Verizon bond demand blows away expectations. Verizon Communications (VZ) has reportedly received over $90B worth of orders for bonds that it's selling in order to help pay for the $130B acquisition of Vodafone's (VOD) 45% stake in Verizon Wireless. Verizon Communications is expected to sell $49B in bonds today, while it will also market a $12B loan. Verizon thought it would sell just $20B of paper this week, but the prospect of a decent return on an investment in a solid company has yield-starved investors clamoring.
Californian city to use "eminent domain" to seize mortgages. Richmond in California has approved a plan for the city to become the first in the country to acquire underwater mortgages using the power of "eminent domain," which enables governments to seize private property for a public purpose. The idea is for the council to work with investor group Mortgage Resolution Partners to make the loans more affordable for home owners and avert foreclosure. However, critics fear that the program could hurt the market for mortgage-backed securities, provoke lawsuits and endanger Richmond's finances.
Apple gets license to run phones on China Mobile's network. A long-awaited deal between Apple (AAPL) and China Mobile (CHL) appears to have moved closer after the U.S. company received a license for its phones to operate on China Mobile's 3G and 4G networks. The news comes after Apple yesterday introduced two new handsets. While an agreement with China Mobile will open up a market of 700M subscribers, the "low-end" iPhone 5C looks rather pricey. The device will retail at 4,488 yuan ($730), just 800 yuan ($130) less than the top-of-the-line 5S.
Top Stock News
Fed seen limiting banks' commodities operations. The Federal Reserve is expected to soon publish guidelines that would restrict banks' involvement in physical-commodities businesses. The new rules, which would be designed to limit banks' risky activities, could accelerate the withdrawal of JPMorgan (JPM), Morgan Stanley (MS) and Goldman Sachs (GS) from sectors such as metals warehousing and power generation, where GS and JPM respectively have been accused of price manipulation.
Dell foe Southeastern buys into News Corp. Southeastern Asset Management has bought 11.9% of News Corp's (NWS, NWSA) voting rights, putting it second behind Rupert Murdoch, who owns 39% of the company's voting stock. Southeastern said it has no plans to influence News Corp. and is known for value investing. However, it's worth noting that Southeastern joined with Carl Icahn to oppose Michael Dell's buyout of Dell (DELL), and in a shareholder revolt at Chesapeake Energy (CHK).
Canada, Ontario selling part of GM holdings in $1.1B deal. The Canadian and Ontario governments are selling 30M common shares in GM (GM) in a block trade to Bank of America (BAC) and RBC Capital Markets (RY) in a deal valued at around $1.1B. The transaction is part of the governments' plan to sell the holdings in the automaker that they received as part of its bailout in 2009. They will be left with over 110M GM common shares and more than 16.1M preferred shares.
Top Economic & Other News
Obama gives diplomacy a chance on Syria. President Obama has asked Congress to delay any vote on military strikes against Syria while talks take place between the U.S., Russia and the Middle Eastern country over a proposal for the latter to give up its chemical weapons. During a televised address, though, Obama was skeptical about the plan and continued to make the case for action. Global equities are mixed today after rallying yesterday on the decreasing prospects of intervention.
Italian Senate delays Berlusconi expulsion vote. A cross-party Senate committee in Italy has held off from sending a vote to the main chamber over whether Silvio Berlusconi should be thrown out following his conviction for fraud. Berlusconi's center-right PDL party has threatened to bring down the ruling coalition if he is expelled. Financial markets have generally remained calm while the dispute has played out, although government bond yields have crept up over the past few weeks.
Increase in Chinese lending raises concern. China's aggregate financing grew for the first time in four months in August, rising to 1.57T yuan ($257B) from 808.8B yuan in July. Growth in bankers' acceptance bills and entrusted loans indicate a pick-up in shadow banking, which has been the subject of much nervousness. While the increase in financing may be helping the economy, says SocGen economist Yao Wei, it only "adds to the downside risk" as Chinese corporations and local governments become ever more indebted.
U.K. unemployment edges down to 7.7%. As in the U.S., the improvement in the U.K. jobless picture continues to be hard-going. The unemployment rate dropped to 7.7% in May-July from 7.8% in February-April, while the number of unemployed fell by 24,000 to around 2.49M. The pound spiked following the data but then dropped back a bit and was +0.2% at $1.5764 at the time of writing.
Alpha-Rich Stock Movers and Great Calls
1) Last Thursday, energy expert Steve Zachritz said Triangle Petroleum's (TPLM) recent deal was a bullish sign for the company, portending 40% upside. The stock is +23% since. Read article »
2) On August 13, Stephen Simpson said Receptos' (RCPT) MS treatment had the potential for clinically meaningful activity for ulcerative colitis, which translated to 50% upside. Four weeks later, shares are +25.7%. Read article »
Alpha-Rich Stocks To Watch
1) Hudson Global (HSON) has shed its legacy baggage and has several paths to a higher valuation. Buysider Thomas Finser sees a potential double even if the company doesn't succeed in its cost-cutting efforts. Read article »
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In Asia, Japan flat at 14425. Hong Kong -0.2% to 22937. China +0.1% to 2241. India +0.2% to 19997.
In Europe, at midday, London -0.1%. Paris flat. Frankfurt +0.4%.
Futures at 6:20: Dow flat. S&P -0.1%. Nasdaq -0.2%. Crude +0.25% to $107.66. Gold +0.1% to $1364.90.
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