Nikkei: Obama to name Summers Fed chief. President Obama plans to name QE hawk Larry Summers as the next Chairman of the Federal Reserve, Japan's Nikkei reports, citing sources. An announcement could be made next week after the FOMC's latest policy meeting, when the Fed could decide to start tapering. However, doubts about the report exist. "You have to wonder just how credible it is. I mean it would be understandable if the New York Times or the Wall Street Journal were reporting this," says one trader, probably speaking for many.
U.S. stock futures mixed following Summers report, dollar up. U.S. stock futures were slightly mixed at the time of writing and EU shares were solidly red following the report that Larry Summers is set to be appointed the next Fed chief. Gold was down and continuing a poor run of late that has also been caused by an easing of tensions over Syria and a collapse in Indian demand due to the tumbling rupee. Ten-year Treasury yields were +2 bps to 2.93%, while the U.S. dollar index was +0.1%.
Twitter files for IPO on the quiet. Twitter has "confidentially submitted an S-1 to the SEC for a planned IPO," the micro-blogging company disclosed yesterday, obviously via a tweet. Further details were sparse, but GigaOm reported that Twitter employees and investors have recently received offers from hedge funds to acquire shares at $26-$28 each. That implies a valuation of around $14B, soundly above the $10B valuation from previous share sales. Dan Primark reports that the IPO could take place this year, and Sky News that it will be on the NYSE (NYSE:NYX).
Top Stock News
Pimco, BlackRock buy over a quarter of Verizon's $49B bond sale. Pimco and BlackRock (NYSE:BLK) reportedly scooped up over 25% of Verizon's (NYSE:VZ) mammoth $49B bond sale on Wednesday, helping the telecom carrier to raise all the money it wanted to at once rather than in chunks, as it had originally intended. Bill Gross' firm bought $8B in bonds and BlackRock $5B, with the two companies also influential in persuading Verizon to price the debt at an above-market rate.
JPMorgan to spend extra $4B to clean up compliance problems. Facing numerous regulatory investigations - including into its mortgage bonds and London Whaling loss - JPMorgan (NYSE:JPM) reportedly intends to allocate an extra $4B on resolving its risk and compliance issues, with the bank also planning to deploy an additional 5,000 workers. Of the $4B, JPMorgan will spend $1.5B on managing risk and complying with regulations, and provision an extra $2.5B for litigation. It has already spent $18B since 2008 on legal expenses.
Paulson, Elliot, lawyers profit from Lehman's collapse. Sunday will mark the fifth anniversary of Lehman Brothers' filing for bankruptcy protection with $639B of assets and $613B of debt. While the bank's collapse was a major element of the financial crisis, hedge funds that snapped up Lehman claims at deep discounts have benefited from the $47.2B paid to creditors since 2012. Paulson, for example, is up over $1B and Elliot Management more than $700M. Meanwhile, the lawyers and accountants who have been sifting through the rubble have earned over $3B.
FDA panel backs use of Roche drug for early stage breast cancer. An FDA advisory panel has recommended that the agency approve Roche's (OTCQX:RHHBY) Perjeta drug for the pre-surgical, or neoadjuvant, treatment of breast cancer. If authorized for this indication, Perjeta could be used as an initial step to shrink tumors and so make surgery less invasive. Roche has estimated that 15,000 American women a year could benefit. Perjeta is already used for treating patients with HER2-positive advanced breast cancer that has spread.
Clear Channel to pay Warner for radio songs for first time. Clear Channel Communications has for the first time agreed to pay royalties to Warner Music Group for songs played on the radio. In return, Warner will lower the costs for Clear Channel of streaming music over the Internet from the 22 cents per 100 songs that the latter pays now. However, it reportedly won't be lower than Pandora's (NYSE:P) 12 cents. While radio broadcasters have fought against their stations having to pay royalties, there have also been complaints about the high cost of streaming.
Musk's loose lips send Tesla lower. Tesla (NASDAQ:TSLA) took a bit of a dive in post-market trading after CEO Elon Musk told Fox News that it's probably not as crazy to short the stock as it was recently. He quickly added that it's still probably not a good idea. Tesla shares have since pared their losses and were -0.6% pre-market.
Top Economic & Other News
Spain - a case of how austerity is not working. Spain's debt rose to 92.2% of GDP in Q2 from 90.1% in Q1 and came in above the government's year-end target of 91.4%. In monetary terms, debt increased to €943B from €923B. Spain's debt load has almost doubled since 2008, when the country's property bubble burst and triggered an intense recession, while the burden has increased from 73% in Q1 last year. The sharp climb has come despite the government's deep austerity measures that were supposed to ease the debt load.
Indian industrial output provides hope but GDP forecast cut. Indian industrial output surprisingly rose 2.6% on year in July, rebounding from a fall of 1.8% in June and beating forecasts for a contraction of 0.9%. Meanwhile, consumer inflation edged down to 9.52% in August from 9.64% in July. While the data may have provided some hope that India's slumping economy could be starting to stabilize, the prime minister's economic advisory panel has cut its FY growth estimates to 5.3% from a previous forecast of 6.4%.
Alpha-Rich Stock Movers and Great Calls
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In Asia, Japan +0.1% to 14405. Hong Kong -0.2% to 22915. China -0.9% to 2236. India -0.25% to 19733.
In Europe, at midday, London -0.3%. Paris -0.1%. Frankfurt -0.1%.
Futures at 6:20: Dow flat. S&P -0.2%. Nasdaq +0.1%. Crude -1% to $107.56. Gold -1.4% to $1311.70.
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