Credit Suisse & Nomura Shares Drop On Warnings Of “Significant” Hits To Q1 Earnings From Archegos Fallout

Plus, the CDC said Pfizer and Moderna’s COVID-19 vaccines are 80% effective two weeks after the first dose, Boeing shares are up after Southwest announced an order for the manufacturer’s 737 Max jets, and Cazoo is going public through a SPAC merger.

Stocks were mixed at the open on Monday with the Dow added just 14 points, or less than 0.1 %. The S&P 500 fell by 0.1%, while the Nasdaq dropped nearly 0.3%.

Credit Suisse and Nomura are down 12% and 13%, respectively, this morning after warning of “significant” hits to first quarter results after they began exiting positions with Archegos Capital Management which defaulted on margin calls last week. “While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first quarter results, notwithstanding the positive trends announced in our trading statement earlier this month,” Credit Suisse said, adding that it would provide a further update on the matter “in due course.” Archegos Capital Management—the family office of trader Bill Hwang—was forced to liquidate over $20 billion in positions at the end of last week, causing a wave of selling pressure on Friday. The SEC said it has “been monitoring the situation and communicating with market participants since las week” regarding the forced liquidation of Archegos’ $20 billion in holdings.

Traffic in the Suez Canal is moving again after the Ever Given—the ship that ran aground and has cut off traffic in the canal since last week—was dislodged. The ship is now on its way to a transit agent at the Suez Canal and will undergo a technical inspection once it arrives there. “Today, the Egyptians have succeeded in ending the crisis of the delinquent ship in the Suez Canal despite the tremendous technical complexity that surrounded this process from every side,” said Egyptian President Abdel Fattah El-Sisi in a tweet. More than 350 vessels are currently waiting on either side of the canal, according to estimates from Leth Agencies, including container ships, bulk carriers, and oil tankers. It is expected the backlog of vessels will be cleared within four days. 

COVID-19 cases are again on the rise in the U.S. even as the nation administers vaccinations at a faster pace than ever. The seven-day average of daily new cases is up 16% over the last week to more than 63,000 cases per day. “What we’re likely seeing is because of things like spring break and pulling back on the mitigation methods that you’ve seen,” White House Chief Medical Advisor Dr. Anthony Fauci said to CBS’ “Face the Nation” on Sunday. In other COVID news, the CDC said that single doses of Pfizer and Moderna’s coronavirus vaccines are 80% effective at preventing infections after two weeks. A second does increased the vaccines’ effectiveness to 90%. “These findings indicate that authorized mRNA COVID-19 vaccines are effective for preventing SARS-CoV-2 infection, regardless of symptom status, among working-age adults in real-world conditions,” the CDC said in a statement. “COVID-19 vaccination is recommended for all eligible persons.”

Boeing shares are up nearly 3% today after Southwest said it agreed to buy 100 737 Max 7 planes as it retires older jets. The airline said that under the agreement it would also convert 70 of its firm orders for Max 8 planes to the smallest and slower-selling jets, the Max 7s, and also added 155 options for 737 Max 7 or Max 8 airplanes through 2029. Southwest, which operates an all-Boeing 737 fleet, said its order is a vote of confidence in the planes, and the sale marks the largest sale since two crashes cause a worldwide grounding in March 2019. The 20-month grounding of the 737 Max was lifted in the U.S. last November. “This cost-effective order book with Boeing allows the Company to maintain the operational efficiencies of an all-Boeing 737 fleet to support its low-cost, point-to-point route network,” Southwest said in a statement.

And U.K.-based used car marketplace Cazoo is going public in the U.S. through a merger with a SPAC. The company with combine with AJAX I, a U.S. blank-check firm founded by billionaire investor Daniel Och, in a deal that values Cazoo at around $7 billion. “This announcement is another major milestone in our continued drive to transform the way people buy cars across Europe,” said Cazoo founder Alex Chesterman. “We have created the most comprehensive and fully integrated offering in the largest retail sector which currently has very low digital penetration.”

Stocks We’re Watching

Century Aluminum (NASDAQ: CENX): Century Aluminum shares are up nearly 12% over the last week after announcing that it has finalized and received all necessary approvals for its new, three-year power contract with South Carolina Public Service Authority for the Mt. Holly aluminum smelter. “We are thrilled to have reached final agreement on this new contract which, most importantly, allows us to immediately lift the WARN notice at Mt. Holly. This milestone is welcome news for all of us, especially our Mt. Holly employees, their families and the surrounding community,” Century President and CEO Michael Bless said in a statement. “I want to personally thank our employees and their families for their patience, fortitude and focus during these challenging times, while we worked to get this new contract in place. Simply put, the plant could not have survived without their hard work and perseverance. We have already begun the investment and onsite work necessary to expand our operations, including rebuilding cells and hiring new employees to add to the Mt. Holly team. We all look forward to that day in the near future when additional metal will be rolling out of the newly restarted potline.”