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  • cedric lefebvre

Friday, 24th April 2020

Quote of the day: The disinfectant knocks the coronavirus out in a minute. One minute,” “Is there a way we can do something like that by injection inside?” POTUS

Opinion: As expected in “Opinion” of the 22nd of April, SP500 rose despite rising job claims. The market is not responding to macro facts. Expecting the SP500 to reach the 3 000 points in the coming weeks.


Lesson of the day:


· Cash-neutral: the long positions and short positions in the portfolio cancel each other out (from the perspective of accounting).

· Net cash as a corporate goal (Apple) refers to the excess cash that a company holds beyond its debt and operating capital needs. In general, investors want to see cash reinvested in the business to drive growth if there are good uses for it.

MARKETS:

· Zoom shares rally toward record heights on news of Nasdaq100 inclusion. Confirming my ZOOM stock pick dating back 19th March.


· Amazon loses trial as French lower court says firm failed to protect workers to deal with deliveries.


· AT&T CEO Steps down. COO J.Stankey for top role.


· Intel (INTC.O) dropped over 5% after the chipmaker gave a quarterly profit forecast that missed analysts’ estimates.


· The S&P 500 ended marginally lower on Thursday after a report that an experimental antiviral drug for the coronavirus flopped in its first randomized clinical trial, denting optimism that the pandemic’s impact on the labor market was nearing an end.

· The market’s sensitivity to news related to coronavirus therapies reflects investors’ desperation for any indication of when the global economy might be able to start returning to normal.

· Steven Mnuchin is considering the creation of a government lending program for U.S. oil companies that have been devastated by the collapse in crude prices. One of the options on the table is for the administration to take equity stakes in exchange for some loans.

· Fear of second wave of infections in Europe. Germany saw its largest jump in new cases and deaths in nearly a week.


· The IHS Markit composite index of purchasing managers plummeted 13.5 points to 27.4, the lowest in data back to 2009, the group reported Thursday. Readings below 50 indicate contraction, and the data are consistent with figures for the Germany, France, Japan and Australia that indicate a worldwide recession. The scale of the fall in the PMI adds to signs that the second quarter will see an historically dramatic contraction of the economy, and will add to worries about the ultimate cost of the fight against the pandemic.


INDUSTRY TREND:

Quote of the day : “S&P 500 companies spent $7 trillion on buybacks and dividends and “been rewarded’ by coronavirus bailouts”

Opinion: Bail out will put a political pressure on government from Tax payers. With Boeing as the spearhead of critics. Regulations on stock buybacks such as quotas wouldn’t surprise me.


Share buy back back on the scene

· The traditional criticism of share buybacks is that it is a way to enrich the wallets of CEOs and top-level executives because it can drive per-share gains of stock by reducing the outstanding float. However, proponents say repurchases are a low-risk way of allocating capital for firms that are uncertain about the return on investment of higher wages and research and development, and therefore the best use of capital.

· Apple expected to add up to $100 billion to buyback program while many companies halt repurchases

· Apple has about $100 billion in net cash and the company has set out to become net-cash neutral “over time.”

· Despite a question timing, logical decision given how attractive the stock is. its large market value makes it difficult for Apple to offer an overly attractive yield.“In the two years since announcing its ‘net-cash neutral’ plan, Apple has returned ~135% of free-cash flow via buybacks (115%) and dividends (~20%),” he wrote. “The returns in excess of free-cash flow have reduced net cash by ~$50 billion over two years and we expect this trend to continue with net cash falling by ~$25 billion per year over the next 4 years.”

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