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Ebix update, jobs & Polestar deliveries ?4

08:57 07-Jul-23

The jobs reports for June came in below expectations at +209K vs forecasts around +230K , though a fall to 3.6% unemployment was expected as more people began seeking work.  Prior months were also revised down.  The employment population ratio and participation rate both remained unchanged.  Wages rose 0.4% sequentially, which is going to mitigate any potential for the Fed to change course.

American equity futures briefly went positive, but fell back, as more detail was digested.  However, we're back up to €/$1.092, which suggests to me that some rebound from yesterday's drop is possible, even in a stretched market.  The divergence from ADP isn't really a surprise, and again, this will get more attention.  However, I expect that those who follow it exclusively will ultimately wind up being misguided.

I'm guessing that we've already measured the extent of today's jobs reaction.  Currencies initially fell below €/$1.085, quickly rebounded to recent highs above €/$1.09, and appear to be settling in the middle ground.  The JOLTS report indicated slightly fewer jobs openings than expected at 9.8M vs 10M, but those numbers are for May.  These still support the overall story of a tight and resilient job market, with ebbing inflation.  None of that should not have surprised markets, but this is what you get when they are overbought.

EBIX is now down below $23, in line with my take on this morning's news.  I'll further note diverging central bank policies between the rich world and the likes of India are likely to challenge pricing on the EbixCash IPO.  Ebix may have little choice but to push it through at any price, though.  The continued trend of highly questionable and partisan regulation, as highlighted by Google's complaint, won't help either.

On 7/6/23 09:28, Esekla wrote:

Ebix has issued a press release with the only new information provided being that its asset sale deliberations with "multiple bidding parties" would be sufficient to cover "100% of its bank debt", but apparently with strings attached:

The Company announced that this prospective asset sale of a unit of its business, is intended to be a liability free transaction for the successful bidder. Ebix also conveyed that it has received bids from a mix of strategic and financial bidders who have already completed substantial due diligence.

Of course, it leads by saying that it plans to announce an IPO date when it receives approval from Indian regulators, but we already knew that.  EBIX shares are back up over 6% in the pre-market to trade in the $27 range.  While EBIX investors might be somewhat relieved that the company won't go bankrupt, with the stock eventually being de-listed, the success of the IPO remains their best hope.  Otherwise, this news completely fails to give any indication of what the company would look like post-debt payoff.

This morning's employment report from ADP came in at 497K jobs added, which more than doubled projections for +240K.  Wage growth continued to moderate, though, which will be a welcome data point for the Fed.  ADP's take was backed up by Challenger job cuts, which shows layoff declining by almost half in June, but that's just a return toward normal levels, and still above prior years.  The government JOLTS report is due out at 10am, and I've come to see all of this as more meaningful than tomorrow's employment figures from the BLS, which is more market moving.

We also got a 15.8K second quarter vehicle delivery press release from Polestar this morning.  I calculate just over 30% sequential growth, which doesn't quite keep pace with overall growth in the BEV market.  The company is also expanding its sales presence:

More than 20 permanent Polestar Spaces are planned to open over the coming months, as we expand our footprint and shift from temporary locations into larger facilities that can accommodate our growing line-up. I'm really pleased that the first Polestar 3 display cars will be arriving in our Spaces in the coming weeks.

PSNY is up over 7.5% in the pre-market to trade around $4.30, but I remain skeptical of the corporate relationship with its parents, which will hamper its sales in America.

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