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GS says US GDP growth will likely peak this quarter and decelerate for the rest of the year.
It sees growth remaining above consensus estimates and trend, which can delay a shift to defensives.
Meantime, global growth continues accelerating, which benefits stocks that follow economic trends.
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US GDP growth is likely to peak this quarter and decelerate throughout the rest of the year as fiscal stimulus and economic reopening tailwinds reach their maximum impact and begin to dwindle away, according to Ben Snider, a strategist at Goldman Sachs. While many nations in the world suffered heavy economic losses and struggled to kick-start activity after the coronavirus triggered a global economic downturn, the US was able to grow robustly from the beatdown. In the third quarter of 2020, US GDP grew at an annualized rate of 33.1% thanks in large part to businesses reopening and an increase in consumer spending. "Although our economists believe the pace of US economic growth will peak in the next month or two, their 2Q forecasts for economic growth remain substantially above consensus estimates," Snider wrote in a note to clients on Wednesday."In addition, they expect core PCE inflation will temporarily surge above the Fed's 2% target. Both of these catalysts should benefit cyclical stocks.The bank's economists expect US growth to come in at 10.5% in the second quarter, which is the second-fastest quarterly growth rate since 1978. On top of that, their 7% GDP growth forecast for the second half of the year would still be above trend and consensus estimates, Snider said.
Usually, in an environment that has positive and accelerating economic growth, the cyclical areas of the market do the best as they tend to follow economic trends. But afterward, when growth first starts to peak and decelerate, more defensive industries tend to outperform, he added.
Still, the rotation from cyclicals to defensives might be delayed this time around. That's because of strong growth expectations despite broad deceleration, economic data releases in coming weeks, and the conviction that global economic growth still hasn't reached its peak, he said. "Rapid vaccine distribution and exceptional fiscal stimulus have helped the US economy accelerate more quickly than most other economies around the world. Our economists expect non-US global growth will peak in 3Q 2021, coinciding with the peak growth rates in Europe, Japan, and EM ex. China, among other economies," he added. That bodes well for many cyclical pockets of the market, as many cyclical US equity industries follow both US and non-US economic trends. That means that the headwind of growth deceleration in the US could partly be canceled out by the acceleration of global growth, he added. Furthermore, some industries within information technology, financials, communications services, and consumer discretionary outperformed the S&P 500 in periods where US economic growth was likely declining and non-US global growth was accelerating since 1998, he said. He noted that in the past few weeks, "global-facing" cyclical stocks have started to outperform their US-facing counterparts, and that's something that he expects will continue for months. That being said, Snider named 45 S&P 500 stocks from cyclical industry groups with the highest foreign exposures to revenue. They are listed below in no particular order. We have included their corresponding tickers, market caps, industry groups, and the percentage of their revenues that did not come from the US as of 2019.
Ticker: NEMMarket cap: $53 billionIndustry group: MaterialsNon-US revenues: 99%Source: Goldman Sachs
2. Monolithic Power Systems
Ticker: MPWRMarket cap: $17 billionIndustry group: SemiconductorsNon-US revenues: 97%Source: Goldman Sachs
3. Lam Research
Ticker: LRCXMarket cap: $88 billionIndustry group: SemiconductorsNon-US revenues: 92%Source: Goldman Sachs
Ticker: NVDAMarket cap: $376 billionIndustry group: SemiconductorsNon-US revenues: 92%Source: Goldman Sachs
5. Maxim Integrated
Ticker: MXIMMarket cap: $25 billionIndustry group: Semiconductors Non-US revenues: 89%Source: Goldman Sachs
Ticker: QCOMMarket cap: $152 billionIndustry group: SemiconductorsNon-US revenues: 89%Source: Goldman Sachs
7. Texas Instruments
Ticker: TXNMarket cap: $170 billionIndustry group: SemiconductorsNon-US revenues: 87%Source: Goldman Sachs
8. Applied Materials
Ticker: AMATMarket cap: $118 billionIndustry group: SemiconductorsNon-US revenues: 87%Source: Goldman Sachs
Ticker: KLACMarket cap: $49 billionIndustry group: SemiconductorsNon-US revenues: 87%Source: Goldman Sachs
Ticker: TERMarket cap: $21 billionIndustry group: SemiconductorsNon-US revenues: 85%Source: Goldman Sachs
11. Broadcom Inc.
Ticker: AVGOMarket cap: $187 billionIndustry group: SemiconductorsNon-US revenues: 81%Source: Goldman Sachs
12. International Flavors & Fragrances
Ticker: IFFMarket cap: $35 billionIndustry group: MaterialsNon-US revenues: 80%Source: Goldman Sachs
Ticker: INTCMarket cap: $255 billionIndustry group: SemiconductorsNon-US revenues: 78%Source: Goldman Sachs
14. Microchip Technology
Ticker: MCHPMarket cap: $40 billionIndustry group: Semiconductors Non-US revenues: 78%Source: Goldman Sachs
Ticker FMCMarket cap: $15 billionIndustry group: MaterialsNon-US revenues: 77%Source: Goldman Sachs
Ticker: BWAMarket cap: $11 billionIndustry group: Automobiles & ComponentsNon-US revenues: 77%Source: Goldman Sachs
Ticker: ALBMarket cap: $17 billionIndustry group: MaterialsNon-US revenues: 76%Source: Goldman Sachs
Ticker: XLNXMarket cap: $30 billionIndustry group: Semiconductors Non-US revenues: 74%Source: Goldman Sachs
19. Baker Hughes
Ticker: BKR Market cap: $14 billionIndustry group: EnergyNon-US revenues: 74%Source: Goldman Sachs
20. Mosaic Company
Ticker: MOSMarket cap: $12 billionIndustry group: MaterialsNon-US revenues: 74%Source: Goldman Sachs
21. Advanced Micro Devices
Ticker: AMDMarket cap: $96 billionIndustry group: Semiconductors Non-US revenues: 74%Source: Goldman Sachs
Ticker: SLBMarket cap: $35 billionIndustry group: EnergyNon-US revenues: 72%Source: Goldman Sachs
23. Linde plc
Ticker: LINMarket cap: $149 billionIndustry group: MaterialsNon-US revenues: 70%Source: Goldman Sachs
Ticker: DDMarket cap: $40 billionIndustry group: MaterialsNon-US revenues: 69%Source: Goldman Sachs
25. Analog Devices
Ticker: ADIMarket cap: $59 billionIndustry group: Semiconductors Non-US revenues: 66%Source: Goldman Sachs
Ticker: FCXMarket cap: $52 billionIndustry group: MaterialsNon-US revenues: 65%Source: Goldman Sachs
Ticker: NOVMarket cap: $5 billionIndustry group: EnergyNon-US revenues: 63%Source: Goldman Sachs
Ticker: APTVMarket cap: $36 billionIndustry group: Automobiles & ComponentsNon-US revenues: 63%Source: Goldman Sachs
29. Air Products & Chemicals
Ticker: APDMarket cap: $63 billionIndustry group: MaterialsNon-US revenues: 62%Source: Goldman Sachs
30. Ingersoll Rand
Ticker: IRMarket cap: $21 billionIndustry group: Capital GoodsNon-US revenues: 59%Source: Goldman Sachs
Ticker: NKEMarket cap: $162 billionIndustry group: Consumer Durables & ApparelNon-US revenues: 59%Source: Goldman Sachs
32. Westinghouse Air Brake Technologies
Ticker: WABMarket cap: $15 billionIndustry group: Capital GoodsNon-US revenues: 59%Source: Goldman Sachs
33. General Electric
Ticker: GEMarket cap: $115 billionIndustry group: Capital GoodsNon-US revenues: 59%Source: Goldman Sachs
Ticker: FBMarket cap: $728 billionIndustry group: Media & EntertainmentNon-US revenues: 57%Source: Goldman Sachs
Ticker: PVHMarket cap: $7 billionIndustry group: Consumer Durables & ApparelNon-US revenues: 57% Source: Goldman Sachs
Ticker: MSCIMarket cap: $39 billionIndustry group: Diversified FinancialsNon-US revenues: 55%Source: Goldman Sachs
Ticker: CTVAMarket cap: $35 billionIndustry group: MaterialsNon-US revenues: 55%Source: Goldman Sachs
Ticker: QRVOMarket cap: $21 billionIndustry group: Semiconductors Non-US revenues: 55%Source: Goldman Sachs
Ticker: CMarket cap: $146 billionIndustry group: BanksNon-US revenues: 54%Source: Goldman Sachs
40. Emerson Electric
Ticker: EMRMarket cap: $55 billionIndustry group: Capital GoodsNon-US revenues: 54%Source: Goldman Sachs
Ticker: GOOGLMarket cap: $1,432 billionIndustry group: Media & EntertainmentNon-US revenues: 54%Source: Goldman Sachs
Ticker: NFLXMarket cap: $243 billionIndustry group: Media & EntertainmentNon-US revenues: 53%Source: Goldman Sachs
43. Willis Towers Watson
Ticker: WLTWMarket cap: $31 billionIndustry group: InsuranceNon-US revenues: 52%Source: Goldman Sachs
Ticker: GRMNMarket cap: $26 billionIndustry group: Consumer Durables & ApparelNon-US revenues: 52%Source: Goldman Sachs
Ticker: XYLMarket cap: $19 billionIndustry group: Capital GoodsNon-US revenues: 51%Source: Goldman Sachs
PITTSBURGH, Sept. 25, 2020 /PRNewswire/ -- The United Steelworkers (USW) today said that union members at Libbey Glass facilities in Toledo, Ohio, and Shreveport, Louisiana, have ratified new, four-year labor agreements with the bankrupt company.
Members of the USW and International Association of Machinists (IAM) voted overwhelming in favor of the contracts, which include a temporary wage reduction and other concessions that will give Libbey financial relief to reorganize its debts under Chapter 11 of the federal bankruptcy code but also include provisions to increase wages when the company's financial condition improves.
USW International Vice President (Administration) David McCall, who chaired the negotiations with Libbey, credited the solidarity of the combined union membership and their negotiating committee for standing up to demand fairness and dignity when management and the company's creditors sought major, permanent concessions.
"Throughout this process, our members made it clear that cutting wages and benefits for hourly workers without shared sacrifices by management would not keep the company afloat," McCall said. "We are proud that we stood together to ensure our voices were heard and we achieved a more just resolution than the mammoth concessions that management originally proposed."
Under the agreements, Libbey will discontinue production in Shreveport, but will maintain a shipping and distribution facility at the location.
The USW represents 850,000 men and women employed in manufacturing, metals, mining, pulp and paper, rubber, chemicals, glass, auto supply and the energy-producing industries, along with a growing number of workers in public sector, service, academic and tech professions.
More information, contact: Tony Montana – 412-562-2592 or email@example.com
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SOURCE United Steelworkers (USW)
PROS Holdings, Inc. (NYSE: PRO) (the "Company”) today announced the pricing of its previously announced private offering of $150.0 million aggregate principal amount of convertible senior notes due 2027 (the "Convertible Notes”). The Convertible Notes are being offered in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act”).
The Convertible Notes will be unsecured, unsubordinated obligations of the Company and will pay interest semiannually at an annual rate of 2.250% and will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, based on the applicable conversion rate at such time. The Convertible Notes have an initial conversion rate of 23.9137 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes (which is equivalent to an initial conversion price of approximately $41.82 per share of the Company’s common stock), representing an initial conversion premium of approximately 32.5% above the closing price of $31.56 per share of the Company’s common stock on September 10, 2020. The conversion rate is subject to adjustment in certain circumstances, including in connection with specified fundamental changes. Holders of the Convertible Notes will have the right to require the Company to repurchase all or a portion of their notes upon the occurrence of a fundamental change (as defined in the indenture governing the Convertible Notes) at a purchase price of 100% of their principal amount plus any accrued and unpaid interest. The Convertible Notes will mature on September 15, 2027, unless converted, redeemed or repurchased in accordance with their terms prior to such date. Prior to June 15, 2027, the Convertible Notes will be convertible only upon the satisfaction of certain conditions and during certain periods, and thereafter, at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of these conditions. The Company expects to close the offering on or about September 15, 2020, subject to the satisfaction of various customary closing conditions.
In connection with the offering, the Company entered into privately negotiated capped call transactions with certain option counterparties. The capped call transactions cover, subject to anti-dilution adjustments, the number of shares of common stock underlying the Convertible Notes sold in the offering. The capped call transactions are generally expected to reduce potential dilution to the Company’s common stock upon conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be.
The Company estimates that it will receive net proceeds from the offering of approximately $145.9 million, after deducting the initial purchasers’ discount and estimated offering expenses. The Company intends to use $25.3 million of the net proceeds of the offering to pay the cost of the capped call transactions. The Company intends to use the remainder of the net proceeds from the offering for general corporate purposes, including working capital, capital expenditures, potential acquisitions and strategic transactions.
This press release is neither an offer to sell nor a solicitation of an offer to buy the Convertible Notes or the shares of common stock issuable upon conversion of the Convertible Notes, if any, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.
The Convertible Notes and the shares of common stock issuable upon conversion of the Convertible Notes, if any, have not been registered under the Securities Act, or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
This press release contains "forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the planned offering, business strategies, market potential, future financial and operational performance and other matters. Words such as "anticipates,” "estimates,” "expects,” "projects,” "forecasts,” "intends,” "plans,” "will,” "believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. These forward-looking statements are based on management’s current expectations and beliefs about future events and are inherently susceptible to uncertainty and changes in circumstances. Except as required by law, the Company is under no obligation to, and expressly disclaim any obligation to, update or alter any forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. With respect to the planned offering, such uncertainties and circumstances include whether the Company will consummate the offering on the anticipated terms of the notes, if at all, and the use of the net proceeds from the offering; and whether the capped call transactions will become effective. Various factors could also adversely affect the Company’s operations, business or financial results in the future and cause the Company’s actual results to differ materially from those contained in the forward-looking statements, including those factors discussed in detail in the "Risk Factors” sections contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the "Annual Report”) and Quarterly Reports on Form 10-Q for the three month period ended March 31, 2020 and the three and six month periods ended June 30, 2020 (the "Quarterly Reports”), filed with the Securities and Exchange Commission. In addition, the Company operates in a highly competitive, rapidly changing and technology-driven industry. This industry is affected by government regulation, economic, strategic, political and social conditions, technological developments and, particularly in view of new technologies, the continued ability to protect intellectual property rights. The Company’s actual results could differ materially from management’s expectations because of changes in such factors. Achieving the Company’s business and financial objectives, including improved financial results and maintenance of a strong balance sheet and liquidity position, could be adversely affected by the factors discussed or referenced under the "Risk Factors” sections contained in the Annual Report and Quarterly Reports as well as, among other things: (1) changes in the Company’s plans, strategies and initiatives; (2) the impacts of the global COVID-19 pandemic on the Company’s business, customers, partners, employees, markets, financial results and condition; (3) stock price volatility; (4) future borrowing and restrictive covenants under the revolving credit facility; (5) the impact of acquisitions, dispositions and other similar transactions; (6) the Company’s ability to attract and retain key employees; and (7) the Company’s ability to attract and retain new and existing customers to its solutions.
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