Live Markets U.s.: IPO Market: See you in September?

Crossfirst Bankshares

15/08/2019 19:20

* Major fallback into the red
    * Defensive groups lead sector gains; energy weakest group
    * 2s-10s U.S. Treasury yield spread nudges up above zero

    Aug 15 - Welcome to the home for real-time coverage of U.S.
equity markets brought to you by Reuters stocks reporters and
anchored today by Terence Gabriel. Reach him on Messenger to
share your thoughts on market moves:
terence.gabriel.tr.com@reuters.net
    
     
    IPO MARKET: SEE YOU IN SEPTEMBER? (1415 EDT/1815 GMT)
    The average return for 2019 IPOs is now about 16%, down from
the 30% mark at the midway point of the year.
    Despite especially choppy market conditions, two more
companies made their debuts on Thursday, capping IPO activity
for the month of August.
    Kansas-based CrossFirst Bankshares Inc  CFB.O , which has
$4.5 billion of assets, saw its stock open flat to the $14.50
IPO price after the company priced its deal below the $15-$17
filed range  urn:newsml:reuters.com:*:nGNX46W26f. This as the sector has been pummeled
after the U.S. 2-year  US2YT=RR  and 10-year  US10YT=RR  yield
curve on Wednesday inverted for the first time since 2007.
    And Chinese internet finance company 9F Inc's  JFU.O  ADSs
on Thursday opened 14.5% above their IPO price of $9.50. The
deal got done at the upper end of the expected range even as the
U.S.-China trade war continues to escalate  urn:newsml:reuters.com:*:nPn9kkwra. JFU
traded to as high as $13.73, but was last up just 3.8% at $9.86.
    Meanwhile, shares of this year's debutant darling Beyond
Meat  BYND.O  are tumbling ~15%. This leaves the high-flying
fake meat company's stock down about 40% from its July 26 record
high, but still up about 460% since its May IPO  urn:newsml:reuters.com:*:nL2N25B0Z1
    It's worth noting that ride-hailing firm Uber Technologies'
 UBER.N  stock fell 3% to new low of $32.92 on Thursday and is
now off 27% from its May IPO price. Coincidentally, smaller
rival Lyft  LYFT.O  is also down 27% since it went public in
March.
    Looking ahead to September, WeWork owner The We Company
filed its financial statements on Wednesday and could test IPO
investor appetite for fast-growing, money losing startups
 urn:newsml:reuters.com:*:nL4N25A3AZ.
    In addition, industrial conglomerate Danaher Corp's  DHR.N 
dental products unit, renamed Envista, filed an amendment to its
IPO filing on Monday adding an extended list of underwriters.
Danaher may be sending a signal that it's ready to launch the
deal post the Labor Day holiday.
           
    (Lance Tupper)
    *****
    
    YIELD CURVE INVERSION OR NOT, EXPANSION MAY HAVE ROOM TO RUN
(1327 EDT/1727 GMT) 
    Now that the 2- and 10-year Treasury yield curve finally
inverted this week, LPL Financial Research put out a note
examining the event.
    LPL says that typically, yield curve inversion is viewed as
a signal of oncoming recession, although often with a relatively
long lead. According to LPL, in the past five economic
expansions, the U.S. economy has peaked an average of 21 months
after the spread between the 2-year and 10-year yields initially
turned negative. Thus, even though LPL says they are discouraged
by the shape of the curve right now, they see few signs of
danger ahead.
    LPL also notes that U.S. stocks have been resilient against
yield curve inversions in the past. It says that, historically, 
the S&P 500 Index  .SPX  has rallied an average of 22% from the
first inversion to the eventual economic peak.
    "We’re not convinced that this yield curve inversion is a
sign of imminent recession,” said LPL Research Chief Investment
Strategist John Lynch. “The U.S. labor market is at full
employment, healthy wage growth is fueling strong consumer
activity, and corporate profits are at record levels.”
    In any event, LPL believes monetary policy is too tight, and
therefore they think this yield curve inversion sends an
important signal to Fed. However, LPL thinks the current U.S.
economic expansion, now in its 11th year, has more room to run.
    
    (Terence Gabriel)
    *****
    
    
    MAJOR AVERAGES FIGHT TO STABILIZE (1220 EDT/1620 GMT)
    Heading toward the midpoint of the trading day, the major
averages are posting modest gains and enjoying at least a
relatively calm session. In fact, the S&P 500  .SPX , with its
0.46% rise, is on track to see its second-smallest daily change,
up or down, this month.
    Nevertheless, there are pockets of strength. Defensive
groups: staples  .SPLRCS , real estate  .SPLRCR  and utilities
 .SPLRCU  are leading sector gainers on the day.
    More economically sensitive groups are lagging. Losses are
small, but energy  .SPNY  and industrials  .SPLRCI  are red. And
even with a surge in July retail sales data  urn:newsml:reuters.com:*:nLNSFJEF8Y, many
retail stocks are weak. The SPDR S&P Retail ETF  XRT.P  is
falling 1.5% and on track for its worst weekly performance for
2019.
    Meanwhile, although the Dow Jones Industrial Average  .DJI 
fell to 25,417.61 early in the session, which was a marginal
violation of its 25,440.39 August 7 low, the index has reversed
higher and is now attempting to reclaim its 200-day moving (at
about 25,590). Strength in Boeing  BA.N  and Walmart  WMT.N 
 urn:newsml:reuters.com:*:nL4N25B2JI is more than offsetting Cisco  CSCO.O  weakness.
 urn:newsml:reuters.com:*:nL2N25B0XP
 
 
    (Terence Gabriel)
    *****
          

    TRADERS DEAL WITH THE CURVES (1111 EDT/1511 GMT)
    Traders are having a mixed reaction to this week's 2s/10s
U.S. Treasury yield curve inversion  US2US10=RR . 
    Some seem to think Wednesday's panic was a total
over-reaction on the actual news. That said, one trader believes
it is particularly troublesome given its accuracy in predicting
recessions. The trader added "Clearly we still have some time
before the market tends to negatively react (usually 12-18
months out), but the narrative has turned into a sell the rally
and avoid the dips more than any time in recent memory."
    As for other curves, especially the U.S.-China trade
dispute, one trader said "All eyes on a twitter happy President
now that earnings season is over. Expectations of a 25 basis
point decrease are in place. Anything else would be surprising
at this point."
    Indeed, traders may say they hate to get political, but one
noted the recent top and bottom were marked by Presidential
tweets/and an about-face on China. Traders also noted
late-afternoon tweeting on Wednesday. One trader said
"Yesterday’s tweets didn’t stall the sell off and we closed on
the lows. Maybe his manipulating via tweet isn’t going to have
that positive effect going forward." 
    In any event, traders remain focused on their charts, and
seeing if recent lows/and key levels such as the 200-day moving
averages can hold. If not, they see the breakdown accelerating.
    Still, concern abounds over the month of August.
 urn:newsml:reuters.com:*:nL2N24J0OL One trader said, "August has actually become the
worst month of the year over the last decade with some of the
most volatile days occurring. There’s been some extreme news -
S&P downgrade 2011, China Aug 24, 2015 and China again last
week. Maybe lack of humans being around has something to do with
it too."
    
    (Terence Gabriel)
    *****

    
    TAKING STOCK OF THE LATEST TRADE-TALK WHIPSAW (1045 EDT/1445
GMT)
    Another day, another session of developments in the
U.S.-China trade dispute causing stocks to whipsaw.
    Futures fell after China's finance ministry said it would
take necessary counter-measures against the latest round of
tariffs on $300 billion of Chinese goods. Then investors nerves 
were cooled after a Chinese foreign ministry spokeswoman said
"We hope the U.S. will meet China halfway."  urn:newsml:reuters.com:*:nL4N25B2NR
    Major indexes edged higher in morning trading as investors
were sorting through the significance, or lack thereof, of the
latest trade talk from the world's two largest economies.
    "The equity market reaction to non-sensical trade
rhetoric has become somewhat absurd," Peter Cecchini, chief
market strategist at Cantor Fitzgerald, said in a morning note.
    While stocks saw a boost earlier this week when the U.S.
delayed tariffs from September to December, risks now "include
Trump getting angry if and when specific countermeasures are
announced, leading to the possibility that he ends up
threatening higher than 10% tariffs on the new basket of goods,
or some other form of further escalation of the dispute,"
analysts at NatWest Markets said in a note.
    NatWest continues "to believe a resolution to the US/China
dispute is not likely in the near-term" and to "get ready for
more headline/tweet driven risk-off ahead."
    Miller Tabak chief market strategist Matt Maley also takes
the long view.
    "Let’s face it," Maley says in a note, "no matter what
happens on the trade-war front over the next few weeks, it is
becoming more and more obvious that this issue is going to be
hanging over the markets for many, many, many months to come."
    
    (Lewis Krauskopf)
    *****
    
    IS IT TIME TO BUY CHINESE EQUITIES? (1017 EDT/1417 GMT)
    Even though the U.S.-China trade war keeps raging on and
China's economic data was weak enough Wednesday to help send
global financial markets into a tailspin, those are not enough
reasons to avoid investing in the world's second biggest
economy, according to Richard Bernstein Advisors.  urn:newsml:reuters.com:*:nL4N25A0U7
    In fact, the firm argued just the opposite in a research
note out on Wednesday, saying it is overweight Chinese equities.
    According to Dan Suzuki, RBA portfolio strategist, "it
almost always comes down to some combination of profits,
liquidity and sentiment."
    While corporate profits in China are declining, he said "the
macro data increasingly suggest that accelerating stimulus could
be helping them find a bottom — particularly relative to most
other regions of the world." 
    Suzuki notes that China has been easing monetary policy all
year, which says explains why China’s yield curve remains steep
and the US curve just inverted.
    He also pointed to China's 35% valuation discount to the US
market. "None of these indicators represents an all-clear
signal, but the risk-reward ratio appears more compelling in
China than it is in most regions of the world," Suzuki wrote.
    
    (Sinéad Carew)
     *****

    DOW INDUSTRIALS: STATE OF CONFUSION (0915 EDT/1315 GMT)
    With a more than 3% collapse on Wednesday, the Dow Jones
Industrial Average  .DJI  just experienced its worst decline for
the year. This as historical volatility measures have risen to
their highest levels in seven months. And with CBT E-Mini Dow
Futures  1YMcv1  swinging wildly overnight, increased volatility
doesn't appear ready to go away anytime soon. (Click on chart
below)
    The Dow closed below its 200-day moving average (25,584.95)
on Wednesday for the first time in more than two months.
However, given the premarket futures' rise, the index appears
poised to attempt to reclaim that hurdle in early trade.
    In any event, August has ushered in sharp losses and
dramatic swings  urn:newsml:reuters.com:*:nL2N25A1BU, and as a result, a close-to-close
volatility measure has surged to its highest level since early
January (27.55). That said, if this study challenges its
2018/2019 highs (41.65/42.17), the Dow can be at risk for
greater downside. Indeed, a  deeper decline would fit with the
blue-chip average playing out the final swing down within a
large expanding triangle pattern.  urn:newsml:reuters.com:*:nL2N2590AD 
    At its recent high, the Dow had retraced 50% of its
July/August slide. Even on a greater recovery, the 76.4%/78.6%
Fibonacci retracement zone (26,936.52/26,979.61) may be a stiff
barrier. This retracement zone capped recoveries in February and
November of last year. 
 
 
    (Terence Gabriel)
    *****

    
    PREMARKET SNAPSHOT: ROLLER COASTER (0818 EDT/1218 GMT)
    Futures have gyrated wildly ahead of Thursday's open.  .N 
Indeed, CBT E-Mini Dow Jones Futures  1YMcv1  at first mounted a
near 250 point snap back in the wake of Wednesday's collapse
into an overnight high. They then plunged 425 points into a low
roughly around 0600 EDT/1000 GMT. There has since been a near
500 point rally, putting the Futures up around 100 points on the
day.
    This as markets initially reacted to Chinese threats to
impose counter-measures in retaliation for the latest U.S.
tariffs.  urn:newsml:reuters.com:*:nL4N25B2KA But traders then cited a conciliatory
report saying that China's Foreign Ministry hopes the U.S. can
meet half way on trade.  urn:newsml:reuters.com:*:nL8N25B350
    Walmart  WMT.N  jumping more than 6% on its Q2 beat and
forecast hike is also poised to help the Dow.  urn:newsml:reuters.com:*:nL4N25B2JI Based
on WMT's premarket rise, it is about to provide around 50 points
of upside just by itself.
    Meanwhile, the closely watched 2s/10s U.S. Treasury yield
spread  US2US10=RR  is flirting with zero. The U.S. 30-Year
Treasury yield  US30YT=RR  hit a fresh record low of 1.9410%.   
  
    Here is your premarket snapshot.  
 
 
    (Terence Gabriel)
    *****

 

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premarket08152019    https://tmsnrt.rs/2N5NxLy
DJI08152019    https://tmsnrt.rs/2YQiHxf
midday08152019    https://tmsnrt.rs/2N4qwbG
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