Gee Wizz

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Thursday, May 3: Although the US Federal Reserve’s, street name: ‘Fed’, decision last night was to keep rates the same it was laced with rhetoric that hikes could come as soon as next month with higher inflation ahead. This sent Wall Street lower, sent Asian markets broadly in the same direction and led to a negative open across Europe. The FTSE was to some degree sheltered by outperforming miners again and didn’t slip much further than 10-20 points for much of the morning session. As a result, it was little surprise to see the likes of Glencore, Evraz, Randgold and Antofagasta dominate the top spots on the index. The largest faller on the day was Smith & Nephew, after the medical equipment firm cut their 2018 outlook in a trading statement; shares slipped >7%. One of the previously mentioned miners, Glencore, also released their Q1 statement in which they stated production was in line across all commodity groups and they reaffirmed full year guidance.

Charles Taylor shares climbed over 4% after they announced a deal to buy Inworx for $50.5m. Inworx is a Latin American insurance software provider, the deal will be part funded via a share placing.

Wizz Air shares enjoyed a strong day after the budget airline provider stated traffic during April rose 19.2% on year and rolling annual traffic to April was up an equally impressive 23.7%. The airline that focuses more on Eastern and Central Europe carried around 2.76 million passengers last month, alongside capacity growing to over 3 million seats compared to 2.57 million a year ago. An important metric used amongst airlines, the load factor, is also heading in the right direction as it moved from 90.1% last year to 90.9% (Load factor measures how many passengers travel in comparison to the seats available). Shares closed +1.8%.

When a company does give an update, there’s only so much they can do with regards to the numbers. Of course, management will do their best to gloss over adverse results or a hiccup in strategy but at the end of the day, one sure fire way of helping yourself isn’t giving a bizarre call to analysts. A lesson we can all take from Elon Musk, famed owner of Tesla. So, if you’re going to host an earnings call, here’s a few pointers on things to avoid doing and saying;

Insulting analysts in the friendliest language like ‘boring bonehead’

Branding questions from huge investment houses ‘so dry they are killing me’

Accepting 20 minutes of questioning from a YouTube channel host with <10,000 subscribers. Unlikely he’ll help fund the future production of Tesla cars but who cares?

Hating moats

 

Who cares huh? Well Wall Street no matter how boring, is vital and has been vital to the funding and success of Tesla. After the phone lines dropped, and confusion settled, $2bn was wiped from its stock market valuation. Boneheads suddenly aren’t so boring now are they Musk? He was unavailable for that question but we assume he’d still reply with ‘yes they are’. Jim Cramer from CNBC believes this could also be his last earnings call. What made you think that Jim?

As we write the FTSE along with most other European bourses looks destined for a poor close although it has outperformed other European markets, the first drop in London for 5 sessions. Wall Street has also opened with sharp losses, the NASDAQ currently down 1.5% alongside the Dow and S&P whom have both fallen 1.2% so far.

 

 

 

 

 

 

 

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