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- Just 49% of money managers in Barron's spring 2019 poll say they're bullish on stocks over the next 12 months, down from 56% in autumn. The percentage of bulls hasn’t dipped below 50% since autumn 2016. The number of bearish investors has grown to 16% from 9%. (Barron's)
- Boeing didn't tell Southwest Airlines, its largest 737 MAX customer, or the FAA that a standard safety feature designed to warn pilots about malfunctioning sensors had been deactivated until after the Lion Air crash in October. Boeing CEO Dennis Muilenburg will face shareholders on Monday for the first time since two fatal crashes (CNBC)
- Chinese industrial profits rose by 13.9% year-over-year in March, the biggest increase since July, rebounding after 4 months of contraction. (SCMP)
- U.S. oil and gas company Anadarko, which agreed this month to sell itself to Chevron for $33 billion, has begun negotiations to sell to Occidental Petroleum instead. (Reuters)
1 big thing: Disney's box office dominance fuels its red-hot stock
Disney's "Avengers: Endgame" ruled the box office this weekend, torching all-time single-day, weekend and per-screen records on its way to well over $1 billion in global ticket sales. It was just the latest victory for Disney, which has had the No. 1 grossing movie every year since 2012 and been the top grossing studio since 2016.
The big picture: Disney is on pace to take a 29.1% share of box office receipts, the largest percentage on record, according to data from Nash Information Services.
- Since 1995, Disney movies have generated $36.9 billion in domestic box office revenue and has accounted for 16.4% of total market share among movie studios.
- To put that into perspective, Disney's releases have earned more than the bottom 4 of the world's top 10 movie studios combined during that time.
- Disney's films have earned almost $2.5 billion more than No. 2 studio Warner Bros., despite releasing 200 fewer movies. It has outearned No. 3 studio Sony by more than $9.5 billion releasing nearly 150 fewer films.
Why it matters to the market: Disney's stock has risen by around 30% so far this year, driven by a 10% gain after unveiling details of its new $6.99 per month Disney+ streaming service.
- Wall Street remains bullish, with 70% of analysts holding a "buy" rating.
Investors have so far not soured on Netflix because of Disney's run, however it's clear they view it as a threat.
- Netflix stock has gained close to 40% this year, but has seen pullbacks coinciding with recent big gains from Disney, including the April 11 launch of Disney+ and on April 23 when Bank of America-Merrill Lynch analysts upgraded Disney to their U.S. 1 list of top investments and increased the price target to $168.
Flashback: Shares jumped 2% last year after the release of "Avengers: Infinity War" delivered $630 million at the box office, a little more than half of the take for "Endgame."
What's next? Disney's box office cash grab may just be getting started. This year also will see the release of "Toy Story 4," "Frozen 2," "Spiderman: Far From Home," "Aladdin," "The Lion King" and "Star Wars: The Rise of Skywalker" to name just a few.
Bonus: Killing the competition
This year Disney is projected to take the highest share of the U.S. box office since at least 1995, grabbing close to one-third of all receipts. The last time Disney didn't have the highest share of the box office was 2015 when Universal netted 22%.
- Since then, Disney has soared above its competition, taking 26.1%, 21.7% and 26.2% of the market in 2016, 2017 and 2018.
2. Exclusive: Tech again leads 2019 buybacks toward record
IT companies are again on pace to spend the most on stock buybacks this year, as the total looks set to pass 2018's $1.085 trillion record total.
- Companies so far have spent $272 billion on buybacks, data compiled by Mike Schoonover, COO of Catalyst Funds, for Axios shows.
Between the lines: The amount of spending on buybacks announced by companies in the IT sector has fallen significantly this year as other industries, particularly energy and industrials, have picked up the slack. Companies in those sectors have about doubled their percentage of announced buybacks.
- The top 5 sectors for buybacks this year accounted for 76% of the total. Last year, the top 5 sectors accounted for 82%, led by IT, financials, health care, consumer discretionary and industrials, respectively.
Interestingly, buyback spending has not coincided with market performance for most sectors.
- IT companies, which announced the most ($369 billion) buyback spending last year and this year ($53 billion), have seen the biggest rise in 1-year return among S&P 500 sectors, up 22.5%, according to data from Fidelity.
- However, financials, which last year accounted for 20% of completed buybacks ($186 billion) and 9% this year ($24 billion), have been the third-worst performer among the S&P's 11 sectors, delivering a 1-year return of just 0.23%.
- The real estate sector accounted for just 1% of share buybacks in both 2018 and 2019 but has seen a 19.5% gain in the last year, trailing only IT.
3. Spain's unemployment report is Europe's latest problem
Spain held its third election since 2015 over the weekend with the country's Socialist party declared the winners. Left-leaning allies also secured victories, but Socialist leader Pedro Sanchez still looks to be a few seats short of the needed majority to form a ruling coalition.
The far-right, anti-immigration and euroskeptic Vox party also won its first seats in Parliament, but not enough votes to help form a governing right-wing coalition.
The intrigue: The election came on the heels of recent data showing Spain's unemployment rate, long bottom of the barrel in developed Europe, had posted its biggest quarter-on-quarter increase in 6 years. Economists had actually projected Spain's unemployment rate would fall, but it rose to 14.7%.
- The country's economy has grown every year since 2013 and the unemployment rate fell to a 10-year low in October.
- Spain created just under 600,000 jobs over the past 12 months, the biggest one-year gain since the summer of 2007, before the start of the country's economic crisis, which essentially lasted for 6 years.
The bottom line: The pickup in Spain's unemployment rate and growing divisions in its parliament could signal more problems for the euro zone, which is already full of them.
4. Study finds Uber drivers could earn as little as $5 an hour
A 2-year study of Uber drivers in Washington, D.C. found that Uber's payment system is so difficult to understand that 100% of participants had trouble figuring out how much they were actually earning.
One female driver even calculated that she was making less than $5 an hour after expenses.
Why it matters: The study could put more pressure on Uber to release more detailed data on how it pays drivers and put it in the cross-hairs of legislators.
- Researchers reported that 83% of drivers in the study knew what percentage of their fares Uber took but 38% did not know how Uber determined that amount.
- "This varying degree of knowledge about compensation details could have been expected if the majority of drivers in our study were new to the Uber platform. But they were not. Seventy percent of the drivers in this study had worked on the Uber platform for at least seven months," researchers from Georgetown University said in the report.
The report's overall findings were limited to its 40-driver, one-city sample size, but because Uber doesn't provide detailed data on what its drivers earn it is one of the clearest examples of how the company operates. (The FTC fined Uber $20 million in 2017 for exaggerating how much drivers could earn.)
The study's main conclusions:
- Data about the Uber workplace is limited. Regulators and researchers do not have access to basic information about labor conditions.
- Uber drivers are encouraged to take on financial risk and debt. 33% of drivers took on debt as a result of their work on the ride-hailing platform.
- Uber drivers report challenges to their health and safety. 30% of drivers reported physical assaults or safety concerns.
- Despite these challenges, the Uber workplace remained attractive. 50% of drivers would recommend the job to a friend, and 45% of drivers planned to keep working the job for at least 6 more months.