Fed doves to fly. Economists expect the Fed to exhibit a more somber tone on the U.S. economy and the outlook for the nascent recovery when the FOMC wraps up its two-day policy meeting today. Since the Fed last met, unemployment data, retail sales, and GDP have all come in weaker than expected. Meanwhile, inflation has weakened, providing ample scope for the still-dovish policy committee to stand pat on asset purchases and reiterate its collective commitment (the now obligatory Esther George dissent notwithstanding) to easy money policies.
China PMI slips. China's official PMI for April slipped to 50.6 from 50.9 in March — analysts polled by Reuters expected a reading of 51.0. Markets were likely prepped for the weakish print after HSBC's "flash" PMI printed at 50.5 for April, missing expectations by a full point. Both reports cited weakness in new export orders, a reflection of tepid global demand.
Top Stock News
Apple's debt offering is largest in history. Apple's (NASDAQ:AAPL) first debt offering in nearly two decades was also the largest corporate bond deal in the history of the market. The company, under pressure to return cash to shareholders, sold a $17B offering in six parts Tuesday: $1 billion of three-year floating-rate notes, $1.5 billion of three-year fixed-rate notes, $2 billion of five-year floating-rate notes, $4 billion of five-year fixed-rate notes, $5.5 billion of 10-year fixed-rate notes and $3 billion of 30-year fixed-rate notes. Goldman and Deutsche led the highly sought-after deal which brought buyers out of the woodwork. AAPL issued the three-year paper at 0.511%, just 20 basis points above the three-year fixed rate Treasury bond.
Facebook faces investors after the bell. Facebook's (NASDAQ:FB) earnings are due after the bell and investors will be watching to see if the world's foremost social media outlet gives details on new ad products, especially those designed for the just-launched Android app "Facebook Home." While some have their eyes on mobile, others say it is not the key metric: "Mobile is just the shifting of dollars, from desktop to mobile," one analyst told FT. The Street expects $0.13 per share on $1.44B in revenue.
Merck reports mixed results. Merck (NYSE:MRK) reported Q1 earnings that beat on the bottom line but missed on revenue as patent expirations and unfavorable foreign exchange rates reduced worldwide sales by 9%. The company said it witnessed growth in vaccines, immunology, animal health, and consumer care products during the period. MRK also revised its guidance for the year, saying it now sees non-GAAP EPS of $3.45-3.55. Analysts expect $3.63.
Novo Nordisk beats estimates, raises sales outlook. Novo Nordisk (NYSE:NVO) reported stronger than expected earnings Wednesday morning as strong insulin and Victoza sales drove a 28% increase in Q1 profits. Specifically, the company said sales of Victoza, a diabetes treatment, soared 35% during the period, while revenues from modern insulins rose 14%. The company's results shrugged-off a U.S. regulatory setback related to the approval of a new insulin product, Tresiba. NVO also upped its FY13 guidance for revenue growth (now expected to be between 9-11%) and reiterated its outlook for operating profits.
Visa earnings on deck. Visa (NYSE:V), which has exceeded analysts' expectations in every reporting period but one since going public in 2008, is set to report after the bell. The company faces easier compares this quarter, as last Q3 was the first period during which legislatively-mandated changes to card-processing networks took hold. Additionally, results will be padded by the fact that during last year's Q3, the company made a payment as part of a settlement between card processors and merchants related to swipe fees. Analysts expect $1.81 per share on revenue of $2.85B.
T-Mobile USA to make NYSE debut. After wrapping up its merger with MetroPCS (PCS), T-Mobile USA is set to make its debut on the NYSE today under the ticker symbol TMUS. The stock should trade between $15-16 per share based on the cash payment to PCS shareholders and a capital injection from parent company Deutsche Telekom (OTCQX:DTEGY). Investors should exercise caution however, one analyst told Bloomberg, as "stocks can do strange things around events like this."
Bain, Golden Gate consortium seen buying BMC Software. A consortium led by Bain Capital and Golden Gate Capital is the odds-on favorite to buy BMC Software (NASDAQ:BMC), as the group has outbid a syndicate comprised of KKR, TPG Capital, and Thoma Bravo, sources told Reuters. The offer for the company is projected to be in the $6.5B range, equating to between $45-50 per share. BMC could still decide not to sell itself, people familiar with the matter said.
Yahoo's Mayer makes $38.6M in first six months. Yahoo (NASDAQ:YHOO) paid Marissa Mayer $38.6M for her first six months of service as CEO, FT reported today. A proxy filing showed Mayer's compensation will be tied to revenue growth (as opposed to profits or cash flow) going forward as "shareholders [have expressed] a deep conviction … that the Yahoo compensation program needs a much greater focus on pay for performance." Yahoo noted that Mayer's "realized" pay was actually closer to $6M, with the lion's share of the headline number coming from as yet unvested stock awards.
Top Economic & Other News
Gold looks to shine as central banks meet. Gold may have had its worst month since December of 2011 in April (-7.8%), but the metal rose for the seventh time in nine sessions Tuesday and looks to remain strong for the remainder of the week, as investors expect the Fed and the ECB to stay the proverbial course in terms of accommodative monetary policy. Traders will be watching the Fed's tone as it wraps up its two-day policy meeting today and will keep a close eye on Mario Draghi tomorrow, as weak unemployment data and tame inflation in the eurozone have fed speculation of an ECB rate cut.
U.K. manufacturing data a welcome surprise. The British manufacturing sector is perhaps healthier than expected, as April's Markit/CIPS PMI prints barely in contraction territory at 49.8. The reading, which beat economists' expectations of a 48.5 print, was an improvement from March's data and suggests the sector may not weigh too badly on British Q2 GDP growth. The report was bolstered by new export orders which ticked up for the first time in at least a year. Manufacturing accounts for more than 10% of the U.K. economy.
In Greece, fresh protests. Greeks celebrated May Day with a fresh round of austerity protests Wednesday as the country's two public and private sector unions called for a 24-hour walkout. The Greek government deployed 1,000 policemen to deal with the crowds who were set to march from Athens' central square to the parliament building. The protestors' message was succinct and clear, albeit familiar: "Enough with these [austerity] policies." Some said turnout for this latest show of discontent was expected to be low thanks to the upcoming Greek Orthodox Easter.
Goldman pockets $200M in Malaysia. Business is good in Malaysia for Goldman Sachs (NYSE:GS), as the venerable investment bank has made some $200M over two years in deals related to bond issues tied to government entities. The firm's participation in two deals involving Malaysia's sovereign-wealth fund have drawn criticism from opponents of Prime Minister Najib Razak, who claim GS overcharged the government for its services. For its part, GS is "very proud of its track record in Malaysia," according to a firm spokesperson quoted by WSJ.
In Asia, Japan -0.5% to 13799. Hong Kong: Closed. China: Closed. India: Closed.
In Europe, at midday, London -0.5%. Paris: Closed. Frankfurt: Closed.
Futures at 7:00: Dow +0.05%. S&P +0.08%. Nasdaq: Flat. Crude -1.25% to $92.27. Gold -0.15% to $1469.00.
Today's economic calendar:
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
9:00 PMI Manufacturing Index
9:00 Treasury Refunding Quarterly Announcement
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
Notable earnings before today's open: AB, ADT, AFAM, AFSI, AGN, AH, AMT, ARW, AVA, CCJ, CHK, CLH, CLX, CMCSA, CVH, CVS, DLPH, DVN, ENR, EXAS, EXC,GRMN, GWR, H, HSP, HUM, ICE, IPGP, IQNT, IRM, JRCC, KCG, KFN, MA, MKL, MRK, NVO, PDCE, PKD, POR, PSX, RDC, RDN, SEE, SPW, TLM, TWX, VG, VIAB, VICL, VPHM
Notable earnings after today's close: ALL, ARI, ARR, ATML, ATO, ATW, AXLL, AXTI, BKD, BMR, CACI, CAR, CBS, CJES, CNQR, CSOD, CVD, CVI, CVRR, CWT, CXO, DVR, DX, DXCM, DXPE, EDMC, ESS, EXPD, EXXI, FB, FNF, FRT, G, GLUU, GNK, GTAT, HNSN, HR, IPI, IPXL, IVR, JDSU, KIM, LNC, LOCK, LVS, MAC, MAR, MET, MUR, NAVB, NGD, NLY, NTRI, PHH, POL, PRU, PSE, PXD, QUIK, ROVI, SAM, SFLY, SGMO, SLTM, SNCR, STX, TEG, TGI, TPC, TSO, TTEK, UAN, UNM, V, VVC, WES, WLT, YELP
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