BOJ stands pat, proclaims recovery. As expected, The Bank of Japan voted unanimously to stay the monetary policy course, as recent CPI and jobless data paints a more upbeat picture of Japan's economic prospects. "The Japanese economy is recovering moderately," the central bank said, updating its language from last month, when it said the economy was "starting to recover." The question now is whether a sales tax hike (designed to help shore up the country's public debt) will derail the recovery and pressure BOJ Governor Kuroda to take further action to stimulate growth.
U.S. auto sales jump to pre-crisis levels. "It hasn't been like this since the '80s," one dealership owner tells WSJ, referring to soaring domestic demand for autos. U.S. light vehicle sales hit 1.5M in August to record the best month for the industry since May 2007. At 16.09M, the annual U.S. automobile selling rate topped the estimates of most analysts and shows the sector is set up well with new model introductions arriving this fall amid tight inventory. A calendar quirk boosted the numbers a bit, but there's no question consumers' pent-up demand has been unleashed. The news boosted General Motors (GM) and Ford (F) Wednesday.
Top Stock News
BlackBerry may find buyer by November. BlackBerry (BBRY) is set to "run a fast auction process that could be wrapped up by November," WSJ said Wednesday evening, citing the ubiquitous "people familiar with the matter." A deal would put an end to what has become a long and painful saga for the once-dominant smartphone maker, and the company's board is apparently "pushing for a quick resolution." Nevertheless, there are no guarantees and it would appear Microsoft's (MSFT) deal for Nokia (NOK) has pushed BBRY further out of the race for smartphone market share.
LinkedIn prices upsized offering. LinkedIn (LNKD) priced its highly publicized follow-on offering at $223/share Wednesday, around 9.4% below its closing price before news of the offering broke. The offering was upsized, as the professional social networking company said it will sell 5,381,166 shares for proceeds of ~$1.2B, around 20% more than anticipated. Some are speculating that the company may go after Hamburg-based Xing, which operates a similar site.
Qualcomm enters the smartwatch fray. Though Samsung's (OTC:SSNLF) Galaxy Gear is getting more headlines, Qualcomm (QCOM) has launched a smartwatch of its own, albeit as a proof-of-concept. QCOM's bulky Toq smartwatch, shown off at the company's annual Uplinq developer conference, makes use of the company's low-power Mirasol displays, features WiPower LE wireless charging tech, and has text-message viewing, Bluetooth connectivity, 3rd-party app support, and the ability to control a phone's music player.
GSK cancer vaccine misses primary endpoint. GlaxoSmithKline's (GSK) experimental cancer vaccine MAGE-A3 missed one of its primary endpoints in a Phase 3 melanoma trial. The antigen-specific cancer immunotherapeutic did not significantly extend disease-free survival compared to placebo. The company says it remains "committed to identifying a patient sub-population who may benefit from this investigational treatment." Data regarding a second endpoint and results from a Phase 3 trial of MAGE-A3 in non-small cell lung cancer are due in 2015 and H1 2014, respectively.
Costco reports sales for August, Q4. Same-store sales at Costco (COST) rose 4% in August, topping analysts' expectations of a 3.8% increase. The retailer said net sales for the month came in at $7.95B, a 7% Y/Y increase. For FQ4, revenue was $31.8B, which looks to be a bit shy of estimates which pegged the figure at $33.1B.
HTC revenues slump 45% in August. You know you're in trouble when a Hello Kitty-themed phone can't save you. HTC (OTC:HTCKF) — which unveiled the Butterfly S Hello Kitty edition this week — slumped in Taipei Thursday as August revenue reportedly fell 45% Y/Y to $443.3M. That's a 16% decline from July and is good for a six-month low. "Following the August revenue release, HTC’s September sales will have to grow 60% month-on-month to meet the low end of its third-quarter guidance," one analyst tells WSJ. Many analysts now expect the company to post a loss for the year.
Otsuka to acquire Astex in $886M deal. As tipped Wednesday, Japanese drug maker Otsuka Holdings (OTCPK:OTSKF) is set to buy Astex Pharmaceuticals (ASTX) for around $886M in the largest deal for the Tokyo-based company since it snapped up a 49% stake in a French mineral water bottler five years ago (Otsuka also markets food). The deal increases the profile of Otsuka's oncology business and strengthens its pipeline as it prepares for patent expiration on Abilify. ASTX rallied nearly 24% Wednesday when news of the deal leaked — the shares rose last week after the company reported top line results from a Phase 2 trial of the acute myelogenous leukemia treatment SGI-110.
Top Economic & Other News
Beige Book: Economic activity expanded at modest to moderate pace. The U.S. economy expanded "at a modest to moderate pace" in July and August, the Fed's Beige Book shows. Of the twelve districts, eight characterized growth as "moderate," three said growth was "modest," and Chicago reported "improved" activity. Robust demand for autos and housing-related goods fueled an increase in consumer spending across most districts, residential real-estate activity "increased modestly," credit quality showed improvement, and lending activity was characterized as "mixed." For those who feel compelled to squeeze some manner of taper hint out of the report, it's worth noting that the Fed described hiring as "steady" and said upward price pressures "remained subdued."
Fed dove wants more stimulus. What taper? On Wednesday, Minneapolis Fed chief Narayana Kocherlakota continued to pound the table for more stimulus, saying the Fed's own forecasts show "the Committee is failing to provide sufficient stimulus to the economy." With unemployment still well above the targeted level of 6.5% and inflation still forecast to remain at or below 2%, Kocherlakota apparently sees no reason to rein in accommodative policies just yet.
HSBC Emerging Market business activity index shows tepid expansion. There's good news and bad news in the latest composite HSBC Emerging Markets services and manufacturing index print. The good news: A reading of 50.7 indicates business activity is expanding and is an improvement from July's reading of 49.5. The bad news: The August print was the third-lowest in more than four years. "Emerging economies are still faced with headwinds, which is evident in weak export orders," HSBC's chief economist said. While China's output expanded in August, HSBC noted that Brazil, India, Indonesia, and Turkey (which have all faced pressure on their currencies of late) are experiencing "supply-side problems, owing to low domestic savings, infrastructure bottlenecks and loss of competitiveness with rising unit labor costs."
Alpha-Rich Stock Movers and Great Calls
1) On August 28, Dr. Hugh Akston said Harvest Natural Resources' (HNR) aggressive accounting and lack of revenue could lead to a drop in share price, with 40-100% downside possible. The stock is -8.9%% to date. Read article »
2) Gain Capital Holdings (GCAP) continues to move higher after Intangible Valuation tabbed the company's strong Q2 report as a major bullish sign. The stock is +34% since the August update, and +61% since the contributor wrote up the idea in June. Read article »
Alpha-Rich Stocks To Watch
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In Asia, Japan +0.1% to 14064. Hong Kong +1.22% to 22597. China -0.2% to 2122. India +2.2% to 18969.
In Europe, at midday, London -0.04%. Paris -0.05%. Frankfurt -0.16%.
Futures at 6:20: Dow -0.15%. S&P -0.14%. Nasdaq -0.04%. Crude +0.6% to $107.81. Gold +0.24% to $1393.40.
Today's economic calendar:
Chain Store Sales
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
8:30 Initial Jobless Claims
8:30 Productivity and Costs
9:45 Bloomberg Consumer Comfort Index
10:00 Factory Orders
10:00 ISM Non-Manufacturing Index
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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