2024-07-23 18:55
July 23 (Reuters) - U.S. equity markets will remain volatile ahead of the country's November presidential election, but the policies of the two candidates should take priority over reacting to "incendiary" rhetoric from their political parties, the chief investment officer of JPMorgan (JPM.N) , opens new tab Private Bank said on Tuesday. "There is a Republican Party trade and there is a Democratic Party trade. But it's anchored on themes," Richard Madigan, the JPMorgan Private Bank CIO, told the Reuters Global Markets Forum , opens new tab, when asked if he sees signs in the market of the "Trump-trade." "They have very different policy positions, but both seem to lead on a road that is going to have rising Treasury issuance and fiscal deficits," which could worsen inflation and bond markets, he said. The Trump trade, which is based on expectations that the tax polices of Republican nominee Donald Trump would lift corporate profits while undermining the country's long-term budget health, gained ground following Democratic President Joe Biden's disastrous TV debate last month. Wall Street recorded a strong start this week after Biden announced his withdrawal from the race and endorsed Vice President Kamala Harris' candidacy for the November election on Sunday, prompting investors to shift back to mega-cap growth stocks and tempering the recent rally in small-cap stocks. In addition, U.S. government bond investors unwound some of the trades put in place on expectations of a second Trump presidency. The S&P 500 (.SPX) , opens new tab is not poised to produce outsized returns of the scale that it already has so far this year, Madigan said. He said JPMorgan Private Bank stepped back from its "overweight" position on equity when the benchmark index hit 5,600 earlier this month. But even more important than the outcome of the U.S. presidential race, Madigan said, "is how we see Congress is distributed. If we end up with a sweep one way or the other, they put a great deal more focus on the policy narrative, because you can actually get actions from it, it's no longer just words." The U.S. Senate is now narrowly controlled by the Democrats, while the House of Representatives is narrowly controlled by the Republicans. The earnings among Big Tech and the companies known as the Magnificent Seven have continued to outperform, while small-cap companies are saddled with expensive debt, depressed earnings and margins, Madigan said. Still, he expects more volatility over the next few months due to valuations and political headlines. "If I don't think I'm playing for higher short-term returns in the equity market and I'm getting more volatility, I can have a very clear view on default risk and on yields," Madigan said. He also said he has been "overweight" U.S. high-yield, European high-yield, and emerging market debt. (Join GMF, a chat room hosted on LSEG Messenger, for live interviews: https://lseg.group/3TN7SHH , opens new tab) Sign up here. https://www.reuters.com/markets/us/investors-eye-us-presidential-race-jpmorgan-exec-says-focus-should-be-policies-2024-07-23/
2024-07-23 18:45
Canadian dollar weakens 0.2% against the greenback Touches its weakest level since June 14 at 1.3775 Price of U.S. oil falls to six-week low Canadian bond yields ease across the curve TORONTO, July 23 (Reuters) - The Canadian dollar weakened for a fifth straight day against its U.S. counterpart on Tuesday as commodity prices fell and investors braced for a potential interest rate cut by the Bank of Canada. The loonie was trading 0.2% lower at 1.3773 to the U.S. dollar, or 72.61 U.S. cents, after touching its weakest level since June 14 at 1.3775. It was the longest stretch of declines for the currency since April. "Canada is just kind of following the drift down in the commodity complex," said Michael Goshko, senior market analyst at Convera Canada ULC. "It's all the commodity currencies that are getting beaten up." Canada is a major producer of commodities, including oil, which fell to a six-week low on rising expectations of a ceasefire in Gaza and growing demand concerns in China. U.S. crude oil futures were down 1.9% at $76.95 a barrel, while copper added to its recent declines. "There is some event risk tomorrow with the Bank of Canada and just how dovish they want to be," Goshko said. The Canadian central bank is widely expected to cut its benchmark interest rate by 25 basis points to 4.50% on Wednesday, its second cut in as many months, after recent data showed inflation easing and retail sales declining. Canadian government bond yields moved lower across the curve, tracking moves in U.S. Treasuries after a weak reading on the U.S. housing market. The 10-year was down 2.5 basis points at 3.387%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-extends-losing-streak-oil-prices-slide-2024-07-23/
2024-07-23 17:40
July 23 (Reuters) - Some of the staff at Elon Musk's Neuralink are making preparations to sell the brain implant company's stock in the wake of its valuation jumping following its first human trial, according to people familiar with the matter. Stock compensation is a big incentive for employees at startups such as Neuralink. The shares they receive are not publicly traded, and employees that want to sell them without the company's blessing have to use complex turnarounds on niche private market exchanges. Now some of Neuralink's employees and investors are preparing for Musk's company to launch a tender offer as early as next month to buy back shares from staff that wish to sell, according to two sources briefed on the matter who requested anonymity because they were not authorized to speak publicly. Neuralink and Musk did not respond to requests for comment. The jump in Neuralink's valuation following the launch of its first human trial in January is evident in secondary market trades. While these trades are thin in volume and do not provide a reliable number for Neuralink's current valuation, they all point to a rise in value -- some to as much as $8 billion, more than double what the company was worth last year. Neuralink has called its first human trial a success. It said it remedied an initial problem of the implant's threads retracting from its first patient's brain and is preparing for more trials in Britain and Canada. Musk recently said the company plans to implant a second patient soon. It could not be learned whether Neuralink has formally scheduled a tender offer or what its terms would be. Last fall, Neuralink launched a tender offer for employees that priced at around $19 per share, when some shares traded on the secondary market close to $35, according to a review of trades by Reuters and sources familiar with the matter. It is common for startups to launch tender offers at a discount to secondary market values. Musk has for years created scarcity for shares in his startups, which also include rocket company SpaceX and artificial intelligence developer xAI, turning them into exclusive clubs that accept only a few investors, such as Peter Thiel's Founders Fund. This scarcity has made the shares sought after and investors content with receiving little information on how the startups have fared once they invested, according to investors and people who have worked closely with Musk. A spokeswoman for Founders Fund declined to comment. The impact of this scarcity is reflected in recent trades. Buyers on private exchanges paid a premium of between 84% and 137% in the last few weeks to the $3.5 billion valuation Neuralink attained in its most recent private fundraising round last November, according to a Reuters analysis of trades recent trades and PitchBook data. Most startups' shares don't trade at such premiums, and the majority of them trade at a discount. The median private company trades at a 32% discount from the valuation of its most recent fundraising, according to brokerage Forge Global. BIG WINDFALL Neuralink's valuation has soared since it was started in 2016, and employees that were given shares at the launch or soon after at a fraction of their current value are in for a big windfall. Some buyers are offering as much as $50 a share, up from about $35 around when the human trial began in January, said Sim Desai, chief executive of Hiive, who said his secondary platform matches buyers and sellers interested in trading Neuralink shares. SpaceX, Musk's most valuable company besides electric car maker Tesla (TSLA.O) , opens new tab, also trades at a premium on the secondary market. One recent transaction at $130.11 valued the company at $232 billion, according to secondary trade data. The company valued itself at about $180 billion in a private fundraising round in April, according to Pitchbook. SpaceX did not respond to a comment request. The sources said Neuralink asks its employees not to trade their shares on the secondary market, preferring they sell stock during tender offers that the company can control. One reason, according to Hiive's Desai, is that federal regulation prevents private companies from having more than 2,000 direct shareholders. Allowing limitless trading on the secondary market, especially for hot companies like Neuralink, could push a company up against the limit, Desai said. The other reason is companies retaining the ability to funnel access to investors they want at their chosen price. "Basically, it's an opportunity for a company, if they restrict the trades, to do their close friends and insiders a favor," Desai said. Due to restrictions on trading placed by Neuralink, Hiive only facilitates the matchmaking for shares, and the parties have to arrange for payment and the transfer of shares on their own, he said. Sign up here. https://www.reuters.com/technology/neuralinks-value-jump-leaves-some-musk-employees-itching-cash-out-2024-07-23/
2024-07-23 16:57
July 23 (Reuters) - Apple (AAPL.O) , opens new tab is likely to introduce its foldable iPhone as early as 2026, the Information reported on Tuesday, that could mark the biggest hardware design revamp for the company's most popular product. The Cupertino, California-based company's plan to release a foldable iPhone could mimic a similar move by Samsung Electronics (005930.KS) , opens new tab, which pioneered the foldable segment in 2019 in a bid to attract new customers with a major hardware design refresh. Apple's foldable iPhone has progressed from the ideation stage, the report said, citing two people with knowledge of the matter. The company has reached out to suppliers in Asia to make components for the device, the Information reported, adding that iPhone maker has created an internal code name V68 for the product. Foldable smartphones, powered with artificial intelligence features, are expected to trigger demand for the iPhone maker, which faces stiff competition from Honor and Huawei in China and Samsung globally. Samsung unveiled its latest foldable smartphones earlier in July, making its priciest flagship model lighter and slimmer with new AI functions. Global foldable smartphone market grew 49% in the first quarter from a year earlier, marking its highest rate of increase in six quarters, according to a Counterpoint Research report from May, with Huawei taking the top spot for the first time, beating Samsung. Apple also plans to bring an upgrade to a camera of at least one iPhone model, that would let its users to control the size of the aperture with a mechanical system, possibly allowing users to create depth-of-field effect, the Information report added. The report also said that there is no guarantee that Apple would release the foldable iPhone. Apple did not immediately respond to a Reuters request for comment. Sign up here. https://www.reuters.com/technology/apple-likely-release-foldable-iphone-early-2026-information-reports-2024-07-23/
2024-07-23 16:47
NEW YORK, July 23 (Reuters) - U.S. small-cap stocks' long-awaited rally has ignited record trading in options contracts that would benefit from their persistent strength, though some strategists say further gains could be limited. The small-company focused Russell 2000 (.RUT) , opens new tab is up 9% over the last 10 sessions while the tech-heavy Nasdaq 100 (.NDX) , opens new tab has slipped 3% over that period in a market rotation fueled by expectations of interest rate cuts and the improved fortunes of Republican presidential candidate Donald Trump. The small-cap rally has been accompanied by a rush into bullish options. A record 1.35 million call options on iShares Russell 2000 ETF (IWM.P) , opens new tab changed hands daily over the last 10 days, Trade Alert data showed. The trade has faltered more recently as tech stocks came roaring back on Monday, and some analysts believe small stocks may struggle to make further headway after this month's explosive rally. Similar rotations have not had much traction the last couple of years, said Joe Mazzola, director of trading and education at Charles Schwab. The Russell 2000's one-week percentage gain outstripped that of the Nasdaq 100 by at least 5 percentage points only three times over the last two years. In each instance the tech index soon regained the advantage, a Reuters analysis showed. In the most recent example in late 2023, the Russell 2000 climbed 22% from November through December on expectations of rate cuts, but struggled to advance further when the cuts did not materialize. The fundamental macro picture does not point to a sustained rally and the ongoing earnings season may be a litmus test, Barclays derivatives strategists said in a note on Tuesday. Some investors see small caps as a market sector that could benefit from lower interest rates. Trump's political agenda, with tariffs on imports and lower taxes, is also broadly viewed as friendly to smaller companies. Megacaps Tesla (TSLA.O) , opens new tab and Alphabet (GOOGL.O) , opens new tab are set to report earnings later on Tuesday, with positive results having the potential to sooth investor nerves and reignite the tech rally. Sign up here. https://www.reuters.com/markets/us/small-caps-rally-ignites-options-frenzy-strategists-urge-caution-2024-07-23/
2024-07-23 15:39
July 23 (Reuters) - Comcast (CMCSA.O) , opens new tab missed estimates for second-quarter revenue on Tuesday as the U.S. telecom and media firm had fewer movie releases during the period, while attendance at its theme parks stayed low, sending its shares down 5%. The company had little to offer in the April-June quarter to match the success of last year's "The Super Mario Bros. Movie" and "Fast X" as it lined up most of its big-ticket movies such as the fourth installment in the hit animated franchise "Despicable Me" and the disaster movie "Twisters" for July release. "The media segments at Comcast were a disappointment," MoffettNathanson analyst Craig Moffett said. Revenue from its studio business fell 27% and was a drag on its total revenue, which fell 2.7% to $29.69 billion in the three months ended June. LSEG was estimating $30.02 billion. Comcast's free cash flow was $1.34 billion in the quarter, well below the estimates of $3.09 billion, which the company attributed to a tax payment related to the previously announced Hulu transaction and other tax-related matters. Its theme park business posted a 10.6% fall in revenue as a post-pandemic surge in visitors eased. Comcast is leaning on Epic Universe - a collection of immersive worlds such as Super Nintendo World and How to Train Your Dragon-Isle of Berk - to bolster its parks business but the launch has been pushed back to 2025 from this year. The company reported it lost 120,000 broadband customers, compared with estimates for a loss of 143,000, according to FactSet, suggesting that it was holding its own against intense competition from AT&T (T.N) , opens new tab and T-Mobile (TMUS.O) , opens new tab. However, Comcast said that the figure was likely to go up in the third quarter because of the end of a federal internet subsidy. The Affordable Connectivity Program subsidized internet access to 23 million U.S. households who could not otherwise afford connectivity. Comcast's media rights deal to broadcast National Basketball Association games will include 100 NBA games each regular season across NBC network and Peacock, the company said on a post-earnings call. The company said revenue from its Peacock streaming service reached $1 billion, though the service lost $348 million in the quarter. The service also had 33 million subscribers, a 38% jump from a year earlier. "However, at 33 million subscribers it is still well off the pace of the competition; Netflix added 39 million in the last year alone," Third Bridge analyst Jamie Lumley said. Excluding items, Comcast reported a profit of $1.21 per share, beating expectations of $1.12, according to LSEG data. Sign up here. https://www.reuters.com/business/media-telecom/comcast-misses-quarterly-revenue-estimates-weak-studio-theme-park-business-2024-07-23/
