SoftBank raises bid for Sprint to $21.6B. SoftBank (OTCPK:SFTBF) has sweetened its bid for Sprint (S) by increasing its offer to $21.6B from $20.1B - or $7.65 vs $7.30 - and raising the cash component by $4.5B. The deal would also give the Japanese carrier 78% of Sprint instead of 70%. Paulson, owner of 7%+ in Sprint, backs SoftBank's revised proposal. Dish (DISH), which has made a $7-a-share bid for Sprint worth $25.5B, is reviewing its options. Clearwire (CLWR) remains a wild card.
BOJ refrains from adding to stimulus. As expected, the Bank of Japan has kept its ultra-loose monetary policy unchanged, although it gave a slightly more upbeat outlook for exports and the wider economy. The BOJ also said "some indicators suggest a rise in inflation expectations." Some market participants had hoped that the bank would take action to address bond volatility, such as by lengthening the duration of one-year low-interest loans to banks.
Equities fall on lack of BOJ action. Japanese and European shares fell while the dollar-yen was -1.8% at the time of writing after the Bank of Japan offered no new stimulus to satiate markets' liquidity habit. U.S. futures were sharply lower as well, while U.S. Treasurys continued to slide, with the 10-year yield up to 2.26%. Hong Kong shares dropped sharply ahead of a holiday tomorrow and the re-opening of mainland Chinese exchanges on Thursday. They've been closed this week and so haven't yet reacted to the weekend's disappointing economic data.
Top Stock News
Lululemon shares dive as CEO announces departure. Lululemon (LULU) shares slumped 13.2% premarket after the yoga-clothing company surprisingly said that CEO Christine Day is stepping down, overshadowing FQ1 earnings that beat expectations and guidance that was mostly above consensus. Since Day became CEO in June 2008, Lululemon's annual revenue has more than quintupled to $1.37B, profits have risen nearly nine-fold to $271M, and its stock price has climbed over five-fold. In FQ1, net income rose 1.4% to $47.3M, adjusted EPS was $0.32 and revenue jumped 21% to $345.8M.
Dole CEO offers to take company private. Dole Food (DOLE) CEO David Murdock has made a buyout offer of $12 a share for the company, representing a 17.6% premium to yesterday's close of $10.20, which gave it a market cap of $913.29M. Traders are hopping mad over the development, because Dole recently cancelled a stock buyback which may have had the effect of lowering the acquisition price. Still, shares were at $12.01 premarket.
Mexico signs telecom overhaul into law. Mexican President Enrique Pena Nieto has signed into law a sweeping overhaul of his country's telecom and broadcast sectors that aims to increase competition and reduce the power of the dominant players, America Movil (AMX, AMOV) and Grupo Televisa (TV). The measures include the creation of a new regulator with wide-ranging powers such as being able to force companies to sell assets. Telefonica (TEF) hopes to benefit.
Top Economic & Other News
Germany's top court weighs ECB bond buys. Germany's Federal Constitutional Court has started a two-day hearing today over the compatibility of the ECB's Outright Monetary Transactions (OMT) program, which allows the bank to buy government bonds in the secondary market, with German law. Lining up against the ECB is Bundesbank chief Jens Weidmann. As with its previous decisions regarding the eurozone, the court is expected to rule for the OMT but attach some strings.
Turmoil in emerging markets continues. The rout in emerging markets has continued today, with the South African rand (EZA) -1.5% at the time of writing, the yield on 10-year government bonds +19.5 bps to 8.09%, and the JSE Top 40 -2.3%. Meanwhile, The Indian rupee (INR) hit a fresh record low of 59 to the dollar and is down by over 7% since the start of May. Elsewhere, Thai shares lost 5.1%, Indonesia 3.5% and the Philippines 4.6%. Worries about the tapering of the Fed's QE and countries' individual problems have combined to cause the losses.
Detroit's fate in the balance. Detroit has a 50/50 chance of filing for bankruptcy, Emergency Manager Kevyn Orr told a packed public meeting yesterday. Orr is due to meet with over 100 creditors, union leaders and bond insurers on Friday, when he'll detail his plan to overhaul the city's finances. Detroit's liabilities are estimated at $17B and it has a deficit of $386M, but it has enough cash on hand to see it through Q4 at least.
Senate OKs bill to slash farmer payments. The Senate last night overwhelmingly passed a $955B agriculture bill that would reduce farm spending by $18B over the next decade, partly by ending the practice of making direct payments to farmers irrespective of crop yields, market prices and the economy. The bill would also slash spending on food stamps by $4B. The House is expected to take up its version of the legislation, which includes cutting food stamps by $20B, next week.
Alpha-Rich Stock Movers and Great Calls
1) Accuray Incorporated (ARAY) is +11% since an article last Wednesday by med-tech expert Stephen Simpson argued for 30-90% upside as ARAY's strong technology captures market share.
2) SunOpta (STKL) is +34% since December, when Yaron Ron Reuven called out STKL, a dominant player in organic foods, as a potential multi-bagger.
Alpha-Rich Stocks To Watch
1) Solta Medical (SLTM). A renewed focus on leaner execution, the liposuction market and disposables means 60% upside to fair value.
2) CSP Inc. (CSPI). A consolidation of CSPI's two operating segments and a lucrative royalty contract should catapult the micro-cap's shares to continued growth.
3) Masco (MAS). Having learned its lessons during the crisis, MAS is primed to benefit from the housing recovery, with 50% upside.
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In Asia, Japan -1.4% to 13318. Hong Kong -1.2% to 21355. China closed. India -1.5% to 19143.
In Europe, at midday, London -1.5%. Paris -1.9%. Frankfurt -1.6%.
Futures at 7:00: Dow -0.7%. S&P -0.8%. Nasdaq -0.8%. Crude -1.1% to $94.71. Gold -1.3% to $1367.70.
Notable earnings before today's open: LDK
Notable earnings after today's close: ULTA
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