Smithfield Foods soars on buyout report. Smithfield Foods (NYSE:SFD) is reportedly close to selling itself to China's Shineway in a deal worth $4.5-5B. The acquisition would represent a 25-30% premium over Smithfield's close yesterday of $25.97. The speculation comes amid calls from large shareholders for the company to split up. Smithfield's shares were +23.2% premarket at $31.99.
U.S. Treasurys stabilize following blood-letting. U.S. bond prices were higher premarket following the carnage yesterday, when the 10-year yield rose 15 bps to a 13-month high of 2.16%. Maybe more troubling for those borrowing short and lending long was a 12 bp jump in the 5-year yield to 1.01% (it's up from 0.65% in a month), and a 4 bp pop in the 2-year yield to 0.28%. It was shoot first, ask questions later for many income plays such as mREITs, utilities and leveraged income funds.
U.S. prosecutors reveal $6B money laundering scheme. Prosecutors have indicted the operators of a Costa Rica-based digital currency exchange called Liberty Reserve (LR) for facilitating the laundering of over $6B in cash. LR users were able to transfer money using Western Union (NYSE:WU), MoneyGram (NASDAQ:MGI), Visa (NYSE:V), MasterCard (NYSE:MA), American Express (NYSE:AXP) and Citibank (NYSE:C). Given the crackdown on compliance policies at banks such as HSBC (HBC), questions now might be asked as to whether those companies have any culpability.
Top Stock News
HMA CEO Gary Newsome to retire. Health Management Associates (NYSE:HMA) CEO Gary Newsome will retire after about five years in the job and will now head a Mormon mission in South America. News of Newsome's departure came after Glenview Capital disclosed a 14.6% stake in HMA but said it doesn't intend to bid for the company. HMA had adopted a poison pill plan on Friday in response to a Glenview notice that it could increase its stake in the company. HMA's shares dropped 7.2% in AH trading.
Citi settles suit over $3.5B in MBSs. Citigroup (C) has reached a settlement in an FHFA lawsuit that accused the bank of misleading Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) into buying $3.5B of mortgage-backed securities, although the terms of the deal weren't disclosed. It's the second settlement so far out of 18 securities fraud cases the FHFA filed against banks in 2011 over $200B-plus in MBSs sold to Fannie and Freddie.
Chevron CEO set to face investor wrath. Chevron (NYSE:CVX) CEO John Watson is due to face at least four resolutions at the company's annual meeting today from activist shareholders that are demanding that he be fired. Among the complaints are Chevron spending $1.2M on a failed campaign to oust the mayor of Richmond in California - where the company operates a major refinery - and trying to avoid a legal judgement on toxic waste in the Ecuadorian Amazon.
Sprint, SoftBank deal gets security clearance. Sprint (NYSE:S) and SoftBank (OTCPK:SFTBF) have reportedly received U.S. national security clearance for the Japanese company's $20.1B acquisition of Sprint. As part of the deal, the government will be able to veto purchases of new equipment and it will establish a small oversight committee. The approval comes amid continued fears about cyber-espionage from China, with Dish (NASDAQ:DISH), which is also trying to acquire Sprint, ramping up the scare-mongering.
Morgan Stanley to raise $1-3B property fund. Morgan Stanley's (NYSE:MS) Msref real-estate department reportedly intends to raise a new $1-3B global property fund and hopes that China Investment Corp., which owns 6.4% in the bank, will become an anchor investor. However, Morgan Stanley might have problems attracting other potential backers, such as Calpers and the New York State Common Retirement Fund, both of which have been burned by placing their money with Msref.
P-E firms eye $2B Optus. Private equity firms KKR (NYSE:KKR), Carlyle (NASDAQ:CG) and Blackstone (NYSE:BX) are among the suitors that are reportedly interested in bidding for Australia's Optus Satellite, which is valued at over A$2B ($1.9B). Optus owner Singapore Telecommunications (OTCPK:SNGNF) has set June 14 as the deadline for first-round offers. The potential buyers are attracted by Optus' steady cashflow and the low capital expenditure that it apparently requires.
Cook talks up Apple pipeline. "We have some incredible plans that we have been working on for a while," Tim Cook (NASDAQ:AAPL) said at an AllThingsD conference talk yesterday. Some of those plans could still involve a TV - Cook reiterated that the market is of "great interest" and that the current experience is outdated. For those waiting for an iWatch, Cook added that the wearable computing market is a very interesting area.
Boeing completes 787 retrofit. Boeing (NYSE:BA) has retrofitted all 50 787 jets in operation with its modified battery system and will now be able to focus on delivering new airplanes. Boeing also plans to start the major assembly of the slightly larger 787-9 this week. The news comes days after All Nippon Airways resumed commercial Dreamliner flights.
Top Economic & Other News
OECD cuts global outlook. The OECD has reduced its world economic growth outlook to 3.1% for this year and 4% for 2014 from prior forecasts of 3.4% and 4.2% respectively. In its twice-yearly Economic Outlook, the organization predicted that the U.S. will improve and that Japan will rebound, while the recession-hit eurozone will fall further behind. The OECD also warned that the withdrawal of QE by central banks could cause spikes in bond yields and harm the world economy.
Germany suffers largest jobless rise in 4 years. As expected, Germany's unemployment stayed unchanged at 6.9% in May, although the number of people without a job rose by a greater-than-forecast 21,000 to 2.96M. That's the biggest monthly increase for over four years as the economy feels the effects of the eurozone crisis and long winter.
Alpha-Rich Stock Movers and Great Calls
1) Imperial Holdings (NYSE:IFT) is +12.4% since May 14, when Whopper Investments (of OUTD fame) said IFT has a lot more room to run.
2) On March 11, buysider Thomas Lott suggested investors Sell Linn Energy And Pick Up Pioneer Southwest. Since then, Linn (NASDAQ:LINE) is -8.9% and Pioneer (PSE) is +44.4%.
Alpha-Rich Stocks To Watch
1) Ecopetrol (NYSE:EC). LatAm expert Caiman Valores turns bullish as a major YTD decline masks production and operational growth.
2) Immersion Corporation (NASDAQ:IMMR). Paolo Gorgo says advanced haptics is reaching widespread adoption, which could mean 40% upside for IMMR.
Alpha-Rich articles are the best long and short ideas on Seeking Alpha. SA Pro subscribers receive early access to these Alpha-Rich articles, which often move markets. For more information about SA Pro and becoming a subscriber, click here.
In Asia, Japan +0.1% to 14326. Hong Kong -1.6% to 22555. China +0.1% to 2324. India -0.1% to 20148.
In Europe, at midday, London -1.3%. Paris -1.4%. Frankfurt -1.3%.
Futures at 7:00: Dow -0.5%. S&P -0.6%. Nasdaq -0.5%. Crude -0.5% to $94.50. Gold -0.6% to $1387.60.
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