Japanese shares lead the fightback. Japanese shares (DXJ) were among the best performers in equity markets today following the great global rout yesterday, jumping 1.7% as the weaker yen and an upturn in U.S. stock futures boosted sentiment. European equities (FEZ) also rose. "The fall (yesterday) looks overdone because fundamentals are still solid and the U.S. economy seems to be improving," says Allianz's Kazuyuki Terao.
PBOC steps in to ease inter-bank credit crunch. China's money market rates have dropped sharply from record levels after the People's Bank of China reportedly provided banks with liquidity amid a severe credit crunch that almost caused the inter-bank market to seize up. The PBOC had withheld funds in order to try to rein in the rapid growth of credit. The one-day repurchase rate slid 442 bps to 8.43% after soaring 527 bps yesterday, while the seven-day rate fell 227 bps to 8.5%.
Oracle shares slump as FQ4 results undershoot. Oracle (ORCL) shares plummeted 8% premarket after the tech giant's FQ4 earnings missed forecasts, including for software sales and subscriptions. Net profit rose 10% to $3.8B and adjusted EPS came in at $0.87 while revenue was flat at $10.9B. "Organic growth is slowing and the company has a lot of pressures it has to deal with," says Bernstein analyst. "They're late to the cloud and playing catch-up."
Top Stock News
SoftBank CEO: To close Sprint buy in July. SoftBank (OTCPK:SFTBF) CEO Masayoshi Son has forecast that his company's $21.6B acquisition of Sprint (S) should achieve savings of ¥200B ($2B) a year over the next four years. The deal should be completed early next month, barring a late twist involving regulatory approval, Son said at a shareholders meeting. He acknowledged that SoftBank considered buying T-Mobile (TMUS) as an alternative to Sprint.
Dish to buy back $2.6B in debt after dropping Sprint bid. Dish Network (DISH) intends to redeem $2.6B worth of debt after officially saying it has abandoned its attempt to acquire Sprint (S). A major question is whether Dish intends to increase its $4.40-a-share offer for Clearwire (CLWR) after Sprint yesterday raised its bid to $5 a share and received the endorsement of Clearwire's special committee.
Rosneft signs $270B oil deal with China. Rosneft (OTC:RNFTF) has reached a $270B agreement to provide China with 365M tons of oil over the next 25 years, with the Russian company due to start transporting supplies next month. The deal adds to the 15M tons a year (300,000 bpd) of oil that Russia already sells to China via an Asian pipeline.
AT&T scours world for acquisitions. AT&T (T) reportedly considered purchasing up to a 29.9% stake in Telefonica (TEF) before the Spanish government blocked the attempt. Ma Bell has also mulled buying U.K.-based Everything Everywhere, Telefonica's O2 British unit and companies in Latin America. AT&T "remains interested" in Vodafone (VOD) assets as well.
Oracle defects to the Big Board. The NYSE (NYX) has gained a major victory over Nasdaq (NDAQ) after Oracle (ORCL) said it would move its listing to the Big Board on July 15. The transfer of what must be one of the most archetypal Nasdaq companies follows similar moves by Infosys (INFY) and Teva Pharmaceutical (TEVA) last year. Oracle will continue to trade under its current ticker symbol.
ADM falls out of love with chocolate. Archer Daniels Midland (ADM) is looking to sell its $2B cocoa and chocolate business, a decision that comes as agricultural companies seek to increase their exposure to the growing grain trade, which is being driven by China's booming demand for food. In addition, cocoa and chocolate operations are capital intensive, while margins have been volatile due to bad weather and political instability in key growing areas.
Top Economic & Other News
Bullard takes issue with taper announcement. The FOMC's decision to allow Ben Bernanke to lay out a plan for reducing QE was "inappropriately timed," says St. Louis Fed chief Jim Bullard, explaining his dissent. Bullard wonders how the committee could permit the announcement of a less accommodative approach at the same as cutting its economic outlook for 2013. "Policy action should be undertaken to meet policy objectives, not calendar objectives," Bullard says.
More trouble in store for mortgage-bond investors. Holders of mortgage bonds may be facing billions of dollars of undisclosed losses after a review of investor documents showed that individual houses are being reported as being in foreclosure long after they've been sold or the loans paid off. The reporting lag has enabled banks and servicers to continue charging investors monthly fees, and could lead to new litigation. The companies involved include Bank of New York Mellon (BK), Wells Fargo (WFC), Ocwen Financial (OCN) and Bank of America (BAC).
Gold regains some of its losses. Gold (GLD) joined in the widespread rally following yesterday's heavy losses as bargain-hunting Chinese investors entered the market, with the metal +0.5% at $1,293.10 an ounce at the time of writing. However, sentiment remains weak and analysts predict a correction as the U.S. withdraws the stimulus that has supported prices for five years. "What the market is undergoing now is a state of normalization," says analyst Joyce Liu.
Over 1.25M march in Brazil over economic issues. Brazilian President Dilma Rousseff has called an emergency cabinet meeting after two weeks of demonstrations yesterday culminated in over 1.25M people marching in more than 100 cities. The protesters are angry about a range of economic issues, including - very surprisingly - the huge sums spent on next year's soccer World Cup. Over the past five days, the real (BZF) has dropped 5.2% vs the dollar while the Bovespa is -4.6%.
House rejects $940B farm bill. The House surprisingly rejected a $940B farm bill yesterday after the measures lost the support of Democrats and right-wing Republicans. Conservatives thought that the legislation allocated too much money for crop subsidies and food stamps, while Democrats objected to a late change to limit the cash for such nutrition programs. A similar bill had passed in the Senate.
Alpha-Rich Stock Movers and Great Calls
1) Yesterday, Ashraf Eassa questioned Biozoom's (OTC:BIZM) valuation in light of its lack of revenue and assets. The stock ended the day -19.9%.
2) Solta Medical (SLTM) bucked the market's broader bloodletting, finishing up after receiving another FDA 510(k) clearance for its Fraxel DUAL laser system. Shares are +5.1% since June 10, when med-tech expert Stephen Simpson noted significant upside potential.
Alpha-Rich Stocks To Watch
1) Pacific Biosciences (PACB). Despite current cash burn, PACB's genome-sequencing technology has 30% annual revenue growth potential.
2) Coinstar (CSTR). The market has completely discounted CSTR's growth potential. With strong free cash flow and EBITDA growth leading the way, shares should rise.
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 +1.7% to 13230. Hong Kong -0.6% to 20263. China -0.5% to 2073. India flat at 18774.
In Europe, at midday, London +0.9%. Paris +0.6%. Frankfurt +0.5%.
Futures at 7:00: Dow +0.6%. S&P +0.7%. Nasdaq +0.6%. Crude +0.3% to $94.63. Gold +0.5% to $1293.10.
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