Today - Friday, May 29, 2015
- Stocks closed lower on the heels on renewed worries about the lack of tangible progress toward a deal between Greece and its creditors and data that showed U.S. GDP shrinking in the first three months of the year.
- Despite declines for the day and the week, the major averages posted solid gains for the month: Dow +1%, S&P +1.1%, Nasdaq +2.6%.
- All 10 S&P sectors ended the day in negative territory, with industrials (-1%) lagging its peers; transport stocks struggled again, as displayed by the 0.8% drop in the Dow Jones Transports, which tumbled 2.2% for the week and 3.4% for the month.
- Energy stocks ended just below the flat line even as crude oil jumped 4.5% to $60.26/bbl.
- Investor participation was above-average thanks to end-of-the-month flows, as more than 1B shares changed hands at the NYSE floor.
- Treasury prices rose as a weak reading on regional factory activity added fuel to typical month-end demand; the 10-year yield fell 3 bps at 2.10%, the lowest in three weeks.
- Humana (HUM +19.6%) surges following a WSJ report that it is exploring a potential sale after receiving indications of takeover interest, and has hired Goldman Sachs to help it explore a potential sale.
- Sources say Aetna (AET +2.2%) and Cigna (CI +5.2%) are among companies that have held preliminary discussions with HUM.
- HUM is one of five health insurers that bankers and analysts have long considered ripe for consolidating the industry, including AET, CI, UnitedHealth (UNH +1%) and Anthem (ANTM +2.6%).
- Three days after CEO Evan Spiegel stated the company plans to eventually go public, CNBC reports Snapchat plans to raise another $650M in private funding. New investors are said to include Alibaba (NYSE:BABA), Fidelity, York Capital, and Glade Brook Capital.
- Bloomberg reported in March Alibaba is investing $200M in the ephemeral messaging platform at a $15B valuation - sharply above the ~$10B valuation Snapchat received just a couple months earlier.
- Snapchat reportedly had 100M monthly active users as of last summer, and has begun monetizing its platform via ads. Spiegel also wants other revenue streams - other mobile messaging platforms such as WeChat and Line derive revenue from games, stickers, and payments/e-commerce. A video-publishing platform called Discover (supported by ESPN, CNN, and Vice) was launched in January.
- Snapchat might be looking to strike while the iron is hot: While making his IPO comments, Spiegel predicted a tech investing "correction" would eventually happen, and that the current investment climate was fueled in part by low interest rates.
- One could be forgiven for thinking a sizable negative print for revised U.S. Q1 GDP growth was priced in, but Treasury prices are nevertheless rallying after the BEA reports a 0.7% contraction for the first three months of the year.
- Most of the GDP components were about flat from the first estimate, leaving revisions to exports and inventories to account for the change.
- U.S. corporate profits in Q1 fell 5.9%, the largest quarterly decline since 2008.
- Alongside the weak U.S. number is Canada reporting an unexpected 0.6% decline in Q1 GDP. This comes against forecasts for growth of 0.3%. It's the first quarterly contraction in GDP up north in four years, and the largest slide since 2009.
- The 10-year Treasury yield is down three basis points at 2.11%. TLT +0.55%, TBT -1.1%
- ETFs: TBT, TLT, TMV, IEF, TBF, EDV, TMF, PST, TTT, ZROZ, TLH, SBND, VGLT, IEI, TYO, UBT, DLBS, DTYS, UST, TLO, VGIT, TBX, SCHR, TENZ, GSY, TYD, LBND, ITE, DTYL, DLBL, TYBS, DFVL, FIVZ, VUSTX, TBZ, DFVS, TYNS, SYTL
- Shanghai slipped only marginally overnight following Thursday's 6.5% plunge. The Nikkei and Hang Seng were little-changed as well, as are the European averages.
- The 10-year Treasury yield is off one basis point to 2.13%, gold is flat, and oil is up $0.78 per barrel to $58.47.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, IVV, UPRO, PSQ, SPXU, TQQQ, SPXL, RSP, QID, SQQQ, QLD, DOG, DXD, RWL, UDOW, EPS, SDOW, DDM, VFINX, BXUB, QQEW, QQQE, SPLX, SFLA, BXUC, QQXT, SPUU, UDPIX, OTPIX, RYARX
- Bubble or no bubble, Chinese shares extended a selloff today after swinging wildly in the wake of one of their biggest falls of the year.
- China equity funds have taken in $4.6B from overseas over the past week, according to data from EPFR, more than double the previous high set in the second quarter of 2008.
- Meanwhile, China is reportedly easing its limits on overseas investments by individuals and businesses as it advances its goal to make the yuan a reserve currency.
- The IMF hinted this week that the promotion may happen in 2015, after saying it doesn't consider the yuan undervalued.
- Shanghai -0.7% to 4,589.
- ETFs: FXI, ASHR, EWH, CAF, YINN, KWEB, PGJ, GXC, FXP, HAO, YANG, TAO, CHIX, CHN, PEK, CHIQ, CQQQ, MCHI, TDF, QQQC, XPP, YAO, GCH, ASHS, YXI, CN, CHXF, FCA, CHNA, CNXT, CHII, ECNS, CHIE, EWHS, CHIM, KBA, KFYP, FCHI, JFC, FHK, AFTY, CHAU
- Switzerland's economy contracted the most since the financial crisis in Q1 as the strong franc took a toll on exports.
- Gross domestic product fell by 0.2% in the first three months of 2015 compared to revised growth of 0.5% in the prior period.
- The outlook for the economy suffered a blow in January when the Swiss National Bank removed its currency cap, causing the franc to rally 15% vs. the euro during the quarter.
- ETFs: FXF, EWL, SWZ, FSZ
- The Japanese economy limped into the second quarter, as household spending declined, people left the job market and the central bank's key inflation gauge registered zero.
- Consumer prices excluding fresh food and effects of last year’s sales-tax increase were unchanged in April, while household spending unexpectedly fell 1.3%. Consumption has now been in decline for 13 straight months.
- Weakness in the economy is raising the stakes for Prime Minister Shinzo Abe as efforts by the central bank fail to spur inflation. The yen has lost a quarter of its value against the dollar since the BOJ boosted asset purchases in April 2013, and fell this week to its lowest since 2002.
- The Nikkei closed up 0.1% following the flurry of data, barely extending its winning streak to an 11th day.
- ETFs: DXJ, EWJ, DFJ, DBJP, NKY, JOF, EZJ, JEQ, JPNL, DXJS, EWV, SCJ, HEWJ, JSC, ITF, JPP, QJPN, FJP, JPMV, DXJT, DXJR, DXJC, JHDG, DXJH, DXJF
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