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Natural gas drops as much as 11%, pulls back from more than 13-year high

U.S. natural gas futures plunged more than 11% at the lows Tuesday, reversing Monday’s surge which saw the contract rally more than 10% at one point to break above $8 per million British thermal units and hit the highest level since September 2008.

Henry Hub prices declined 11.1% at the session low to trade at $6.95. However the contract made back some of those losses during afternoon trading, and ultimately settled 8.24% lower at $7.176.

From Monday’s high to Tuesday’s low the May contract shed 13.8%.

Natural gas prices have been on a tear since Russia’s invasion of Ukraine in late February. The contract is coming off five straight weeks of gains and is up nearly 90% for the year.

Matt Maley, chief market strategist at Miller Tabak, said Monday that natural gas looked ripe for a pullback from a technical perspective. Pointing to the relative strength index, a momentum indicator, Maley said the commodity was second-most overbought since 2003.

“Its RSI chart is now up to levels that have been followed by short-term pullbacks in the past,” he noted Thursday. “We are still bullish on natural gas (and natural gas-related stocks), so we’re not saying that investors should take profits right here. Instead, we [are] merely saying that investors should avoid chasing these assets over the near term.”

Prices surged Monday on forecasts for colder spring temperatures, fuel switching from coal to natural gas, as well as the U.S. sending record amounts of LNG to Europe.

What is a poison pill? How Twitter’s plan to block Elon Musk’s hostile takeover bid would work

Last week, Twitter announced a “poison pill” plan in response to Tesla CEO Elon Musk’s offer to buy Twitter outright and take it private. But what exactly is a poison pill?

In this video, you’ll not only get a crash course in the latest round of “Elon Musk vs. Twitter”, you’ll find out exactly how the poison pill Twitter has implemented is designed to work. You’ll also learn the history of when the corporate poison pill was invented, and that during the period of 1997 to 2001 – the Dot Com era – for every company that successfully used a poison pill defence to deter a takeover, a full twenty companies ended up getting taken over.https://www.youtube.com/embed/82pr19jgov0?feature=oembed&enablejsapi=1&origin=https:%2F%2Fwww.theglobeandmail.com

While the name does indeed come from the use of poison pills by captured spies to avoid interrogation, a corporate poison pill is not designed to kill a company. It’s more formally known as a shareholder rights plan, and only gets triggered when a potential acquirer crosses a certain ownership threshold – 15 per cent in the case of Twitter.

Once triggered, it allows all the other shareholders – except the acquirer – to buy more shares at a deep discount. In Twitter’s TWTR-N -0.78%decrease plan, they will let everyone buy a newly created class of preferred shares: 1/1000th of a preferred share per common share they already own. But these new fractions of a share have the same voting power as a full common share.

And because we apparently can’t get enough of the 4/20 obsession (a meme associated with cannabis culture): the exercise price to buy 1/1000th of these new preferred shares will be $210 and their value will be set at twice that amount which is … $420.

If the poison pill gets triggered, it will have the effect of diluting the acquirer’s position and therefore the acquirer may think twice about simply buying more shares. What it also does is buy time and leverage.

The board can use the existence of a poison pill to drive a better deal with the acquirer. But in the end, it’s the shareholders who have the final say. They could be persuaded to vote against the board because Twitter’s share price hasn’t really done much since its IPO in 2013.

Maybe it is indeed time for new management. Whether that ends up happening, and whether or not it’s Mr. Musk at the helm, is still unknown.

Musk says Twitter board will be paid nothing if he acquires the company

Elon Musk said Monday that Twitter’s board of directors won’t be compensated for serving if he acquires the company.

“Board salary will be $0 if my bid succeeds, so that’s ~$3M/year saved right there,” Musk said in a tweet.

It’s not clear who would be appointed to serve the board of a Musk-owned Twitter. Currently, Twitter spends about $2.9 million in cash and stock awards to board members, according to a filing with the SEC. Executives do not receive additional compensation for their seats, so that does not include payments for CEO Parag Agrawal and former chief Jack Dorsey.

The Tesla and SpaceX CEO has been on a tear to acquire Twitter. After building up more than 9% in stock, Musk offered to buy Twitter in a deal valued at about $43 billion. In response, Twitter adopted a limited duration shareholder rights plan, often referred to as a “poison pill,” in an effort to fend off a potential hostile takeover. Musk may also be considering a potential tender offer to Twitter shareholders to take control of the company.

The outspoken executive has argued Twitter needs to be “transformed” into a private company so it can become a forum for free speech. He’s also said that Twitter’s board members’ interests “are simply not aligned with shareholders” and that the board “owns almost no shares” of the company.

Asia stocks decline as investors react to mixed Chinese economic data

• Shares in Asia slipped in Monday morning trade.
• China saw a faster-than-expected GDP growth in the first quarter, data released by the National Bureau of Statistics showed Monday, despite parts of the country being hit by Covid lockdowns in March.
• Markets in Australia and Hong Kong are closed on Monday for a holiday.

https://www.cnbc.com/2022/04/18/asia-markets-investors-await-chinas-first-quarter-gdp.html

China’s first quarter GDP beats expectations to grow 4.8% year-on-year

BEIJING — China’s first quarter GDP grew faster than expected despite the impact of Covid lockdowns in parts of the country in March, according to data released by the National Bureau of Statistics Monday.

First quarter GDP rose by 4.8%, topping expectations of a 4.4% increase from a year ago.

Fixed asset investment for the first quarter rose by 9.3% from a year ago, topping expectations for 8.5% growth. Industrial production in March rose by 5%, beating the forecast for 4.5% growth.

However, retail sales in March fell by a more-than-expected 3.5% from a year earlier. Analysts polled by Reuters anticipated a 1.6% decline.

Beginning in March, the country has struggled to contain its worst Covid outbreak since the initial phase of the pandemic in 2020. Back then, lockdowns across more than half the country resulted in a 6.8% contraction in first quarter growth from a year earlier.

“We must be aware that with the domestic and international environment becoming increasingly complicated and uncertain, the economic development is facing significant difficulties and challenges,” the bureau said in a statement.

The urban unemployment rate ticked higher in March to 5.8%, up from 5.5% in February. The unemployment rate for those aged 16 to 24 remained far higher at 16%.

Retail sales grew by 3.3% in the first quarter from a year ago, but the apparel, autos and furniture subcategories still posted declines for the period.

Within retail sales, jewelry declined the most and was down by 17.9% in March from a year ago. It was followed by a 16.4% decline in catering and a 12.7% decline in clothing and shoes, the data showed.

“We must coordinate the efforts of Covid-19 prevention and control and economic and social development, make economic stability our top priority and pursue progress while ensuring stability, and put the task of ensuring stable growth in an even more prominent position,” the bureau said.

Although economic figures released for January and February beat expectations, figures for March have begun to reflect the impact of stay-home orders and travel restrictions around economic centers like the coastal metropolis of Shanghai.

Exports, a major driver of China’s growth, rose by a more-than-expected 14.7% in March, but imports unexpectedly fell, down by 0.1% from a year ago, according to data released last week.

APRIL 18, 2022 Oil prices rise; weak OPEC production in focus

Oil prices moved higher in early Asian trade, with weak crude production from OPEC supporting prices, Oanda market analyst Ed Moya said in a note. Although the IEA’s oil-reserve release is weighing on sentiment, Moya says this already looks priced in. Click on Link Below

Oil prices rise; weak OPEC production in focus | Fox Business

Wells Fargo’s quarterly profit tops expectations as lower costs blunt hit from weak mortgage lending

Wells Fargo & Co’s WFC-N +0.25%increase first-quarter profit dropped 21 per cent but beat Wall Street expectations on Thursday as top boss Charlie Scharf plans to keep a tight rein on costs cushioned a drop in mortgage lending.

Overall average loans grew 3 per cent in the quarter, largely helped by credit card and auto lending. Mortgage loans, however, fell 33 per cent from a year ago on lower originations as the Federal Reserve raised interest rates to tame soaring inflation.

“Our internal indicators continue to point towards the strength of our customers’ financial position, but the Federal Reserve has made it clear that it will take actions necessary to reduce inflation and this will certainly reduce economic growth,” Chief Executive Charlie Scharf said.

“In addition, the war in Ukraine adds additional risk to the downside.”

Wells Fargo leans heavily on revenue from its consumer and corporate banking business, as it does not have a large capital markets division compared with Wall Street rivals Goldman Sachs Group Inc and Morgan Stanley.

Non-interest expenses fell 1 per cent on lower personnel and divestitures, in line with Scharf’s plan to turn around the bank and save about $10-billion annually over the longer term.

Net interest income rose 5 per cent during the quarter helped by higher loan balances and a decrease in long-term debt, among others. Overall average loans grew to $898-billion in the past quarter, up from $873.4-billion a year earlier.

Consumer spending has been on the rise for months, as the United States emerges from the COVID-19 pandemic and many make up for lost time travelling, shopping and dining out.

Top executives at some of the big U.S. banks had said early in the first quarter that consumer have healthy cash balances in their banks and are eager to spend and borrow.

The fourth-largest U.S. lender posted a profit of $3.67-billion, or 88 cents per share, for the three months ended March 31, compared with $4.64-billion, or $1.02 per share, a year earlier.

Cogeco’s second-quarter profit rises 7.8% to $118.8-million on revenue boost

Cogeco Inc. CGO-T -0.04%decrease says its net profit increased nearly eight per cent in its second quarter on a boost in revenues.

The Montreal-based company says its net income attributable to shareholders was $118.8-million or $2.29 per diluted share, up from $110.2-million or $2.11 per share a year earlier.

Revenues for the three months ended Feb. 18 increased 14.5 per cent to $748.1-million, from $653.2-million in the second quarter of 2021.

Cogeco was expected to earn $2.27 per share on $741.2-million of revenues, according to financial data firm Refinitiv.

American broadband services revenue increased 31 per cent in constant currency while Canadian broadband services revenue was up 2.1 per cent mainly due to the DERYtelecom acquisition in December 2020 and organic growth.

Media activities revenue was up 4.9 per cent following an easing of COVID-19 public health restrictions.

“For our radio business, our revenue has grown despite a weaker advertising market due to sudden lockdowns brought on by the Omicron variant, however signs have been positive for the economy as public health measures are being lifted,” stated CEO Philippe Jette in a news release.

Goldman Sachs tops analyst estimates as trading desks crush expectations amid surging volatility

Goldman Sachs first-quarter earnings blew past expectations as its traders effectively navigated a surge in markets volatility from the war in Ukraine.

Here’s are the numbers:

• Earnings: $10.76 per share, vs. $8.89 estimate, according to Refinitiv
• Revenue: $12.93 billion, vs. $11.83 billion estimate.

“It was a turbulent quarter dominated by the devastating invasion of Ukraine,” CEO David Solomon said in the release. “The rapidly evolving market environment had a significant effect on client activity as risk intermediation came to the fore and equity issuance came to a near standstill. Despite the environment, our results in the quarter show we continued to effectively support our clients.”

Goldman’s traders made the best of that turbulent environment as revenue from fixed income, currency and commodities was up 21% from a year ago to $4.72 billion in the first quarter. That was far more than the $3.04 billion estimate for FICC trading from analysts polled by FactSet. Equities trading revenue came in at $3.15 billion, 15% lower than the first quarter of 2021, but much better than expectations as well.

Goldman Sachs has been one of the big beneficiaries of a torrid two years of Wall Street deals activity, putting up record revenue figures and blowing past performance targets.

The results showed the bank’s trading side stepped in to make up for a slowdown in mergers, IPOs and debt issuance slowed in the first quarter.

Goldman Sachs is the world’s biggest mergers advisor by revenue and is the most Wall Street-dependent firm among the six biggest U.S. banks. One of Solomon’s biggest priorities has been to diversify the firm’s revenue streams, boosting consumer banking, wealth and asset management operations.

Analysts will be keen to ask Solomon how the deals pipeline looks for the remainder of 2022, and if mergers and IPOs are being killed, or merely pushed back into future quarters.

Another area of concern for the bank is trading, where spikes in volatility and market dislocations caused by the Ukraine war may have benefited some traders, while leaving others holding losses. It remains to be seen whether the quarter’s tumult led to the type of volatility that encouraged clients to trade, or it left them on the sidelines.

In February, Solomon increased the bank’s guidance for returns and targets in wealth and asset management divisions after handily exceeding goals set in early 2020.

Goldman shares have fallen 15.8% this year through Thursday, compared with the 10.5% decline of the KBW Bank Index.

On Wednesday, JPMorgan Chase said first-quarter profit slumped 42% as it posted losses tied to Russia sanctions and set aside money for future loan losses.