Moody's warns of downgrade on major banks. Moody's has put Goldman Sachs (GS), JPMorgan (JPM), Morgan Stanley (MS) and Wells Fargo (WFC) on review for downgrades as the agency considers reducing its assumption about how much government support they're likely to get. Bank of America (BAC) and Citigroup (C) are also on review, but the "direction (is) uncertain," due to their standalone credit strength.
SEC to push for new exchange rules following Nasdaq outage. SEC boss Mary Jo White said yesterday that she will push to implement proposed rules that would require exchanges and clearing houses to add testing requirements and safeguards for their trading software. White made the comments following the three-hour outage on the Nasdaq, which was caused by a technical problem. The company has reportedly identified "connectivity" issues with rival NYSE Arca (NYX) as a major factor. Nasdaq OMX (NDAQ) closed -3.4%, although that was up from losses of more than 5%.
Exxon to sell 35% stake in $50B Iraqi oil project. Iraq's oil minister has confirmed that Exxon Mobil (XOM) is selling stakes in the the country's West Qurna-1 oilfield to PetroChina (PTR) and Indonesia's Pertamina. The U.S. major is selling 25% to the Chinese company and 10% to Pertamina, with the deals set to possibly be finalized after two or three weeks. Exxon, which owns 60% at the moment, will reportedly remain the operator of the $50B project, while Shell (RDS.A, RDS.B) will retain its existing 15%.
Top Stock News
China Mobile hands out $3.2B worth of 4G equipment orders. China Mobile (CHL) has reportedly awarded initial contracts worth a total of 20B yuan ($3.2B) for the construction of its 4G network. Ericsson (ERIC), Alcatel-Lucent (ALU) and Nokia's (NOK) NSN have each won deals worth around 10% of the total tender. China's Huawei and ZTE have obtained 25% each. The building of China Mobile's 4G network should help pave the way for the mobile carrier to finally strike a deal with Apple (AAPL), whose upcoming devices are expected to support the operator's 4G TD-LTE technology.
Pandora shares tumble despite FQ2 earnings beat. Pandora's (P) FQ2 earnings topped Street expectations, but shares sank 7.65% premarket after the online music service provided light guidance due to rising costs associated with acquiring songs and expanding its sales force. In FQ2, adjusted EPS came in at $0.04 while revenue jumped 58% to $162M, although Pandora made a net loss of $7.8M. The company plans to soon remove its 40-hour monthly mobile listening cap, which has hurt its near-term growth.
BP claims-deadline could be pushed back into 2015. BP (BP) is set to face another setback in its attempt to limit the amount of compensation it's shelling out for the Gulf oil spill, with the deadline for claims set to be extended beyond April 2014, as provisionally set. The date could even slip into 2015. Claims amounted to $9.6B at the end of June and are rising amid BP's so far unsuccessful attempts to change the way the administrator is interpreting the terms of a compensation deal that the company agreed to.
Three states move to support AMR / US Airways merger. Florida, Texas and North Carolina, which are home to large hubs for AMR (OTC:AAMRQ) and US Airways (LCC), have requested that the Department of Justice drop its attempt to block the proposed merger of the two airlines, as the combined carrier would help their local economies. The DOJ is challenging the deal, arguing that it would lead to reduced competition and higher fares.
Top Economic & Other News
Brazil launches $60B blitz to boost the real. Brazil's central bank will today embark on a $60B program aimed at supporting the real (BZF), which has dropped 9.1% vs the dollar during this month alone. On Monday-Thursday, the bank will sell $500M worth of foreign-exchange swaps every day, while on Friday it will auction $1B of dollar loans. The program adds to swap and credit-line actions of $45B that the bank has already announced this year, not that they've done much good. The real was at 2.4428 to the dollar at the time of writing.
CFTC looks to rein in high-speed trading. The Commodity Futures Trading Commission is completing a road map that will aim to rein in high-speed trading (HST) and bring it under increased oversight. Inter alia, the CFTC is looking at how to prevent algorithms from spinning out of control and causing havoc on the markets. The road map comes amid rising concern that systems are becoming increasingly unstable. Serious events include Goldman Sachs' (GS) erroneous trades this week and Facebook's (FB) botched IPO, not to mention yesterday's Nasdaq (NDAQ) outage.
Bullion's bull run set to continue - analysts. The recent increase in the price of gold, which has climbed by over 14% since dropping to almost $1,200 an ounce in June, has a strong basis and is set to continue, analysts believe. Some of the reasons for bullion's rise include heavy demand in Asia, turmoil in emerging markets, high-priced U.S. equities and the under-performance of commodities in general. Another factor is a possible future constraint on supply as miners cut back on projects.
Jackson Hole kicks off. The Federal Reserve's annual jamboree of central bankers and other leading economic lights got under way last night, but without three star names: Ben Bernanke, the ECB's Mario Draghi and the Bank of England's Mark Carney. Still, attendees include Janet Yellen and Bank of Japan Governor Haruhiko Kuroda. Previous Jackson Hole events have been used for major announcements, such as when Bernanke signaled new rounds of QE in 2010 and 2012. His absence this weekend makes any new policy initiatives unlikely.
Alpha-Rich Stock Movers and Great Calls
1) On August 2, Josh Burwick argued that the market was underestimating BroadSoft's (BSFT) 2014 earnings potential, with 50% upside looming for shares. The stock is +10.6% in the three weeks since. Read article »
2) On June 27, Alan Brochstein said Apogee Glass (APOG) offered compelling value as its architectural glass reverted to historic margins. The shares are +20.4% since. Read article »
Alpha-Rich Stocks To Watch
1) BioFuel Energy's (BIOF) faltering performance, shaky balance sheet, and lack of leverage in making an asset sale leave it in a precarious position. Biofuels expert Tristan R. Brown sees 75% downside. Read article »
2) JetBlue (JBLU) may be the chief beneficiary of the American / US Airways merger news. As either an acquisition target or a standalone play, the airline's shares have significant upside. Read article »
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In Asia, Japan +2.2% to 13661. Hong Kong -0.1% to 21864. China -0.5% to 2057. India +1.1% to 18519.
In Europe, at midday, London +0.2%. Paris -0.5%. Frankfurt flat.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq flat. Crude +0.2% to $105.22. Gold +0.3% to $1374.90.
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10:00 New Home Sales
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