Tag: Daily Market Brief

Thursday’s figures bring the total number of first-time claims for unemployment insurance to more than 33.5 million since mid-March. The Labor Department last week reported an increase of 3.8 million initial claims on a seasonally adjusted basis.

The Dallas-based department store has secured $675 million of “debtor-in-possession financing,” or loans meant to fund its operations as it goes through the bankruptcy process. Creditors have also committed $750 million in exit funding, a sum that includes a full refinancing of the debtor-in-possession financing.

Uber reported a first-quarter loss of $2.94 billion, or $1.70 a share, compared with a loss of $1.01 billion in the year-ago period. Revenue swelled 14% to $3.54 billion from $3.1 billion in the year-ago period. Analysts surveyed by FactSet had estimated a loss of 84 cents a share on revenue of $3.55 billion on average.

The ride-sharing company posted revenues of $955.7 million, up 23%, and ahead of the Wall Street analyst consensus at $898 million. In what will likely come as a pleasant surprise to the Street, Lyft posted an adjusted Ebitda, or earnings before interest, taxes, depreciation, and amortization, loss of $85.2 million, narrower than the company’s original projected loss of $140 million to $145 million.

Thanks to the capital raise, he said, Norwegian now has about $3.5 billion of liquidity. “The future is certainly brighter for Norwegian Cruise Line Holdings and the industry than it was just a few days ago,” he added.

The new 50-50 joint venture will have £11 billion in combined revenue and 46 million customer accounts across mobile, broadband, and pay-TV platforms. Mike Fries, CEO of Liberty Global and José María Álvarez-Pallete López, chairman and CEO of Telefónica, said the two companies plan to invest £10 billion in the U.K. over the next five years.

In an investor call Thursday morning, the company laid out an updated timeline for development of the Covid-19 vaccine, which is faster in key ways than the timeline that had been previously described. The company says it hopes for approval of the drug next year.

The company should have enough liquidity to last 10 months—signs that the industry is stabilizing, albeit at sharply reduced capacity. Shares closed Thursday up about 2% after logging bigger gains during the session.

But the food delivery company also said it planned to spend almost all of its potential profits in the second quarter “to drive more sales for restaurants and, to a lesser extent, policies and products to keep our restaurants, drivers, and diners safe.” Shares slumped about 12% Thursday in the wake of the earnings report.

Teva Pharmaceutical Industries, the large manufacturer of generic drugs, joined the former group Thursday morning, sticking to its previously issued guidance of between $16.6 billion and $17 billion in revenue this year. Investors rewarded the company, sending Teva shares up nearly 10%. In an interview with Barron’s, CEO Kåre Schultz said Teva expects the Covid-19 pandemic to be a wash for its business.

Crude is up for two reasons. One is that investors now expect demand to return for major products like gasoline and diesel as countries start loosening lockdown orders imposed to stop the spread of the coronavirus. The other is that oil companies have gotten more serious about reducing supply. U.S. oil production has already declined by almost 1 million barrels a day since it peaked in March, according to Rystad Energy. Earnings releases from U.S. oil companies show they’re prepared to make dramatic cuts.

A set of reports on Tuesday show the sharp hit the coronavirus pandemic and efforts to curb its spread have had on everything from retail and hospitality to professional services in April. It’s just the latest data point to reflect the growing toll the crisis is having on nearly every segment of the economy.

California, which is suing the companies under authority granted by a new state law and under the California Competition Law, said the decision to classify drivers as contractors has deprived them of rights such as paid sick leave and unemployment insurance.

Disney reported fiscal second-quarter profit of $460 million, or 26 cents a share, on sales of $18.01 billion, up from $14.9 billion in the year-ago quarter, which included only a few days of results from Disney’s $71 billion acquisition of Fox assets. In that quarter, though, Disney reported profit of more than $5 billion, with a boost from the acquisition of a controlling interest in Hulu.

The cutbacks, first reported by The Information, were announced to employees by company CEO Brian Chesky on Tuesday afternoon. “We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill,” Chesky told employees in a note.

Norwegian, the smallest of the big three U.S. cruise operators, suspended its operations in mid-March due to the coronavirus pandemic along with its peers—Carnival and Royal Caribbean Cruises. There has been some disagreement about how much cash Norwegian is burning each month as its ships sit idle during the pandemic crisis. But several analysts estimated recently that Norwegian had six to eight months of liquidity remaining with no sailings.

The company said in a statement on Tuesday that lenders had agreed to waive some of the requirements in its debt contracts until May 22. Hertz failed to make a required lease payment to the subsidiary that owns its automobile fleet on April 27, and would have defaulted if it hadn’t reached a forbearance agreement with its lenders.

United said Monday that it expected to cut its management staff by at least 30%, starting in October, according to a memo sent to employees. The cuts amount to about 3,450 workers. United is receiving $5 billion in payroll support under the government’s Cares Act program, which includes restrictions on compensation and layoffs. But the money doesn’t cover payrolls entirely and it will run out in September, giving United more flexibility to reduce its workforce.

The companies are working together on a messenger RNA-based vaccine, a novel approach in which BioNTech specializes. Pfizer is one of the world’s largest vaccine makers.

Under the original terms of that deal, Neumann would have sold up to $970 million of stock to SoftBank.

The privately owned retailer filed for Chapter 11 bankruptcy early Monday to carry out the restructuring agreement with lenders and equity investors. J. Crew will convert about $1.65 billion of debt into equity. It has obtained $400 million of debtor-in-possession financing and committed financing to exit bankruptcy from its lenders.

Buffett said Saturday that he had sold his entire stake in U.S. airline stocks through his holding company Berkshire Hathaway. Buffett held stakes of roughly 8% and 10% in the four largest U.S. carriers: American Airlines Group, Delta Air Lines, United Airlines, and Southwest Airlines.

“We shut off air travel in this country. And what that does to people’s habits, how they behave in the future, it’s just hard to evaluate. I don’t know the answer,” said Warren Buffett at Saturday’s Berkshire Hathaway annual meeting, answering a question about the downturn in commercial aerospace. “If you think about Boeing, it is one hell of a company…we hope for the best and we wish everybody the best, obviously, and we wish ourselves the best in [aerospace], but part of [our success] is out of our—certainly out of our control.”

Factory orders tumbled a worse-than-expected $51 billion, or 10.3%, from February, the Census Department said Monday. Economists polled by Bloomberg predicted a 9.7% decline. Transportation-related orders were a big factor behind the drop—they fell 41%—as travel slowed to a trickle and supply-chain disruptions started to build midway through the month. Backing out those, overall orders fell 3.7% from a month earlier.

President Donald Trump in recent days has floated the idea of tariffs, and other possible retaliatory measures have reportedly been under discussion, including lifting China’s sovereign immunity, which would allow U.S. citizens or governments to file lawsuits against Beijing seeking damages. Shortages in critical medical and other equipment have also fueled calls for the U.S. to bring supply chains back home.

The Miami-based cruise operator, which oversees nine brands and more than 100 ships, on Monday cited in a press release eight ships that it plans to use when it reopens.

In a letter to employees, GE Aviation head David Joyce called the situation the industry is facing unprecedented, pointing out commercial air traffic will be down 80% year over year in the second quarter. On a typical spring day, more than 2 million passengers go through TSA checkpoints at U.S. airlines. That number is now below 200,000 a day.

The debate is moot for the moment, as Gilead has said it would donate its current stock of more than 140,000 treatment courses. But it could be important in the coming months if remdesivir becomes and remains the standard of care for Covid-19 patients.

“During the quarter, we witnessed an unprecedented shift in demand from food service to retail, temporary plant closures, reduced team member attendance, and supply chain volatility as a result of the virus,” said CEO Noel White in the company’s news release. “While we cannot anticipate how long the challenges presented by Covid-19 will persist, we remain focused on driving long-term growth.”

The Spanish telecom group said discussions to combine its O2 mobile business with Liberty Global’s Virgin Media cable network were in “negotiation phase” and it couldn’t guarantee the terms of the deal or the probability of success. People close to the situation said the talks were at an advanced stage and a deal could be announced as early as Thursday, when Telefónica is due to report its first-quarter earnings.

Under standard accounting, Exxon lost $610 million, or 14 cents per share in the first quarter. But excluding one-time items, the company posted earnings per share of 53 cents, ahead of Wall Street expectations for 4 cents. Revenue of $56.2 billion was a decline from last year’s $63.3 billion, but ahead of analysts’ expectations for $53.5 billion.

Chevron said it will spend $14 billion on capital expenditures this year, down from the $16 billion it said it would spend in March, and the company’s initial expectations of $20 billion. Chevron also plans to reduce its operating expenses by another $1 billion.

Shares of Gilead are up 29.3% so far this year as the S&P 500 has dropped 9.9%. The stock soared on excitement over the company’s antiviral remdesivir, which a government-run study found shortened the recovery time for Covid-19 patients, according to an announcement this week. All three of the analysts praised Gilead for its work on remdesivir. But they say the antiviral won’t lead to profits for Gilead, and that the run-up of the stock on remdesivir news has boosted the valuation too far, or at least far enough.

AbbVie reported adjusted diluted earnings per share of $2.42 for the quarter, beating the S&P Capital IQ Consensus estimate of $2.25. The company reported net revenue of $8.6 billion, up 10.1% from the same quarter last year. AbbVie said in its news release that it expects its acquisition of Botox maker Allergan to close this month.

Tesla shares, already trading lower Friday morning, slumped following the tweet. Regardless of how investors feel about the stock, Musk has a point. And shares could have further to fall.

For the quarter, Apple reported revenue of $58.3 billion, up 1% from a year ago, with profits of $2.55 a share, up 4%. The Wall Street forecast had called for revenue of $54.5 billion and profits of $2.26 a share. In February, Apple withdrew its original guidance for the March quarter, which had called for revenue of $63 billion to $67 billion.

The company reported that its quarterly sales increased by 15% from last year, above the 10% increase analysts had forecast. Its diluted quarterly earnings per share jumped 31% from last year, well above estimates for a 16% increase. Earnings per share came in at $1.89 a share on sales of $1.783 billion, beating forecasts for $1.67 a share and $1.707 billion.

Net losses for the asset management firm totaled $2.3 billion in the first quarter, with $1 billion—or $4.47 a share—of those losses attributable to Apollo’s class A shareholders. By comparison, in the first quarter of 2019, Apollo reported profits of $315.5 million, with $139.9 million—or 67 cents a share—attributable to its class A shareholders. Still, despite the significant first-quarter drop, Apollo is declaring a cash dividend of 42 cents a share.

But looking at the current quarter, Honeywell expects sales to slide. It says sales linked to the aerospace industry, which has been hard hit by the coronavirus crisis, likely will decline 25% year over year. Energy-linked sales will be down 15%. Even building-technology sales will fall 10%.

“As a result of the [bond offering] response, and pending the closure of this transaction …we do not plan to seek additional funding through the capital markets or the U.S. government options at this time,” reads the company’s news release.

The Labor Department said Thursday that seasonally adjusted initial jobless claims fell from the previous week’s 4.4 million. That marks the lowest since the first multimillion reading for the week of March 20. Still, the tally remains historically high and suggests about 1 in 5 workers has been laid off in recent weeks. For perspective, jobless claims over the past six weeks are more than five times the worst stretch of the Great Recession.

Faced with a coronavirus-induced recession that ECB President Christine Lagarde said could see the eurozone’s gross domestic product shrink between 5% and 12% this year, the governing council also reiterated that it was “fully prepared” to increase the massive pandemic-related bond-buying program it announced last month.

It announced a new lending facility created to buy loans made to companies with relatively high debt burdens—up to six times last year’s earnings before interest, tax, depreciation and amortization, or Ebitda. In the new part of its Main Street Lending Program, called the “Main Street Priority Loan Facility,” it will buy 85% of eligible loans from the banks that originate them.

Still, analysts say that an emergency-use authorization for remdesivir is likely to come soon.

“Our hope is that, by joining forces, we can accelerate the globalization of a vaccine to combat the virus and protect people from the deadliest pandemic in a generation,” AstraZeneca CEO Pascal Soriot said in a statement.

Amazon reported first-quarter earnings of $2.5 billion, or $5.01 a share, down from $3.56 billion, or $7.09 a share, in the year-ago period. Revenue grew to $75.5 billion from $59.7 billion in the year-ago period. Analysts surveyed by FactSet had estimated $6.23 a share on revenue of $73.7 billion on average.

American reported an adjusted loss of $2.65 a share, missing consensus estimates for a loss of $2.33 a share in the first quarter. Revenue came in at $8.5 billion, below estimates of $8.9 billion. If there was good news in the report, it was that American’s liquidity appears to have stabilized. The company said it had $6.8 billion of cash and available funds at the end of the first quarter and expects to have $11 billion by the end of June.

Revenue grew 13% to $6.36 billion in the first quarter, beating the FactSet consensus of $5.79 billion. Shipments of cigarettes and cigars rose 6.2%, led by a 6.7% rise in Marlboro cigarettes.

The fast-food chain reported a near-15% decline in its diluted first-quarter earnings per share to $1.47, a larger drop than Wall Street’s forecasts of a 9% decline to $1.56. Its net income fell 17%, also more severe than forecast.

The company declined to give detailed financial forecasts for the second quarter or the full year, but it provided encouraging details on its business for the quarter to date. The news echoed comments made Tuesday by Alphabet in its own March quarter earnings report.

Details were scant in the news release, which said that the NIAID, part of the National Institutes of Health, would provide more information soon. A NIAID spokesperson said the institute had no further information at the moment, but was planning an announcement as early as later Wednesday.

Microsoft reported fiscal third-quarter earnings of $10.75 billion, or $1.40 a share, on sales of $35 billion Wednesday, up from profit of $1.14 a share on revenue of $30.57 billion a year ago. Analysts on average expected earnings of $1.27 a share on sales of $33.76 billion, according to FactSet.

The Commerce Department said Wednesday that the economy shrank at the fastest rate since the last recession as governments responded to the spread of Covid-19 with stay-home orders in March, leading to rapid changes in demand as businesses and schools switched to remote work or closed and consumers canceled, restricted, or redirected their spending. The decline was worse than the 4% contraction economists polled by Bloomberg anticipated.

The Fed’s policy-setting arm, the Federal Open Market Committee, left interest rates unchanged in a range of 0% to 0.25% and refrained from announcing any new policies meant to prop up a quickly deteriorating economy. Since early last month, the Fed has responded quickly to evolving economic and financial conditions with little regard for its official meeting schedule.

Officials are close to releasing updated details for their Main Street Lending Program, Powell said on Wednesday. The central bank will “keep looking to add products and add different borrowers to it as we go,” he said.

The volume of home purchase applications jumped by 12% week over week on a seasonally adjusted basis, or 13% on a non-seasonally adjusted basis, for the week ending April 24, according to the MBA. The same index increased 2% on a seasonally adjusted basis, or 3% non-seasonally adjusted, the week prior.

Tesla late Wednesday said it earned $16 million, or 9 cents a share, in the first quarter, versus losses of $2.90 a share in the year-ago period. Adjusted for one-time items, the company earned $1.24 a share. Sales rose to $5.99 billion from $4.5 billion a year ago. Shares rose more than 2% following the report.

“The Covid-19 pandemic is affecting every aspect of our business, including airline customer demand, production continuity and supply chain stability,” said CEO Dave Calhoun in the company’s news release. “Our primary focus is the health and safety of our people and communities while we take tough but necessary action to navigate this unprecedented health crisis and adapt for a changed marketplace.” To adjust, Boeing is cutting aircraft production rates as well as staffing levels.

The ride-sharing company said in a Securities and Exchange Commission filing that it will take $28 million to $36 million of restructuring and related charges, mostly in the second quarter, in connection with the cuts.

AstraZeneca posted a 16% rise in revenue to $6.4 billion during the first three months of 2020 compared with the same period a year earlier, driven by the strong growth across every therapy area and region. That beat analysts’ overall expectations of $5.91 billion, according to a consensus based on estimates by 12 analysts polled by FactSet.

Yet oil company stocks, after falling along with the commodity, rebounded later in the morning. The disconnect is striking, given that oil stocks would normally plunge when futures were down this much.

West Texas Intermediate futures fell 25%, to $12.64 a barrel. Brent crude, the international benchmark, fell 8.4%, to $19.65 a barrel. The SPDR S&P Oil & Gas Exploration & Production exchange-traded fund was down just 1.1%.

Other drillers may follow Diamond into bankruptcy, or otherwise try to negotiate their debt. Oil production is likely to fall more before rebounding. In a few years, the industry is likely to be whittled down to a few larger players after the remaining companies merge, predicts Evercore analyst James West.

Monday morning, The Wall Street Journal reported that the company is pushing back production of the new phones by about a month. Worth noting is that a production push-out doesn’t necessarily delay any planned announcement date. The story said Apple was pushing ahead with plans for four new iPhone models in three sizes: 5.4 inches, 6.1 inches and 6.7 inches. Some would have 5G; all will have OLED displays. The Journal said Apple is cutting its production plans for the second half of the year by about 20%.

Boeing’s announcement isn’t the end of the story. Not by a long shot. For Embraer, now comes arbitration. For Boeing, now come more questions about remaining cash. The original deal between the U.S. and Brazilian aerospace firms was struck in 2018, shortly after Boeing rival Airbus purchased a controlling stake in the Bombardier C-series program.

The comment from Chief Executive David Calhoun was a signal that paying back debt and keeping up Boeing’s manufacturing supply chain were bigger priorities than paying dividends for the foreseeable future.

The Fremont plant is outside of San Francisco, where a stay-at-home order remains in place until at least May 4. It isn’t clear under what authority Tesla plans to recall workers, and the company didn’t respond to a request for clarification. There are still a few thousand Covid-19 cases diagnosed in that region.

The auto maker had been paying a 38-cents-a-share quarterly dividend, for an annual dividend of $1.52, giving the stock a yield of 6.9%. In 2017, the company’s board approved a $5 billion increase in the company’s share buyback program. In all, the program authorized up to $14 billion of repurchases. So far under that program, it has bought back $10.6 billion.

Bank of America, BNP Paribas, Citigroup, Deutsche Bank, JPMorgan, Standard Chartered, and UBS have all advised their employees to use alternative video conferencing tools for client communication, according to people familiar with the matter.

Live Nation stock has been hit hard as lockdowns to fight the coronavirus pandemic have forced the company to cancel events. Its executives have taken pay cuts. Most stocks have been volatile, but Live Nation has taken a bigger hit than most. The company’s share price has been cut nearly in half so far in 2020, compared with a 12.2% drop in the S&P 500 index, a measure of the broader market.

Buffett, who is 89 years old, and Abel, who is 57, will be the only directors present at the meeting, Berkshire said in a statement on Monday.

Oil has been tumbling for months, but fell off a cliff on Monday in part because of a technical shift. The May crude futures contract expires on Tuesday, and when futures expire their price tends to converge with the spot price of the commodity. Anyone buying the May contract on Monday is likely planning on taking physical possession of the oil. And no one right now seems to want to own a barrel of oil at any price.

For the quarter, the enterprise-computing company posted revenue of $17.6 billion, down 3.4% from a year earlier, but in line with Street estimates. IBM said revenue was up 0.1% when adjusted for divested businesses and currency. Non-GAAP profit was $1.84 a share, a nickel ahead of the Street consensus at $1.79 a share.

United expects to borrow up to $4.5 billion from the Treasury Department’s loan program—part of the Cares Act package of financial support for the airline industry. The company has also applied for $5 billion to help cover payrolls through September, including a $3.5 billion grant and $1.5 billion as a loan. United said it had $6.3 billion in cash and liquid investments as of April 16, including $2 billion in an undrawn credit facility.

The high-end department store is considering a filing as soon as this week, according to a Reuters report citing people familiar with the matter. The retailer is also said to be negotiating with creditors to obtain financing so it can maintain some operations during a restructuring.

As part of the Cares Act, the government’s Covid-19 rescue package, Congress provided $349 billion to help small businesses keep paying their employees. The Paycheck Protection Program, or PPP, is overseen by the Small Business Administration. Commercial banks give out the money as loans that will be forgiven if the small businesses hire back their workers by June. Although the program was meant to help businesses with 500 or fewer employees, big hotel and restaurant chains successfully lobbied to be included.

The company’s first quarter numbers on Monday, however, look terrific. DuPont earned about 83 cents a share from $5.2 billion in sales. Wall Street analysts were looking for 68 cents from $5 billion in sales. The results easily beat expectations.

In a research note Monday, BofA Global Research analyst Justin Post argues that Amazon’s enormous investment in logistics has created a valuable asset that will allow the company to become a major player in the package-delivery sector—and not just for goods sold on Amazon.com. Post contends the company’s delivery capabilities could be worth $100 billion to $230 billion by 2025.

Internet gambling revenues (excluding sports betting) in New Jersey rose 66%, to $65 million in March, the state reported recently. Online gambling includes slots as well as table games like blackjack. New Jersey is a leader in internet gambling. “We believe the impact of Covid-19 could spur more states to legalize online casino and sports betting,” Morgan Stanley gaming analyst Thomas Allen wrote in a client note.

Alibaba said in a statement on Monday that it plans to invest an additional 200 billion yuan (approximately $28 billion) in cloud technology over the next three years, including operating systems, servers, chips, and network.

Ultomiris has Food and Drug Administration approval in two rare diseases: atypical hemolytic uremic syndrome and paroxysmal nocturnal hemoglobinuria. It is the successor to another Alexion drug, Soliris, which is expected to face generic competition in the near future.

West Texas Intermediate futures, the U.S. benchmark, rose, then fell and then rose again after Trump’s tweet. Around 10:20 a.m., they were up 3.5%, to $23.56 a barrel. Brent futures, the international benchmark, also moved up and down, and were up about 1.6%, to $31.98 a barrel. Oil prices had been rising this month in anticipation of a deal.

Ford said it would report an adjusted pretax loss of roughly $600 million and that deliveries to dealers plunged 21%. Frankly, this shouldn’t be a surprise. Things aren’t great for car makers right now. For starters, production was halted industrywide in March and plants aren’t slated to reopen until early May.

It is an interesting time in the automotive industry to say the least. U.S. production was halted in mid-March and auto firms, including Ford, General Motors, and Tesla, have raced to change over assembly lines to manufacture health-care equipment to help battle the pandemic.

While the company’s announcement didn’t specify how much of the charge stemmed from new investment losses, a fund spokesman tells Barron’s that the latest write-down reflects $9.9 billion of lost value in the quarter that ended in March. With the new write-down, the fund has posted an investment loss of about $400 million since its 2016 inception, wiping out cumulative gains of $9.5 billion through December.

The company said it now expects to invest more than $500 million in payroll increases, up from a previous estimate of $350 million, as hourly employees’ wages are increased by $2 an hour, and as hourly base pay for overtime hours worked was doubled.

General Electric has roughly $35 billion in bonds due between now and 2024. The final amount of the new debt sale will depend on the market, but it could amount to tens of billions.

In March, according to new data from China’s Ministry of Industry and Information Technology, total handset sales were up 241% from February to 21.8 million units, though still down 23% from a year earlier. The total included 6.2 million 5G phones, up 161% from February, and accounting for 27% of all phones shipped, down from 37% a month earlier.

Barclays analyst Tim Long says this reflects a 416% surge in iPhone sales in March from February, to about 2.5 million units, shifting the balance back to 4G phones. Apple is expected to announce its first 5G iPhones later this year.

The data, published Friday in the New England Journal of Medicine, were from hospitalized patients given the drug on a compassionate-use basis, not from a clinical trial. There was no control group randomly selected to receive a placebo. That makes it difficult to determine exactly what the results mean.

On Friday, Eli Lilly said its drug baricitinib, which the Food and Drug Administration has approved as a treatment for rheumatoid arthritis, would be included in a large study run by the National Institute of Allergy and Infectious Diseases to test various potential therapies to treat Covid-19.

Official reports from the Chinese government, a set of closely followed purchasing managers’ indexes, recently showed that Chinese manufacturing and service-sector activity unexpectedly expanded in March after suffering the worst contractions on record in February. Some investors and economists found in the news reason to be optimistic about the ability of economies around the world to rebound quickly once the virus threat dissipates. But that optimism requires an assumption the data are accurate.