedented monetary inflation stimulus and bailouts the economy has barely recovered The chart below from Doug Short displays post war real gdp growth The black line shows the 10 year average which has been in a steep decline since 2006 At the time the Bush II recovery was the weakest on record It has been surpassed by a pathetically weak recovery statistically under Obama The growth rate in each of the past seven quarters has been below the the 10 year moving average Meanwhile economic data as a whole is okay but is currently failing to meet expectations economic data relative to expectations has gone negative for the US and the rest of the world is not far behind Clearly continued disappointing economic data combined with any weakness in equities would prompt more Fed action Judging from what happened in 2010 and 2011 it is a near certainty It is important to note the current position of the markets in contrast to a year ago Currently precious metals are bottoming while equities are nearing multi year resistance This decoupling shown in the chart below began in the aftermath of the mini euro crisis Other than 2001 2002 we haven t seen an extended period of decoupling between precious metals and equities However that doesn t preclude the possibility in the coming years In fact there are two cases of a decoupling during the 1970s In the chart below we graph the S P 500 blue and the Barron s Gold Mining Index red and scale numbers adjusted The period from 1971 1972 bears quite a bit of resemblance to 2011 2012 The S P 500 blue continued to make new highs while the gold stocks red remained in a long term consolidation that included two corrections However decoupling would soon benefit the gold stocks as they rose more than 4 fold in less than 18 months And during that period the S P entered one of its worst bear markets on record Finally note that the next major bottom in the gold stocks in 1976 coincided with a top in the S P 500 The current decoupling of precious metals and equities combined with an unsustainable recovery provides insight into the future With equities nearing major resistance and precious metals emerging from an important low it is obvious which asset class is in a position to benefit from disappointing economic data and which asset class could enter a mild cyclical bear market Equities have already experienced two nasty bear markets and two recessions Though still in a secular bear the outcome of the next few years is far more likely to be something on the order of the late 1970s and not the mid 1970s The combination of the failure of equities to make new highs and continued disappointing economic data would likely serve as a catalyst to ignite the precious metals sector while equities could enter a situation similar to the late 1970s The potential struggle of equities combined with a resurgence in precious metals will ultimately attract the hot money inflows that we have not seen since 2006 2007 |
JPM | JPMorgan in advanced talks to settle forex investigation | NEW YORK Reuters JPMorgan Chase Co N JPM said on Tuesday it is in advanced stages of settlement talks with the U S Department of Justice and Federal Reserve over previously disclosed investigations into its foreign exchange trading The company gave the description of the talks in a quarterly filing with the U S Securities and Exchange Commission on Tuesday A Justice spokesman acknowledged that the department has an active ongoing investigation but declined to comment further
JPMorgan also estimated its reasonably possible legal expenses in excess of its litigation reserves at 5 5 billion as of the end of March down from 5 8 billion at the end of December |
JPM | Proxy firms recommend JPMorgan shareholders vote against pay plan | Reuters Two major proxy advisory firms recommended that JPMorgan Chase Co s N JPM shareholders vote against the bank s executive compensation plan saying Chief Executive Jamie Dimon s pay was not fully aligned with his performance ISS said the reintroduction of a large discretionary cash bonus in Dimon s pay mix without a compelling rationale had weakened the performance basis of his pay JPMorgan paid Dimon a cash incentive bonus of 7 4 million in 2014 his first bonus in three years Dimon s total pay package for the year was 20 million unchanged from last year ISS said Dimon s pay over the last three years outranked the company s total shareholder returns during the period Glass Lewis said its analysis indicated that JPMorgan was deficient in aligning pay with performance JPMorgan s shareholders are scheduled to vote on the bank s executive pay in a non binding motion at its annual meeting on May 19 Shareholders will also vote on whether Dimon should continue as the chairman Both ISS and Glass Lewis said that the bank needed to designate an independent chairman Shareholders would benefit from the strongest form of independent board oversight which an independent chairman could provide ISS said in its report Proxy advisers guide big shareholders such as mutual funds on how to vote in corporate elections
Glass Lewis gave JPMorgan an F grade on pay for performance policies lower than the D it gave the bank a year earlier |
JPM | JPMorgan probed over role in French tax evasion case | PARIS Reuters U S bank JPMorgan Chase N JPM has been placed under formal investigation in France as part of a probe into alleged tax evasion by senior managers at investment firm Wendel PA MWDP a court official said on Wednesday A Paris based spokesman for JPMorgan declined to comment on the move part of a wider investigation in which as many as 14 Wendel executives face charges including tax evasion and insider trading over transactions conducted in 2004 2007 The bank is suspected of acting as an accessory to tax evasion the court official said In a U S regulatory filing on Tuesday JPMorgan said that in April it had been notified that the authorities were formally investigating its role in transactions financed by the bank on behalf of a number of Wendel managers Though JPMorgan provided financing for the deal from its Paris branch it was not a tax advisor according to a person familiar with the matter who was not authorized to speak publicly The deal was booked in France the person added France has vowed to crack down on tax avoidance by individuals offshore companies and the financial institutions that serve them following publication of leaked HSBC L HSBA client data that had been handed to the Paris authorities in 2008 French magistrates last month ordered HSBC to post bail of 1 billion euros 1 13 billion to cover potential fines if convicted on charges that it helped French clients dodge tax In the separate three year investigation concerning Wendel the former head of French employers organization Medef Ernest Antoine Seilliere was formally accused of tax fraud last October His predecessor at the helm of the investment firm Jean Bernard Lafonta was placed under investigation five months earlier on insider trading charges JPMorgan is also defending separate civil claims by some of the same Wendel managers according to the quarterly 10 Q filing made on Tuesday which gave no further details JPMorgan Chase is responding to and cooperating with the investigation it said In afternoon trading in New York JPMorgan shares were down slightly more than 1 percent in line with other big U S banks |
BMY | Novartis NVS Reports Positive Phase III Data On Asthma Drug | Novartis AG NYSE NVS announced positive results from a late stage study on QMF 149 for asthma QMF149 is an investigational once daily fixed dose combination containing indacaterol acetate IND a long acting beta agonist LABA and mometasone furoate MF currently in development for the treatment of patients suffering from inadequately controlled asthma who remain symptomatic despite current treatment Per the results of the multicentre double blind phase III QUARTZ study once daily a low dose of QMF149 demonstrated both statistically significant and clinically meaningful improvements in lung function and asthma control compared to inhaled corticosteroid ICS monotherapy The candidate met the primary and key secondary endpoints when compared to once daily MF in both adult and adolescent patients with asthma We note that patients included in the QUARTZ study were inadequately controlled on low dose ICS Novartis has submitted a regulatory application for this investigational once daily inhaled combination treatment which has recently been accepted for review by the European Medicines Agency EMA QUARTZ is the first completed study of the phase III PLATINUM clinical development program which is evaluating both QMF149 indacaterol and mometasone furoate and QVM149 indacaterol acetate glycopyrronium bromide and mometasone furoate Novartis aims to improve inhaled asthma care by developing once daily fixed dose combination treatments delivered with the dose confirming Breezhaler device to help asthma patients achieve better control The company also recently received FDA approval for Piqray alpelisib formerly BYL719 in advanced breast cancer In addition the FDA also approved Zolgensma the first and only gene therapy for pediatric patients aged less than 2 years with spinal muscular atrophy SMA which is a rare genetic disorder Novartis share price has been flat so far in the year against the s 2 1 decline Approval of new drugs will boost sales for the company Novartis has streamlined its portfolio to focus on legacy drugs business The separation of the Alcon business is a step in the right direction as the business was not performing as per management s expectations Novartis will also sell selected portions of its Sandoz U S portfolio specifically the Sandoz U S dermatology business and the U S oral solids portfolio Zacks Rank Stocks to ConsiderNovartis currently carries a Zacks Rank 5 Strong Sell Some better ranked stocks are Bristol Myers Squibb Co NYSE BMY Roche OTC RHHBY and Celgene Corporation NASDAQ CELG While Bristol Myers sports a Zacks Rank 1 Strong Buy the other two carry a Zacks Rank 2 Buy You can see Bristol Myers earnings per share estimates have increased from 4 78 to 5 03 for 2020 in the past 60 days Roche s earnings per share estimates have increased from 2 35 to 2 40 for 2019 in the past 60 days Celgene s earnings estimates have moved up by a cent to 10 74 over the past 30 days The Could Be the Fastest Way to Grow Wealth in 2019Research indicates one sector is poised to deliver a crop of the best performing stocks you ll find anywhere in the market Breaking news in this space frequently creates quick double and triple digit profit opportunities These companies are changing the world and owning their stocks could transform your portfolio in 2019 and beyond Recent trades from this sector have generated 98 119 and 164 gains in as little as 1 month |
BMY | Bristol Myers Squibb BMY Stock Moves 1 11 What You Should Know | In the latest trading session Bristol Myers Squibb BMY closed at 45 37 marking a 1 11 move from the previous day This change was narrower than the S P 500 s daily loss of 1 32 Elsewhere the Dow lost 1 41 while the tech heavy Nasdaq lost 1 51
Prior to today s trading shares of the biopharmaceutical company had lost 2 13 over the past month This has lagged the Medical sector s loss of 1 9 and was narrower than the S P 500 s loss of 5 09 in that time
BMY will be looking to display strength as it nears its next earnings release The company is expected to report EPS of 1 03 up 1 98 from the prior year quarter Our most recent consensus estimate is calling for quarterly revenue of 5 98 billion up 4 82 from the year ago period
Looking at the full year our Zacks Consensus Estimates suggest analysts are expecting earnings of 4 18 per share and revenue of 24 11 billion These totals would mark changes of 5 03 and 6 88 respectively from last year
Any recent changes to analyst estimates for BMY should also be noted by investors These revisions typically reflect the latest short term business trends which can change frequently With this in mind we can consider positive estimate revisions a sign of optimism about the company s business outlook
Our research shows that these estimate changes are directly correlated with near term stock prices We developed the Zacks Rank to capitalize on this phenomenon Our system takes these estimate changes into account and delivers a clear actionable rating model
The Zacks Rank system ranges from 1 Strong Buy to 5 Strong Sell It has a remarkable outside audited track record of success with 1 stocks delivering an average annual return of 25 since 1988 Within the past 30 days our consensus EPS projection remained stagnant BMY is currently a Zacks Rank 1 Strong Buy
In terms of valuation BMY is currently trading at a Forward P E ratio of 10 98 This represents a discount compared to its industry s average Forward P E of 14 36
Meanwhile BMY s PEG ratio is currently 2 14 The PEG ratio is similar to the widely used P E ratio but this metric also takes the company s expected earnings growth rate into account The Large Cap Pharmaceuticals industry currently had an average PEG ratio of 2 06 as of yesterday s close
The Large Cap Pharmaceuticals industry is part of the Medical sector This group has a Zacks Industry Rank of 73 putting it in the top 29 of all 250 industries
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
You can find more information on all of these metrics and much more on Zacks com |
C | UPDATE 2 Daiwa Samsung Sec prosper but competitive threat seen | Daiwa net profit 2 bln yen vs 7 1 bln yen consensus
Daiwa boosts trading profit
Samsung Secs Q2 net 57 5 bln won vs 76 6 bln won
consensus
Samsung sees rise in broking commission advisory fees
Wraps Daiwa and Samsung Securities adds byline background
By Junko Fujita and Jungyoun Park
TOKYO SEOUL Oct 30 Reuters Daiwa Securities Japan s
second largest brokerage and South Korea s Samsung Securities
Co may face a tough task in sustaining their strong quarterly
profits as their margins are seen coming under pressure from
competitors moves
There is a concern Daiwa may lose revenue after pulling out
last month from its 10 year old investment banking joint
venture with Sumitomo Mitsui Financial Group leaving the
brokerage vulnerable to growing competition
SMFG Japan s third largest bank expanded its brokerage
business by buying Nikko Cordial Securities from Citigroup and
launching underwriting and corporate advisory businesses this
month
Daiwa Securities Chief Financial Officer Nobuyuki Iwamoto
told a media conference on Friday about 220 bankers left Daiwa
for SMFG
Daiwa was the No 2 underwriter for bond sales by Japanese
companies for the quarter but it could lose its position if
enough of its clients leave the brokerage to go to Nikko
Cordial
Mitsui Sumitomo Banking Corp the main banking unit of SMFG
and a frequent bond issuer this month switched its bond
underwriter to Nikko Cordial from Daiwa
Samsung Securities South Korea s biggest brokerage also
faces stiff competition in both retail brokering and investment
banking sectors as new rivals such as KB Investment
Securities emerge while existing peers tie up with stronger
financial players
Daewoo Securities is also expected to encroach upon Samsung
Securities stronghold areas of investment banking and other
value added services after becoming a unit of state owned
financial institution KDB Holding
We have been waiting for changes to take place at Samsung
Securities but it has been slow In the meantime Daewoo
Securities is expected to strengthen its corporate financing
capability through KDB said Chung Bo seung an analyst at
Hanwha Securities
EARNINGS STRONG
Both Daiwa and Samsung Securities unveiled strong quarterly
results on Friday thanks to a rebound in stock markets and an
increase in investor risk appetite
Daiwa reported a 2 billion yen 22 million net profit for
July September compared with a 20 6 billion yen loss in the
year ago period as Japan s benchmark Nikkei average recovered
from a 26 year closing low hit on March 6
The profit however was below a 7 1 billion yen estimate
by three analysts polled by Thomson Reuters I B E S
The Japanese brokerage boosted trading profits almost
three fold and joined its bigger rivals such as Nomura
Holdings Inc Goldman Sachs and JPMorgan Chase Co in posting
profits for the latest quarter
At Samsung Securities July September net profit almost
doubled to 57 5 billion won 48 6 million from 29 7 billion
won a year earlier but was also below an average forecast for
a profit of 76 6 billion won according to Thomson Reuters
I B E S Its profit was eroded by losses from its bond
investments
Daiwa shares finished up 2 9 percent at 491 yen on Friday
They have fallen about 9 percent so far this year
underperforming a 3 6 percent fall in Tokyo s brokerage sector
subindex
Samsung shares ended down 1 7 percent on Friday They are
up 10 8 percent this year
1 90 72 yen
Editing by Muralikumar Anantharaman |
C | US STOCKS Wall St hit by financials outlook concerns | Investors fret about outlook as consumer sentiment slips
Financials lead sell off analyst sees Citi write down
Dow off 2 4 pct S P 500 off 2 6 pct Nasdaq off 2 4 pct
Updates to early afternoon changes byline
By Ellis Mnyandu
NEW YORK Oct 30 Reuters U S stocks slid on Friday as
investors worried the economy s recovery might not be
sustainable and financials sank as an influential bank analyst
projected a 10 billion write down for Citigroup
Investors unloaded shares across the board Wall Street s
favorite measure of investor fear the CBOE Volatility Index
vaulted to 31 25 its highest level since July
Citigroup fell more than 5 percent to 4 08 after CNBC
reported that Calyon s bank analyst Mike Mayo is forecasting
the U S bank will write down 10 billion in deferred tax
assets in the fourth quarter
The KBW bank index fell 4 8 percent while the S P
financial index lost 4 5 percent Other sectors taking a
beating were technology industrials and materials
The market s slide coinciding with technical glitches on
the New York Stock Exchange wiped out Thursday s gains which
represented the best one day rally for stocks in three months
Analysts said there were doubts that the recovery would be
strong enough to justify higher stock prices
Financials have been and continue to be the lightning rod
for the stock market said Ted Weisberg trader with Seaport
Securities in New York There are political and fundamental
issues that make that sector vulnerable to weakness and that
weakness will spread throughout the rest of the market
The Dow Jones industrial average slid 235 79 points or
2 37 percent to 9 726 79 The Standard Poor s 500 Index
dropped 27 71 points or 2 60 percent to 1 038 40 The Nasdaq
Composite Index tumbled 50 01 points or 2 38 percent to
2 047 54
A huge influx of orders prevented the New York Stock
Exchange from disseminating quotes shortly after the start of
trading on Friday
NYSE Euronext the parent of the New York Stock Exchange
said the delays followed an inordinate influx of orders
received as Friday s session got under way Later in the
session the company had to temporarily transfer quote
processing to a backup system
The interruption on the NYSE and in the NYSE Amex cash
equities trading was later resolved
The benchmark S P 500 is up 53 7 percent from the 12 year
closing low of March 9 It has shed 5 3 percent from its
post March peak it reached on Oct 19
Reporting by Ellis Mnyandu Additional reporting by Leah
Schnurr Editing by Jan Paschal |
C | US STOCKS SNAPSHOT Wall St slides on outlook S P off 3 pct | NEW YORK Oct 30 Reuters U S stocks accelerated their
losses on Friday with the S P 500 down 3 percent as investors
worried the economy s recovery might not be sustainable and
shares of financials tumbled
Financials were hurt as an influential bank analyst
projected a 10 billion write down for Citigroup which fell
more than 6 percent
The Dow Jones industrial average fell 258 99 points or
2 60 percent to 9 703 59 The Standard Poor s 500 Index
tumbled 31 44 points or 2 95 percent to 1 034 67 The Nasdaq
Composite Index gave up 53 46 points or 2 55 percent at
2 044 09
Reporting by Leah Schnurr Editing by Kenneth Barry |
C | US STOCKS SNAPSHOT Wall St hit by financials outlook concerns | NEW YORK Oct 30 Reuters U S stocks slumped on Friday
as investors worried the economy s recovery might not be
sustainable and financials sank as an accounting expert
projected a 10 billion write down for Citigroup
The S P 500 and Nasdaq were down for the month putting
an end to seven straight months of gains The Dow was flat for
the month but it was the worst one day percentage loss for the
index since July
The Dow Jones industrial average fell 249 85 points or
2 51 percent to 9 712 73 The Standard Poor s 500 Index
slid 29 92 points or 2 81 percent to 1 036 19 The Nasdaq
Composite Index lost 52 44 points or 2 50 percent to
2 045 11
Reporting by Leah Schnurr Editing by Kenneth Barry |
C | FOREX Dollar yen rally on shift to safe haven | Doubts about economy send investors to safe havens
Dollar index on track for biggest weekly gain since June
Euro commodity FX tumble as equity markets post losses
Euro on pace for biggest weekly loss since April
Adds comment detail updates prices
By Wanfeng Zhou
NEW YORK Oct 30 Reuters The dollar and yen rallied on
Friday as a sharp sell off in the stock market and uncertainty
about the economy boosted safe haven demand for the U S and
Japanese currencies
The dollar headed for its first weekly gain in four and its
biggest weekly advance since June against a basket of
currencies as data painted a mixed picture of the U S economy
underscoring the fragility of a recovery
Major indexes on Wall Street fell more than 2 percent as
euphoria sparked by Thursday s third quarter gross domestic
product report faded and an accounting expert projected a 10
billion write down for Citigroup Inc For details see
ID nN30433397
The main driver is equities said Nick Bennenbroek head
of currency strategy at Wells Fargo in New York You re still
seeing the relationship between the dollar and the equity
market holding intact
For much of the past year the dollar has been taking its
cue from swings in risk sentiment rising when disappointing
economic data hurts risk appetite and falling when the data
points the other direction
In late trading the euro fell 0 8 percent to
1 4707 The euro zone currency was down 1 9 percent on the
week on pace for its worst weekly performance since
mid April
The ICE Futures dollar index a measure of the
greenback s value against six major currencies rose 0 6
percent to 76 401 and was up 1 3 percent on the week its best
weekly gain since June
Data on Friday showed U S consumers cut spending in
September while sentiment turned gloomier this month A
separate report showed factory activity in the U S Midwest
expanded for the first time in more than a year but employment
conditions deteriorated ID nN30482062
The U S data deluge proved decidedly mixed today failing
to support the feel good effect from the blockbuster U S GDP
report yesterday said Michael Woolfolk senior currency
strategist at BNY Mellon in New York
SWISS FRANC FALLS
The dollar fell 1 5 percent to 89 99 yen a two week
low The yen also gained as the Bank of Japan said it would
stop buying Japanese corporate bonds and commercial paper
starting a withdrawal process from the credit market See
ID nT32693
That meant the BoJ would be reducing the volume of its
currency in the market a move that should boost the yen
The yen also rose sharply against other major currencies
The euro fell 2 4 percent to 132 35 yen sterling
dropped 2 3 percent while the Australian dollar
lost more than 3 percent
Against the U S currency the Australian dollar dropped
1 9 percent to US 0 8984 and the New Zealand dollar lost
2 3 percent to US 0 7161
The Swiss franc fell amid talk of intervention on behalf of
the Swiss National Bank to weaken the currency The bank
declined to comment ID nWEA7901
Traders said the market got nervous about intervention
because the euro had fallen to levels around 1 5080 francs
where the SNB had already intervened this year
The euro jumped as high as 1 5180 against the Swiss franc
according to electronic trading platform EBS its
highest since mid October
The dollar rose as high as 1 0275 francs according
to Reuters data and last traded at 1 0260 up 0 8 percent
Additional reporting by Gertrude Chavez Dreyfuss Editing by
Kenneth Barry |
C | Preparing For A Summer Slowdown My Investing Strategy For Q2 | Over the past two months I ve warned that the S P 500 could pull back by 5 percent to 10 percent this spring Recent market action suggests that this correction may have started If my forecast pans out the second quarter could give us an opportunity to buy high quality names at favorable prices Here s my four part strategy to investing in energy stocks for the next few quarters Buy yield at the right price Focus on master limited partnerships MLPs royalty trusts and integrated oil companies that trade at reasonable valuations Book profits on overextended names If you re still sitting on sizable gains in stocks that have run up too high take advantage of these lofty valuations to raise some capital Buy undervalued growth stories Oil field services stocks will benefit over the long term from the end of easy oil or the increasing expense of incremental production Current stock prices don t reflect this upside Hedge your bets Last summer my short bet on First Solar NSDQ FSLR made money while the broader market tumbled This time around a bet against North American natural gas producers could offset some damage if stocks pull back in the third quarter This updated strategy is primarily a function of my outlook for the broader market and energy commodities Whereas market participants were overly bearish about the global economy s growth prospects last summer investor sentiment has how grown far Last summer s swoon stemmed in part from temporary headwinds such as supply chain disruptions caused by Japan s devastating Sendai earthquake and a spike in oil prices in early 2011 This year many investors are overlooking the impact of an unseasonably warm winter on economic activity That s not to suggest that we expect the US to lapse into recession in 2012 rather US gross domestic product GDP will continue to grow at a lackluster rate of 2 percent to 3 percent Consider recent trends in the Citigroup US Economic Surprise Index which is calculated on a three month basis and increases when a data point beats the Bloomberg consensus estimate and declines when a data point falls short of expectations The data points themselves are weighted by their importance to economic models and historical power to move the stock market The economy s 2010 summer swoon touched off a 17 percent correction in the S P 500 between April and July A number of factors contributed to this breakdown the first stage in the EU sovereign debt crisis that resulted in a bailout for Greece the end of the Federal Reserve s first round of quantitative easing a major oil spill in the US Gulf of Mexico and concerns that the US government would allow the tax cuts implemented by George W Bush to expire as planned on Dec 31 2010 After stocks rallied from late summer 2010 into the spring 2011 the US economy found itself mired in another soft patch The proximate causes of the 2011 summer swoon included supply chain disruptions stemming from the earthquake that hit Japan in March 2011 surging oil prices after the outbreak of civil war in Libya an intensification of the EU sovereign debt crisis the end of the Fed s second round of quantitative easing and Standard Poor s downgrade of the US government s credit rating In keeping with the pattern established in the past two years US economic growth accelerated in early fall A number of downside catalysts could set the stage for history to repeat itself elevated oil prices the end of the Fed s efforts to lower long term interest rates by buying long term bonds uncertainty surrounding the upcoming presidential election and subsequent tax policy and another flare up in the ongoing EU sovereign debt debacle Trends in the Citigroup US Economic Surprise Index are eerily reminiscent of the summer swoons of 2010 and 2011 The index surged late last year because analysts estimates had grown overly bearish today the consensus expectations have overshot economic realities opening the door for disappointment Seasonal distortions stemming from the winter that never was are one cause for concern Most economic data points are seasonally adjusted based on historical data to average out predictable fluctuations and isolate emerging trends For example retailers hire people ahead of the holiday season even in bad economies that employment rises ahead of the holiday season reveals little about underlying trends in the jobs market Construction activity and home purchases typically decline in winter months and pick up again during the spring thaw But last winter was the fourth warmest in recorded US history Accordingly construction activity got under way earlier than usual and home sales that normally would occur in May or June took place on an equally balmy day in February and March In this situation the standard seasonal adjustments will skew results Consider this little watched data series from the Bureau of Labor Statistics monthly Employment Situation report This graph tracks the number of employees in the US who missed work because of bad weather a data point that isn t seasonally adjusted Usually there s a spike in weather related absences during the winter but the 2011 12 winter brought the fewest missed workdays since the 2000 01 winter This trend suggests that the government s normal seasonal adjustments to jobs data including the widely watched nonfarm payrolls number overestimated the usual weather related decline in employment Larger than expected gains in employment in late 2011 and early 2012 have driven the rally in the stock market but there s a good chance some of the increase stemmed excessive seasonal adjustments The March employment number released on April 6 2012 indicated that the US created 120 000 jobs falling significantly short of a consensus estimate that called for 205 000 new positions The latest figure also marks a major deceleration in job creation from 275 000 in January and 240 000 in February 2012 In fact the March nonfarm payrolls number was the worst since October of last year Seasonal adjustments to employment data tend to be less pronounced in March than in January and February because of improving weather That the March data disappointed could be the first sign that normal seasonal adjustments in an abnormal winter artificially inflated results Investors should also consider another wonky seasonal adjustment the lingering impact of the economy hitting a wall after Lehman Brothers declared bankruptcy Factoring this dramatic meltdown into seasonal adjustments could contribute to the mini boom and mini bust pattern that s characterized economic growth in the past two years Although this hypothesis is difficult to prove the theory s empirical appeal is difficult to deny Depression like data from fall and winter 2008 09 makes for easy comparisons while the economy s subsequent recovery in summer 2009 provides a tougher hurdle Over each of the past two years the US economy has experienced a summertime soft patch and wintertime acceleration These unusual seasonal swings could be a statistical legacy of the Great Recession Nevertheless the US economy remains on reasonably strong footing and while a stock market correction could be in the cards the US shouldn t slip into recession in the near term Rather the biggest risk resides in incoming US economic data that falls short of analysts elevated expectations |
C | Global Equities Tumble On Spanish Debt Fears April 24 2012 | EquitiesAsian markets tumbled on Wednesday as hopes for another round of easing by the Fed faded The Nikkei tanked 2 3 to 9820 its steepest drop in 5 months The Kospi slumped 1 to 2019 while the ASX 200 managed to ease just 1 as a slide in the Australian Dollar helped exporters In China the Shanghai Composite and Hang Seng were closed for a holiday Selling pressure intensified in Europe following a weak Spanish bond auction The DAX plunged 2 8 the CAC40 tumbled 2 7 and the FTSE skidded 2 3 Spain sold just 2 6 billion Euros in short term debt an amount which was at the bottom of its target range and yields on Spanish 10 year notes climbed to 5 61 US stocks fared modestly better but still closed sharply lower The Dow dropped 125 points to 13075 the S P 500 fell 1 to 1399 and the Nasdaq shed 1 5 to 3068 CurrenciesThe US Dollar benefited from the shift away from risk climbing 7 against the Euro Swiss Franc and Australian Dollar The Yen climbed 5 to 82 42 as traders unwound carry trade positions The Canadian Dollar declined 6 to 9966 while the Pound eased 2 to 1 5888 Economic OutlookThe ADP payroll report indicated the economy added 209K jobs last month slightly more than forecast but a smaller gain than last month s 230K jump On Friday the government will release the official non farm payroll report which is expected to show a gain of 211K jobs ISM non manufacturing PMI slid to 56 0 from 57 2 slightly below forecasts US Weekly Jobless Claims Continue To DropEquitiesChina s Shanghai Composite returned from a 3 day holiday to rally 1 7 while most Asian markets traded lower The Hang Seng fell 1 the Nikkei slid 5 and the ASX 200 declined 3 Sharp gains in car makers lifted the Kospi 5 as Hyundai Motors rallied more than 4 European markets recovered from early losses after the weekly US jobless claims report showed modest progress The FTSE gained 4 the CAC40 rose 2 while the DAX lagged behind easing 1 US stocks closed mixed after a quiet session The Dow slipped 15 points to 13060 the S P 500 eased 1 point to 1398 while the Nasdaq gained 4 to 3081 The VIX rose 1 6 to 16 70 up 7 8 for the week Volatile Week Ends On A Quiet NoteOn the earnings front beverage maker Constellation Brands tumbled 12 5 after lowering its outlook while Bed Bath Beyond jumped 8 5 after beating earnings forecasts CurrenciesEuropean currencies retreated as the Euro skidded 6 to 1 3067 while the Pound and Swiss Franc declined 4 The Australian Dollar and Canadian Dollar both rose 3 and the Yen inched up 1 to 82 36 Economic OutlookWeekly unemployment claims declined by 6000 to 357K slightly weaker than the 355K forecast by analysts Overseas Canada s payroll report showed the economy staged a sharp upswing last month adding 82 3K jobs The figure blew past forecasts for a modest 11 3K Western Markets Tumble As Data DisappointsEquitiesAsian markets gained on Friday as investors disregarded a North Korean rocket launch and disappointing growth data from China GDP data from the first quarter showed the Chinese economy grew at 8 1 down from 8 9 in the previous quarter The Shanghai Composite rose 4 amid hopes that signs of a slowdown will prompt more easing from the government The Hang Seng jumped 1 8 to 20701 the ASX 200 climbed 1 and the Nikkei advanced 1 2 to 9638 Korea s Kospi snapped a 3 day losing streak bouncing 1 1 Meanwhile European markets tanked amid growing debt concerns and selling accelerated in the afternoon after US consumer sentiment data disappointed The CAC40 sank 2 5 the DAX slumped 2 4 while the FTSE fell 1 Markets in Spain and Italy plunged more than 3 after data showed Spanish banks were borrowing extensively from the ECB France s CAC40 Tumbles 2 5 US markets closed at the low of the session dropping more than 1 The Dow shed 137 points to 12850 the Nasdaq declined 1 5 to 3011 and the S P 500 fell 1 3 to 1370 CurrenciesThe US Dollar benefited from the switch to risk off mode particularly against its European counterparts The Euro fell 8 to 1 3078 the Swiss Franc skidded 9 to 1 0877 and the Pound dropped 6 to 1 5856 The Canadian Dollar declined 5 to 9996 and the Australian Dollar lost 6 to 1 0378 The Yen eased fractionally to 80 93 Economic OutlookConsumer sentiment data from the University of Michigan disappointed unexpectedly sliding to 75 7 from last month s 76 2 reading CPI data showed prices rose 3 above forecasts but the less volatile core CPI was in line with estimates rising 2 Spanish Debt Fears Grow As Yields Cross 6 EquitiesAsian markets skidded on Monday following Friday s slide in the West The Nikkei tanked 1 7 to 9471 the Kospi dropped 8 and the ASX 200 declined 5 In greater China the Hang Seng fell 4 and the Shanghai Composite eased 1 ending a 4 day winning streak European markets rebounded from early losses thanks to strong US sales data The DAX advanced 6 CAC40 gained 5 and the FTSE rose 3 Yields on 10 year Spanish debt crossed above 6 hitting their highest level this year and the cost to insure Spanish debt spiked to a record high US stocks ended mixed as the Dow climbed 72 points to 12921 while the Nasdaq slumped 8 to 2988 and the S P 500 eased less than 1 point to 1370 Apple shares fell 4 2 to 580 13 marking its 5th straight loss Apple Shares Drop For 5 Straight DaysToy maker Mattel Corp tumbled 9 1 after earnings fell short of forecasts CurrenciesThe Euro briefly fell below the 1 30 mark but recovered to close up 3 to 1 3116 The Pound rose 2 to 1 5887 the Swiss Franc gained 3 to 1 0877 and the Yen climbed 6 to 80 46 The Australian Dollar dropped 4 to 1 0333 and the Canadian Dollar settled down fractionally at 1 0001 Economic OutlookMonday s economic data was mixed Retail sales blew past forecasts rising 8 vs forecasts for a 4 gain On the negative side the Empire State manufacturing index tumbled to 6 6 from 20 1 way below estimates The NAHB housing market index unexpectedly fell to 25 from 28 the first drop in 7 months European And US Stocks SoarEquitiesAsian markets continued to slide on Tuesday as concerns over Spain s debt burden escalated The Nikkei eased 1 to 9465 the Kospi fell 4 and the ASX 200 declined 3 China s Shanghai Composite slumped 9 and the Hang Seng slipped 2 as Chinese financial shares struggled European markets soared as a dose of good economic data and a successful Spanish debt auction triggered a buying spree The DAX and CAC40 surged 2 7 and the DTSE climbed 1 8 European banks led the gains as the sector jumped 4 1 Germany s ZEW economic sentiment index climbed to its highest level since June 2010 blowing past analyst forecasts US stocks advanced as well but the gains were slightly less impressive The Nasdaq spiked 1 8 to 3043 the S P 500 rallied 1 6 to 1391 and the Dow rocketed up 194 points to 13116 Nasdaq Soars 1 8 Apple shares jumped 5 1 snapping a 5 day losing streak Citigroup climbed 3 2 after earning an upgrade from Meredith Whitney CurrenciesThe Dollar traded mostly lower on Tuesday as money flowed back into risk The Canadian Dollar jumped 9 to 9903 the Pound rose 2 to 1 5934 and the Australian Dollar gained 4 to 1 0394 The Euro and Swiss Franc closed flat while the Yen declined 6 to 80 90 Economic OutlookBuilding permits rose to 75M up from 72M last month hitting their highest level since September 2008 but housing starts unexpectedly dropped to 65M from last month s 69M |
JPM | Britain s bank tax jump threatens to push HSBC StanChart to new home | By Steve Slater and Sinead Cruise LONDON Reuters HSBC LONDON HSBA and Standard Chartered LONDON STAN are looking at the viability of quitting London for a new home in Asia because a big jump in a tax on UK banks makes staying in Britain increasingly painful Several investors told Reuters they want the two banks to do a thorough analysis on whether it makes sense to move after Britain raised the bank tax by a third last month Some are expected to quiz bosses on it at shareholder meetings including at an investor gathering in Hong Kong on Monday There is a very clear risk that HSBC and StanChart reach a pain threshold where they think it is no longer worth staying in the UK said Richard Buxton head of equities at Old Mutual Global Investors which owns HSBC shares and who said the bank was reflecting on a move The tax has increased eight times since being introduced in 2010 to ensure banks make a fair contribution after the financial crisis The latest rise was seen as a popular move ahead of Britain s May 7 election Aberdeen Asset Management the second biggest shareholder in Standard Chartered with an aggregate 9 4 percent stake said the bank should consider the option Senior management are already assessing the situation people familiar with the matter said Four years ago HSBC said it would review its domicile in 2015 although the bank declined to comment if or when any review might occur It s a live conversation internally because it s an issue being raised by investors and sell side analysts said a person close to one of the banks who asked not to be named as the discussions are private The banks who make most of their profits in Asia face a combined 2 billion bill this year under the annual UK bank tax up from 1 5 billion last year and almost double what they paid in 2013 The opposition Labour Party plans to increase it by 800 million pounds to 4 5 billion pounds 6 8 billion a year for the banking industry as a whole if it wins power to pay for childcare for three and four year olds Labour is neck and neck with Prime Minister David Cameron s Conservatives in polls Another hefty rise could be the final catalyst and force banks to move Bernstein analyst Chirantan Barua said HSBC which has described the levy as a tax on staying in London faces a bill of 1 5 billion this year about 7 percent of expected profits Standard Chartered is set to pay 500 million or about 9 percent of earnings TOO MANY MOVING PARTS HSBC says it has two home markets Britain and Hong Kong It moved from Hong Kong to London in 1993 when it bought Midland Bank and its most likely move would be back to its former home one of the few places that could handle its 2 6 trillion balance sheet The bank began life in Hong Kong 150 years ago with roots as a financier of trade between Europe and Asia It issues most of the territory s bank notes and has made 24 billion in profits there over the last three years compared to a 4 billion loss in Britain over the same period London has been home to Standard Chartered since it was formed in 1969 and its most likely new home would be Singapore from where most of its businesses are already run Analysts said the cost of moving could be between 1 5 billion and 2 5 billion per bank HSBC told UK lawmakers in February before the levy increase the best location was still Britain It had postponed a review in 2011 because Chief Executive Stuart Gulliver said there were too many moving parts to make a rational decision Industry sources said that could still be the case for both banks They are trying to improve profitability cut costs sell businesses deal with old misconduct issues and simplify Standard Chartered also gets a new CEO next month Bill Winters who may want to raise capital On a 10 or 15 year view I d be surprised if both of them are still here But I don t think it s an issue for the short term they have bigger priorities John Paul Crutchley UBS banking analyst said Yet it could be worth it JPMorgan NYSE JPM analyst Raul Sinha estimated the higher UK bank levy will cut Standard Chartered s earnings by 13 percent in 2017 while a move away from Britain could lift its return on tangible equity a key profitability measure by 1 6 percentage points to 12 7 percent Britain is also forcing banks to separate domestic retail operations by 2019 so if HSBC is serious about moving it could spin off its UK business at the same time analysts said But the complexity of all the issues in the mix make a decision difficult These include Europe s pay rules for staff the risk of losing staff how capital and leverage rules in places like Singapore compare access to capital political stability credit ratings and the risk of regulatory change in any new jurisdiction Britain s strongest card is London itself which has always ranked alongside New York as the most attractive global financial hub in the Z Yen Global Financial Centres index Banks accused of sabre rattling with threats to quit before are also wary of stepping into a political minefield StanChart and HSBC might well be firing warning shots on their possible relocation to tell politicians they won t be bullied said Paul Mumford senior investment manager at Cavendish Asset Management which owns stock in both banks
But I think unless these firms start feeling that some politicians are in tune with what they offer the UK then we might see genuine action the threat is there he said |
JPM | Chinese tourists luxury spending soars Global Blue | PARIS Reuters Chinese tourists spent a record amount on luxury goods last month helped by shopping sprees in Europe as the weak euro made items cheaper than at home VAT refund company Global Blue said Spending by Chinese tourists the biggest buyers of luxury goods soared by 122 percent in March after a 52 percent rise in February bringing the increase for the first quarter to 67 percent Global Blue said in a report published on Monday This compared with a rise of 32 percent in the fourth quarter and 18 percent in 2014 Many Chinese tourists have stayed away from luxury hot spot Hong Kong where big brands have invested significantly in new shops in recent years following pro democracy protests last year This continues to reflect the redirection of Chinese spending from Hong Kong towards Europe in particular given the widening of the price differentials which is a much discussed theme during the ongoing reporting season broker Barclays LONDON BARC said in a note about the Global Blue figures Exchange rate movements have led to significant regional price differences with the same luxury item sometimes costing more than 50 percent less in European capitals than in major Chinese cities The trend has encouraged Asian buyers to snap up goods in Europe and resell them at home a practice often referred to as parallel trading or the gray market and which brands worry could raise issues about their products perceived authenticity Broker JPMorgan NYSE JPM Cazenove estimates 20 to 40 percent of luxury sales in mainland China are now parallel based on what luxury goods executives and consultants have said Last week Burberry L BRBY said it would re align prices to match rivals after brands such as Chanel and Patek Philippe cut prices in Asia by over 20 percent to reduce the discrepancy with Europe Kering PA PRTP will be expected to give an update on its pricing policy particularly for its flagship Gucci brand when it posts first quarter results on Tuesday Global Blue said overall worldwide global tourism spending reached its highest level in March since May 2011 despite Russian spending falling 39 percent against a 51 percent drop in January
Watches and jewelry performed best with sales up 67 percent in March against 32 percent the previous month it said Leather goods sales rose 50 percent versus 24 percent in February |
JPM | House passes cyber threat information bill | By Patricia Zengerle WASHINGTON Reuters The U S House of Representatives passed a bill on Wednesday that would make it easier for private companies to share information about cyber security threats with each other and the government without fear of lawsuits The vote was 307 116 in favor of the Protecting Cyber Networks Act There were 202 votes in favor from Republicans and 105 from Democrats Several previous bills addressing the issue had failed partly because of concerns that they might lead to more of the surveillance exposed two years ago by former National Security Agency contractor Edward Snowden But a series of high profile cyber attacks on Sony Pictures Entertainment Target and other U S corporations added urgency to the push for legislation At some point we need to stop talking about the next Sony the next Anthem the next Target the next JP Morgan Chase NYSE JPM and the next State Department hack and actually pass a bill that will help ensure that there will be no next cyber attack said Representative Adam Schiff the top Democrat on the House Intelligence Committee Corporations have been clamoring for Congress to act The U S Chamber of Commerce sent a letter to every member of the House earlier on Wednesday urging support of the bill The legislation must be approved by the Senate before it can be sent to President Barack Obama to sign into law A similar measure passed by a 14 1 vote in the Senate Intelligence Committee and supporters say they expect strong bipartisan support in the full Senate as well when it considers the bill later this spring The Obama administration said on Tuesday it had some concerns about the bill but supported its passage and believed it could be fixed as the legislation is finalized in Congress Privacy advocates blasted the legislation These bills do little to protect the Internet but rather reward companies who undermine the privacy of their customers said Nathan White senior legislative manager at the advocacy group Access Now in a statement The House is due to debate a second cyber security bill the National Cyber security Protection Advancement Act of 2015 on Thursday That bill would use the U S Department of Homeland Security as an intermediary for sharing the electronic information |
JPM | House passes second threat sharing cybersecurity bill | WASHINGTON Reuters The U S House of Representatives voted overwhelmingly on Thursday to pass a bill that extends liability protection for companies that share information about cyber attacks if they give the data to the U S Department of Homeland Security The House voted 355 to 63 in favor of the bill a companion to a measure the chamber passed on Wednesday making it easier for private companies to share information about cybersecurity threats with each other and the government without fear of lawsuits The legislation must still be passed by the Senate and signed by President Barack Obama to become law Despite strong objections from privacy advocates who worry that the legislation could lead to more surveillance supporters expect passage in the Senate The White House has said it had some concerns about the bill but supported its passage and believed it could be fixed as the legislation is finalized in Congress Corporations have been clamoring for Congress to address cybersecurity after high profile attacks on companies including Sony Pictures Entertainment Target Anthem and JP Morgan Chase NYSE JPM
The National Cybersecurity Protection Advancement Act of 2015 would use the DHS as an intermediary for sharing the electronic information |
BMY | Why Is Celgene CELG Up 1 4 Since Last Earnings Report | A month has gone by since the last earnings report for Celgene CELG Shares have added about 1 4 in that time frame outperforming the S P 500
Will the recent positive trend continue leading up to its next earnings release or is Celgene due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts Celgene Q1 Earnings Beat Estimates on Revlimid SalesCelgene reported better than expected results for the first quarter of 2019 on strong sales of Revlimid Celgene reported adjusted earnings of 2 55 per share which beat the Zacks Consensus Estimate of 2 49 and increased from 2 05 in the year ago quarter Total revenues grew 13 7 year over year to 4 025 billion in the quarter and beat the Zacks Consensus Estimate of 4 01 billion Otezla Revlimid Drive GrowthNet sales of Revlimid came in at 2 6 billion reflecting 15 year over year increase The drug performed well both in the United States up 13 and international markets up 19 Growth in the quarter was driven by increase in market share and extended treatment duration Net sales of another cancer drug Abraxane increased 9 in a year to 286 million Pomalyst Imnovid sales came in at 557 million up 23 year over year Sales were driven by increase in market share and extended duration Sales of psoriasis drug Otezla were up 10 year over year to 389 million but missed the Zacks Consensus Estimate of 418 million All other product sales including Istodax Thalomid Vidaza and an authorized generic version of Vidaza in the United States totaled 215 million in the quarter down from 229 million in the year ago quarter Adjusted research and development expenses increased 25 9 to 874 million Adjusted selling general and administrative expenses decreased 2 6 to 671 million Business UpdateEarlier in the month the stockholders of Celgene voted in favor of the proposed merger with Bristol Myers Squibb Company NYSE BMY The transaction will close in the third quarter of 2019 Pipeline UpdateThe company announced top line results from the phase III ROBUST trial evaluating Revlimid plus rituximab cyclophosphamide doxorubicin vincristine and prednisone R CHOP chemotherapy R2 CHOP in patients with previously untreated activated B cell ABC subtype diffuse large B cell lymphoma DLBCL The trial did not meet the primary endpoint of demonstrating superiority in progression free survival PFS compared to placebo plus R CHOP Celgene announced that the Committee for Medicinal Products for Human Use CHMP adopted positive opinions for Revlimid in combination with bortezomib and dexamethasone RVd in adult patients with previously untreated multiple myeloma who are not eligible for transplant and for Pomalyst Imnovid in combination with bortezomib and dexamethasone PVd for the treatment of adult patients with multiple myeloma who have received at least one prior treatment regimen including Revlimid Last month Celgene submitted a New Drug Application NDA to the FDA for ozanimod in patients with relapsing forms of multiple sclerosis RMS The FDA granted Priority Review designation to the NDA for fedratinib in patients with myelofibrosis with a target action date of Sep 3 2019 In April Celgene and Acceleron Pharma submitted a BLA to the FDA for luspatercept for the treatment of adult patients with very low to intermediate risk myelodysplastic syndromes MDS associated anemia who have ring sideroblasts and require red blood cell RBC transfusions and for the treatment of adult patients with beta thalassemia associated anemia who require RBC transfusions The company is also working to expand Revlimid s label The FDA granted Priority Review designation to the supplemental New Drug Application sNDA for Revlimid in combination with rituximab R in patients with relapsed and or refractory indolent NHL A decision from the FDA is expected by Jun 27 2019 Roche s Tecentriq in combination with Abraxane for the treatment of adult patients with unresectable locally advanced or metastatic triple negative breast cancer TNBC was granted accelerated approval in the United States 2019 Outlook ReiteratedCelgene expects earnings per share of 10 60 10 80 in 2019 Net revenues are estimated to be 17 0 17 2 billion Revlimid sales are projected to be 10 8 billion and Abraxane sales to be around 1 1 billion Pomalyst s revenues are expected to be 2 4 billion whereas Otezla sales are projected to be 1 9 billion
How Have Estimates Been Moving Since Then
Fresh estimates followed a downward path over the past two months
VGM Scores
At this time Celgene has an average Growth Score of C though it is lagging a lot on the Momentum Score front with an F However the stock was allocated a grade of B on the value side putting it in the top 40 for this investment strategy
Overall the stock has an aggregate VGM Score of C If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Celgene has a Zacks Rank 2 Buy We expect an above average return from the stock in the next few months |
BMY | Why Is Bristol Myers BMY Up 2 6 Since Last Earnings Report | It has been about a month since the last earnings report for Bristol Myers Squibb BMY Shares have added about 2 6 in that time frame outperforming the S P 500
Will the recent positive trend continue leading up to its next earnings release or is Bristol Myers due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts Bristol Myers Q1 Earnings Beat Sales Up on Strong EliquisBristol Myers reported better than expected results for the first quarter of 2019 on the stellar performance of its blood thinner drug Eliquis First quarter 2019 earnings of 1 10 per share beat the Zacks Consensus Estimate by a penny and surpassed the year ago quarter s earnings of 94 cents Total revenues of 5 92 billion surpassed the Zacks Consensus Estimate of 5 80 billion and increased 14 from 5 2 billion recorded in the year ago period Continued strong sales of Opdivo and Eliquis contributed to the top line in the reported quarter Quarterly DetailsRevenues were up 18 year over year when adjusted for foreign exchange impact Revenues increased 24 to 3 4 billion in the United States and 2 outside the country Ex U S revenues were up 10 when adjusted for foreign exchange impact Eliquis witnessed strong growth and became the top revenue generator for the company Sales of the drug rose 28 to 1 92 billion Opdivo which is approved for multiple cancer indications continued its impressive performance with sales up 19 year over year to 1 8 billion Sales of Opdivo and Eliquis rose 20 and 36 respectively in the United States Leukemia drug Sprycel raked in sales of 459 million up 5 year over year Sales of rheumatoid arthritis drug Orencia were up 8 to 640 million Melanoma drug Yervoy contributed 384 million to the top line during the reported quarter up 54 year over year Multiple myeloma drug Empliciti recorded sales of 83 million up 51 year over year However performance of key drugs in the Virology unit disappointed Sales of Baraclude declined 37 to 141 million Sales of other brands including Sustiva Reyataz Daklinza and all other products that have lost exclusivity in major markets fell 21 year over year to 487 million Adjusted research and development R D expenses in the quarter were up 11 1 to 1 30 billion Adjusted marketing selling and administrative expenses increased 2 6 to 1 billion Gross margin was 69 in the quarter compared with 72 8 in the year ago quarter The year ago period results included an inventory charge Regulatory UpdateIn February 2019 the European Commission approved Sprycel in combination with chemotherapy for the treatment of pediatric patients with newly diagnosed Philadelphia chromosome positive acute lymphoblastic leukemia AcquisitionsEarlier in the month more than 75 of shareholders voted in favor of the company s impending acquisition of biotech big wig Celgene Corporation NASDAQ CELG at the Special Meeting of Stockholders The transaction will close in the third quarter of 2019 The acquisition was announced in January for a whopping 74 billion The buyout is expected to be 40 accretive to the bottom line on a standalone basis in the first full year and result in cost synergies of approximately 2 5 billion by 2022 The merged entity will generate more than 45 billion in cash flow over the first three full years Pipeline UpdateThe phase II CheckMate 714 trial evaluating Opdivo versus Opdivo plus Yervoy in patients with recurrent or metastatic squamous cell carcinoma of the head and neck did not meet its primary endpoints 2019 GuidanceBristol Myers reiterated its adjusted earnings and revenue expectations for 2019 The company projects earnings of 4 10 4 20 per share The Zacks Consensus Estimate for earnings is pegged at 4 16 The company expects worldwide revenues to increase mid single digits
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates
VGM Scores
Currently Bristol Myers has a great Growth Score of A though it is lagging a lot on the Momentum Score front with an F However the stock was allocated a grade of B on the value side putting it in the second quintile for this investment strategy
Overall the stock has an aggregate VGM Score of B If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift Notably Bristol Myers has a Zacks Rank 1 Strong Buy We expect an above average return from the stock in the next few months |
BMY | BMY Or NVO Which Is The Better Value Stock Right Now | Investors interested in Large Cap Pharmaceuticals stocks are likely familiar with Bristol Myers Squibb BMY and Novo Nordisk CSE NOVOb NVO But which of these two companies is the best option for those looking for undervalued stocks Let s take a closer look
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions while our Style Scores work to identify stocks with specific traits
Bristol Myers Squibb has a Zacks Rank of 1 Strong Buy while Novo Nordisk has a Zacks Rank of 3 Hold right now Investors should feel comfortable knowing that BMY likely has seen a stronger improvement to its earnings outlook than NVO has recently However value investors will care about much more than just this
Value investors analyze a variety of traditional tried and true metrics to help find companies that they believe are undervalued at their current share price levels
Our Value category highlights undervalued companies by looking at a variety of key metrics including the popular P E ratio as well as the P S ratio earnings yield cash flow per share and a variety of other fundamentals that have been used by value investors for years
BMY currently has a forward P E ratio of 10 98 while NVO has a forward P E of 19 70 We also note that BMY has a PEG ratio of 2 14 This metric is used similarly to the famous P E ratio but the PEG ratio also takes into account the stock s expected earnings growth rate NVO currently has a PEG ratio of 2 17
Another notable valuation metric for BMY is its P B ratio of 4 90 The P B ratio is used to compare a stock s market value with its book value which is defined as total assets minus total liabilities For comparison NVO has a P B of 16 26
These are just a few of the metrics contributing to BMY s Value grade of B and NVO s Value grade of C
BMY stands above NVO thanks to its solid earnings outlook and based on these valuation figures we also feel that BMY is the superior value option right now |
BMY | Why Is Exelixis EXEL Down 1 Since Last Earnings Report | A month has gone by since the last earnings report for Exelixis EXEL Shares have lost about 1 in that time frame outperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is Exelixis due for a breakout Before we dive into how investors and analysts have reacted as of late let s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts Exelixis Earnings Revenues Beat Estimates in Q1Exelixis reported earnings of 27 cents easily beating the Zacks Consensus Estimate of 24 cents However the bottom line declined from 40 cents in the year ago quarter Net revenues came in at 215 5 million up from 213 7 million in the year ago quarter The top line also surpassed the Zacks Consensus Estimate of 203 6 million Quarter in DetailNet product revenues came in at 179 6 million up 33 7 from the year ago quarter driven by continued growth of Cabometyx in the United States for the treatment of advanced renal cell carcinoma RCC In April 2016 the FDA approved a tablet formulation of cabozantinib distinct from the capsule form under the brand name Cabometyx for the treatment of advanced RCC in patients who have received prior anti angiogenic therapy The company also expanded the drug s label for the treatment of previously untreated advanced RCC in December 2017 Cabometyx generated 175 9 million of net product revenues up from 171 6 million in the prior quarter Patient demand grew 33 year over year and 3 sequentially driven by both RCC and HCC New Prescriptions were up by 17 sequentially Cometriq cabozantinib capsules for the treatment of medullary thyroid cancer generated 3 7 million in net product revenues Total collaboration revenues were 35 9 million compared with 79 5 million in the year ago quarter In the reported quarter research and development expenses increased 67 4 to 63 3 million stemming from personnel expenses and clinical trial costs Selling general and administrative SG A expenses were 60 1 million up 11 3 year over year driven by increases in personnel expenses and stock based compensation Pipeline UpdateThe pipeline progress in the year so far has been encouraging Cabometyx received another FDA approval for the treatment of patients with hepatocellular carcinoma HCC in January 2019 In April CheckMate 9ER the phase III trial evaluating the combination of cabozantinib and Opdivoversus Pfizer s Sutent in patients with previously untreated advanced or metastatic RCC completed enrollment The study was sponsored by Bristol Myers Squibb Company NYSE BMY and co funded by Exelixis and partners Ipsen and Takeda Exelixis initiated a multicenter randomized double blinded controlled phase III study COSMIC 313 The study is evaluating Cabometyx in combination with Opdivo and Yervoy versus Opdivo and Yervoyin in patients with previously untreated advanced RCC The primary endpoint of the trial is progression free survival and the secondary endpoints are overall survival and objective response rate In January 2019 partner Daiichi Sankyo announced that Minnebro esaxerenone tablets were approved by the Japanese Ministry of Health Labour and Welfare as a treatment for patients with hypertension The compound was identified during the prior research collaboration between Exelixis and Daiichi Sankyo which the companies entered in March 2006 and has been subsequently developed by the latter Exelixis submitted an investigational new drug IND application in February 2019 to the FDA for XL092 a next generation small molecule tyrosine kinase inhibitor targeting VEGF receptors MET and other kinases implicated in cancer s growth and spread Following the FDA s acceptance of the IND filing the company initiated a phase I dose escalation trial evaluating the pharmacokinetics safety and tolerability of XL092 in patients with advanced solid tumors with the primary objective of determining a dose for daily oral administration of XL092 suitable for further evaluation 2019 GuidanceR D expenses are expected to be between 285 million and 315 million SG A expenses are expected to be between 220 million and 240 million
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates The consensus estimate has shifted 14 86 due to these changes
VGM Scores
Currently Exelixis has an average Growth Score of C though it is lagging a lot on the Momentum Score front with an F However the stock was allocated a grade of B on the value side putting it in the top 40 for this investment strategy
Overall the stock has an aggregate VGM Score of C If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift Notably Exelixis has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
C | Pay czar Feinberg increased base pay at U S firms WSJ | Oct 28 Reuters Kenneth Feinberg the U S Treasury
bailout program s special master for compensation who cut
total compensation for top earners at seven bailed out firms
last week increased base salaries at the companies the Wall
Street Journal said citing its own analysis of U S Treasury
data
Base salaries at the companies on average rose 14 percent
to 437 896 a year the paper said adding that 89 of the 136
employees under the U S pay czar s review got a raise in base
salary
The paper added that Feinberg agreed to more than double
cash salaries for 13 of 21 Citigroup Inc employees
Government officials told the paper they agreed to increase
some base salaries in the wake of some companies expressing
concern that the pay czar was planning to lock up too much
employees compensation for the long term
Last week Feinberg slashed overall pay by more than half
for top earners at seven companies that received massive
taxpayer bailouts and ordered that most of their salaries be
paid in the form of long term company stock ID nNYS005528
Reporting by Ajay Kamalakaran in Bangalore Editing by Ian
Geoghegan |
C | UPDATE 2 Nomura posts profit on retail trading operations | July Sept net profit 28 3 bln yen vs 6 2 bln yen consensus
Boosted by 1 6 bln trading gain investment trusts
To pay 4 yen per share dividend first payout in 3 quarters
Shares close up 0 3 pct before result
By Junko Fujita
TOKYO Oct 28 Reuters Nomura Holdings Inc Japan s
largest brokerage reported its largest profit in nine quarters
beating market expectations on strong sales of mutual funds and
1 6 billion in trading gains
Nomura also said it would pay a 4 yen per share dividend
after forgoing a payout for the previous two quarters
The results show that Nomura s expansion of its trading
business in Europe through the purchase of some operations of
failed investment bank Lehman Brothers is paying off
Nomura s dividend payout is an indication that the firm is
returning to normalcy after a difficult year said Neil Katkov
head of Asia research at financial consultancy Celent in Tokyo
The Lehman acquisition initially seen as a potential
pitfall has instantly made them a leading player in Europe and
Asia
Nomura last year bought Lehman Brothers Asian European and
Middle East operations Its global peers including Goldman Sachs
Group Inc and JPMorgan Chase Co have also benefited from
strong trading revenue
Nomura posted a 28 3 billion yen 310 million net profit
for July September compared with a 72 9 billion yen loss a year
earlier and marking its largest quarterly profit since the
April June quarter of 2007
The result beat the average estimate of 6 2 billion yen
profit in a survey of three analysts by Thomson Reuters I B E S
Nomura benefited from solid demand for mutual funds from
retail investors seeking higher returns from foreign shares and
booked a 148 5 billion yen gain from its trading operations a
sharp swing from a 21 billion yen loss a year earlier
From this result we can see the unification of Lehman and
Nomura have started to work Nomura Chief Financial Officer
Masafumi Nakada told a news conference
Nomura Chief Executive Kenichi Watanabe had said in a speech
on Tuesday that the broker was now rebuilding its U S operation
after it shrank the business there following heavy losses in the
residential mortgage backed securities arena
The U S expansion was part of the reason why Nomura
increased its capital this month by selling about 4 7 billion
shares Watanabe said
Nomura is capitalising on the retreat of some Wall Street
firms and boosting its fixed income operations in the United
States It hired two senior bankers from Barclays and Citigroup
Inc as co heads to cement the business in the Americas
Prior to the announcement shares of Nomura rose 0 3 percent
to 643 yen Tokyo s brokerage sector subindex fell 0 1 percent
Reporting by Junko Fujita Editing by Muralikumar Anantharaman |
C | UPDATE 2 Ford picks Geely for Volvo cars bid | Ford to hold detailed talks with Geely
Ford not seeking to keep stake in Swedish unit
No timeline for agreement or word on sale price
Adds with Geely statement Ford shares background
By Quentin Webb and Charlotta Kristiansson
LONDON GOTHENBURG Oct 28 Reuters Ford Motor Co named
Zhejiang Geely Holding Group as preferred bidder for its
loss making Swedish unit Volvo in what could lead to the biggest
overseas acquisition by China s fast growing auto sector
Ford and privately owned Geely did not disclose a possible
sale price for Volvo but media reports have put it closer to 2
billion than the 6 45 billion Ford paid for Volvo in 1999
The announcement moves the long running sale which began in
December closer to a conclusion Intellectual property
concerns which last week threatened to derail any deal with
Geely may have been overcome
But it could be months before a final agreement Ford named
Tata Motors as preferred bidder for Jaguar and Land Rover its
other top end European brands in January 2008 and reached a
final accord in March of that year
Ford said it will engage in detailed and focused
negotiations with Geely but there was no specific timeline to
conclude negotiations Ford will not retain a stake
This sale is complicated because Volvo is closely woven into
Ford s wider operations undertaking much of the group s safety
work for example and Ford said it would continue cooperating
with Volvo
Ford Chief Financial Officer Lewis Booth told a news
conference at Volvo s Gothenburg head office that Ford and Volvo
needed to make sure the deal contained appropriate safeguards
and Geely had to undertake more due diligence
But he said We believe that Geely have the potential to
be a very good owner of Volvo they take the heritage of
Volvo and the brand of Volvo very seriously indeed
ENSHRINE INDEPENDENCE
Hangzhou based Geely said its proposal financed by Chinese
banks would enshrine management independence at Volvo while
allowing the Swedish carmaker to source components and tap into
sales networks in China
Volvo would keep existing production and research and
development facilities union agreements and dealer networks
Geely said in a statement on Wednesday
A Volvo union leader said he was unfamiliar with Geely and
had asked to speak to its representatives as soon as possible
Earlier Geely had faced competition from rivals including a
U S led group including former Ford director Michael Dingman
dubbed the Crown consortium and Beijing Automotive Industry
Holding Corp BAIC sources familiar with the matter have said
Geely is not the only Chinese automaker reaching overseas
the smaller Tenzhong aims to close that deal to buy General
Motors s Hummer brand by early 2010
Frankfurt traded Ford shares stood 1 2 percent lower by 1251
GMT at 4 96 euros a share outperforming a 4 3 percent drop in
the automaking sector
Wednesday s agreement is not with Geely s listed Hong Kong
subsidiary Geely Automobile Holdings
Citigroup and JPMorgan are advising Ford while Rothschild
is advising Geely
For a story on the GM Opel sale see
Additional reporting by Victoria Klesty Editing by Douwe
Miedema and Marcel Michelson |
C | FTSE sheds 2 3 pct hits three week closing low | Weak commodity prices weigh on miners energy firms
Banks under pressure on continuing break up fears
Defensive telecoms food retailers gain
By Harpreet Bhal
LONDON Oct 28 Reuters Britain s top shares fell 2 3 percent to hit a
three week closing low on Wednesday dragged down by falls in energy stocks
after BG Group posted a sharp drop in net profit while miners tracked weaker
metals
The market also came under pressure on data showing new U S homes sales
unexpectedly tumbled in September their first drop in six months underscoring
the hazards to an economic recovery that businesses appeared to be banking on
The FTSE 100 closed down 120 55 points at 5 080 42 on the 80th anniversary
of the Black Monday stock market crash of 1929 and posted its biggest one day
percentage fall since July 2
The FTSE has rallied 47 percent since hitting a floor in March After three
months of consecutive gains from July to September the index is on course to
post its first monthly decline in four months
When you see the quality of economic data coming out which at best is
average and you have a 50 percent rally in the last seven months something has
to give We are just having a reality check here said David Buik senior
partner at BGC Partners
Miners were the biggest drag underpinned by lower metals prices on worries
about rising inventories and poor demand Xstrata Lonmin Rio Tinto and BHP
Billiton shed 6 1 to 9 4 percent
Vedanta Resources lost 4 2 percent pressured by a broker downgrade by
Barclays Capital to equal weight from overweight Kazakhmyz which reports
third quarter output numbers on Thursday was 9 1 percent lower
BG Group fell 3 3 percent after posting a 44 percent drop in third quarter
net profit to 484 million pounds 792 5 million as gas and oil prices
plummeted though its underlying profits beat forecasts
BP shed 1 7 percent a day after posting forecast beating results Citigroup
cut its rating for the oil major to hold from buy on its judgement that the
firm s operational recovery is peaking
Royal Dutch Shell and Cairn Energy declined 1 2 to 5 2 percent ahead of
their third quarter results on Thursday Weaker crude prices also weighed on the
sector
BANKS UNDER PRESSURE
The banking sector extended its decline with the break up of Dutch
financial services group ING continuing to weigh heavily on its UK peers
Investors are unsettled by mounting fears over the disposals government backed
banks will have to make in order to satisfy the European Commission
Royal Bank of Scotland Lloyds Banking Group Barclays Standard Chartered
and HSBC fell 1 3 to 6 1 percent
In the wake of ING s split Britain s state owned lender Northern Rock got
clearance from European regulators to be broken up on Wednesday paving the way
for a sale
Investors are also apprehensive ahead of important U S GDP numbers
tomorrow which are expected to show the world s biggest economy is coming out of
a technical recession said Angus Campbell head of sales at Capital Spreads
Life insurers were also weak with Prudential Legal General Old Mutual
and Standard Life down 2 7 to 9 8 percent
Prudential posted a better than expected 9 percent drop in third quarter
sales as its Asian region and U S businesses offset weakness at home
GlaxoSmithKline dropped 0 4 percent The drugmaker posted broadly in line
sales of 6 76 billion pounds and expects a big H1N1 vaccine boost in the fourth
quarter
AstraZeneca lost 1 5 percent ahead of its third quarter numbers on Thursday
while Shire which is due to report quarterly figures on Friday slipped 0 9
percent
On the upside telecoms stocks were higher with mobile heavyweight Vodafone
up 0 3 percent and Inmarsat adding 0 6 percent as Barclays Capital initiated
coverage on the European telecommunications sector with a positive view
Defensive utility food retailers also gained ground with Tesco and WM
Morrison up 1 9 and 1 3 percent Tesco also benefitted from optimism about its
expansion into financial services
Editing by Rupert Winchester |
C | UPDATE 2 ICBC Q3 profit surges eyes on loan growth | Q3 net 33 6 bln yuan vs 32 6 bln consensus
Loans rose 2 6 pct from end June slowing from H1
Margin stabilisation may bring relief analyst
Releads adds analyst comment
By Michael Wei and Doug Young
BEIJING HONG KONG Oct 29 Reuters Slowing loan growth
could be a drag on profits at Industrial Commercial Bank of
China ICBC next year after a lending boom earlier this year
helped the world s most valuable bank post a 19 percent jump in
third quarter profit
Loans granted by China s banks totalled 7 4 trillion yuan
in the first half triple the year earlier level before
falling significantly in July and August But lending picked up
surprisingly in September to 517 billion yuan 75 7 billion
Looming over Chinese banks now is the question of how they
will pace their lending in 2010 as they are on track to issue
about 10 trillion yuan this year Few analysts think this
year s level will be sustainable
Domestic rivals China Construction Bank and Bank of
Communications have already reported a slowdown in loan growth
in the third quarter
ICBC in which Goldman Sachs Allianz Group and American
Express hold stakes said loans and advances totalled 5 58
trillion yuan 817 billion as of end September
Compared with 5 44 trillion yuan in loans at end June the
third quarter figure was only up 2 6 percent a sharp slowing
from the 19 percent loan growth ICBC recorded in the first
half
Concerns are growing that China might lean on banks to
tighten lending eating into profit as the country reins in its
ultra relaxed monetary stance under its economic stimulus
programme
But there are bright spots that could bring relief some
say
An expected drop in bank loans next year would not dampen
banks earnings as long as net interest margins which already
bottomed out pick up next year after falling sharply in 2009
said Simon Ho an analyst at Citigroup
If net interest margins stabilise or recover next year
loan growth would translate into earnings growth
Chinese lenders have seen shrinking margins following five
interest rate cuts since last September as the government
spurred lending to sustain growth in the global economic
crisis
ICBC s net interest income fell to 178 2 billion yuan in
the first nine months of 2009 down 9 42 percent from the same
period of last year
After declining for most of the year net interest margins
began stabilising in the second quarter and are expected to
rise in the final quarter this year and next year
ICBC with a market value of roughly 500 billion reported
July September earnings of 33 6 billion yuan 4 92 billion
compared with 28 2 billion yuan a year earlier and a touch
above the 32 6 billion yuan forecast by seven analysts polled
by Reuters
Ahead of the results ICBC s Hong Kong listed shares ended
down 2 7 percent in a market that fell 2 3 percent The shares
are up about 49 percent so far this year matching gains in the
benchmark Hang Seng Index
6 83 yuan
Editing by Chris Lewis and Muralikumar Anantharaman |
C | Daiwa posts quarterly profit on market recovery | TOKYO Oct 30 Reuters Daiwa Securities Group Japan s
second largest brokerage reported a second straight quarterly
profit helped by a rebound in the stock market and demand for
investment trusts from retail investors
Daiwa posted a 2 billion yen 21 93 million net profit for
July September compared with a 20 6 billion yen loss a year
earlier
Three analysts surveyed by Thomson Reuters I B E S produced
an average profit estimate of 7 1 billion yen
Daiwa s rebound comes as Japan s benchmark Nikkei average has
recovered from a 26 year closing low hit on March 6 with
investors having turned more optimistic about prospects for a
global economic recovery and become willing to take on more risk
But there is also a concern Daiwa may lose revenue after last
month deciding to pull out of its 10 year old investment banking
joint venture with Sumitomo Mitsui Financial Group leaving the
brokerage vulnerable as competition intensifies
SMFG Japan s third largest bank expanded its brokerage
business by buying Nikko Cordial Securities from Citigroup and
launching underwriting and corporate advisory businesses this
month
Daiwa shares are down about 9 3 percent so far this year
underperforming Tokyo s brokerage sector subindex which lost 3 6
percent
1 90 72 Yen
Reporting by Junko Fujita Editing by Muralikumar Anantharaman |
C | Morning Report April 17 2012 | Three weeks after announcing an emergency rescue package that topped 1 trillion European officials will seek more funding from the IMF to fight growing fears surrounding Spain s finances that could see the European sovereign debt crisis once again plunge the markets into chaos European officials will push for more funding at the latest IMF meetings due on April 20 22 The Americans have already insisted that Europe must overcome its crisis using its own financial resources just as IMF Managing Director Christine Lagarde seeks more contributions to fight risks separate from Europe s troubles such as an elevated oil prices and slowing US growth The EUR has miraculously rallied to almost 1 3150 on better than expected US retails sales after plunging to below 1 3000 and hitting a 2 month low yesterday Spain continues to dominate headlines as the nation heads inexorably towards a financial crash Spanish 10 year bond yields have breached 6 for the first time this year while the cost of 5 year credit default swaps surged above 520 basis points It has become clear to us that Spain will have no choice but to seek international assistance even if the European Central Bank decides to restart its bond purchasing programme and takes steps to bolster the Spanish banking sector Moody s has reportedly decided to postpone a review of over 100 European banks which was supposed to be due this week until the beginning of May The Australian dollar has recovered from a test of support at 1 0300 to open the morning at 1 0350 US equities are trading largely unchanged despite a stronger than forecast increase in retail sales at 0 8 Technology shares have fallen with the Nasdaq lower by 0 8 The S P 500 has rallied from earlier losses when Apple shares plunged as much as 3 6 on falling mobile phone carrier subsidies for the iPhone Banks led the recovery with Citigroup gaining 1 8 and the index has closed down 0 05 to 1 370 European shares have recovered slightly from the heavy falls incurred last week with most indices gaining around 0 5 However Spain s IBEX continues to fall down by another 0 6 Data released by the Commodity Futures Trading Commission showed that hedge funds and other speculators have reduced net long positions in futures and options contracts by the most since late December as the Chinese economy slows The CRB lost 2 09 points to 300 76 WTI crude gained marginally by 0 2 to 103 05 as retail sales in the US increased more than forecast Precious metals remain soft with gold losing 0 45 to 1 653 while silver is flat at 31 35 Soft commodities are broadly lower with cotton coffee and sugar experiencing the heaviest falls Copper rose by 0 1 Gold fell towards 1640 after a breach of the support of 1650 during the Asian morning before the lack of further offers saw the price drifting up in choppy trading to open this morning at 1652 almost flat to the last open recording a relatively small trading range of 1641 1657 Yesterday an absence of any news related to further monetary stimulus from the US has had most traders sidelined and gold moved only marginally higher from its low despite a surging euro overnight We will continue to observe market appetite for gold in the face of risk events to assess the safe haven demand for it However at this stage the yellow metal seems to underperform against US Treasury bonds in response to risk aversion In general we maintain our neutral view in the mid term until the price falls below 1600 or rises towards 1800 as the gold market finds or loses confidence in the upward multi year trend Short term wise we maintain a neutral bias as the resistance trend line has been valid for weeks Compass DirectionShort Term Medium TermNEUTRAL NEUTRALAUD USD fell from the opening bell on Monday morning trade as the weekend news that China broadened its trading range on the yuan to 1 and the news that Spain and Italy had taken up a large percentage of the LTRO had risk averse traders running to the hills However AUD found solid support towards 1 0310 after breaking below our 1 0335 55 support area Solid buying from Australian exporters provided enough to drag the AUD back to 1 0379 during the European session The price remained well bid during US trade despite the mixed US data releases Chatter has put the bounce in euro to repatriation flows and weak shorts being taken out RBA Monetary Policy Minutes and New Motor Vehicle Sales are due during the late morning with all eyes on the views of the RBA People will be looking for indications of the next cut by the RBA despite ANZ raising mortgage rates late last week We see yesterday s Asia session weakness as a new pattern and we look for this to continue today if the releases areas expected Compass DirectionShort Term Medium TermBEARISH BEARISH |
C | This Bank Stock Could Gain 50 In A Couple Of Years | When it comes to stock picking it s not always about finding the best company in an industry It s about finding the best stock in that industry I was reminded of that axiom after poring over first quarter results from Wells Fargo NYSE WFC JP Morgan NYSE JPM and Citigroup NYSE C The first two banks have been the class of the field Citigroup remains in clean up mode as it emerges from a number of self inflicted wounds from the last recession Still Citigroup has potentially much more upside than those better run banks At first blush investors are understandably attracted to Wells Fargo and JP Morgan Warren Buffett has owned Wells Fargo for much of the past decade rightly acknowledging a solid management team that avoids the worst of the industry s excesses And JP Morgan is one of the few major investment banks to successfully capitalize on the weakness seen by rivals such as Citigroup and others Citigroup for its part has seen its capital base come under focus because it has been slow to shed assets that are no longer core to the bank s future direction such as hedge fund management A recent brush back by regulators after Citigroup applied for permission to boost dividends and buybacks was just another blemish for this erstwhile banking giant Indeed Citigroup s need to retrench to shore up its balance sheet has led it to now have a slightly smaller revenue base than Wells Fargo and it s now only two thirds the size of JP Morgan Five years ago Citigroup had the largest revenue base Moreover Citigroup is only slightly cheaper than those other two banks when comparing price to earnings P E ratios In most instances it pays to pursue an industry s better operator if its shares are only slightly more expensive Arguably all three of these bank stocks are quite appealing in terms of P E ratios as current earnings are quite depressed compared to what they might be by the middle of the decade Yet in one respect Citigroup is simply far too cheap to ignore Shares have risen more than 50 since bottoming out last November but they still sell at a considerable discount to tangible book value Even as the stock price has rebounded so has tangible book value Assuming that Citigroup is slow to reinstate a more robust dividend tangible book value looks set to keep on rising at fast pace Dividends eat into book value In just the last eight quarters Citigroup has boosted tangible book value by 31 5 And that s in a still weak economy At current trend rates analysts think tangible book value will approach 60 a share by the end of 2013 As I ve noted in the past stocks can often trade below book on a short term basis due to near term investor concerns in this case European exposure which is actually fairly limited for Citigroup But that gap tends to close over longer periods It s also worth noting that the healthier bank stocks trade at a premium to tangible book Indeed banks have tended to trade between 1 5 and 2 0 times tangible book for much of the past 30 years The subpar valuation for Citigroup implies that the bank has inferior growth prospects relative to Wells Fargo JP Morgan and others but that s simply not the case As I have noted in previous updates Citigroup has been dedicating a significant amount of resources towards expansion in Asia and Latin America right at a time when major European banks which have typically had a strong presence in those high growth regions are pulling capital out in order to shore up their operations back at home Citigroup is getting little credit for these forward thinking moves right now but it will Risks to Consider Although Citigroup s exposure to Europe is fairly limited problems in that region could still weigh on bank stocks in coming quarters A clear catalyst exists to finally get this stock rolling Citigroup will re submit its financial statements for a stress test in June with a response from regulators due later in the summer A green light which is likely will now that its capital base is even stronger than before should pave the way for a big dividend hike and or a large stock buyback plan Indeed any time you see a stock selling well below tangible book value then buybacks should be the preferred choice by David Sterman |
C | Stock Market Goes BiDirectional April 17 2012 | U S stock market action on Monday was highly unusual with the Dow Jones Industrials rallying strongly while the Nasdaq experienced major selling This behavior is bearish and indicates lower stock prices in the future The open set the tone for the day with the Dow up over 100 points shortly thereafter and the Nasdaq down more than 20 points The Dow rallied even further and the Nasdaq sold down to even lower levels By the close however not much had changed from the open The Dow was up 72 points to 12 921 and the Nasdaq down 23 points to 2988 The S P 500 and the small cap Russell 2000 were caught in the middle and were barely changed The S P 500 fell 0 69 points to 1369 57 and the Russell 2000 rose 1 79 points to 798 08 The explanation for the Dow Industrials rally was the supposedly good retail sales numbers fueled by inflation with rapidly rising gasoline prices leading the way and bailout poster child Citigroup s C mediocre earnings report The culprits on the Nasdaq were easy to spot with big selling in Apple Computer AAPL and Google GOOG dragging the index down Apple closed at 580 down 25 4 2 and Google was lower by 19 3 0 for a final price of 606 at the end of the day It was the second day of major selling for Google Both drops indicate the big money is getting out of these stocks All the major four indices closed below their 50 day simple moving average a strong technical negative This was the first time the Nasdaq has done so since last December The Dow has done this for six days in a row however and the Russell 2000 for seven If a stock or index moves below its 50 day moving average and stays there for several days it should be assumed that it will eventually fall to its 200 day This is still in the realm of normal bull market activity Non confirmation in a bull market should always be considered a negative for stocks A bullish behaving Dow and a bearish acting Nasdaq is not a good sign The Dow Industrials itself has a separate non confirmation problem with the Transportation Average Even though the Industrials went to new highs in the last few weeks the Transportation Average has not Perhaps it still will but it doesn t look like it will happen This has been a reliable market sell signal for over 100 years |
C | Moving To The Next Crisis Meredith Whitney s Reversal Ipad Content For Kids And Palestinian Investing | So the next major crisis is now in Spain and Italy as bond yields were up yesterday but they have retreated today so the market rallies For many investors it seems like stock markets just move from crisis to crisis to find something to worry about Certainly there are always events and situations in the world which can have a dramatic effect on how much business gets done Still I think it is incredibly counterproductive to constantly be worrying about where the next disaster is going to take place and when The only good thing about it is it gives someone like myself a chance to buy stocks on a more frequent basis principally because other market participants have no faith in the long term earnings power of their businesses One of the things I love about the equity markets is that they continually test you You have to know that when you buy a stock it is going to go down if you are long and it will go up if you are short I find it almost hysterical that traders say buy on the way up Ask them how many positions they own what their price points are and how long they have owned the stocks and get documentation before you run out and listen to the tv guys Oh yeah tell them to take their pretty charts and graphs and well you get the idea So Meredith Whitney has changed course about her opinion on Citigroup Could it have anything to do with the fact that she now has her own firm and maybe just maybe could use some more business Hard to get clients when you are constantly ripping everything wouldn t you say My definition of insanity is investing with the Palestinians Apparently there is a big market for it As if there are not plenty of opportunities in the rest of the world If you forgot the Covestor Next Invest conference here is a link as it is available through April 21 2012 If you have any thoughts or comments on the current post please share them no matter how opinionated they are As always on any company mentioned here past performance is not a guarantee of future returns Investing involves risk of losses on invested capital One should research any investment and make sure it is suitable with your objectives risk tolerance risk profile liquidity considerations tax situation and anything else pertinent to your financial situation Also the CFA credential in no way implies investment returns will be superior for any charterholder |
C | C Getting More Bearish As It Climbs | Unless C closes above 35 89 to provide further validation to its Double Bottom by invalidating perhaps its daily Bear Pennant it is making the paradoxical climb of a new intraday Bear Pennant This pattern tried to confirm on the open and appears to be now looking for an apex probably between 35 50 and 35 75 with confirmation coming on a drop below 34 89 for a target of 33 16 It is supported by an unclosed gap around 33 53 Interestingly it has reshaped the daily Bear Pennant but one that still confirms at 32 70 for a target of 28 50 but with the focus first on the pattern above so long as C remains below the aforementioned 35 89 on a closing basis And all of this is why C is getting more bearish as it climbs |
C | LEI Index Points To Improving Economy But Is It Reliable | Economic numbers out of the US continue to surprise to the downside Just today the jobless claims came in higher than expected The Philadelphia Fed activity came in lower than expected Existing home sales were down 2 6 month over month versus up 0 7 per economists survey The Citigroup US Economic Surprise Index is continuing to trend down It was therefore strange to see the Conference Board US Leading Economic Indicator LEI beating expectations to the upside Does it mean that LEI is ahead of the game and is pointing to improved economic conditions in the near future Not necessarily The chart below compares LEI with the US existing home sales data In the past decade at least compared to US home sales LEI was actually more of a lagging indicator This doesn t mean that LEI is irrelevant but it does indicate that LEI may not always signal an improving economy Below are the components of the index some of which may have a considerable amount of noise 1 Average weekly hours manufacturing2 Average weekly initial jobless claims3 Manufacturing new orders consumer goods and materials4 ISM new orders consumer5 Manufacturers new orders nondefense capital6 Building permits new private housing units7 Stock prices8 Leading Credit Index9 Interest rate spread 10 Treasury yield less Fed funds 10 Average consumer expectations |
BMY | Roche Gets FDA Nod For Venclexta Plus Gazyva To Treat CLL | Roche Holding SIX ROG AG OTC RHHBY announced that the FDA has approved its supplemental new drug application sNDA for Venclexta venetoclax in combination with Gazyva obinutuzumab The company is a seeking label expansion of the drug for the first line treatment of chronic lymphocytic leukemia CLL or small lymphocytic lymphoma SLL
The nod was based on data from the phase III CLL14 study which compared Venclexta Gazyva with Gazyva chlorambucil Results from the program showed that Venclexta Gazyva demonstrated a durable and significant reduction in the risk of disease worsening or death by 67 as compared to Gazyva chlorambucil a current standard of care
Roche plans to present the study outcomes at the American Society of Clinical Oncology Annual Meeting to be held in June 2019
Venclexta is co developed by AbbVie NYSE ABBV and Genetech a unit of Roche Both Roche and AbbVie co commercialize the product in the United States while the latter exclusively commercializes the same in ex U S markets
The FDA reviewed and approved the sNDA under its Real Time Oncology Review RTOR and Assessment Aid pilot programs Previously the regulatory agency had granted Venclexta a Breakthrough Therapy Designation in combination with Gazyva for the treatment of previously untreated CLL with co existing medical conditions
Notably last September the FDA approved the label expansion of Venclexta in combination with Rituxan to include minimal residual disease MRD negativity data from the phase III MURANO study
The investigation evaluated the combo regimen for relapse refractory CLL patients having received at least one prior therapy as compared to Teva Pharmaceuticals NYSE TEVA Treanda bendamustine plus Rituxan
These label expansions of the drug will help it gain an access to a broader patient population and should drive sales in the future
Shares of Roche have increased 4 9 so far this year versus the decrease of 1 1
In a separate press release Roche announced positive findings from the phase I II STARTRK NG probe which evaluated its investigational medicine entrectinib for treating children and adolescents with recurrent or refractory solid tumors with and without neurotrophic tyrosine receptor kinase NTRK ROS1 or anaplastic lymphoma kinase ALK gene fusions
Data from this analysis showed that entrectinib shrank tumors in all the 11 patients who had NTRK ROS1 or ALK fusion positive solid tumors including two patients achieving a complete response The company plans to update the details at the annual meeting of American Society of Clinical Oncology in Chicago come Jun 2 2019
Zacks Rank
Roche currently carries a Zacks Rank 2 Buy Another top ranked stock in the same sector is Bristol Myers Squibb Company NYSE BMY which sports a Zacks Rank 1 Strong Buy You can see
Bristol Myers earnings estimates have moved 5 2 north for 2020 over the past 60 days
Breakout Biotech Stocks with Triple Digit Profit Potential
The biotech sector is projected to surge beyond 775 billion by 2024 as scientists develop treatments for thousands of diseases They re also finding ways to edit the human genome to literally erase our vulnerability to these diseases Zacks has just released Century of Biology 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance Our recent biotech recommendations have produced gains of 98 119 and 164 in as little as 1 month The stocks in this report could perform even better |
BMY | Mallinckrodt MNK Down After Filing Suit Against HHS And CMS | Shares of Mallinckrodt plc NYSE MNK crashed 24 2 after the company filed suit in federal district court against the U S Department of Health and Human Services HHS and Centers for Medicare and Medicaid Services CMS to protect Medicaid patient access to Acthar
The lawsuit was filed against the agency s decision which required Mallinckrodt to change the base date average manufacturer price AMP used to calculate Medicaid drug rebates for Acthar
Through the lawsuit the company challenges CMS unexplained and unlawful reversal of its repeated 2012 written authorizations on calculation of Medicaid rebates for Acthar
The company has decided to seek court intervention to ensure that CMS follows Administrative Procedure Act and other legal requirements after repeated failed attempts to solve the matter through discussions
Acthar Gel which became part of the company s portfolio following the Questcor acquisition is currently approved for 19 indications It is the lead drug in Mallinckrodt s portfolio
Per Mallinckrodt the attempted reversal which CMS seeks unlawfully to make retroactive would substantially eliminate Medicaid net sales of Acthar Gel
If the court doesn t intervene Mallinckrodt would lose Medicaid net sales for Acthar Gel which currently contributes 10 to total Acthar sales This in turn also jeopardizes the company s annual guidance of raking in more than 1 billion of Acthar sales in 2019 with the potential for retroactive non recurring charges going up to 600 million
We remind investors that Mallinckrodt was in the news last month as there were allegations against Acthar s previous owner Questcor for conducting illegal sales and marketing activities related to Acthar Per the company the original action was filed in 2012 prior to Mallinckrodt s ownership of Acthar Gel and consist of two complaints filed by former Questcor employees
The U S Department of Justice DOJ elected to join an existing civil False Claims Act case against the company However since these allegations were made prior to Mallinckrodt s acquisition of Acthar Gel the company does not expect any impact on its business today due to these
Mallinckrodt s stock has plunged 37 5 in the year so far compared with the s decline of 4 6
Acthar generated sales of 223 9 million in the first quarter We expect the lawsuit to weigh on shares until resolved
Zacks Rank Key Picks
Mallinckrodt currently carries a Zacks Rank 3 Hold Some better ranked stocks are Bristol Myers Squibb Co NYSE BMY Roche OTC RHHBY and Celgene Corp NASDAQ CELG While Bristol Myers sports a Zacks Rank 1 Strong Buy the other two carry a Zacks Rank 2 Buy You can see
Bristol Myers earnings per share estimates have increased from 4 78 to 5 03 for 2020 in the past 60 days
Roche s earnings per share estimates have increased from 2 35 to 2 40 for 2019 in the past 60 days
Celgene s earnings estimates have moved up 3 cents to 10 74 over the past 30 days
Today s Best Stocks from ZacksWould you like to see the updated picks from our best market beating strategies From 2017 through 2018 while the S P 500 gained 15 8 five of our screens returned 38 0 61 3 61 6 68 1 and 98 3 This outperformance has not just been a recent phenomenon From 2000 2018 while the S P averaged 4 8 per year our top strategies averaged up to 56 2 per year |
C | Crunch week for Lloyds as regulators near verdict | Lloyds prefers pre Xmas launch for capital plan sources
Rights issue could be launched on Nov 2 sources
Banking fees could be 2 percent of rights issue sources
Lloyds declines comment
By Victoria Howley and Douwe Miedema
LONDON Oct 23 Reuters Lloyds Banking Group faces a
crunch week over its plans to plug a 20 billion pound 33 30
billion hole in its capital before Christmas with a key
decision resting with UK regulators
Britain s largest retail bank 43 percent owned by the
government hopes regulators will decide early next week to
allow it to stay out of a UK scheme for bad debts sources close
to the matter said That would enable it to complete its more
than 11 billion pound rights issue in December its preferred
timeframe the sources said
If the regulators fail to decide Lloyds would then likely
have to sell its shares in the New Year because of the lull in
markets over the holiday period possibly putting it at a
disadvantage as other companies queue up to tap equity markets
The bank is considering alternatives to the state backed
Asset Protection Scheme APS to insure against losses from
toxic debt for which it signed up earlier this year
But it still needs a green light from Britain s three
regulators all of which are under pressure to avoid further
trouble for banks Executives have been in frantic daily
discussions over the last two weeks according to one of the
sources
If Lloyds receives approval early next week it can push
ahead with pre marketing to launch its more than 11 billion
pounds 18 billion rights issue on Monday Nov 2 sources
close to the matter said
The share sale would then close on Dec 11 the sources said
and the rump set to be small if the Treasury takes up its
rights would be placed on Dec 14
A debt exchange through which the bank aims to raise more
than 5 to 7 billion pounds of contingent capital top up
capital that can be converted into equity if the bank hits
trouble is expected to run alongside the rights issue
The overall package to plug Lloyds capital deficit of more
than 20 billion pounds is also expected to include asset sales
Lloyds definitely wants something sooner rather than later
closing before Christmas Things would be very tight if you went
beyond the timeframe outlined one of the sources said
Another source familiar with the situation however
cautioned against assuming a make or break December deadline for
Lloyds with the process possibly going into next year but said
all parties were hoping for a quick solution
Sources close to the situation have told Reuters that
regulators keen to keep a fragile recovery on course are
nearing a decision to approve the plan
Economic data on Friday showed Britain is in the longest
recession on record
But with cracks appearing within the tripartite regulator
the Bank of England the Financial Services Authority and
Britain s Treasury and pressure to ensure Britain returns to
economic growth sources warned a no was still possible
Newspaper reports have said the Bank of England in
particular is concerned Lloyds will need to dip its hands back
into taxpayers pockets if the economy worsens
Lloyds has not yet mandated banks for its rights issue but
sources close to the matter have said it has lined up UBS and
Bank of America Merrill Lynch as lead underwriters Citigroup
Goldman Sachs JP Morgan Cazenove and HSBC will be joint
underwriters
According to one of the sources on Friday fees could be
above 2 percent raising the prospect of a fat payday for
Lloyds bankers
Lloyds the FSA and the BoE declined to comment The
Treasury had no immediate comment
Additional reporting by Matt Falloon and Clara
Ferreira Marques Editing by Erica Billingham
1 6006 Pound |
C | UPDATE 1 Crunch week for Lloyds as regulators near verdict | Lloyds prefers pre Xmas launch for capital plan sources
Rights issue could be launched on Nov 2 sources
Banking fees could be 2 percent of rights issue sources
Govt source says no decision likely next week
Lloyds declines comment
Adds comment from government source
By Victoria Howley and Douwe Miedema
LONDON Oct 23 Reuters Lloyds Banking Group faces a
crunch week over its plans to plug a 20 billion pound 33 30
billion hole in its capital before Christmas with a key
decision resting with UK regulators
Britain s largest retail bank 43 percent owned by the
government hopes regulators will decide early next week to
allow it to stay out of a UK scheme for bad debts sources close
to the matter said That would enable it to complete its more
than 11 billion pound rights issue in December its preferred
timeframe the sources said
However a government source told Reuters it was unlikely
that a final decision will be made in the coming week
If the regulators fail to decide Lloyds would then likely
have to sell its shares in the New Year because of the lull in
markets over the holiday period possibly putting it at a
disadvantage as other companies queue up to tap equity markets
The bank is considering alternatives to the state backed
Asset Protection Scheme APS to insure against losses from
toxic debt for which it signed up earlier this year
But it still needs a green light from Britain s three
regulators led by the Treasury all of which are under pressure
to avoid further trouble for banks Executives have been in
frantic daily discussions over the last two weeks according to
one of the sources
If Lloyds can get approval early next week it can push
ahead with pre marketing to launch its more than 11 billion
pounds 18 billion rights issue on Monday Nov 2 sources
close to the matter said
The share sale would then close on Dec 11 the sources said
and the rump set to be small if the Treasury takes up its
rights would be placed on Dec 14
DEBT EXCHANGE
A debt exchange through which the bank aims to raise more
than 5 billion to 7 billion pounds of contingent capital top
up capital that can be converted into equity if the bank hits
trouble is expected to run alongside the rights issue
The overall package to plug Lloyds capital deficit of more
than 20 billion pounds is also expected to include asset sales
Lloyds definitely wants something sooner rather than later
closing before Christmas Things would be very tight if you went
beyond the timeframe outlined one of the sources said
Another source familiar with the situation however
cautioned against assuming a make or break December deadline for
Lloyds with the process possibly going into next year but said
all parties were hoping for a quick solution
Sources close to the situation have told Reuters that
regulators keen to keep a fragile recovery on course are
nearing a decision to approve the plan but also that the
Treasury must be convinced any agreement would be a better deal
for taxpayers
Economic data on Friday showed Britain is in the longest
recession on record
But with cracks appearing within the tripartite regulator
the Bank of England BoE the Financial Services Authority
FSA and Britain s Treasury and pressure to ensure Britain
returns to economic growth sources warned a no was still
possible
Newspaper reports have said the Bank of England in
particular is concerned Lloyds will need to dip its hands back
into taxpayers pockets if the economy worsens
Lloyds has not yet mandated banks for its rights issue but
sources close to the matter have said it has lined up UBS and
Bank of America Merrill Lynch as lead underwriters Citigroup
Goldman Sachs JP Morgan Cazenove and HSBC will be joint
underwriters
According to one of the sources on Friday fees could be
above 2 percent raising the prospect of a fat payday for
Lloyds bankers
Lloyds the FSA and the BoE declined to comment The
Treasury had no immediate comment
Additional reporting by Matt Falloon and Clara
Ferreira Marques editing by Erica Billingham and Karen Foster
1 6006 Pound |
C | Strength in commods drugs lift FTSE 0 1 pct | Oils miners gain on firmer commodities prices
Shire leads drugs higher on Vyvanse news
British Airways falls on antitrust threat downgrade
By Jon Hopkins
LONDON Oct 26 Reuters Britain s leading share index was
up 0 1 percent in early deals on Monday just extending gains
set on Friday thanks to strength in heavyweight oils and miners
as commodity prices rose while drug issues also found support
By 0853 GMT the FTSE 100 index was 6 16 points higher at
5 248 73 having closed up 35 21 points on Friday at 5 242 00
after shrugging off a shock fall in UK GDP data
It s a really quiet start with many traders in London away
for school s half term but with gains in Asia the FTSE 100
has managed to keep pushing forward mainly thanks to commodity
issues said David Morrison market strategist at GFT Global
Oil majors led the UK blue chips higher as crude prices held
around the 80 a barrel level with Royal Dutch Shell BP BG
Group and Tullow Oil adding 0 6 to 0 7 percent
BP s incoming chairman Carl Henric Svanberg will lead a
shake up of the oil giant s boardroom when he takes over the
Sunday Times reported
Miners also lent the FTSE 100 index some strength and metal
prices benefited from a slightly weaker dollar Lonmin Rio Tinto
Anglo American Vedanta Resources and BHP Billiton were up
1 1 to 1 4 percent
The pharma sector saw good demand ahead of third quarter
numbers from the sector later this week with Shire adding 1 2
percent while AstraZeneca up 1 0 percent and GlaxoSmithKline
gaining 0 1 percent
Shire got a boost from news that the U S Food Drug
Administration has determined that the firm s key attention
deficit disorder treatment Vyvanse was properly granted
five year market exclusivity
BA RUNS INTO TURBULENCE
British Airways was the top FTSE 100 faller losing 3 1
percent after report in the Financial Times said the airline
along with Iberia and American Airlines may have to give up
take off and landing slots to satisfy EU conditions for a
proposed tie up
Deutsche Bank also downgraded its stance on BA to sell
from hold
Financials were the biggest sectorial drag on blue chip
sentiment however with banks and life insurers the worst
performing sectors
British banks must give breakdowns of bonuses by the end of
the week or they will need to use the cash to beef up reserves
the Sunday Times reported quoting Adair Turner head of
Britain s banking regulator
Meanwhile retail banks should be stopped from paying big
cash bonuses and use the money instead to support new lending
according to the text of a speech to be given by the opposition
Conservatives finance spokesman on Monday
Part nationalised banks Lloyds Banking Group and Royal Bank
of Scotland were the worst off losing 1 9 and 2 1 percent
respectively as investors fretted over cash call uncertainties
Royal Bank of Scotland is planning to scale back its
involvement in the government s asset protection scheme media
reports said on Saturday
Sector heavyweight HSBC lost 0 2 percent impacted by a
downgrade to hold from buy by Citigroup
Life insurer Prudential off 1 3 percent also fell victim
to a broker downgrade with SG Securities cutting its rating to
hold from buy on valuation grounds
Among other weak life insurers Legal General RSA
Insurance and Standard Life fell 0 4 to 0 7 percent
Standard Life is not looking to sell off its underperforming
Canadian business according to a source despite a newspaper
report saying that it had asked its advisors to review the unit
Japan s benchmark Nikkei rose 0 8 percent to hit its highest
close in four weeks on Monday lifted by exporters But on
Friday U S stocks fell as industrial companies weak results
overshadowed robust earnings from tech and retail heavyweights
Editing by David Cowell |
C | UPDATE 1 Shire gets boost as FDA backs Vyvanse exclusivity | FDA confirms 5 year exclusivity for hyperactivity drug
Shire shares rise 2 4 percent
Adds detail on Actavis sales forecast shares analysts
LONDON Oct 26 Reuters Shire Plc s attention deficit
hyperactivity drug business received a boost on Monday as the
U S Food and Drug Administration confirmed its new medicine was
entitled to five years of exclusivity
Following an administrative review the FDA found that the
previously awarded exclusivity period running to Feb 23 2012
had been properly granted the company said in a statement
Shares in Shire rose 2 4 percent by 1105 GMT on the news
which prevents the FDA from accepting generic filings for
Vyvanse and effectively sees off an early threat from Icelandic
generics company Actavis
Actavis had sued the FDA to overturn the exclusivity because
Vyvanse is a metabolically converted drug and its active
ingredient dextroamphetamine is the same as the older drug
Adderall
Vyvanse is an important driver for future sales at Shire
and the drug is expected to have a 13 percent share of the
hyperactivity market by the end of 2009 according to analysts
at Citigroup
Thomson Pharma consensus forecasts point to Vyvanse sales of
504 million this year rising to 1 06 billion in 2013
GlaxoSmithKline has a deal to co promote Vyvanse for adults
in the United States that was initiated in May doubling the
sales force behind the product to around 1 300 representatives
Reporting by Ben Hirschler Editing by Will Waterman |
C | FTSE up 0 2 pct by midday UK Q3 earnings eyed | Oils pharmas gain ahead of Q3 results this week
Shire leads drugmakers higher on Vyvanse news
British Airways falls on antitrust threat downgrade
By Harpreet Bhal
LONDON Oct 26 Reuters Britain s top shares edged up 0 2
percent by midday on Monday as energy firms and drugmakers
gained ahead of third quarter earnings this week outpacing a
decline in banks and life insurers
At 1150 GMT the FTSE 100 was up 10 90 points at 5 253 47
points Gains were exaggerated by thin volumes with the index
trading at just 24 percent of its average 90 day trading volume
Energy firms added the most points to the index as crude
prices hovered around 80 BP and BG Group which report
third quarter earnings on Tuesday and Wednesday respectively
were up 0 7 and 0 1 percent while Royal Dutch Shell and Tullow
Oil put on around 0 7 percent each
Drugmakers also saw good demand ahead of third quarter
numbers from the sector Shire AstraZeneca and GlaxoSmithKline
were up 0 2 to 2 5 percent
Shire got a boost from news that the U S Food Drug
Administration has determined that the firm s key attention
deficit disorder treatment Vyvanse was properly granted
five year market exclusivity With the U S reporting season
in full swing analysts said investors are now focused on
third quarter results from UK firms this week which would
dictate the direction for equities
This is the first week when the UK corporate
reporting season really gets into full swing said Richard
Hunter head of UK equities at Hargreaves Lansdown
Most investors are going to be keeping their powder dry
until they digest the many corporate results we have got coming
on stream as the week progresses
Defensive issues also lent some support to the index with
heavyweight Vodafone up 0 5 percent and household cleaning
products firm Reckitt Benckiser up 1 5 percent
Cable Wireless rose 2 3 percent benefiting from a report
in the Sunday Times that the company has revived plans for a 3 6
billion pound demerger a year after putting a proposed split on
hold
BANKS UNDER PRESSURE
Banking stocks were on the back foot led by falls in
part nationalised lenders Lloyds Banking Group and Royal Bank of
Scotland which were down 4 3 and 3 1 percent as cash call
concerns continued to worry investors
HSBC shed 0 6 percent impacted by a downgrade to hold
from buy by Citigroup while Barclays was off 1 5 percent
British banks must give breakdowns of bonuses by the end of
the week or they will need to use the cash to beef up reserves
the Sunday Times reported quoting Adair Turner head of
Britain s banking regulator
Meanwhile retail banks should be stopped from paying big
cash bonuses and use the money instead to support new lending
according to the text of a speech to be given by the opposition
Conservatives finance spokesman on Monday
British Airways lost 3 8 percent after a Financial Times
report said the airline along with Iberia and American Airlines
may have to give up take off and landing slots to satisfy EU
conditions for a proposed tie up
Deutsche Bank downgraded its stance on BA to sell from
hold citing tie up risks
Life insurer Prudential lost 1 percent weighed on by a
rating downgrade to hold from buy by SG Securities on
valuation grounds
Legal General RSA Insurance and Standard Life fell 0 2
to 0 8 percent
Standard Life is not looking to sell off its underperforming
Canadian business according to a source despite a newspaper
report saying that it had asked its advisors to review the unit
editing by Tiisetso Motsoeneng and John Stonestreet |
C | Weak banks miners push FTSE down 1 pct | Lloyds RBS slip ING move raises fears
Commodity stocks lower on dollar s rise
British Airways falls on antitrust threat downgrade
By Tricia Wright
LONDON Oct 26 Reuters Britain s FTSE 100 share index
ended 1 percent lower on Monday with mining and energy stocks
suffering as the U S dollar rose and commodity prices fell
while a sharp decline in ING put pressure on financials
The index ended down 50 83 points at 5 191 74 having risen
as high as 5 281 12 earlier in the session It closed 0 7
percent firmer on Friday
The index has surged 50 percent from a six year low in
March though is still about 4 percent below its level in
mid September 2008 before the collapse of Lehman Brothers
You ve got profit taking you ve got a resistance of 5 300
you ve got dire GDP numbers on Friday last week and you ve got
companies still going cap in hand to shareholders said Angus
Campbell head of sales at Capital Spreads
All these factors are coming into play and we haven t been
assisted in any shape or form by a weak start to trading on Wall
Street he said
Banks were lower led by part nationalised banks Lloyds
Banking Group and Royal Bank of Scotland off 7 2 percent and
5 7 percent respectively with investors unsettled by moves from
European peer ING to split in two and launch a 7 5 billion euro
rights issue
Sector heavyweight HSBC lost 1 8 percent impacted by a
downgrade to hold from buy by Citigroup while Barclays shed
2 5 percent
Barclays bought the banking arm of British insurer Standard
Life for 226 million pounds to build up its UK mortgage and
savings business
Standard Life was off 1 5 percent while its peers were also
weaker weighed down by the ING news with Legal General down
1 7 percent and RSA Insurance 0 5 percent lower
Prudential down 3 2 percent also fell victim to a broker
downgrade with SG Securities cutting its rating to hold from
buy on valuation grounds
MINERS OILS RETREAT
Miners were under pressure retreating as the U S dollar
rose and metals prices waned
Rio Tinto BHP Billiton Antofagasta and Vedanta Resources
lost 1 to 1 5 percent
It was a similar story with energy stocks with crude prices
below 79 a barrel
BG Group Royal Dutch Shell and Cairn Energy dropped 0 2 to
2 4 percent
Among individual movers British Airways fell 4 8 percent
after a report in the Financial Times said the airline along
with Iberia and American Airlines may have to give up airport
take off and landing slots to satisfy EU conditions for a
proposed tie up
Deutsche Bank also downgraded its stance on BA to sell
from hold
Gains in defensive stocks helped anchor the FTSE 100 on
Monday as economic concerns resurfaced prompting investors to
look to assets perceived as safe bets
Household cleaning products firm Reckitt Benckiser put on
0 5 percent while British American Tobacco added 0 2 percent
Cable Wireless rose 3 3 percent after a weekend press
report said it has revived plans for a 3 6 billion pound
demerger of its International business
We may well see some choppier trading in the days to come
ahead of Thursday s U S GDP figures but barring any surprises
here most investors seem happy to pounce on these sell offs and
pick up stock on the cheap said Philip Gillett sales trader
at IG Index
Editing by Greg Mahlich |
C | Morning Social Media Outlook April 4 2012 | In recent years traders and investors have increasingly turned to social media to discuss their investments Now interested parties can get a scientific look at what is being discussed on a weekly monthly and even hourly basis Provided by Social Market Analytics here is the morning social media outlook for Wednesday April 4 Most Bullish Celgene NASDAQ CELG was initiated at Cantor Fitzgerald with a price target of 90 Currently Celgene is trading around 80 per share near an all time high Luminex NASDAQ LMNX extended its pact with Bio Rad up until 2013 Most Bearish SanDisk NASDAQ SNDK guided lower yesterday Tuesday evening stating that demand had declined Limited Brands NYSE LTD is trading nearly flat on the current session Red Book retail sales numbers were released on Tuesday Most Discussed Apple NASDAQ AAPL nearly always sits atop this list The company received a 1001 price target on Monday while Gene Munster stated that Apple was likely to hit 1000 per share in 2014 Research in Motion NASDAQ RIMM was mentioned by Munster on CNBC When asked about his Apple call Munster stated that Apple was taking share from other phone makers like RIM and that the company was on pace for bankruptcy Google NASDAQ GOOG is also a popular stock to discuss Citigroup raised its price target on the tech giant to 750 per share from 680 recently and shares of the company are currently trading near 644 Goldman Sachs NYSE GS announced that it would change some of its management on Monday The announcement may have come following the piece from Goldman s ex employee Greg Smith Microsoft NASDAQ MSFT announced overnight Monday that it would be moving its European logistics center Its new operating system Windows 8 has also become a popular topic to discuss Interested in getting more information about stock trends on social media Signup for the Social Market Analytics newsletter on their website |
C | BAC Looking Bearish Again | BAC s chart is very similar to that of Citigroup only it closed above its 50 DMA last week Perhaps its position above its 50 DMA means it evades its own Bear Pennant Flag but more likely is a drop to at least 8 where there is a decent shelf of support Relative to its Bear Pennant it is drawn here to show how it and similar to Citi s pattern but not diagramed as such in that recent note began to confirm on Friday but with safe closing confirmation coming in BAC at 8 50 for a target of 7 22 and a level that is in the next shelf of support down Unless BAC closes above 9 78 its near term bearish look should be taken seriously considering the fact that its bearish Rising Wedge has begun to confirm now that last fall s Double Bottom is more than fulfilled with BAC rather familiar with a Double Triple Bottom fulfilling into a bearish Rising Wedge duo over the last few years Put otherwise BAC is looking bearish again after having been this year s comeback kid |
JPM | JP Morgan rises 1 in pre market trade after Q1 earnings beat | Investing com JP Morgan Chase NYSE JPM the largest U S bank reported stronger than expected first quarter earnings and revenue ahead of Tuesday s opening bell sending its shares higher in pre market trade
JP Morgan said adjusted earnings per share came in at 1 45 in the first quarter above expectations for adjusted earnings of 1 41 per share
Net income was 5 9 billion up 645 million or 12 from the prior year predominantly driven by higher revenue from fixed income trading
The bank s revenue totaled 24 8 billion in the first three months of 2015 beating estimates for revenue of 24 5 billion
According to the report first quarter results were affected by a 487 million or 0 13 cents per share write off for legal expenses in the wake of government probes into alleged wrongdoing
The Board intends to increase the quarterly common stock dividend in the second quarter of 2015 from the current 0 40 per share to 0 44 per share
Traders will now turn their attention to the bank s conference call due to start at 8 30 a m Eastern Time
Following the release of the report JPM shares rose 1 34 in pre market trade to trade at 62 90 from Monday s closing price of 62 07
Meanwhile the outlook for U S equity markets was downbeat The Dow futures pointed to a drop of 0 15 the S P 500 futures shed 0 15 while the Nasdaq 100 futures slumped 0 15 |
JPM | JPMorgan profit rises as fixed income trading rebounds | By Tanya Agrawal and David Henry Reuters JPMorgan Chase Co NYSE JPM the biggest U S bank by assets reported a better than expected quarterly profit after a decision by the Swiss central bank to remove a cap on the franc shocked markets and spurred trading in currencies and bonds The bank s strong results bolstered Chief Executive Jamie Dimon s argument that size and diversification are advantages not a reason to break up the bank Some analysts have suggested JPMorgan should be broken up to reduce capital requirements and complexity JPMorgan s revenue from trading fixed income currencies and commodities FICC by 5 percent to 4 07 billion in the first quarter The strong investment banking results helped boost JPMorgan s shares as much as 2 5 percent to 63 61 on Tuesday Chief Financial Officer Marianne Lake told reporters it was too soon to say whether trading activity would hold up in the current quarter although volumes seemed to be a bit lower JPMorgan s investment bank is the world s biggest by revenue according to research firm Coalition Its revenue rose 8 4 percent to 9 58 billion in the quarter But the unit has been under pressure to cut costs as clients have reduced trading since the financial crisis and regulators have demanded that big banks take fewer risks hold more capital and improve controls JPMorgan was the first big U S bank to report for the quarter Overall results are expected to show that trading debt underwriting and mortgage refinancing were strong even as low interest rates cut into profitability on loans Profit at Wells Fargo NYSE WFC Co the No 1 U S mortgage lender which also reported on Tuesday was also better than expected as mortgage banking recovered JPMorgan s home loans including refinancing jumped 45 percent 24 7 billion as mortgage rates hovered near two year lows Net income rose to 5 91 billion or 1 45 per share from 5 27 billion or 1 28 per share a year earlier Analysts on average had expected earnings of 1 40 per share according to Thomson Reuters I B E S The results included an after tax charge of 487 million for legal expenses The bank has said its legal troubles should normalize by 2016 JPMorgan s revenue increased 3 7 percent to 24 07 billion while expenses adjusted for legal costs fell by 402 million to 14 2 billion Money set aside to cover bad loans rose 12 8 percent to 959 million
The bank s interest margin a key measure of profitability fell to 2 07 percent from 2 20 reflecting low interest rates |
JPM | Wells Fargo profit falls as employee costs rise | By Anil D Silva and Neha Dimri Reuters Wells Fargo Co N WFC the largest U S mortgage lender reported a drop in quarterly profit for the first time in five years as employee costs rose at a time margins are under pressure from low interest rates Banks are struggling to boost margins as persistent low interest rates and stricter capital requirements offset any benefit from cost saving initiatives Low rates have prevented Wells Fargo and its regional rivals from capitalizing on their growing deposit base Net interest income has also come under pressure as lower yielding loans replace higher yielding assets Wells Fargo s shares fell 2 percent to 53 58 on Tuesday The bank s net interest margin a key measure of profitability fell to 2 95 percent in the first quarter ended March 31 from 3 20 percent a year earlier Non interest expense rose about 5 percent to 12 51 billion mainly because of higher employee costs as the bank expanded its workforce and paid incentives to retirement eligible employees Wells Fargo s employee base rose to 266 000 in the quarter S P Capital IQ analyst Erik Oja said The bank had 265 000 employees at the end of 2014 But we aren t standing still on costs Chief Executive John Stumpf said We watch every expense around here as we repurpose dollars we save into things we have to invest in The bank however reported a better than expected profit as mortgage banking revenue rose after four quarters of decline helped by a surge in refinancing The average 30 year mortgage rate fell to as low as 3 59 percent in the first quarter the lowest in nearly two years according to the Federal Home Loan Mortgage Corp Rates in the year earlier quarter averaged 4 35 percent on a monthly basis Wells Fargo s revenue from mortgage lending rose 2 4 percent to 1 55 billion The bank said on Friday it was buying commercial real estate loans valued at 9 billion from GE Capital Mortgage applications in the pipeline surged to 44 billion as of March 31 from 26 billion at December end JP Morgan Chase Co N JPM which also reported results on Tuesday said quarterly net income from mortgage banking rose nearly three fold Net income applicable to Wells Fargo s common shareholders fell about 2 7 percent to 5 46 billion or 1 04 per share Revenue rose 3 percent to 21 28 billion
Analysts on average had expected earnings of 98 cents per share and revenue of 21 24 billion according to Thomson Reuters I B E S |
BMY | Prothena s PRTA Q1 Earnings Beat Estimates Revenues Miss | Prothena Corporation NASDAQ PRTA reported mixed results for the first quarter of 2019 The company reported a loss of 52 cents per share narrower than the Zacks Consensus Estimate of a loss of 60 cents and the year ago quarter s loss of 1 26 Quarterly revenues came in at 0 19 million missing the Zacks Consensus of 0 20 million Revenues were also down from 0 23 million in the year ago quarter Revenues mainly came from the company s collaboration with Roche Holdings OTC RHHBY The company s shares have lost 0 4 in the year so far compared with the growth of 3 2 Quarter in DetailR D expenses were 13 3 million down 61 7 year over year due to lower clinical trial costs reduced consulting and personnel costs and decreased product manufacturing expenses General and administrative G A expenses came in at 9 9 million down from 14 2 million in the year ago quarter As of March 31 2019 Prothena had 414 2 million in cash cash equivalents and restricted cash Pipeline UpdatesThe company is evaluating prasinezumab PRX002 RG7935 in collaboration with Roche for the treatment of Parkinson s disease A phase II study PASADENA which is being conducted by Roche among patients suffering from Parkinson s disease is ongoing and data from the part I study is expected in 2020 Also Prothena initiated a phase I study on PRX004 in patients with hereditary ATTR amyloidosis in the second quarter of 2018 The study continues to enroll patients Preliminary data from lower dose cohorts including safety tolerability and pharmacodynamics are expected in the fourth quarter of 2019 Prothena has a global neuroscience research development collaboration with Celgene Corp NASDAQ CELG to develop new therapies for a broad range of neurodegenerative diseases The collaboration is focused on three targets implicated in the pathogenesis of several neurodegenerative diseases inducing tau TDP 43 and a third that is undisclosed The preclinical tau program part of a worldwide collaboration with Celgene initiated cell line development of a lead candidate The company recently reported results from the phase III VITAL study of NEOD001 in AL amyloidosis and the company is exploring business development opportunities that could result in further clinical investigation of NEOD001 Our TakeThe narrower than expected loss in the first quarter was encouraging for Prothena We expect investors focus to remain on pipeline updates as the company has no approved product in its portfolio yet Moreover the company earlier had discontinued the development of its lead pipeline candidate NEOD001 Prothena has very limited number of candidates in its pipeline Now investors are likely to focus on the ongoing phase II study of prasinezumab though results from the mid stage study on this candidate are not expected before 2020 Zacks Rank Stock to ConsiderProthena currently carries a Zacks Rank 3 Hold
A better ranked stock in the healthcare sector is Bristol Myers Squibb NYSE BMY which sports a Rank 2 Buy You can see Bristol Myers earnings per share estimates have increased from 4 76 to 4 93 for 2020 in the past 60 days Breakout Biotech Stocks with Triple Digit Profit PotentialThe biotech sector is projected to surge beyond 775 billion by 2024 as scientists develop treatments for thousands of diseases They re also finding ways to edit the human genome to literally erase our vulnerability to these diseases Zacks has just released Century of Biology 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance Our recent biotech recommendations have produced gains of 98 119 and 164 in as little as 1 month The stocks in this report could perform even better |
BMY | Why Bristol Myers Squibb BMY Is A Top Dividend Stock For Your Portfolio | Getting big returns from financial portfolios whether through stocks bonds ETFs other securities or a combination of all is an investor s dream However when you re an income investor your primary focus is generating consistent cash flow from each of your liquid investments
While cash flow can come from bond interest or interest from other types of investments income investors hone in on dividends A dividend is that coveted distribution of a company s earnings paid out to shareholders and investors often view it by its dividend yield a metric that measures the dividend as a percent of the current stock price Many academic studies show that dividends account for significant portions of long term returns with dividend contributions exceeding one third of total returns in many cases
Bristol Myers Squibb in Focus
Based in New York Bristol Myers Squibb BMY is in the Medical sector and so far this year shares have seen a price change of 8 71 Currently paying a dividend of 0 41 per share the company has a dividend yield of 3 46 In comparison the Large Cap Pharmaceuticals industry s yield is 2 88 while the S P 500 s yield is 1 94
Looking at dividend growth the company s current annualized dividend of 1 64 is up 2 5 from last year In the past five year period Bristol Myers Squibb has increased its dividend 5 times on a year over year basis for an average annual increase of 2 49 Any future dividend growth will depend on both earnings growth and the company s payout ratio a payout ratio is the proportion of a firm s annual earnings per share that it pays out as a dividend Bristol Myers s current payout ratio is 40 meaning it paid out 40 of its trailing 12 month EPS as dividend
Looking at this fiscal year BMY expects solid earnings growth The Zacks Consensus Estimate for 2019 is 4 18 per share with earnings expected to increase 5 03 from the year ago period
Bottom Line
Investors like dividends for many reasons they greatly improve stock investing profits decrease overall portfolio risk and carry tax advantages among others But not every company offers a quarterly payout
For instance it s a rare occurrence when a tech start up or big growth business offers their shareholders a dividend It s more common to see larger companies with more established profits give out dividends Income investors have to be mindful of the fact that high yielding stocks tend to struggle during periods of rising interest rates That said they can take comfort from the fact that BMY is not only an attractive dividend play but also represents a compelling investment opportunity with a Zacks Rank of 2 Buy |
BMY | Bristol Myers BMY Is An Incredible Growth Stock 3 Reasons Why | Growth stocks are attractive to many investors as above average financial growth helps these stocks easily grab the market s attention and produce exceptional returns But finding a growth stock that can live up to its true potential can be a tough task
In addition to volatility these stocks carry above average risk by their very nature Also one could end up losing from a stock whose growth story is actually over or nearing its end
However the task of finding cutting edge growth stocks is made easy with the help of the Zacks Growth Style Score part of the Zacks Style Scores system which looks beyond the traditional growth attributes to analyze a company s real growth prospects
Our proprietary system currently recommends Bristol Myers Squibb BMY as one such stock This company not only has a favorable Growth Score but also carries a top Zacks Rank
Research shows that stocks carrying the best growth features consistently beat the market And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank 1 Strong Buy or 2 Buy returns are even better
Here are three of the most important factors that make the stock of this biopharmaceutical company a great growth pick right now
Earnings Growth
Arguably nothing is more important than earnings growth as surging profit levels is what most investors are after For growth investors double digit earnings growth is highly preferable as it is often perceived as an indication of strong prospects and stock price gains for the company under consideration
While the historical EPS growth rate for Bristol Myers is 18 6 investors should actually focus on the projected growth The company s EPS is expected to grow 5 this year crushing the industry average which calls for EPS growth of 0 9
Cash Flow Growth
Cash is the lifeblood of any business but higher than average cash flow growth is more beneficial and important for growth oriented companies than for mature companies That s because high cash accumulation enables these companies to undertake new projects without raising expensive outside funds
Right now year over year cash flow growth for Bristol Myers is 24 2 which is higher than many of its peers In fact the rate compares to the industry average of 10 2
While investors should actually consider the current cash flow growth it s worth taking a look at the historical rate too for putting the current reading into proper perspective The company s annualized cash flow growth rate has been 13 6 over the past 3 5 years versus the industry average of 3 3
Promising Earnings Estimate Revisions
Beyond the metrics outlined above investors should consider the trend in earnings estimate revisions A positive trend is a plus here Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near term stock price movements
The current year earnings estimates for Bristol Myers have been revising upward The Zacks Consensus Estimate for the current year has surged 0 4 over the past month
Bottom Line
While the overall earnings estimate revisions have made Bristol Myers a Zacks Rank 1 stock it has earned itself a Growth Score of B based on a number of factors including the ones discussed above
You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
This combination indicates that Bristol Myers is a potential outperformer and a solid choice for growth investors |
C | Strong commodities boost FTSE on recovery hopes | FTSE up 1 8 percent to new 2009 peak
Oil miners lifted by rising commodity prices
Apple Texas Instruments earnings eyed after market closes
By Jon Hopkins
LONDON Oct 19 Reuters Britain s top shares added 1 8
percent on Monday lifted by gains in miners and energy issues
as commodity prices rose on an improved demand outlook and
investors looked towards further earnings news from the United
States
The FTSE 100 index ended 91 30 points higher at 5 281 54 a
new peak for 2009 on the 22nd anniversary of the Black Monday
stock market crash of October 1987
Oil majors provided the main strength for blue chips as
crude prices hit a year high of 79 05 a barrel on Monday
rising for the eighth straight session
BP Royal Dutch Shell BG Group and Tullow Oil all advanced
between 0 6 and 2 7 percent
The anniversary of Black Monday passed without event as
the FTSE continued to power ahead and strength in equities
showed little sign of abating as demand remains robust said
Manoj Ladwa senior trader at ETX Capital
Although mining and banking stocks are leading the march
investors are happy to buy across the board as long as the
payoff is better than cash on deposit Ladwa added
Miners found support as metals prices rose on the back of a
weak U S dollar and on hopes for improved demand as corporate
earnings recover
Anglo American Xstrata Fresnillo Vedanta Resources
Kazakhmys and Rio Tinto added 1 9 to 4 8 percent
The U S earnings season remained the major focus for
investors seeking further signs of recovery in global demand
Apple and Texas Instruments report quarterly earnings after
U S markets close on Monday
U S blue chips were stronger by London s close up 1 0
percent as investors looked to the next batch of earnings news
for direction after some disappointments last Friday from Bank
of America and General Electric
Fund manager Schroders was the top UK blue chip gainer up 5
percent as investors sought issues leveraged to an equity market
recovery with hedge fund Man Group up 3 0 percent and London
Stock Exchange up 3 6 percent
Banks were positive thanks to gains in heavyweight HSBC up
2 3 percent while Barclays and Standard Chartered added 2 6 and
1 4 percent respectively
However the part nationalised banks were weak with Lloyds
Banking Group and Royal Bank of Scotland down 1 2 and 0 2
percent respectively on cash call uncertainties
AVIVA LIFELESS
Aviva was the biggest blue chip faller off 1 5 percent
after the life insurer said it expects to pocket 1 2 billion
euros for future growth after the flotation of Dutch unit Delta
Lloyd later this year with investors concerned by what the
insurer might do with the cash
Telecoms firm Cable Wireless was also a blue chip faller
down 0 2 percent after Citigroup cut its rating on the stock to
hold from buy in a sector preview
Among the mid caps bus and rail group National Express
jumped 10 5 percent higher after Stagecoach confirmed it has
approached its rival about a possible merger in a deal which was
valued by the Sunday Telegraph at 1 65 billion pounds
Stagecoach added 0 1 percent
In a sign of improvement in the British economy property
website Rightmove said house prices in England and Wales rose
for the first time in more than a year in October buoyed by a
dearth of properties coming onto the market
However in contrast to the upbeat view on the economy
Monetary Policy Committee member Adam Posen said in a newspaper
interview on Sunday that the Bank of England must continue its
policy of quantitative easing because the financial system has
yet to recover fully
In another negative assement of the prospects for economic
growth ahead of Friday s first reading for UK third quarter GDP
the Ernst Young ITEM Club s autumn forecast said British GDP
growth will struggle to hit 1 percent in 2010 while showing
weak growth in the second half of 2009
Editing by David Cowell |
C | State Bank of India issues dlr bond price guidance | HONG KONG Oct 20 Reuters State Bank of India the
country s largest lender has issued initial price guidance of
200 215 basis points over mid swaps for its 5 year dollar bonds
a source close to the deal said on Tuesday
The benchmark sized offering has Barclays Capital Citigroup
HSBC JPMorgan and UBS as bookrunners
The issue is likely to be priced during London business hours
on Tuesday
It has been rated Baa2 by Moody s Investors Service and
BBB minus by Standard Poor s
Reporting by Umesh Desai editing by Ken Wills |
C | UPDATE 1 Spanish Q3 unemployment data better than expected | Q3 unemployment unchanged from Q2 at 17 9 percent
Number of unemployed fell 14 100 to 4 1 million
Workforce participation rate slips
Adds details reaction
By Jason Webb
MADRID Oct 23 Reuters Spanish unemployment was
unchanged at a better than expected 17 9 percent in the third
quarter but analysts said a fall in the number of people
looking for work disguised continuing job destruction
The number of unemployed workers totalled 4 1 million in the
third quarter down by 14 100 from the second quarter when the
rate had also been 17 9 percent the National Statistics
Institute said
Spain s unemployment rate is the highest in Europe as it
pays the price for a decade long boom during which most of its
growth was based on adding low productivity labour in the
construction and services sectors
We expected a much higher rate said Estefania Ponte of
BNP Paribas But she added The number of people seeking work
has fallen and that s made the headline figure look a bit
better
The number of people with jobs fell by 7 3 percent from a
year earlier she pointed out
A lot of employment is still being destroyed in Spain
which doesn t give you a very good base going forward she
said
Economists surveyed by Reuters had forecast unemployment
would rise to 18 6 percent in the third quarter
With Spain s economy expected by economists to contract by
roughly 4 percent this year and to continue to decline in the
early parts of 2010 the government has forecast unemployment
will rise to a maximum 18 9 percent
Things would be considerably worse if it were not for
massive government spending centred on a public works programme
which has torn up streets all over Spain and is set to push the
budget deficit to close to 10 percent of gross domestic product
this year
Many private economists are more pessimistic than Socialist
Prime Minister Jose Luis Rodriguez Zapatero and expect Spain s
relatively uncompetitive labour force will continue to contract
as the economy suffers the hangover from a decade long private
sector debt and property binge
We expect unemployment will continue to rise in the fourth
quarter and that we ll hit 20 percent in 2009 said Jose Luis
Martinez of Citigroup
The workforce participation rate slipped to 59 8 percent
down a quarter of a percentage point from the previous quarter
Particularly hard hit have been immigrants whose
unemployment rate was 27 5 percent compared to 16 1 percent for
Spaniards
Economists point out that while Spain s official employment
rate is terrible many supposedly unemployed workers are
surviving in the burgeoning black economy Unions say this has
been a key factor in avoiding social unrest
Additional reporting by Krista Hughes Damian Wroclavsky and
Manuel Maria Ruiz |
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