Author: fortraders

Standard Chartered CEO Bill Winters has expressed surprise at the terms of the sale of Credit Suisse to UBS, which prioritised shareholders over bondholders. Winters was speaking at the Qatar Economic Forum, organised by Bloomberg. Under the rescue deal, UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.4 billion) in stock and to assume up to 5 billion francs in losses. This resulted in $18 billion in Credit Suisse’s Additional Tier 1 (AT1) debt being rendered worthless.

Winters said the banking crisis was over but that a transformation of banks was still needed. Qatar Investment Authority CEO Mansoor Ebrahim al-Mahmoud said he thought UBS had got a “good deal” with the Credit Suisse takeover. UBS has flagged tens of billions of dollars of potential costs and benefits from its takeover of Credit Suisse, which will create a wealth manager with more than $5 trillion in invested assets and over 120,000 employees globally.

Wall Street opened lower on Tuesday as talks over increasing the U.S. debt limit remain inconclusive. White House and congressional Republican negotiators will meet again later in the day to discuss how to raise the $31.4 trillion debt ceiling, with just nine days left for the deadline. Trading on the S&P 500 index was stuck in a 30-point range in the last two sessions as U.S. debt ceiling talks lingered.

Worries over the debt limit pushed yields on one-month Treasury bills to record highs at 5.888%. Investors also await S&P Global’s flash reading of the U.S. Composite PMI Index for May and Dallas Federal Reserve President Lorrie Logan’s remarks due later in the day.

Megacaps were largely subdued with Meta Platforms Inc, Apple Inc and Alphabet Inc down between 0.2% and 0.4% in premarket trading. Lowe’s Companies Inc fell 1.3% after the retailer cut its annual comparable sales forecast. Shares of larger rival Home Depot dipped 0.1%.

Dicks Sporting Goods added 2.5% after the retailer beat first-quarter estimates and reiterated its annual sales forecast. Zoom Video Communications fell 2.6% after the video conferencing platform recorded its slowest quarterly revenue growth. Shares of regional lenders extended gains from the previous session, led by a 16.2% rise in PacWest Bancorp.

GTCR LLC, a private equity firm, has raised its largest fund ever, collecting $11.5 billion from investors. The milestone defies fundraising challenges private equity funds are facing due to investors avoiding risk and hoarding cash. The new fund, GTCR Fund XIV, initially aimed to raise $9.25 billion and amassed $11 billion from institutional investors, including from sovereign wealth funds, public and private pension funds, foundations and endowments. GTCR’s investments include U.S. vaccine reagent vendor Maravai Life Sciences Holdings, in-flight internet provider Gogo Inc, and ticketing company Vivid Seats Inc. In 2021, GTCR partnered with buyout firm Reverence Capital Partners to acquire the asset management business of Wells Fargo & Co for $2.1 billion. GTCR was founded in 1980 and has more than $35 billion in assets under management across business services, media, telecoms, healthcare, technology, financial and consumer services sectors.

Ford (NYSE:F) held their Capital Markets Day on Monday in Dearborn, Michigan, where the company discussed their plans to meet their long-term profit targets. Ford reiterated their goal of achieving a 10% EBIT margin by 2026, with the Model e segment aiming for 8%. The company believes that enhancing their margin profile can be achieved by placing a greater emphasis on cost management. Ford identified several potential avenues for cost reduction, including streamlining complexity, enhancing supply chain stability, optimizing manufacturing processes, and implementing engineering redesigns.

Analysts are mixed on the stock, with Wells Fargo rating Ford as Underweight, citing the rise in battery raw material costs and US fuel economy regulations. Citi and Goldman Sachs analysts are Neutral on the stock, with Goldman analysts writing in a note that they are positive on the steps the company is taking to improve long-term profitability.

Ford also announced new Lithium agreements with Nemaska, EnergySource Minerals, Albemarle (NYSE:ALB), and Compass Minerals (NYSE:CMP) to help reach their 2M EV goal by 2026. These strategic partnerships in the lithium sector will support Ford in securing the necessary resources for their electrification goals.

Shares of F are down 0.26% in pre-market trading on Tuesday.

Brazilian stocks are expected to continue their gradual uptrend this year, according to a Reuters poll. The Bovespa equity index is expected to reach 120,000 points by the end of 2021, a 9.4% increase from its current level. This is due to mixed company earnings, with food exporters feeling the pinch from slower global growth, while banks take advantage of sky-high interest rates. In Mexico, the S&P/BMV IPC stock index is expected to rise 7.5% to 57,475 points by year-end, for a total gain of 18.6% in 2023. An agreement between the central bank and government officials should lead to policy easing at some point, which is likely to propel Brazilian stocks higher.

Investors were active in premarket trading on Tuesday, May 23rd, with stocks in focus across a range of sectors. Lowe’s (LOW) stock fell 1.6% after the home improvement chain reported a decline in first quarter sales and lowered its full-year financial outlook. Dick’s Sporting Goods (DKS) stock rose 2.8% after the retailer beat first quarter earnings expectations and reaffirmed its full-year outlook. Yelp (YELP) stock soared over 10% after activist investor TCS Capital Management called on the service-recommendation site to explore strategic options. AutoZone (AZO) stock fell 3% after the auto parts retailer reported a slowdown in comparable sales in its third quarter. Lordstown Motors (RIDE) stock fell 10% after the electric vehicle startup announced that it will effect a 1:15 reverse stock split on May 24. Alibaba (BABA) ADRs fell 1.5% after Bloomberg reported that the Chinese tech giant’s cloud division has begun a round of job cuts. PacWest Bancorp (PACW) stock rose 15%, adding to Monday’s strong gains following the announcement of the lender’s plan to sell $2.6 billion worth of its loan portfolio to build capital. Warner Bros Discovery (WBD) stock rose 0.4% as the entertainment giant relaunches its HBO Max streaming service as “Max” in a bid for a wider audience. Microsoft (MSFT) stock rose 0.2% after Jefferies called the software giant a top pick, with a ‘buy’ rating, seeing more than 20% upside on AI enthusiasm.

Microvast (NASDAQ:MVST) shares plummeted 22.7% in pre-market trading Tuesday after the lithium battery company was denied a $200 million grant from the U.S. Energy Department. The grant was part of the $1 trillion 2021 bipartisan infrastructure law, and was intended to strengthen America’s battery production and supply chain.

The Energy Department reportedly told Microvast that it failed to receive the grant due to its alleged links to China’s government. The two sides had been in talks for Microvast to build a plant in Tennessee.

Representative Frank Lucas, a Republican, said the news was “a win for taxpayers and American businesses.” He added that the funds were not intended to “tighten China’s stranglehold on these supplies.”

Shares of Microvast had been up 43.8% through Monday’s close. The stock is now down 24% in pre-market trading.

Investors got a lot of news yesterday with analyst downgrades for Apple, Revolve, Rain Therapeutics, and Intercept Pharmaceuticals. Apple was downgraded to Hold on downside risk to Q3 revenues, Revolve was downgraded on lack of near-term catalysts, Rain Therapeutics received downgrades following Phase 3 MANTRA data, and Intercept Pharmaceuticals was downgraded after FDA panel decision.

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Lordstown Motors Corp announced on Tuesday that it will carry out a reverse stock split in order to meet the Nasdaq listing requirements and appease investor Foxconn. The 1:15 split will take place on May 24th.

The electric vehicle startup’s shares have been trading below the $1 minimum requirement of the Nasdaq, and the company had warned earlier this month that it might be forced to file for bankruptcy due to uncertainty over the investment from Foxconn.

The $170 million investment from Foxconn is crucial for the company, and the reverse stock split is seen as a way to appease the investor and ensure the deal goes through.

Lordstown Motors shares fell 10% in premarket trading to $0.26 following the announcement. The company has said there is no assurance that the Foxconn deal will close, and investors will be watching closely to see if the reverse stock split will be enough to secure the investment.

Investors were cautious on Tuesday as uncertainty over the ongoing debt ceiling negotiations weighed ahead of earnings from a number of major retailers. President Joe Biden and House Republican Speaker Kevin McCarthy ended Monday’s meeting without an agreement to raise the $31.4 trillion U.S. debt limit, though both sides talked about progress being made. Treasury Secretary Janet Yellen said it’s now “highly likely” that her department will run out of sufficient cash in early June.

The release of the monthly U.S. purchasing managers’ indices is also due Tuesday, and is expected to provide insight into how elevated interest rates are impacting the country’s services and manufacturing sectors. Later in the week sees the release of the April personal consumption expenditure index reading, the Fed’s preferred inflation gauge.

Retailers Lowe’s, Dick’s Sporting Goods, Williams-Sonoma, Intuit, and Toll Brothers are all due to report earnings. Oil prices edged higher as the U.S. driving season draws nearer, while gold futures fell 1% to $1,958.35/oz. EUR/USD traded 0.3% lower at 1.0777.