Boehner pledges not to allow debt default. House Speaker John Boehner has reportedly told Republicans that he won't allow the U.S. to default, and if necessary, will use GOP and Democratic votes to increase the debt ceiling. Boehner is also looking to negotiate a combined deal for passing budget legislation and raising the cap. Meanwhile, a compromise proposal floating about is for Congress to pass a federal funding bill in return for a repeal of a medical-device tax but no delay to Obamacare.
Twitter unveils $1B IPO; implied valuation $12.8B. Twitter is looking to raise $1B in its IPO, the company disclosed yesterday, saying it will trade under the TWTR ticker symbol. The micro-blogging service's S-1 filing implied it will have a market cap of $12.8B despite an H1 net loss of $69.5M. Revenues more than doubled to $253.6M, although expenses surged 87% to $316.5M. One possible concern is that Twitter's "average cost per ad engagement" - i.e. ad prices - has been steadily falling.
Samsung estimates continued record profit. Samsung (OTC:SSNLF) has estimated that its operating profit climbed 22.8-27.8% to another quarterly record of 9.9-10.3T won ($9.2-9.6B) in Q3, in line with consensus of 9.96T won. The company expects that sales grew 11-15% to 58-60T won vs forecasts of 59.7T won. "Despite record-high earnings, doubts over the sustainability of smartphone-driven profits hint at an overall valuation discount for Samsung," says analyst Greg Roh.
Top Stock News
Barclays' £5.8B fundraising 95% subscribed. Barclays' (BCS) £5.8B rights issue has been 95% subscribed, with the bank deciding to dispose of the unsold shares - an estimated £300M worth - in the market. The success of the fundraising comes despite a downbeat trading update and a number of legal disclosures in the prospectus for the issue. Barclays priced the shares in late July at 185 pence each, well below yesterday's close of 270.55 pence. The stock was at 273.45 pence at the time of writing.
Dimon out as Chairman of JPMorgan's main bank unit. Jamie Dimon has reportedly stepped down as Chairman of the unit that runs JPMorgan's (JPM) deposit and consumer banking operations. Dimon gave up the title because attorneys recommended it for "technical reasons," and not due to pressure from regulators and investors. Bank board member William Weldon replaced Dimon in the post; the latter remains Chairman and CEO of the parent company.
Ackman's Pershing Square down $1.2B since March. William Ackman's very public fights over Herbalife (HLF) and J.C. Penney (JCP) have proven to be rather costly so far: the value of assets under management at the activist investor's Pershing Square firm were reportedly down by $1.2B at the end of September from $12.4B on March 1. Pershing's main fund is up 0.5% on the year, well below the S&P 500's 20% return.
Top Economic & Other News
BOJ leaves massive stimulus policy unchanged. As expected, the Bank of Japan has maintained its target of expanding the monetary base by ¥60-70T ($720B) a year. Following a policy meeting, the BOJ again said the economy is "recovering moderately," noting that corporate capex has been rising as profits have improved. However, the BOJ is concerned by risks from overseas. The decision came just days after the government said it will raise sales tax to 8% from 5% in April despite fears that the move will hurt the economy.
Italian Senate panel debates whether to expel Berlusconi. An Italian Senate committee has begun a hearing over whether Silvio Berlusconi should be expelled from Parliament following his conviction for tax fraud. The full chamber will vote on the issue once the panel has delivered its verdict. The hearing comes two days after Berlusconi pulled a u-turn and voted with the government against a no-confidence motion. The former Prime Minister had roiled Italy by saying last weekend that he would withdraw his support for the ruling coalition. Italian shares were +1.3% at the time of writing.
Stockton on course to exit Chapter 9. Stockton's council has authorized a plan that will allow the Californian city to exit bankruptcy protection after it agreed with bond insurer Assured Guaranty (AGO) to restructure over $150M in loans. Stockton now has deals with all but three of its 19 major creditors, including with all the relevant bond insurers. The city hopes to file the plan to exit bankruptcy early next week and then leave Chapter 9 protection in around six months.
CFTC chief to step down. Commodity Futures Trading Commission Chairman Gary Gensler reportedly intends to leave the CFTC by the end of 2013 after five years in the post. Gensler's term has been tumultuous, and has included the financial crisis, an overhaul of derivatives rules under the Dodd-Frank law, and the prosecution of major banks for manipulating the Libor rate. Formerly of Goldman Sachs, Gensler surprised many by taking a tough and tenacious approach to reform.
Jobs report canceled. The Labor Department won't publish the Nonfarm Payrolls report today, as scheduled, due to the government shutdown. The department hasn't yet set a new release date.
Alpha-Rich Stock Movers and Great Calls
1) On Tuesday, Street Smart investor tabbed DNO International (OTCPK:DTNOF) as a strong buy due to its track record and pending catalysts. The company's Norwegian-listed shares are +7.5% since. Read article »
2) On July 1, Ashraf Eassa said that Silicon Motion (SIMO) offered a significant opportunity as market-share gains and a long-term growth story emerged. The stock is +24.2% to date. Read article »
Alpha-Rich Stocks To Watch
1) RealD's (RLD) model has too many vulnerabilities and its path to growth remains prohibitively expensive. Follow The Data argues this could mean 30-50% downside. Read article »
2) CenturyLink's (CTL) legacy issues will be difficult to overcome, leading to an attractive short. Tech analyst Stephen Lin expects lower guidance to catalyze the move over the next six months. Read article »
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In Asia, Japan -0.9% to 14024. Hong Kong -0.3% to 23139. China closed. India +0.1% to 19916.
In Europe, at midday, London +0.1%. Paris +0.5%. Frankfurt +0.1%.
Futures at 6:20: Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude +0.3% to $103.58. Gold -0.1% to $1316.
Ten-year Treasury Yield +0.1 bps to 2.62%
Today's economic calendar:
8:30 PM Fed's Fisher: Economy Policy
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