Weekly Market Updates: 3/4/19

Initial Public Offerings: Lyft Files for IPO

​Last week, Super League Gaming (live streaming of in-person amateur gamer competitions) and Kaleido Bioscience (clinical-stage healthcare company focused on the human microbiome) completed their initial public offerings. Super League is the first e-sports company to go public.

​Lyft officially filed for an IPO late last week, reporting $2.16 billion in revenue in 2018.

Mergers & Acquisitions: Over $2.5 Billion Transacted for SaaS Companies Last Week

Data from Pitchbook indicates that $32.3 billion was spent on 37 M&A transactions last week, up $24.9 billion for the same number of deals the prior week. Much of the increase in spending can be attributed to large deals, including a $21.4-billion acquisition bid by manufacturing and healthcare conglomerate Danaher for General Electric’s biopharmaceutical business.
 
In another major M&A deal of the week, Illinois-based Alight Solutions acquired global information technology firm Wipro’s stake in Workday and Cornerstone OnDemand. The deal was among the $2.5 billion spent for SaaS firms last week.

Economy: Strong Dollar Helps Trade Deficit Reach 10-Year Record

Among news last week:
 

• Data from the Commerce Department shows the U.S. trade gap widened to a record level in 2018, despite efforts in trade policy to narrow the gap. The trade deficit in goods grew 10% last year to $891 billion, the widest on record. Soybeans and other farm products took a particularly hard hit due to retaliation against U.S. trade policy. Including services, the trade gap widened 12% to $621 billion, the widest level since 2008. According to Kenneth Rogoff, a former IMF economist, the trade gap grew because of the strength of the U.S. economy.

• The U.S. manufacturing index slipped, as reported by the Institute for Supply Management, to its lowest level since November 2016. The index slipped to 54.2 in February from 56.6 in January. Polled economists were expecting a drop to 55.5 last month. Declines in new orders, production, employment and prices led the overall drop. It should be noted, however, that a level of 54.2 still signals manufacturing expansion, just at a slower pace.

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• According to the Labor Department, U.S. worker productivity, a driver of wages and total output, is signaling a recovery after years of lagging growth. Worker productivity is measured as output per hour of nonfarm business sector workers and grew at a 1.9% annual rate in the fourth quarter of 2018, outpacing the 1.3% average rate during the current economic expansion. During the post-World War II expansion, worker productivity grew at 2.1%. A nation can only produce as much as its labor force is capable of, so significant growth in worker productivity signals increased domestic output to come.