Monthly Archives: February 2020

Goldman Sachs asks some clients to skip New York conference amid coronavirus outbreak

A Goldman Sachs sign is seen on at the company’s post on the floor of the New York Stock Exchange.

Brendan McDermid | Reuters

Goldman Sachs is asking attendees for a conference scheduled to be held by the investment bank next week to skip the event if they’ve recently traveled to countries worst hit by the coronavirus.

The warning, for Goldman’s eighth annual housing and consumer finance conference held at the bank’s New York headquarters, was just added to the event’s registration website.

“In light of the recent outbreak of the novel coronavirus, COVID-19, Goldman Sachs has enacted several precautionary measures to ensure the wellbeing of our clients and our people,” the bank said.

It’s the latest move by corporations seeking to protect workers from the coronavirus, which has roiled global stock markets this week amid signs the disease is spreading. On Thursday Facebook announced it was canceling an annual software developer conference held in San Jose, California because of the outbreak. Morgan Stanley asked attendees of an upcoming San Francisco event to confirm online that they hadn’t traveled to China, South Korea, Japan or Italy in the past two weeks, according to Reuters.

Goldman asked people who have traveled to mainland China within the last 14 days, South Korea as of Feb. 19 or the Lombardy and Veneto regions of Italy as of Feb. 22 to stay away from the conference, according to the post.

The warning also includes people who have “been in close contact” with people who have traveled to those areas, or travelers who have passed through airports and train stations in the affected regions.

The Goldman event typically draws established companies and start-ups in the mortgage, real estate technology and investment industries.

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Square emerges as a coronavirus hedge while other payment stocks get crushed

Jack Dorsey, chief executive officer of Square Inc., second right, tours the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Thursday, Nov. 19, 2015. 

Yana Paskova | Bloomberg | Getty Images

Square has been an outlier in this week’s payment stock wreckage.

Shares of Mastercard, Visa, American Express and Paypal were battered as companies warned of a slowdown in spending and travel due to the quickly-spreading coronavirus.

Meanwhile, Square surged as much as 10% a day after reporting better-than expected fourth-quarter results and upbeat guidance. Jack Dorsey’s payment company generates roughly 90% of its revenue inside of the U.S., and is significantly less exposed to travel and leisure than some of its competitors.

Square CFO Amrita Ahuja said coronavirus hasn’t had a material impact on results so far in the first quarter, and the company doesn’t envision an impact in near-term.

“We’re actually under-indexed to categories like tourism and travel,” Ahuja told CNBC in an interview at Square’s headquarters in San Francisco. “This is an area that we will continue to monitor — international today is a relatively small part of our business.”

Fears around coronavirus and its impact on global growth and corporate profits have roiled U.S. stocks this week. The total number of confirmed cases has increased with South Korea confirming more than 1,700 cases and 400 cases confirmed in Italy.

Mastercard shares were on pace for the worst week since 2008 after the company issued a warning that the fast-spreading virus could weigh on revenue this year. American Express and Visa have not changed guidance, but were both heading for their worst week in roughly a decade.

“Cross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted by the Coronavirus,” the company said in a statement Monday. The company forecast first-quarter revenue growth about two to three percentage points lower than previous guidance.

PayPal made a similar announcement on Thursday, lowering its outlook for first-quarter revenue growth by one percentage point. While PayPal’s business trends “remain strong,” international cross-border e-commerce activity “has been negatively impacted by COVID-19,” the company said in a statement.

Macquarie Capital analyst Dan Dolev said Square is so far, proving immune to coronavirus. Its current revenue model “has little reliance on cross-border travel, which has been the epicenter of the coronavirus financial mayhem,” Dolev said in a note to clients following earnings.

Square also reported break-out growth in its Venmo competitor, Cash App. The company said its peer-to-peer payments and stock-trading app now has 24 million users — up 60% from a year ago. The app generated $361 million in revenue, half of which came from bitcoin trading.

Square operates in the U.K., Canada, Australia and Japan. International revenue grew at 52% year over year fourth quarter. The company said international growth is compounding at roughly twice the average rate.

Growth abroad is still a key part of Square’s future, Ahuja said. While the virus might not factor in immediately, she did say there were still unknowns when it comes to the severity of the outbreak.

“Of course, we’ll continue to monitor any impact to the overall consumer spend numbers that we see,” Ahuja said.

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Stocks making the biggest moves midday: Virgin Galactic, Square, Tesla, Box, Etsy & more

Inside Virgin Galactic’s hangar at Spaceport America in New Mexico.

Virgin Galactic

Check out the companies making headlines in midday trading.

Virgin Galactic — Shares of the space company sank more than 18% amid multiple pessimistic sell-side analyst notes. Both Credit Suisse and Morgan Stanley downgraded the equity from overweight/outperform to equal weight/neutral. Morgan Stanley analyst Adam Jonas wrote that the stock’s recent price surge over the last month means investors should be “waiting for the fundamentals to catch up.” Credit Suisse echoed that sentiment, saying the price had grown too frothy and that they are “no longer able to recommend SPCE shares” as such.

Tesla — Tesla dropped about 9% amid the broader market’s sell-off as investors ditched what Wall Street views as some of the market’s riskiest names. The stock, down more than 21% since Monday, came under pressure after Panasonic said it would end its partnership with Elon Musk’s electric-car company and stop producing solar panels with Tesla as soon as May. The announcement marked the latest rift between the two companies that have otherwise been partners in a broader push to sell electric cars.

Etsy — Shares of Etsy soared more than 11% after the e-commerce website reported earnings per share of 25 cents on revenue of $270 million, topping analysts’ expectations. Analysts forecast earnings per share of 16 cents on revenue of $265 million, according to Refinitiv. Etsy also issued full year revenue guidance above Wall Street’s estimates.

Box – Shares of Box surged 8% after the online storage software company reported better-than-expected earnings. Box beat estimates by 3 cents with adjusted quarterly profit of 7 cents per share, according to Refinitiv. The company also saw revenue beat estimates as demand for cloud services in general continues to accelerate.

Square – Shares of Square jumped 9% after the mobile payments technology company posted strong quarterly numbers. Square came in 2 cents ahead of estimates with adjusted quarterly profit of 23 cents per share, according to Refitiniv. Square saw its user base numbers surge compared to a year earlier.

Anheuser-Busch InBev – Shares of Anheuser-Busch InBev tumbled more than 8% after the beer brewer said its current quarter profit would decline by about 10% due to the coronavirus. The company expects the coronavirus outbreak to significantly hit demand for its products in China.

Microsoft – Shares of Microsoft are down 3.5% after the tech giant said it did not expect to meet prior guidance for its personal computing segment, due to supply chain disruptions related to the coronavirus outbreak.

Facebook, Apple, Amazon, Netflix, Google — Shares of the so-call FAANG stocks were hit hard by the market sell-off. Shares of Apple tanked 4%, Facebook shares fell 1.4%. Amazon fell 2.5% and Google parent Alphabet tumbled 3.2%. Netflix shares bucked the broader market’s trend, gaining 2.3%

Airlines, hotels — Travel stocks took a beating on Thursday morning as companies and countries around the world issued travel restrictions and advisories. Among airlines, American Airlines dropped 4.8%, JetBlue fell 3.5% and Southwest Airlines slipped 2.3% and hit a new 52-week low. Royal Caribbean plunged 6.4%, while fellow cruise stocks Carnival and Norwegian Cruise Lines were down roughly 3%. MGM Resorts also lost 3%.

Marathon Petroleum — Shares of the energy company slid 6% as the sector came under pressure, dragged lower by falling oil prices. At the lows of the day, U.S. West Texas Intermediate crude fell more than 5%, breaking below $46 to trade at its lowest level in 13 months. ConocoPhillips and Occidental Petroleum were each down more than 4%, with EOG Resources, Pioneer Natural Resources and Devon Energy all shedding more than 3%.

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JPMorgan says buy the dip, bank on Fed ‘insurance’ cuts

Trader Michael Urkonis works on the floor of the New York Stock Exchange, January 28, 2020.

Bryan R Smith | Reuters

For investors struggling to see an end to this market mayhem, JPMorgan said it’s time to buy the dip as the bank believes the coronavirus impact is “likely temporary” and the Federal Reserve will come to the rescue.

Stocks tumbled into correction territory briefly on Thursday as the massive sell-off accelerated amid concern over the fast-spreading coronavirus and its damage to the global economy. JPMorgan is sticking with its bullish market forecast, with a year-end S&P 500 target of 3,400, betting on “potential Fed insurance cuts” to lift stocks. The target represents a 10% rise from Thursday’s level.

“While it is easy to turn cautious on the market after a ~10% drop, we argue investors should not discount the benefit of announced and unannounced global policy responses that are likely to outlast the impact of COVID-19,” Dubravko Lakos-Bujas, J.P. Morgan’s chief U.S. equity strategist, said in a note on Thursday.

Amid the market rout, traders are increasingly pricing in a rate reduction in the coming months. The fed funds futures market is assigning a near 60% chance of a rate cut at the Fed’s April policy meeting, according to the CME FedWatch Tool. Traders also see the possibility of three reductions in 2020.

“Potential Fed insurance cuts at a time when the US employment base is close to full and prime-age participation rate is on a rise could result in an even hotter economy once the COVID-19 impact rolls off and stimulus remains,” Lakos-Bujas said.

JPMorgan’s view is more bullish than some of the other biggest banks on Wall Street. For instance, Goldman said Thursday it now sees zero earnings growth for U.S. companies this year because of the outbreak.

Still, JPMorgan believes the sell-off is only short-lived as it thinks the stock rout is also partly caused by the rise of Senator Bernie Sanders in the Democratic Presidential pool.

“Additionally, the market is pricing in rising odds of a progressive candidate, even though much can still change ahead of the DNC nomination, while polls remain firmly in favor of President Trump,” Lakos-Bujas said.

The bank is not alone in blaming the sell-off to the election. “Bond king” Jeffrey Gundlach also pointed the finger at Sanders for the market’s tumultuous rout this week.

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