Fed Chairman Jerome Powell has alluded to a ‘hot’ labour market in the U.S., as the current number of job openings far exceeds the total number of unemployed – 4.5 million to be exact.  In other words, a tight labour market occurs when job openings (demand) > total unemployed (supply). Moving across the Atlantic, the U.K. finds itself in the same position for the first time ever.  The latest data from the Office of National Statistics shows total job openings at 1,295k, an all-time high.  Conversely, the number of individuals who are unemployed dropped to an all-time low of 1,257k.

January has marked one of the most volatile starts on record and the sell-off in high growth technology stocks was vicious. In a prior note (Data Insight: A Turbulent Start to the Year for Global Equities, January 27, 2022), we observed that technology stocks suffered from the largest drawdown in the Russell 1000 index.  94% of constituents within the information technology sector have experienced a drawdown of at least 10%, while two-thirds of the sector have experienced a drawdown of at least 20%. Netflix Inc, while having GICS Sector of Communication Services and a Refinitiv Business Classification Sector of Technology

Increased labor costs and tariffs are expected to contribute to margin contractions within the S&P 500. As a result, the S&P 500 is expected to see 19Q3 revenue increase 3.6% from the prior year, while earnings are expected to decline by 3.1%. If this holds, it will be the first earnings decline since 16Q2’s YoY decrease of 2.1%.

The second quarter of 2019’s earnings season has arrived and analysts have become increasingly bearish. Analysts currently estimate S&P 500 year-on-year (YoY) 19Q2 earnings will decline 0.1%; however, a year ago expectations for the index were for an increase of 10.6%. Anticipation of margin compression is one of the reasons for the decline in earnings expectations. Exhibit 1: S&P 500 YoY 19Q2 Earnings Estimate History Part of the reduction in growth is due to a stronger than expected 18Q2 earnings (80.2% of companies beat estimates), which led 19Q2 YoY estimates to fall to 9.2% by Oct. 1, 2018. It is

Honeywell has put Dan Loeb in his place. The $110 billion conglomerate on Tuesday said it has decided to spin off two small, low-margin risky businesses rather than the aerospace unit the activist investor had targeted. It’s a smarter way for new Chief Executive Darius Adamczyk to improve returns without much pain, especially on top of the better margins he’s already producing. Loeb argued that carving out aerospace, which produces almost 40 percent of Honeywell’s revenue and a greater chunk of its profit, could generate $20 billion of shareholder value. Yet his argument relied on that unit being valued in

Pirelli is back. The Italian maker of Formula 1 racing tyres, now controlled by Chinese state-owned firm ChemChina, is planning to relist its shares in Milan next month. Pirelli’s focus on the high-end consumer tracks may deserve a premium to some peers, but a mooted valuation of up to 12 billion euros looks overinflated. New investors will get a company much souped-up since ChemChina delisted it in 2015, alongside longtime manager and shareholder Marco Tronchetti Provera. Back then it derived nearly a quarter of its revenue from lower-margin sales to industrial clients, which have now been folded into the Chinese

Ravenous investors are devouring fintech’s IPO scraps. Financial software group Alfa is floating in the biggest UK offering this year by company value. The pricing looked rich to start with, but investors have bid it up even higher. Blame a general lack of big listings, especially for the technologically-enthused. Alfa is worlds apart from most of the racy fintech companies taking on the banks, like peer-to-peer lenders Zopa and RateSetter. Founded in 1990, it sells software to companies like Bank of America, Barclays and Mercedes-Benz to manage asset-financing agreements. If that sounds dull, the stock’s performance on Friday was anything

Lloyds Banking Group has hit peak Antonio Horta-Osorio. The UK lender’s recovery under its current chief executive has been impressive, however one slices it. But from here, his efforts become relatively less important in driving Lloyds’ returns than what happens to the British economy. The UK bank is outperforming on several measures that investors care about. The margin it makes between interest paid and received increased in the first quarter to 2.8 percent, beating both Lloyds’ own target of just over 2.7 percent, and analysts’ estimates. The gold dust that is equity capital is also mounting – Lloyds now says