Morning Reads
- A South African executive has been ordered to pay thehighest-ever civil monetary penalty in any US Commodity Futures Trading Commission case
- US hedge fund Elliott Investment Management is said to build stake in Germany’s Software AG
- The euro zone avoids a recession by growing in the first quarter, but inflation picks up
- Lloyds joins UniCredit in redeeming its additional tier 1 bonds in full
- UK businesses plan to raise prices for consumers over the next 12 months
- China’s probe into US consultancy Bain & Company could spook foreign investors
- How Randi Weingarten landed at the center of America’s political fights
- Business groups and some congressional Democrats are calling on President Biden to negotiate with House Speaker Kevin McCarthy on debt limit. NY Time
- US officials are leading rescue efforts for First Republic (FRC) bank. Reuters
- The Biden administration will allow summer sales of higher ethanol E15 gasoline (ADM, GPRE). Bloomberg
- New York Democrats reach deal to increase minimum wage to $17/hour (DG, DLTR, FIVE, XRT, WMT). NY Times
Todays Open Interest Change
PREMIUM
Prepper
Cloudy outlook erases Amazon's (AMZN) big post-earnings gains. Pinterest (PINS) falls 6% as Q1 beats, but Q2 costs ramp higher. Snap (SNAP) slides 17% as revenue slumps worse than expected. Learn more about these stocks with Seeking Alpha Premium.
This is an abridged transcript of the podcast.
- Amazon, SNAP and Pinterest are a few of the companies that reported earnings Thursday. Premarket SNAP is down the most at 19 percent.
- Urgent rescue talks for First Republic. But the question is, will the U.S government get involved?
- Cannabis stocks saw a jump on Thursday. This happening after the bipartisan SAFE banking bill is reintroduced.
OUR TOP STORY
Amazon was one of the big names that reported earnings Thursday.
Seeking Alpha Associate news editor Kevin Curran has details on what the company had to say.
*audio from Kevin*
Amazon (NASDAQ:AMZN) has also made some small job cuts to its entertainment wing.
According to media reports, the company has cut 100 positions in its Amazon Studios and Prime Video units, out of a combined workforce of about 7,000.
The company says those cuts though will be followed by adding new roles in areas key to future growth.
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Snap (NYSE:SNAP) is down 19 percent premarket.
The company was not able to join its peers in escaping the ad slump, posting first-quarter earnings where revenues slid even worse than analysts expected.
Snap Non-GAAP EPS of $0.01 beats by $0.02. Revenues fell nearly 7% to $989M, vs. expectations for $1.01B, in what still looked like a tough environment for ad spending on the company.
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Pinterest stock (NYSE:PINS) is down just shy of 14% premarket despite first-quarter earnings that beat expectations on top and bottom lines.
Pinterest also forecast second-quarter growth to match that of the past two quarters amid hopes it would accelerate, and some continuing cost increases.
Revenues rose nearly 5% to $602.6M, vs. forecast growth of just over 3%.
Non-GAAP net income fell 16% to $57.7M and topped expectations.
This week we’ve talked a lot about big tech earnings.
There’s an article I’d like to bring to your attention, it’s entitled “How to avoid having big tech dominate your portfolio.”
It highlights ETF’s you may want to checkout. I’ll leave a link in show notes.
NOW MORE ON THE MARKET
U.S. stocks surged on Thursday as strong earnings from Meta (META) encouraged buying in the technology space. Meanwhile, stabilization in First Republic (FRC) signaled easing tension in the regional banking space.
The Nasdaq (COMP.IND) finished +2.4%, the S&P 500 (SP500) closed +2.0% and the Dow (DJI) ended +1.6%.
All 11 S&P sectors ended in the green. Communication Services led the advance, soaring by 5.5%. Info Tech, Real Estate and Consumer Discretionary all climbed more than 2%.
Leo Nelissen is a market expert…he tells Seeking Alpha that "As investors are trying to hide in the tech sector, they might be faced with challenges." He says "Inflation is proving to be much more persistent than anticipated, which will likely keep the Fed in a hawkish stance for the foreseeable future. Additionally, the slowing pace of economic expansion significantly increases the odds of stagflation, meaning that this rally could be short-lived."
Nelissen went on to say: "Therefore, unless inflation drops rapidly within the next 4-8 weeks, it is unlikely that we will see an extended bull market."
Following close on the heels of an earnings-inspired rally in Microsoft (MSFT), Facebook parent Meta (META) surged 14% as a recovery in ad sales helped the company beat expectations on earnings and revenue.
On the economic front, the government released figures on Q1 economic growth that came in below expectations. The initial estimate of Q1 GDP showed growth of only 1.1%, significantly lower than the 2.6% growth seen in the fourth quarter and below the expectation of a 2.0% rise.
In response to the latest economic data, Treasury yields pushed higher. The 10-year yield (US10Y) rose 10 basis points to 3.53%, the 2-year yield (US2Y) climbed 17 basis points to 4.09%.
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MORE OF OUR TOP STORIES
The U.S. government is "coordinating urgent talks" to save First Republic Bank (NYSE:FRC) as "private-sector efforts led by the bank's advisers have yet to reach a deal." That's according to Reuters, which said the FDIC, Treasury Department and Federal Reserve are involved.
In the daily White House press briefing the press secretary was asked about First Republic and how this situation differs from SVB…
*audio from press secretary*
While the efforts may help bring more parties such as banks and private equity firms to the negotiating table, it's still unclear whether the U.S. government will ultimately participate in the rescue.
On Monday, First Republic (FRC) revealed that deposit outflows totaled more than $100B in Q1, and put the spotlight on Wall Street institutions that deposited $30B at the bank on March 16 to stave off a regional banking crisis.
Shares of First Republic (FRC) are up 11% in premarket trading, after climbing nearly 9% on Thursday, but the stock is still off 58% for the week.
The most recent article on First Republic is by Logan Kane.
It’s entitled “First Republic Is Likely The Next Shoe To Drop.”
In the article he rates FRC a strong sell.
He tells his 21 thousand followers that he believes that this is not currently a threat to the overall financial system, but FRC is an example of a large bank using too much leverage in a zero-rate world and flying too close to the sun.
I’ll leave a link to that article in show notes.
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Accenture (NYSE:ACN) makes a deal to acquire Einr AS, a Norwegian business consulting company specialized in high volume logistics solutions using SAP technologies.
It aids in optimizing the flow of products from manufacturers to consumers.
Einr is headquartered in Oslo, Norway and its 42 employees will join the Accenture SAP Business Group in the Nordics.
Terms of the transaction were not disclosed.
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Canadian Licensed Producers ((LPs)) rose Thursday after bipartisan Senate and House lawmakers reintroduced a much-awaited banking bill to bring reforms to the cannabis industry.
Notable gainers include: Canopy Growth (NASDAQ:CGC), Tilray (NASDAQ:TLRY) and Cronos (NASDAQ:CRON)
The legislation called the Secure and Fair Enforcement (SAFE) Banking Act would ensure critical banking and financial services for legal marijuana companies and protect financial institutions that deal with them from being penalized by federal officials.
CGC rose 3.15%, Cronos finished up 6.4% and Tilray ended Thursday up 9.6%.
If you haven’t checked out the Cannabis Investing Podcast on Seeking Alpha, I’ll leave a link to the page in show notes.
One of the most recent episodes that’s a good listen is “Where is the value in cannabis stocks.”
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Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are pointing lower. The Dow is down 0.2%. The S&P 500 is down 0.3% and the Nasdaq is down 0.3%. Crude oil is up 0.2% at nearly $75 a barrel. Bitcoin is up 1% at $29,285.
In the world markets, the FTSE 100 is down 0.3% and the Dax is down 0.1%.
On today’s economic calendar, at 945 am Chicago PMI and at 3pm farm prices.