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What Do John Bean Technologies’ Newly Added Risk Factors Reveal?

Chicago-headquartered John Bean Technologies (JBT) provides technology solutions to the food processing and air transport industries. Let’s take a look at the company’s latest financial performance, corporate developments, and risk
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Chicago-headquartered John Bean Technologies (JBT) provides technology solutions to the food processing and air transport industries.

Let’s take a look at the company’s latest financial performance, corporate developments, and risk factors.

John Bean Technologies’ Q2 Financial Results and 2021 Guidance

Revenue increased 16% year-over-year to $475.5 million in the second quarter of 2021 and exceeded the consensus estimate of $452.96 million. The majority of the company’s revenue comes from the FoodTech division, where sales rose 19% year-over-year to $360.7 million. Additionally, AeroTech revenue jumped 6% year-over-year to $114.8 million.

Adjusted EPS of $1.19 rose from $1.09 in the same quarter last year and beat the consensus estimate of $1.00.  JBT ended Q2 with $202.3 million in cash. (See John Bean Technologies stock charts on TipRanks).

For Q3, the company anticipates revenue in the range of $485 million - $505 million. It expects adjusted EPS for the quarter to be in the band of $1.10 - $1.20. The consensus estimate calls for EPS of $1.19.

For full-year 2021, JBT anticipates revenue to grow in the range of 10% - 13%, with the FoodTech unit's sales growing at least 14%. The company noted that the full-year outlook is subject to a number of risks, including a slower than expected economic recovery due to new COVID-19 variants.

John Bean Technologies’ Corporate Developments

In July, JBT completed the acquisition of food safety solutions provider Prevenio. It said that Prevenio, which primarily serves the poultry industry, expands its recurring revenue stream. Prevenio’s annualized run-rate revenue in 2021 is estimated at $50 million.

During Q2, JBT raised $356 million through a convertible note offering. The company said that the offering provides it with additional flexibility to make organic investments and execute acquisitions.

John Bean Technologies’ Risk Factors

The new TipRanks Risk Factors tool reveals 51 risk factors for John Bean Technologies. Since Q4 2020, the company has updated its risk profile with five additional risk factors.

The company tells investors that the convertible notes may dilute the ownership of existing shareholders when converted. It goes on to say that the public market sale of the shares from the converted notes could adversely impact the prevailing market price of the shares. Furthermore, the company cautions that the existence of the convertible notes could encourage shorting of its stock.

JBT warns that servicing its debts could cause liquidity problems. It says that if its operations are unable to generate sufficient cash flow to meet its debt service obligations, it may be forced to reduce capital investments or sell some of its assets. But it says there is no guarantee that such remedial efforts would be successful, and hence, it could default on its debt obligations.

JBT tells investors that the results of its operations may be adversely affected by labor shortages or an increase in labor costs. It states that labor challenges have increased because of the COVID-19 pandemic.

The majority of JBT’s risk factors fall under the Finance and Corporate category, with 35% of the total risks. That is below the sector average of 39%. JBT shares have gained about 30% since the beginning of 2021.

Analysts’ Take

Following John Bean Technologies’ Q2 report, Robert W. Baird analyst Mircea Dobre reiterated a Buy rating on JBT stock and raised the price target to $162 from $151. Dobre’s new price target suggests 9.39% upside potential.

Citing a potential boost from accretive acquisitions, the analyst has identified JBT as one of his top ideas for the second half of 2021.

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The post What Do John Bean Technologies’ Newly Added Risk Factors Reveal? appeared first on TipRanks Financial Blog.

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Economics

Fed Urged To Fire Officials Over “Pandemic Profiteering”

Fed Urged To Fire Officials Over "Pandemic Profiteering"

Two weeks ago, Fed Presidents Robert Kaplan and Eric Rosengren (and to a lesser, though still notable extent, Fed Chair Powell himself) were ‘outed’ for their multi-million-dollar stock

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Fed Urged To Fire Officials Over "Pandemic Profiteering"

Two weeks ago, Fed Presidents Robert Kaplan and Eric Rosengren (and to a lesser, though still notable extent, Fed Chair Powell himself) were 'outed' for their multi-million-dollar stock and bond trades, sparking widespread outrage, bolstering claims that not only is the market rigged and manipulated by the Fed but that it is rigged directly for the benefit of Fed members like Kaplan and Rosengren who - whether they intended or not - benefited monetarily from their own decisions and their inside information that nobody else was privy to..

While none of the transactions appears to violate the Fed's code of conduct, CNBC reported, municipal bonds are an asset class that are far more niche that stocks or ETFs. 

Officials “should be careful to avoid any dealings or other conduct that might convey even an appearance of conflict between their personal interests, the interests of the system, and the public interest," the Fed's code of conduct says.

It was such 'bad optics' that less than two days after the widespread public fury at this grotesque discovery, the presidents of the Federal Reserve banks of Boston and Dallas said they would sell their individual stock holdings by Sept. 30 amid "ethics concerns", and invest the proceeds in diversified index funds or hold them in cash.

While we are sure the Fed officials hoped this would satisfy the ignorant masses... it has not. And as The Wall Street Journal reports, two advocacy groups and a former Fed adviser have said that The Fed should fire at least one (and perhaps both) of the Fed officials over their "pandemic profiteering trading conduct."

Better Markets, a group that pushes for tighter financial regulation; the left-leaning Center for Popular Democracy’s Fed Up campaign; and Andrew Levin, a former top Federal Reserve staff member and now a professor at Dartmouth College, are calling for the Fed to take action against Messrs. Kaplan and Rosengren.

“It’s time for the Fed to do what leaders are supposed to do:  Lead by example,” Better Markets president and chief executive officer Dennis Kelleher wrote in a letter sent to Fed Chairman Jerome Powell Tuesday.

Messrs. Kaplan and Rosengren, both should resign or be fired “for having lost the confidence and trust of the American people and, one would think, the Chairman of the U.S. central bank,” Mr. Kelleher said.

As The Fed is about to shift policy regimes into a taper of its unprecedented fre-money-gasm-machines, Mr. Kelleher added:

“This is no time for the American people to lose confidence and trust in the Fed, which must be above reproach, not set the lowest bar for ethical and legal conduct,”

Some Fed watchers say the trading raises questions about who policy was designed to help.

“There are a lot of reasons that working people are right to wonder if the Fed has their best interests in mind,” said Benjamin Dulchin, campaign director for Fed Up.

“These trades are only the most obvious reason, but it makes it harder for the Fed to do its job,” Mr. Dulchin said, adding if he were Mr. Kaplan or Mr. Rosengren, “I would resign.”

There is, however, one man supportive of Kaplan - his predecessor at the Dallas Fed, Rich Fisher, who shrugged off the million-dollar trades as nothing, noting that in fact, Kaplan was "talking against his own book..."

But, 'Dick', actions speak louder than words eh? And now that he has been shamed into cutting all market exposure, who cares whether he is hawkish or dovish - he's made his!

Source: NorthmanTrader
Tyler Durden Wed, 09/22/2021 - 08:25

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Economics

Nomura Fears ‘Hawkish Surprise’ In Dot-Plot As ‘Vol Expansion’ Window Closes

Nomura Fears ‘Hawkish Surprise’ In Dot-Plot As ‘Vol Expansion’ Window Closes

Is history going to repeat itself today?

The last time the US equity market ‘hiccupped’ was following the FOMC meeting in September 2020…

As Bloomberg notes,..

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Nomura Fears 'Hawkish Surprise' In Dot-Plot As 'Vol Expansion' Window Closes

Is history going to repeat itself today?

The last time the US equity market 'hiccupped' was following the FOMC meeting in September 2020...

As Bloomberg notes, the environment looks similar in several ways to today’s:

  • In September 2020, the Fed noted the limits of monetary policy in dealing with the economic shock caused by the pandemic. Now, the Fed is hamstrung by high inflation and will likely have to start pulling back on accommodation.

  • Back then, House Speaker Nancy Pelosi was pushing out a stopgap funding plan without Republican support in an effort to avoid a government shutdown. Now, she is brokering a truce within her own party to push through a multi-trillion dollar spending bill while averting a government shutdown and a Treasury default.

  • Concerns over the Covid-19 virus heading into autumn were also a worry then as they are now. This headline from Sept. 18, 2020, “Wall Street’s Return-to-Office Push Finds Virus Won’t Cooperate” could easily be swapped onto stories over the past month.

And while the market is rebounding on Evergrande headlines (which, if one scratches below the surface of the headline alone, do not offer much hope for the majority of bondholders... especially dollar bondholders), and the usual pre-FOMC 'drift', Nomura's econ team is far less sanguine and sees a number of hawkish risks across the statement, updated forecasts and press conference:

  • While we do not expect a formal tapering announcement this meeting, the Committee is likely to finalize the tapering plan ahead of a November announcement. Chair Powell may provide an update on tapering parameters that have gained a consensus, potentially including the size and frequency of adjustments.

  • Data have softened and the pandemic outlook has become more uncertain but, if anything, the FOMC appears to be increasingly concerned that the primary impact of subsequent COVID disruptions will be prolonged upward pressure on inflation as opposed to depressed demand.

  • We see upside risk to the September “dot plot.” While we think the median 2022 policy rate forecast will stay at the effective lower bound (ELB), the bar for a half or full hike is low. We think 2023 will continue to show two rate hikes, while 2024 – a new addition in September – will show an additional two hikes. Concerns over inflation could result in more than four forecasted cumulative hikes by end-2024.

  • The FOMC’s updated economic projections are likely to show a flatter growth path – with downward revisions to 2021 but stronger numbers in 2022-23 – along with notably higher near-term inflation forecasts as supply chain disruptions prove more persistent than the Committee expected just a few months ago.

  • The post-meeting FOMC statement will likely include new language to signal an imminent tapering announcement, and we believe the Committee may nuance the language describing inflation as rising “largely reflecting transitory factors.”

Tying this FOMC today back into the recent US Equities spasm, Nomura's Charlie McElligott points out that it is becoming clear to me that the “window for volatility expansion” will soon be closing again thanks to “clearing” of Op-Ex- and Fed meeting- event risks, which will only further drive resumption of “reflexive vol / gamma selling” as well as hedge monetization flows that will then see spot rally (VIX ETN Net Vega has now DECREASED by 7.2mm over the past 1w into the Vol squeeze)…

UNLESS we can again realize larger daily changes (i.e. 1.5% type moves) on Index-level again in order to justify UX1 at 23 / 24 which would be prompted by a 'hawkish surprise'...

Because, have no doubt, there is still “energy” there to overshoot in either direction with some very real accelerant flows remaining on account of Dealer options positioning: currently we see SPX / SPY Dealers short ~$9.2B of $Gamma (6.6%ile, flips positive above 4411) while $Delta remains negative at -$139.1B (11.2%ile, flips positive above 4400); similar for QQQ, with REALLY negative $Gamma at -$709.6mm (1.3%ile, flips up at 375.02) and negative $Delta at -$16.5B (2.7%ile, flips positive above $373.85)

But overall, SpotGamma notes that the key to the last several days has been this: we have not see any data to suggest material put buying, despite market weakness.

If puts were bought then that would add market pressure because dealers have to short futures to hedge.  If traders come out of the FOMC needed to buy downside put hedges then that adds additional selling.

The bottom line is that we expect some large swings today, and for the market to “stage” at either 4430 or 4300 into the close today, which could set the direction for a large move into Friday.

Tyler Durden Wed, 09/22/2021 - 09:30

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China Syndrome? Is Evergrande A Symptom Of Deeper Malaise

China Syndrome? Is Evergrande A Symptom Of Deeper Malaise

Authored by Bill Blain via MorningPorridge.com,

“If that’s true, we are very close to the China Syndrome ”

Evergrande’s imminent default is rocking markets – but few believe…

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China Syndrome? Is Evergrande A Symptom Of Deeper Malaise

Authored by Bill Blain via MorningPorridge.com,

“If that’s true, we are very close to the China Syndrome ”

Evergrande’s imminent default is rocking markets – but few believe the collapse of a Chinese property developer could trigger a global financial crisis. What if Evergrande is just a symptom of a deeper malaise within the Chinese economy and its political/business structures? Maybe there is more at stake than we realise? What if Emperor Xi decides he needs a distraction?

Amid this week's market turbulence, and the overnight headlines, Evergrande dominates thinking this morning. The early headlines say the risk is “easing”. Don’t be fooled. S&P are on the wires saying it’s on the brink of default and is unlikely to get govt support. It’s Asia’s largest junk-bond issuer. Anyone for the last few choc-ices then?

The market view on the coming Evergrande “event” is mixed. Some analysts are dismissing it as an internal “China event”, others reckon there may be some systemic risk but one Government can easily address. There is some speculation about “lessons” to be learnt… There are even China supporters who reckon its proof of robust China capitalism – the right to fail is a positive!

I’ve got a darker perspective.

The massive shifts we’ve seen in China’s political/business public persona over the past few years have been variously ascribed: a reaction to Trump’s protectionism, China taking its place as a leading nation, Xi flexing his military muscle, and now a clampdown on divisive wealthy businesses to promote common prosperity.

What if Evergrande is just a symptom of something much deeper?

That that last 30-years of runaway Chinese growth has resulted in a deepening internal crisis, one that we barely perceive in the west? What if the excesses that have spawned Evergrande and the illusion every Chinese can afford luxury flats and a western standard of living is about to implode? Crashing oriental minor chords!

The looming Chinese property debacle will be fascinating, but it many respects will be similar and yet very different to the multiple market unwinds we’ve seen in the west. How it plays out will have all kinds of implications for growth, speculation and how global investors perceive China in the future. Folk are variously describing it as China’s Lehman Brothers, or the next “Minsky Moment” when speculation ends with a sharp jab of reality to the kidneys.

I’m thinking back to a story I read a few years ago about the Shanghai Auto-fair pre-pandemic. Evergrande New Electric Vehicles had the largest stand and was showing off 11 different EVs. Not one of these were actually available to buy – they were all models of as-yet unproduced cars. The company was valued at billions and yet never sold a single vehicle. This morning, it’s just another worthless business Evergrande is trying to flog. (See this story on Bloomberg TV: China’s Zombie EV Makers.)

The market is asking itself a host of questions about Evergrande’s collapse: How bad will its tsunami of Chinese contagion deluge global markets? When it’s going to happen? What knock-on effects will cascade through markets?

Perhaps the most important question is: Who will be exposed “swimming naked” when the Evergrande tide goes out? Who will be left with the biggest losses? As the company is definitely bust, these losses rather depend on just how China’s authorities respond.

Step back and think about it a moment – try putting these in context:

  • Fundamentally all business is about identifying a consumer need and filling it.

  • Fundamentally, greedy businessmen tend to get carried away because the political-financial system enables them.

  • Fundamentally, it’s just another burst bubble and who cleans up the mess.

  • In Evergrande’s case a thousand flowers of capitalism with Chinese characteristics grew into an unsustainable business – fundamentally no different from debt-fuelled sub-prime mortgages, or CDOs cubed, in the West.

The big difference this time is its China! China has done things… differently. The path China pursued in its recovery and growth since 1980 has not been without… consequences.

Thus far we’ve praised China for its spectacular growth and the creation of valuable companies under the red banner of Chinese capitalism. It is going to be “interesting” to see how the subsequent mess is cleared out. Questions about Moral Hazard are going to be shockingly simple – Government has made it abundantly clear that any wrongdoing by company executives will be punished in the harshest possible way.

More importantly, Chinese politics and business works on a very different playing field to the west. Forget the rule of law or the T&C’s of Evergrande bonds. It easy to dismiss and characterise the way Chinese business works as institutionalised systemic corruption – but it’s a system Ancient Roman Emperors would recognise as a patron/client relationship. Emperor Xi’s clients and his princelings will continue to benefit from his patronage in return for their support at his court, and will be protected in a meltdown. The system Xi presides over will have little motivation to intervene to protect western investors who find themselves caught in the Evergrande fiasco.

Where Xi will have to take notice is outside the rich, wealthy princeling cadre which increasingly owns and runs China. There will be massive implications for wealth/inequality among the Chinese people from a property collapse. With a third of Chinese GDP dependent on the property sector, (and about 4 million jobs at Evergrande), the collapse of one of the biggest players, and the likelihood others will follow is much more than just a systemic risk.

Property is a key metric in the aspirations to wealth of the rising Chinese middle classes. The same smaller Chinese investors and savers will likely prove the largest losers from the property investment schemes they were sucked into. These real losses will rise if hidden bank exposures trigger a domestic banking crisis – which apparently isn’t likely (meaning it is..). There are reports of investor protests in key China cities – putting pressure on the govt to act to mitigate personal losses.

Xi’s clampdown on big tech is painted as the Party’s programme to engineer a more socially-equal economy. He has pinned the blame for rising inequality on “corrupt” business practices and has his cadre’s waving books on Xi thought, mouthing slogans about “common prosperity” and “frugality”. These are going to look increasingly hollow if the middle classes bear the coming Evergrande pain, and the Party Princelings continue to prosper.

The really big risk in China is not that Evergrande is going to default – it’s much bigger. If the Party is seen to fail in its promise to deliver wealth, jobs and prosperity for the masses – then that is very serious. China’s host of failed EV companies, an economy still reliant on exporting other nations tech, and a massively overvalued property sector (that the masses still equate with prosperity) all suggest a much less solid economy than the Party promotes.

If the illusion of a strong economy is unravelling – who knows what happens next, but in Ancient Rome the answer would be simple… Blame someone else, and invade..

This could get very “interesting…” and not in a good way.

Tyler Durden Wed, 09/22/2021 - 08:45

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