Stocks rallied on Friday to cap what was a big week for stocks as the S&P 500 closed at its highest level of 2016 with the benchmark index now down just 1.1% for the year.
First, the scoreboard:
- Dow: 17,213.3, +218.2, (+1.3%)
- S&P 500: 2,022.2, +32.6, (+1.6%)
- Nasdaq: 4,748.5, +86.3, (+1.8%)
- WTI crude oil: $38.50, +1.5%
So, the International Energy Agency, the world’s energy watchdog, basically called the bottom in oil prices.
In its report, the IEA noted that a slight decline in supply coupled with firming demand indicate that oil prices are likely headed higher from here — or use the IEA’s language, “It is clear that the current direction of travel is the correct one.”
Oil prices gained about 1.7% on Friday.
Elsewhere in the oil market the latest Baker Hughes rig count showed that combined US oil and gas rigs in use fell to the lowest since at least 1949. The decline in US oil rigs has been taken as a bullish sign for prices as a reduction in supply is really, at the end of the day what is needed to bring prices back up.
Goldman Sachs, meanwhile, thinks the recent rally in prices is likely to be self-defeating as a rise in prices will likely bring supply back online, thus bringing prices back down. Which is basically what happened last spring.
Julie Bort has the inside story of how Zenefits became one of the highest-flying and then fastest-falling starts ups in Silicon Valley. The headline — LIES, BOOZE, AND BILLIONS: How one of the fastest-growing startups in Silicon Valley history raised $850 million then spiraled out of control — sort of says it all.
And while this story has the Silicon Valley-backed hook, what we really see is a sales company that got really excited about rewarding its salespeople but sort of forgot these people were working in a very regulated environment, and, well, forgot that.
“Most of us had never been in the insurance industry,” a former salesperson told Bort. “We were all software salespeople in the San Francisco Bay Area. I got the job and didn’t even find out I had to get a licence until they told me in an email later.”
You should read the whole thing here »
A Bloomberg News report Friday indicated that Intel is apparently mulling a sale of parts or all of its venture capital portfolio. Which leaves us working through a few possibilities.
Intel could be looking to sell this portfolio because it has seen peers like Fidelity write down the value of their investments in some startups and thinks the market has turned and its time to get out. Alternatively, Intel could be floating this idea of a sale just to get a sense for what certain assets sitting on its books are worth since they have seen writedowns from peers like Fidelity and want to get their own read.
But our first thought is that this has the classic sign of when a market has reached a top because here we have Intel’s venture capital arm — a liquidity provider — seeking liquidity.
Bloomberg was also out with a story on Instacart, which will buy and then deliver your groceries for you, which is having very basic problems making its service profitable.
The basic problem is that it costs the company more than the $5.99 it charges to deliver groceries. And look, no one wants to go to the grocery store, really, and maybe customers would be willing to pay more for having someone else do it.
But Instacart put its initial prices where it did to gain market share and is now facing the conundrum of offering what is effectively a luxury service that, were it to demand higher prices, would probably just be forgone by customers that liked having someone else do their grocery shopping, but maybe not that much.
Bill Ackman has invested a lot of money in pharmaceutical company Valeant.
Ackman has also lost a lot of money on this investment.
Now, to get some of that money back, Ackman wants Valeant — which saw its share price explode higher over the last few years on the back of buying small companies and increasing the price of their drugs — to sell some stuff. Namely, Bausch & Lomb, a company Valeant acquired in 2013 that sells contacts.
However, it seems that Valeant has already ruled that out, according to Bloomberg.
Which is problematic for Ackman both because this was sort of his next best idea for the company and because it could create a rift between him and CEO Mike Pearson, who is sort of the whole reason Ackman got involved in the company in the first place.
The Wall Street Journal reported late Friday that Valeant weighed getting rid of Pearson, who missed a chunk of time during the winter after coming down with pneumonia. Ultimately, they elected against paying Pearson the $200 million in deferred stock he’d be due if he were fired and began his “second act” at the helm of Valeant, though as the Journal outlines, this time under very different conditions.