Europe Heading for Recession? Corporate and Fundamental News and Reviews for Today
Market reviews
• A recovery in global stock markets in Asia proved short-lived on Tuesday, as another set of weak economic data from China dampened sentiment and capped gains in Asian shares. Trade tensions are rising between China and the United States. In China, trade data on Tuesday showed that exports unexpectedly picked up in August, but imports missed forecasts. Chinese shares struggled to catch up on demand on Tuesday, falling to a seven-month low. Meanwhile, underscoring anemic consumer demand, the CSI tourism index fell to a record low. Chinese shares have been on a downward trend for months, and it is clear that Beijing has much more to do to restore investor confidence in its beleaguered stock market. Rising trade tensions are certainly not helping matters. This week, the US House of Representatives passed a bill aimed at restricting business with China's WuXi AppTec, BGI and several other biotech companies on national security grounds, causing WuXi AppTec's Hong Kong-listed shares to fall more than 10% at one point.
• The European Union needs a much more coordinated industrial policy, faster decisions and significant investment if it is to match the economies of its rivals, the United States and China, Mario Draghi said on Monday in a long-awaited report.
“Europe is the most open economy in the world, so when our partners do not stick to the rules, we are more vulnerable than others,” Draghi said. Draghi said the EU needs an additional investment of 750-800 billion euros ($829-884 billion) annually, up to 5% of gross domestic product, compared with the 1-2% envisaged by the Marshall Plan to rebuild Europe after World War II.
• The ECB, which is expected to cut rates by 25 basis points on Thursday, could be slightly more dovish than the Fed, which is expected to do the same next week. “But the ECB is the central bank of 20 countries, not just one,” it noted, noting that while Germany and France need aggressive rate cuts, Spain, for example, simply needs accommodative policy.
• Strategist warns: Europe heading for recession as US consumers weaken BCA’s chief European strategist Matthieu Savary says investors should focus on forward-looking indicators. The swings in the VIX volatility index are also a concern as they raise the prospects that corporate spreads will widen again, as the widening Caa/Ba spread is already warning. Increased volatility is also putting a damper on carry trades, which are key tools for allocating liquidity into growth assets. Given this outlook, the firm recommends sovereign bonds over equities, buying healthcare stocks SXDP and selling industrials SXNP, selling the euro against the US dollar (EURUSD) and the Swiss franc (EURCHF), and favoring Swiss equities in European portfolios.
• Gulf of Mexico storm helps lift crude oil futures: Oil futures are gaining some momentum after last week's big losses as the market keeps a close eye on a tropical system in the Gulf of Mexico that is expected to make landfall in the U.S. midweek with hurricane strength.
• By 2035, global helium demand is likely to nearly double, driven largely by growth in demand from the semiconductor industry due to a lack of viable alternatives. Helium is needed to manage heat in semiconductor manufacturing, and there are currently no viable alternatives. Air Products (APD), Linde (LIN), Air Liquide (AI), and privately held Zephyr Solutions are among the largest helium companies in the world.
• Boeing (BA.N) shares rose 5% in pre-trading on Monday after the planemaker and its main union reached a tentative agreement covering more than 32,000 workers, helping to avoid a potential strike. The deal includes a 25% across-the-board pay increase over four years, below the 40% increase demanded by the International Association of Machinists and Aerospace Workers (IAM) union, reflecting its recognition of Boeing's dire financial situation.
• KeyCorp (NESE:KEY) said it sold about $7 billion of "low-yielding" investment securities, leading to an expected after-tax loss of about $700 million in the third quarter. Shares fell 4%.
• Terns Pharmaceuticals' (TERN) oral GLP-1 drug reaches Phase 1 finish line with encouraging weight loss data after one month. Clinical trial results showed TERN-601 was well tolerated and demonstrated dose-dependent, statistically significant placebo-corrected mean weight loss across all three doses. Shares rise 20%.
• Gina A. Richardson, Director of Farmers National Banc Corp, purchased 1,300 shares of the company's stock on September 9, 2024, at a price of $14.92 per share for a total value of $19,396.
• Furniture maker Virco (VIRC) falls after second-quarter revenue misses expectations. Furniture maker Virco shares fell 13%. Second-quarter revenue of $108.4 million fell short of analysts' average estimate of $115.9 million.
• Bank of London has paid all its taxes, a spokesman said on Monday, after British media reported on Saturday that the clearing house had received a so-called winding-up petition from the UK tax authorities over unpaid amounts. Bank of London was launched in 2021 by former Barclays executive Anthony Watson. Watson said on September 3 that he had stepped down as CEO but would remain a senior adviser. Stephen Bell, the bank’s chief risk and compliance officer, took over as CEO. The bank is primarily a clearing house, with customer deposits totalling more than £500 million as of August. The bank deposits those funds with the Bank of England rather than lending them out, as most banks do.
• The new iPhone 16 will cost between $799 and $1,199 in the US. The long-awaited price increase for Apple's new iPhone 16 lineup that shareholders had hoped for hasn't happened, but Tim Cook is clearly hoping to boost sales without raising the price.
AAPL shares initially fell 1% during the presentation and ended the day at zero.
• The total cryptocurrency market capitalization fell 13.1% in August, according to a study, which analysts said was driven by global macroeconomic concerns and weak unemployment figures in the US, which increased fears of a recession.
• SEC crackdown on NFTs raises concerns it could stifle cryptocurrency innovation.
• Italian luxury shoe group Golden Goose said its adjusted underlying profit rose 12% to 109.2 million euros in the first half of the year as its net income continued to rise. Revenue rose 12% at constant exchange rates to 307 million euros.
• Citi expects investment banking fees to rise 20% in third quarter.
• KKR Agrawal chief calls industrial infrastructure 'the next big idea' Fortune 500 companies have a lot of industrial assets needed for production but not necessarily owned, and they can sell those assets to strengthen their balance sheets, said Raj Agrawal.
German startup Cylib, backed by Porsche, is starting construction on a battery recycling plant. The 236,000-square-foot industrial plant in Chempark Dormagen, between Dusseldorf and Cologne, is set to begin operations in 2026 with a recycling capacity of 30,000 tons of end-of-life batteries per year, Cylib said.
• Oracle's (ORCL) Cloud Computing Growth Could Be Wall Street's Next AI Darling
Cloud computing was one of the first industries to get a noticeable boost from AI, and Oracle's quarterly results on Monday show that trend is likely to continue.
• The U.S. Commerce Department said Monday it is proposing to require detailed reporting from developers of advanced artificial intelligence and cloud computing providers to ensure the technologies are secure and able to withstand cyberattacks.
• HSBC is considering merging its commercial and investment banks to cut costs - Bloomberg.
The combined unit would be the bank's biggest source of revenue, bringing in about $40 billion annually.
• Chinese stock exchanges add Alibaba (BABA) to Stock Connect scheme.
• Stellantis is under scrutiny in the U.S. over suspected Jeep engine fires, a potential problem for the automaker as it seeks to reverse a decline in market share in North America.
• A surge in hybrid car sales amid slowing adoption of electric vehicles should unexpectedly boost demand for platinum group metals (PGMs) in the coming years, similar to the way coal is now expected to last longer.
• Huawei has received 3 million pre-orders for its smartphone, its website showed on Monday, hours before Apple's next-generation iPhone debuted.
• The EU is buying too much defense equipment from abroad, especially from the US - AP.
• Siemens to invest $60m in high-speed train plant in upstate New York. The company is investing in a new US plant to transport passengers between Los Angeles and Las Vegas.
• HPE shares fell 5% in post-market trading after the company said it had begun a public offering of $1.35 billion in Series C mandatory convertible preferred shares to finance its acquisition of Juniper Networks.
• Goldman CEO expects third-quarter trading revenue to fall 10% y/y due to high base effect.
• MRK shares fell 2% yesterday as Summit Therapeutics (SMMT) said its cancer drug outperformed Merck's Keytruda in a head-to-head trial.
• SMMT shares jump 56%... Citi says Nvidia stock dominance may be ending
• PLTR shares rose 14% yesterday after the announcement of their future inclusion in the S&P 500. DELL rose 4%, while ERIE fell 1% on similar news.
Stocks leaving the index also behaved differently: AAL +4%, ETSY -2%, BIO -2%.
Analysts are already discussing who could be the next candidate for addition and name APO, TTD, WDAY, COIN, FERG.
International Reviews
• The EU may block funding for Slovakia - Bloomberg. The European Commission prepared this decision in response to the closure of the office of the special prosecutor, who supervised a number of corruption cases related to the spending of European funds.
• In Turkey, 15,000 companies went bankrupt in January-August 2024. Which is 28% more than in the same period in 2023.
Problems for Turkish companies arise due to the high interest rate of the Central Bank and high inflation.
• New York Fed report shows inflation expectations largely stable in August The U.S. public's outlook for inflation pressures was little changed last month amid ongoing price pressures, according to a report released Monday by the Federal Reserve Bank of New York.
• US wholesale inventories were revised lower in July amid a sharp rebound in sales, casting doubt on whether inventory investment will support economic growth in the third quarter.
• Americans lost $5.6 billion to cryptocurrency scams in 2023, according to the FBI. The most common scheme was investment scams, which accounted for $3.96 billion in losses.
Scammers often approach people through dating apps or social media to build trust over a period of weeks or months before offering to invest in crypto.