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Shares of Amazon (AMZN) jumped as much as 10% AH on Wednesday as it announced a rare 20-for-1 stock split alongside a $10B buyback authorization. The last time the company split its shares was before the dot-com bubble in 1999, and since then, the stock has returned over 4,500%. Alphabet (GOOG, GOOGL), Apple (AAPL) and Tesla (TSLA) have also turned to splits recently, with the trend making somewhat of comeback during the COVID-19 pandemic.
Snapshot: While Amazon's decision doesn't affect any fundamentals, it does make the stock (or options contracts) more affordable for retail investors or those that don't want such a holding to be a large portion of their portfolios. A lower price can also mean the stock will be eligible for inclusion in the price-weighted Dow Jones Industrial Average. Amazon further alluded to the benefits for its worker purchase program, saying "this split would give our employees more flexibility in how they manage their equity in Amazon."
Amazon shareholders of record as of May 27 will have 19 additional shares for every one share in June (with trading expected to begin on a split-adjusted basis on June 6). AMZN shares have recently lagged behind other tech companies as the pandemic surge in online shopping and cloud computing eased over the past few months. After touching a record high of $3,773 in November, the stock has fallen back 26% to $2,785.
Buyback plans: As mentioned above, Amazon's board of directors also approved a $10B buyback authorization, marking the largest share repurchase plan in the company's history. It replaces the repurchase approval of $5B that was established in 2016, though only $2.12B was spent on that effort thus far. Amazon didn't buy back any stock in 2019, 2020 or 2021, but has repurchased 500K shares for $1.3B in 2022. (253 comments)
Investors witnessed a big comeback for stocks on Wednesday, with the S&P 500 and Nasdaq gaining 2.5% and 3.6%, respectively, though cautious sentiment is lingering due to the ongoing conflict in Ukraine. While U.S. equity indices snapped a four-session losing streak, and energy prices eased, stock futures fell again overnight, down about 1% at the time of writing. Some are calling yesterday's rally a dead-cat bounce, while others are strongly buying into the dip, but whatever the case may be, traders should know that there is still plenty of volatility out there.
CPI Day: Another curveball could be on tap for today as the Labor Department publishes fresh Consumer Price Index data. The release, expected to show inflation coming in at a flaming 7.9% Y/Y in February, will be the last before the Fed gathers for its March meeting next week. Before entering the FOMC blackout period, Chair Jerome Powell said he planned to propose a quarter percentage point rate hike, but some surprises may present themselves in the current environment.
Meanwhile, the European Central Bank will gather today, and is anticipated to stress flexibility in the face of stagflation fears. There are further bets that EU leaders will take action to limit the economic impact of Russia's invasion of Ukraine at a separate meeting in Versailles. Among the topics to be discussed are common debt issuance, or maximizing the use of existing facilities, to fund a collected response to the crisis which is weighing heavily on the energy landscape in the Europe.
More volatility: Crude futures on Wednesday plunged by the most since November after the UAE's ambassador to Washington said it would urge OPEC+ members to boost oil output, before Energy Minister Suhail Al-Mazrouei dampened those comments over Twitter. Looking to plug a gap made by its ban on Russian oil, the U.S. is urging the Saudis to release spare capacity and entertaining the idea of easing sanctions on Venezuela. Talks with Iran are also running into trouble in Vienna, but it could lead to more crude supply if a nuclear deal is struck with Tehran. (9 comments)
Things are getting crazy in commodity markets as prices go into overdrive. The London Metal Exchange (LME) was forced to suspend all trading in its nickel contracts (LN1:COM) on Tuesday, saying it wouldn't reopen things until March 11 at the earliest as it balances its books and returns stability to the market. The cost of LME three-month nickel, the key pricing benchmark for the global physical supply chain, shot up to $101,365 a ton on Tuesday, up from $30,000 just sessions earlier.
The big short: It's an unfolding story that reportedly involves China's Tsingshan Holding Group, the world's biggest producer of nickel used in stainless steel and EV batteries. The firm apparently made a sour nickel bet by building up a massive short position, but now faces $8B in paper losses due to an influx of margin calls (it has since secured loans from JPMorgan and China Construction Bank). Nickel was already on a rip due to the commodity rally turbocharged by the conflict in Ukraine when the historic short squeeze pushed things over the edge.
"This has never happened before in the history of the nickel market," Guy Wolf, the global head of market analytics at Marex. "'Unprecedented' is an overused word, but this actually is." The closest thing that may come to it is the "Tin Crisis" of 1985, which pushed many brokers out of the industry and saw the LME suspend trading in the metal for four years. Morgan Stanley is even saying the effects of nickel's jump on EV prices and sales could be significant over the next couple of years.
Fun fact: The remarkable rally in nickel prices has pushed the price of an actual nickel, a $0.05 piece, way above its worth. While only 25% of a nickel is made from the actual metal, at Tuesday's prices, it would be worth $0.125 (that's without the rest of the valuable copper that makes up the coin). While the strange price point has occurred many times throughout history, don't get too exciting about starting a melting operation. It's illegal to extract the raw materials in pennies and nickels with the intent of selling them for profit. (6 comments)
The first person to receive a heart transplant from a pig, 57-year-old David Bennett, has died two months after the landmark surgery at the University of Maryland Medical Center. He had agreed to receive the genetically modified heart after failing to secure a human heart through several waiting lists. While doctors did not cite a specific reason for the death, they said his condition had started to deteriorate several days ago (a thorough postmortem examination is underway).
Quote: "There was no obvious cause identified at the time of his death," a hospital spokeswoman noted, while Bennett's son thanked the hospital for conducting the highly experimental surgery as a last resort. "We are grateful for every innovative moment, every crazy dream, every sleepless night that went into this historic effort," David Bennett Jr. said in a statement. "We hope this story can be the beginning of hope and not the end."
Several biotech companies are developing pig organs for human transplant, with the heart used in the most recent operation coming from Revivicor, a subsidiary of United Therapeutics (UTHR). The organ was altered to make it more acceptable to a human, including removing and inserting 10 genes to keep the heart from growing after transplant. The team at the University of Maryland Medical Center also used a new drug made by Kiniksa Pharmaceuticals (KNSA) to help prevent the organ from being rejected by the patient's body.
Eye on the future: A total of 106,657 people are currently on the U.S. transplant waiting list, and more than 6,200 patients die each year before getting one. In 2021, more than 40,000 organ transplants were conducted nationwide, including a record 3,800 heart transplants. (3 comments)
In Asia, Japan +3.9%. Hong Kong +1.3%. China +1.2%. India +1.5%.
In Europe, at midday, London -1.2%. Paris -2.2%. Frankfurt -2.3%.
Futures at 6:20, Dow -1.1%. S&P -0.9%. Nasdaq -0.9%. Crude +4% to $113. Gold +0.6% to $2000.90. Bitcoin -7.5% to $39,080.
Ten-year Treasury Yield -1 bps to 1.93%
Today's Economic Calendar
8:30 Consumer Price Index
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
1:00 PM Results of $20B, 30-Year Note Auction
2:00PM Treasury Statement
4:30 PM Fed Balance Sheet
Companies reporting earnings today »
What else is happening...
Citigroup's (C) plan to sell its consumer bank in Russia stalls.
Starbucks (SBUX) workers at 3 more Buffalo stores vote to unionize.
Oracle's (ORCL) cloud business seen as 'the driver' of Q3 results.
Next EV earnings: Rivian's (RIVN) quarterly report card coming later today.
NIO (NIO) begins trading on the Hong Kong stock exchange.
Campbell Soup (CPB) leans on pricing to offset labor, supply challenges.
Granholm urges U.S. energy companies to boost oil and gas production.
Eye on policy... Washington prepares windfall tax for Big Oil.
Sony (SONY) halts PlayStation sales in Russia amid Ukraine war.
Bayer (OTCPK:BAYRY) to sell pest control business to Cinven for $2.6B.