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Morning Recap 08/14
U.S. Equities and Futures:
- U.S. S&P equity futures have exhibited a positive momentum, trending above the level noted in the previous update.
- Despite Asian shares closing lower, the market remains buoyant above Friday's close, reflecting a mostly affirmative session in European equities.
- Investors remain focused on stretched valuations, increased rates, negative operational leverage risks to earnings, energy price rebound, and a host of other factors.
Economic Concerns and Considerations:
- The recent market tone has shifted towards defensive, with the spotlight on long positioning, upward pressure on rates, and macro- and earnings-related factors.
- The optimistic talking point remains the soft landing, with analysts suggesting that continued positive sentiment in this area could foster further growth in long positioning via record money-market fund assets.(high liquidity, seems there is no confidence in positioning on risky assets yet)
- China: the slide in shares of real estate firm Country Garden after the suspension of onshore bonds trading, and liquidity concerns at Zhongrong International Trust.
Corporate News Highlights:
- Several notable corporate movements, such as Tesla's price cut on two versions of its Model Y sedan in China, and MA's agreement to take a minority stake in MTN Group's fintech business, shape the business landscape.
- Other headlines include higher shipping costs, higher streaming costs, U.S. fiscal pressures, curve steepening, EV price wars, and more. (Nothing really important for my portfolio, but I wanted to at least report them)
- Earnings reports for companies like Embraer ($ERJ) and Getty Images Holdings ($GETY) will further influence the market landscape.
European Markets Overview:
- European markets remain mostly higher with FTSE 100 at 0.18%, DAX at +0.57%, and CAC40 at +0.34%.
- Economists have raised inflation projections for 2023, but there are also concerns about energy price dynamics and the possibility of negative macro surprises.
- Corporate news includes Exor's acquisition of a stake in Philips, earnings updates from various companies, and Plus500's announcement of H1 earnings and buyback.
Asian Markets Overview:
- Asian equities closed lower with a significant impact on Hong Kong property stocks and Taiwan.
- Country Garden's suspension of trading in onshore bonds and liquidity problems at an asset manager in China weighed on Hong Kong and Shanghai banks and financials.
- Regional volatility is increasing as doubts grow over China's economic recovery, impacting currencies, equities, and bonds across Asia.
Additional News and Insights:
- Various international news, including China's support for foreign investment, European governments' imposition of windfall taxes on profit-making businesses, and Malaysia's political landscape, will continue to influence global economic perspectives. (Negatively, which in my opinion will continue for the rest of the summer during this correction of overly bullish sentiment that we had during the past few months)
- The economic data reflecting equity fund outflows, money market funds inflows, and updates on trade balances and CPI for different countries will provide analytical insights for investors.
U.S. Market and Corporate News:
Acquisitions and Agreements:
- WEX Inc. ($WEX) announces the agreement to repurchase convertible senior notes from Warburg Pincus for approx. $370M in cash.
- MSCI ($MSCI) unveils its intention to acquire the remaining 66% of The Burgiss Group, LLC for $697M in cash.
- SilverBow Resources ($SBOW) announces the acquisition of Chesapeake's oil & gas assets in South Texas for a total purchase price of $700M.
- KBR and Intuitive Machines ($KBR) are awarded a $719M contract to aid NASA's space orbital systems development.
- Goldman Sachs AM completes the acquisition of a 72.11% stake in Frøy ASA ($FROY.NO NO) and intends to make a mandatory offer for the remaining outstanding shares.
- SoftBank Group ($9984.JP UK) is in discussions to acquire a 25% stake in Arm from Vision Fund 1, according to Reuters.
Earnings and Financial Reports:
- Magic Software Enterprises ($MGIC) reports Q2 EPS of $0.28 ex-items vs. $0.24 a year ago.
- Genelux ($GNLX) posts Q2 EPS of ($0.23) compared to ($0.31) year-ago.
- Superior Drilling Products ($SDPI) reports Q2 EPS of $0.01 vs. year-ago $0.00.
- TeraWulf ($WULF) reports Q2 GAAP EPS of ($0.08) vs. year-ago ($0.14).
- Modular Medical ($MODD) (Cannot link the ticker) reports Q1 EPS of ($0.22) vs. year-ago ($0.30).
- JinkoSolar Holding Co. ($JKS) reports Q2 EPADS CNY22.20 vs. year-ago CNY12.60; the Subsidiary proposes a private offering of up to CNY9.7B in shares.
- Uxin Ltd. ($UXIN) reports adjusted Q4 EPS of (CNY0.05) vs. year-ago (CNY0.09).
- Sonida Senior Living ($SNDA) reports Q2 adjusted EBITDA of $7.5M, a 77% increase vs. year-ago $4.2M.
- Azure Minerals ($AZS.AU) reports chatter around the company at the Diggers and Dealers event, as per The Australian.
- Golden Agri-Resources ($E5H.SP) reports H1 EBITDA of $477.6M, a 41% decrease vs. year-ago $807.4M.
Dividend and Stock Offerings:
- Westlake ($WLK) increases its quarterly dividend by 40.1% to $0.50 from $0.357.
- BIOLASE ($BIOL) files amended S-1; plans to offer up to approx. 1.96M units.
- Sunnova Energy ($NOVA) announces a $75M common stock offering through Goldman.
- ForgeRock ($FORG) announces that Thoma Bravo will extend the closing date of its acquisition in anticipation of DOJ review.
Corporate and Legal Updates:
- StarTek ($SRT)'s holders MCI Capital and Iowa City Partners send a letter to the board, stating CSP's offer doesn't reflect the company's fair value.
- Kezar Life Sciences ($KZR) plans to report safety and dose escalation data from the KZR-261 trial in 2024.
- Coinbase ($COIN) announces its official launch in Canada.
- SFL Corp. ($SFL) announces a new approx. $100M contract for the semi-submersible rig Hercules.
- 22nd Century Group ($XXII) reports Q2 EPS of ($1.40) vs. FactSet’s ($1.07).
- Nikola ($NKLA) recalls 209 Class 8 Tre battery-electric vehicles following preliminary results of battery investigations.
- AMC Entertainment ($AMC) receives court approval for its stock conversion plan.
- United States Steel ($X) rejects a $35/share acquisition proposal from Cleveland-Cliffs.
- Apple ($AAPL) is said to be in discussions with SoftBank Group to acquire a 25% stake in Arm from Vision Fund 1.
Up/Downgrades:
Upgrades: None.
Downgrades:
- Marriott International:($MAR) Market performs from outperform at Bernstein.
- Capri Holdings: ($CPRI)Market performs from outperform at BMO Capital Markets.
- Public Service Enterprise Group ($PEG): Neutral from buy at UBS.
Other Notable News:
- Country Garden Holdings suspends trading in corporate bonds in mainland China starting August 14.
- Arrival reported to be working with Alvarez & Marsal to prepare for possible insolvency.
- New Work reports Q2 pro forma EPS €1.72 vs. year-ago €2.08 and reaffirms FY outlook.
- U.S. Earnings Today: No major earnings releases are expected.
I am prepared for another choppy day/week/month.
Have a great week everyone! is there anything you would like to see in this morning recap besides the notbales events?
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