JPMorgan "global deal" could reach up to $7B. How badly does JPMorgan (JPM) just want all of this to go away? The bank is reportedly in talks to settle the myriad of investigations into its various dubious practices, with the NYT reporting that the company could pay $3-7B. JPMorgan has apparently offered $3B. Since 2011, the firm has agreed to pay a total of $5.4B in major settlements. The WSJ provides a tally of the significant agreements.
Leading EU banks need extra €70.4B in core capital. The EU's top 42 banks need a further €70.4B ($95B) of capital to comply with Basel III core-capital regulations, the European Banking Authority estimates. The rules, which are due to take effect in 2019, require that banks hold a core-capital buffer of at least 7% of their assets on a risk-weighted basis. Banks will also need to maintain a leverage ratio of 3% of their total non risk-weighted assets from 2018. The shortfall for this requirement is €106.6B.
Alibaba heads for U.S. IPO after HK negotiations stall. Alibaba reportedly plans to carry out its blockbuster IPO in the U.S. after negotiations with the Hong Kong stock exchange broke down over the e-commerce giant's demand that its "partners" - a group of founders and senior managers - maintain control over board composition. Listing in New York would enable Alibaba to issue shares that provide its partners with more voting power. The IPO could value Alibaba at up to $120B. That would be a boon to Yahoo (YHOO), which owns 24% in the Chinese company.
Top Stock News
Amazon launches new tablets, cuts Fire HD price. Amazon (AMZN) has launched two tablets under the Kindle Fire HDX name: a 7" model and an 8.9" model. The company said the displays offer perfect color accuracy and the ability to optimize pixels based on the amount of available light. Amazon has also made the Fire HD thinner and added a faster CPU. One problem, though, is that the firm can't offer the popular Google (GOOG) apps (Maps, YouTube, etc.) that come bundled with Google-approved Android devices.
Applied Materials optimistic that deal will be approved. Applied Materials (AMAT) Executive Chairman Mike Splinter is confident that while regulators will take a "close look" at the company's proposed $7.1B acquisition of Tokyo Electron (OTCPK:TOELF), the firm is "confident it will get approved." Splinter doubts that overlap between product lines will be a problem. "Where we actually compete, there is very, very little overlap," he said. However, top semiconductor players such as Intel (INTC), Samsung (OTC:SSNLF) and TSMC (TSM) could object to the deal.
Noble Corp. to break up into two. Noble Corp. (NE) plans to spin off a business comprised of many of its standard-specification drilling units, resulting in the creation of two separate offshore drilling companies. Noble would continue to own and operate its high-specification assets, focusing on deepwater and ultra-deepwater markets for drillships and semi-submersibles, as well as on harsh environment and high-specification markets for jackups.
GM to clean financial house after debt placement raises $4.5B. General Motors (GM) intends to lower its cost of capital and strengthen its balance sheet after raising $4.5B through its first major private sale of debt since its emergence from bankruptcy. GM plans to spend $3.2B to repurchase 120M of preferred shares held by the United Auto Workers union retiree healthcare trust - although this will bring an $800M charge in Q3 - and another $1.2B to prepay in full, 7% notes held by the Canadian Auto Workers' Union Health Care Trust.
AT&T launching mobile broadcast network, says tower deal close. AT&T (T) plans to create a mobile broadcast network to deliver video services to its subscribers. The plans come even though Qualcomm's (QCOM) FLO TV mobile broadcast service crashed and burned in epic fashion. Meanwhile, AT&T is close to selling its wireless tower assets in a sale that could yield around $5B that the operator could use to pay down debt or make a European acquisition.
SAC faces fine of up to $2B as talks start to settle charges. Federal prosecutors have reportedly commenced talks with SAC Capital Advisors to settle criminal insider-trading charges against the hedge fund, with the government wanting a fine of up to $2B and a guilty plea from the firm. SAC founder Steve Cohen hopes he can also resolve a civil action from regulators in which he is in danger of of being banned from the securities industry.
Gates rules out second run as Microsoft CEO. In case confirmation was needed, Bill Gates has ruled out a second stint as Microsoft (MSFT) CEO. There have been plenty of calls for Gates, who reportedly played a role in speeding up Steve Ballmer's retirement plans, to return as CEO as Microsoft contends with slumping Windows sales and the acquisition of Nokia's (NOK) phone unit. Gates said that he's "part-time involved" with Microsoft as Chairman and that running his massive foundation remains his "full-time job."
Top Economic & Other News
Lew not so sure of debt-limit deal. Treasury Secretary Jacob Lew believes that investor confidence that Washington will agree to a deal to increase or extend the debt cap is probably "greater than it should be." Republicans and Democrats have until the middle of October to come up with something. First, though, they have until early next week to avert a government shutdown by forging a settlement on a funding bill.
Average price of insurance under Obamacare: $328 a month. The average cost of a mid-tier health-insurance plan under Obamacare is $328 a month, price data from the government showed yesterday, just a week before enrollment in the healthcare overhaul is due to begin on October 1. Insurers that intend to sell plans on exchanges include UnitedHealth (UNH), Aetna (AET), WellPoint (WLP) and Humana (HUM). Molina Healthcare (MOH) is also set to play a role.
China's "Beige Book" indicates slowdown. In contrast to data showing that China's economy is stabilizing and even picking up, the country's unofficial "Beige Book" shows that its slowdown has continued. Growth in manufacturing softened, the private survey said, as opposed to government figures showing that factory output accelerated in July and August. The Beige Book also revealed "weakening gains in profits, revenues, wages, employment and prices."
German consumer confidence nudges up to six-year peak. German consumer confidence has reached its highest level in six years heading into October, with the GfK survey edging up to 7.1 from 7 a month ago and topping consensus that was also 7. A sub-index tracking income expectations softened, due to increasing food prices harming perceived purchasing power. However, consumers have a "euphoric" willingness to buy. The positive GfK survey adds to yesterday's decent business-confidence reading.
Alpha-Rich Stock Movers and Great Calls
1) On September 16, Helix Investment Research tabbed Cascade Microtech (CSCD) as a buy, saying the company's balance sheet and insider holdings made it a strong way to play the recovery in semis. The stock is +13.2% to date. Read article »
2) Rubicon (RBCN) has continued to rise since Valuable Insights wrote up the long case on June 3rd, already hitting the article's short-term target. The shares are +52% to date. Read article »
Alpha-Rich Stocks To Watch
1) Stericycle (SRCL) keeps on cleaning up, with its growth story still in the middle innings. As its international segment replicates its U.S. success, shares could have 30% upside. Read article »
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In Asia, Japan -0.8% to 14621. Hong Kong +0.1% to 23210. China -0.4% to 2199. India -0.3% to 19856.
In Europe, at midday, London +0.1%. Paris -0.3%. Frankfurt flat.
Futures at 6:20: Dow +0.05%. S&P flat. Nasdaq +0.1%. Crude +0.5% to $103.69. Gold +0.3% to $1320.20.
Ten-year Treasury Yield -1 bps to 2.65%.
Notable earnings before today's open: AZO
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