Live Markets U.s.: And the IPOs just keep on coming

Silk Road Medical

29/04/2019 18:59

* S&P 500 hits new intraday high, but index gains modest
    * Financials lead major sector gains; utilities lag  
    * Oil positive, gold lower; U.S. 10-year T-Note yield up 

    April 29 - 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
    
    AND THE IPOs JUST KEEP ON COMING (1355 EDT/1755 GMT)    
    The IPO calendar continues to swell as seven more companies
launched their deals this morning.
    There were already six IPO hopefuls on this week's docket
looking to raise up to $1 billion, headlined by gambling
products company Scientific Games'  SGMS.O  social gaming
subsidiary Sciplay Corp  SCPL.O  ($350 million) and vegan burger
maker Beyond Meat  BYND.O  ($180 million)  urn:newsml:reuters.com:*:nL3N2241TH
    Now, even with all eyes riveted on Uber Technologies'
 UBER.N  up to $9 billion IPO next week  urn:newsml:reuters.com:*:nL1N22801T, eight
other firms are craving investor attention for another $1
billion-plus. Engineering and construction firm Parsons Corp
 PSN.N  could be the next largest haul with its approximate $500
million deal, along with the typical fare of four biotech
companies.
    The multi-billion dollar question obviously is whether all
this new supply can be absorbed. But with stocks trading at
record highs amid low volatility, the environment is near ideal.
And this as the average return of 2019 IPOs hovers around 30%,
per Reuters' calculation, with more than two thirds of the 32
deals trading above issue.
    Below are some of this year's best and worst IPO performers:
        
 
 
 
 
    (Lance Tupper)
    *****
    
     
    DO STOCKS AND BONDS NEED COUPLE'S THERAPY? (1338 EDT/1738
GMT)
    Bond yields have not risen with the stock market this year
so to a nosey bystander, it looks like the pair are having
relationship problems, according to Jim Paulsen, chief
investment strategist at The Leuthold Group in Minneapolis.
    But the rapport looks way more encouraging when you examine
how trading in each asset class is correlating with the other
according to Paulsen who says a positive trailing correlation
between bonds and stocks tends to be promising. 
    When investors obsess about inflation the correlation tends
to be negative but when they switch their obsession to recession
potential, the relationship turns positive, he said. 
     "Since 1998 when the correlation has been really positive
the next 12 months stock performance has been very good," he
said. "When its been very low or negative the future stock
return has been very bad."   
    Right now investors are worried more about a potential
recession than inflation. And that's good news, producing a
correlation between stock market movements and changes in bond
yields in its 2nd highest quintile since 1998, says Paulsen 
    "Even though yields haven't come up they've been moving more
in line with stocks in a more positive fashion. That's telling
me that the outlook for the next year in the stock market is
pretty good," said the strategist.
    Here is a graphic from Paulsen's research note:
 
 
    (Sinéad Carew)
    *****
    
    CHANGES AHEAD FOR THE S&P (1245 EDT/1645 GMT)
    New names could join the S&P 500  .SPX  as a result of
recently approved changes to the methodology behind the index,
according to a note from Ivan Cajic at Virtu Financial.
    S&P Dow Jones Indices announced last week https://us.spindices.com/documents/indexnews/announcements/20190425-916961/916961_spcomp1500consultoniwfaddcriteriaresults4.25.19.pdf?force_download=true
 that it would eliminate a rule requiring new additions to the
S&P Composite 1500  .SPSUP  - which comprises the S&P 500, the
mid-cap S&P 400  .IDX  and the small-cap S&P 600  .SPCY  - to
have an investible weight factor (IWF) of 0.50, meaning at least
50% of its total shares outstanding in the public float.
    As of Wednesday, instead of a 0.50 IWF, new additions to
each of those indexes  .SPCY  must have a float-adjusted market
capitalization that is at least 50% of the minimum total market
capitalization for the applicable index. For the S&P 500, that
means at least a $4.1 billion float-adjusted market cap and an
$8.2 billion total market cap.
    The change in methodology is intended to expand the number
of potential components for the indexes. Virtu's Cajic pointed
out a few names that under the new criteria could become part of
the S&P 500 and projected the value of the trades such changes
would trigger. See the chart below.
 
 Name        Projected   Projected   Projected   Net
             Weight in   Value of    Number of   Average
             S&P 500     Trade       Shares      Daily
                                     Traded      Volume
 Las Vegas   10.29 bps   $3.148 bln  46.89 mln   1243%
 Sands Corp                                      
  LVS.N                                          
 T-Mobile    9.25 bps    $2.828 bln  38.90 mln   1114%
 US Inc                                          
  TMUS.O                                         
 Keurig Dr   2.29 bps    $701 mln    25.35 mln   1062%
 Pepper Inc                                      
  KDP.N                                          
 Sirius XM   3.03 bps    $927 mln    161.83 mln  539%
 Holdings                                        
 Inc                                             
  SIRI.O                                         
   (April Joyner)
    *****
    
    NEW HIGH? YES. MOMENTUM? NO (1209 EDT/1609 GMT) 
    The S&P 500  .SPX  has finally made a new intraday record
high. Indeed, with an early move above its 2,940.91 September 21
intraday peak, the index has extended to as high as 2,946.23.
    However, the move has done little to stoke overall momentum
with the major averages barely in positive territory heading
toward the midway mark of the trading session. In fact, the S&P
500  .SPX  is on track for its tightest range as a percentage of
the prior day's close since December 28, 2017.     
    Nevertheless, regarding the new SPX high, Joe Saluzzi,
Co-Manager of Trading at Themis Trading in Chatham, NJ said "The
goldilocks economy is exactly where you are right now. That
seems sustainable to me. Overall I think you keep going here."
Saluzzi also cited good earnings, an accommodative Fed and good
economic data, adding “The next catalyst will be the China
deal.”
   Rick Meckler, partner at Cherry Lane Investments, a family
investment office in New Vernon, NJ echoed that sentiment over
trade saying "It's really about the administration continuing to
hint a trade agreement is near." Adding to this, Meckler said,
"People don't want to miss out on the expected rally from that
news. That, combined with the momentum that's already been in
place to keep pushing to slightly newer highs, is leaving the
market devoid of sellers. Even if you want to sell, you're
probably waiting for that announcement to pick your spot. That's
the major thing."
 
 
    (Terence Gabriel, Sinéad Carew, Caroline Valetkevitch)
    *****

    
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midday11292019    https://tmsnrt.rs/2GTsI2s
Positive stock bond correlation bodes well     https://tmsnrt.rs/2XTjVD8
Select top 2019 IPO performers    https://tmsnrt.rs/2GTzHbG
5 worst 2019 IPO performers to date    https://tmsnrt.rs/2Wev550
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