Wall Street Breakfast: Must-Know News 35 comments
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- JPMorgan, Cazenove to tie the knot. Sources say JPMorgan (JPM) is set to pay close to £1B ($1.7B) for the 50% it doesn't already own in Cazenove, the vaunted 190-year U.K. stock broker. The New York-based bank teamed up with the privately-owned Cazenove in November 2004 to expand relations with U.K. clients. The deal, which is reportedly at an advanced stage, is expected to trigger windfall profits for some of London's leading financiers. Just under half of Cazenove's shares are owned by current staff, while some 9% are owned by institutions and the rest by former partners.
- GM gearing out of debt. General Motors plans to start paying the $6.7B it owes the U.S. government and to possibly wash its hands of the entire amount by the middle of 2011, sources say. A potential catch: the carmaker plans to use other money from the government to repay the borrowing. A congressional oversight panel had reported in September that taxpayers were unlikely to get back the bailout funds lent to automakers.
- Cisco hikes Tandberg offer. Cisco Systems (CSCO) sweetened its bid for Norway's video-conferencing-equipment maker Tandberg in an offer that values the company at $3.39B, or 170 Norwegian kroner a share ($30.35 a share), up from its previous offer of 153.50 kroner a share in September. Tandberg's board and management back the deal, and said it has received acceptances from more than 40% of its shareholders including its two largest. Cisco said it will withdraw the offer if it doesn't get a 90% level of acceptances by Dec. 1.
- Setback for Merck's cholesterol drug. Zetia, Merck's (MRK) cholesterol drug, suffered a setback after a new study found that Abbott Laboratories' (ABT) Niaspan was more effective and safer as a secondary cholesterol treatment. Two prior studies had raised questions about the value and effectiveness of Zetia and Vytorin, and sales have dropped 14% to about $3B this year. Some doctors have questioned the validity of the study, noting it lacked in size and duration, and was ended early.
- Bristol-Myers plans nutritionals spin-off. In a move aimed at focusing on its core medicine business, Bristol-Myers (BMY) said Monday it will spin off its stake in its nutritionals division, Mead Johnson (MJN), in a deal that could net as much as $6.5B. Earlier this year, Bristol-Myers sold 17% of Mead Johnson in an IPO offering.
- GE jets to China. GE (GE) said Sunday it's making a "substantial" investment to establish a joint venture in China, hoping to tap the country's growing appetite for planes, and with an eye on a planned aircraft that the Chinese government hopes will rival commercial jets from Boeing (BA) and Airbus. GE will form a 50-50 JV with China's leading aircraft company, Aviation Industry Corp., to jointly supply avionics systems for jetliner makers globally. The business is part of GE's aviation-systems division, which generates annual revenue of about $2.5B, roughly 13% of GE's 2008 aviation revenue of $19.2B. The joint venture requires Chinese regulatory approval and is expected to launch in mid-2010.
- Citi sells Bellystem24 to Bain. In a move aimed at rustling up more cash to help shore up its finances, Citigroup (C) said it will sell its 93.5% stake in Japanese telemarketer Bellystem24 to the private equity firm Bain Capital, for ¥93.5B ($1B), as had been widely expected. Bain beat back rival bidders Permira and a team of CVC Capital and Blackstone (BX). The telemarketer will be purchased through a tender offer, which will be launched by a firm owned by funds advised by Bain. Citi said the tender will be completed on Dec. 30 and that the deal is not expected to have a material impact on the bank's net income or capital ratios.
- Japan reignites, for now. Japan's economy grew at the fastest pace in more than two years in Q3, fueled by government stimulus measures and exports to Asian neighbors. GDP grew an annualized 4.8%, marking the country's second consecutive quarter of expansion and an acceleration from the 2.7% pace of Q2. But even as gains surpassed economists' expectations, there were indications the strength may not be sustainable, as signs of a possible deflationary spiral emerged with price patterns falling by the sharpest rate in 50 years. Elsewhere, Japan's government appeared closer to approving new stimulus measures that could be worth $30B as economic growth is likely to slow next year due to sluggish personal spending and rising inventories.
- Hoenig on big banks: Let them fail. The U.S. economy still faces "significant weaknesses," KC Fed president Thomas Hoenig said Monday, "and coupled with a rapidly rising level debt and enormous moral hazard issues, we have a great deal of work ahead of us." Speaking at a central banking event in Abu Dhabi, Hoenig also urged policymakers to allow large financial institutions to fail if needed: "Our institutions must be allowed to fail no matter what their size or political influence."
- Sony waiting for spending spark. In an interview over the weekend, Sony (SNE) CEO Howard Stringer said the consumer electronics industry continues to languish and that "we are waiting for a signal that hasn't arrived." Stringer noted a stronger yen and tougher competition from Korea and China had hurt the Japanese market, while in the U.S. he warned the recovery "will be neither a V nor a W, but an L."
- China accuses Fed of reckless rate policy. China said the Fed is endangering global recovery with its insistence on keeping domestic interest rates near zero for the next 12-18 months. China's chief bank regulator rebuked the U.S. for fueling speculative capital flows that may spur asset-price inflation, which he said has already led to massive dollar arbitrage speculation. His comments came two days after the CEO of Hong Kong, Donald Tsang, said he was "scared" because "America is doing exactly what Japan did last time" when Japan's zero interest rate policy contributed to the 1997 Asian financial crisis.
- GM may have to go it alone with Opel - Germany. Germany's promise to provide state aid to GM's European arm Opel no longer applies now after GM backed out of the Magna International (MGA)-led, government-backed deal to take over the carmaker, German Economy Minister Rainer Bruederle says. "GM Chairman Ed Whitacre has said that his company can handle Opel, so this means that agreements and pledges that were based on other concepts are moot," he told reporters Monday. "Opel has the same right as any other German company to apply for state aid. We have a duty to examine this thoroughly. The outcome is open and there is no entitlement to have it approved."
- Apple bites back at Psystar. A U.S. District judge ruled Friday that Psystar Corp., which sells computers based on the Apple (AAPL) Mac operating system, violated Apple's copyright, apparently ending a two-year battle.
- UBS: what's behind the turnaround? Investors are waiting for UBS CEO Oswald Grubel to unveil a far-reaching plan today to turn the hard-hit bank around. Among other moves, they will be looking to see how the recently recruited head of the bank's U.S. wealth-management unit plans to improve profits and staunch an exodus of bankers, and whether there will be any indications if Grubel will sell the division in the longer term.
- Vivendi nabs Brazil telecom bid. Vivendi said it has purchased a controlling stake in GVT SA for 7.2 billion reais ($4.18B), giving it a foothold in Brazil's telecom market and upstaging a competing bid by Telefonica SA (TEF), Europe's second largest phone company. France's Vivendi, the owner of the world's largest music company, said GVT fits with its strategy of secular expansion in rapid-growth economies. Vivendi is widely thought to be looking to shed its stake in NBC Universal.
Earnings: Before Open
- Lowe's (LOW): Q3 EPS of $0.24 in-line. Revenue of $11.38B in-line. "We are beginning to see signs of improved performance in some of the hardest-hit housing markets including California, Florida and areas of the desert Southwest." (PR)
- GM: Q3 revenue of $28B vs. consensus of $22.9B, up $4.9B from Q2. Dealer inventories fell 158K to 424K. Market share was flat at 19.5%. Says it will accelerate repayment of its outstanding $6.7B in rescue loans ahead of the July 2015 maturity date. (PR)
Today's Markets
Overseas markets posted solid gains Monday, sending U.S. futures higher in overnight trading.
- Asia: Nikkei +0.2% to 9791. Hang Seng +1.7% to 22944. Shanghai +2.7% to 3275. BSE +1.1% to 17033.
- Europe at midday: FTSE +1.5% to 5353. CAC +0.8% to 3838. DAX +1% to 5744.
- Futures at 7:00: Dow +0.6% to 10308. S&P +0.8% to 1100. Nasdaq +0.6%. Dec. crude +1.2% to $77.27. Gold +1.1% to $1,129. 30-year Tsy +0.39% at 119-29. 10-year +0.17%. Euro +0.3% vs. dollar. Yen +0.2%.
Monday's Economic Calendar
- 8:30 Retail Sales
8:30 Empire State Mfg Survey
10:00 Business Inventories
10:00 Philly Fed's Survey of Professional Forecasters
12:15 PM Bernanke: Economic Outlook
1:15 PM Fed's Fisher: The Fed and the Economy
6:15 PM Fed's Kohn: Policy Challenges - Notable premarket earnings: LOW, PWRD, SOL, SCR
- Notable postmarket earnings: AGO, PSUN, SINA
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This article has 35 comments:
Sorry they borrowed A LOT more than 6.7 Bil. Who is playing with the numbers and thinks we wont see it?!
"A congressional oversight panel had reported in September that taxpayers were unlikely to get back the bailout funds lent to automakers."
They will be unlikely to see me buy one of their cars until that money is paid back. ALL OF IT!!! I hope I am not alone in this thought. I cant see helping the muggers get away with the money they stole from me.
Wow ! So soon after bankruptcy. Would the situation been much different today if things stayed as they were before bankruptcy?
A lot of shareholders lost a bundle (seniors' retirements). Was it much to do about nothing. Has or will this help GM produce the cars of the future or have we, they, forgotten about this already?
---------------
Absolutely...A breath of fresh air and reality!
"I'll gladly pay you Tuesday for a hamburger today."
So GM takes $45 billion with the left hand and supposedly will, at some point "pay back" $6.7 billion with the right hand? More slight of hand? More shell games? What a steaming crock of B.S.
GE helping China with airplanes and avionics in competition with Boeing?
Just great, maybe GE can help China build a jet fighter to shoot ours down or troop transports to invade Taiwan, Midway, and Hawaii.
The lust for Mammon amongst "American" companies seems to vault patriotism and national interest quite easily.
We are giving China - an oppressive regime ruled by their army - all of our knowledge and advances in order to make a buck. We should not be surprised when they eclipse us or conquer us economically or militarily.
So where was this guy in 2008 and why didn't he speak up then? A day late and $1.3 trillion short...
On Nov 16 08:42 AM ebworthen wrote:
> GM to "pay back" $6.7 billion.
>
> "I'll gladly pay you Tuesday for a hamburger today."
>
> So GM takes $45 billion with the left hand and supposedly will, at
> some point "pay back" $6.7 billion with the right hand? More slight
> of hand? More shell games? What a steaming crock of B.S.
>
> GE helping China with airplanes and avionics in competition with
> Boeing?
>
> Just great, maybe GE can help China build a jet fighter to shoot
> ours down or troop transports to invade Taiwan, Midway, and Hawaii.
>
>
> The lust for Mammon amongst "American" companies seems to vault patriotism
> and national interest quite easily.
>
> We are giving China - an oppressive regime ruled by their army -
> all of our knowledge and advances in order to make a buck. We should
> not be surprised when they eclipse us or conquer us economically
> or militarily.
Yeah, we're creating a bunch of "zombie banks just like in Japan".
www.avic.com.cn/EN/cop...
"China Aviation Industry Corporation (AVIC) is an ultra large state-owned enterprise and an investment institution, authorized and managed by the Central People’s Government...
AVIC develops in series fighter, fighter bomber, bomber, transport, trainer, reconnaissance aircraft, helicopter, attack aircraft, general aviation aircraft, UAV, etc. It also develops engines and missiles, such as turboprop engines, turbo-shaft engines, turbojets, turbofans, air-to-air missiles, air-to-surface missiles and ground-to-air missiles. It develops and builds brand aircraft including J-10, FBC-1, FC-1, L-15, JL-9, etc., brand engines such as Taihang, Qinling, Kunlun, etc. It provides advanced aviation-weaponry to Chinese military forces."
GM has even more baggage now that the Government and the UAW are the largest shareholders. See how fast they run this Co. into the ground, again.
I agree with you Guns, I will never buy a Chevy again.
"A potential catch: the carmaker plans to use other money from the government to repay the borrowing."
This is exactly how the US government pays off bonds; sell new bonds to pay off the old. I am sure Mr Ponzi is rolling over in his grave and Mr Madoff is wondering "Why am I in jail?"
On Nov 16 09:49 AM JCCIII wrote:
> Government Motors getting out of debt:
>
> "A potential catch: the carmaker plans to use other money from the
> government to repay the borrowing."
>
> This is exactly how the US government pays off bonds; sell new bonds
> to pay off the old. I am sure Mr Ponzi is rolling over in his grave
> and Mr Madoff is wondering "Why am I in jail?"
> They will be unlikely to see me buy one of their cars until that
> money is paid back. ALL OF IT!!! I hope I am not alone in this
> thought. I cant see helping the muggers get away with the money they stole from me.
[GM gearing out of debt. General Motors plans to start paying the $6.7B it owes the U.S. government and to possibly wash its hands of the entire amount by the middle of 2011, sources say. A potential catch: the carmaker plans to use other money from the government to repay the borrowing.]
Running just like another government entity: Social Security. Robbing one revenue stream to pay another. This is going to last more than to 2011 because I think doubleguns is quite correct with his statement that most Americans will balk at purchasing GM products (unless there is cash for clunker or other superhypes).
When Loral's CEO Bernard Schwartz partnered with China in the mid-1990's over rocket and satellite technology, he was called treasonous and nearly escaped Federal prosecution.
My, how this administration has altered the playing field, particularly as it relates to Goldman Sachs and GE.
> I'm hard at work, putting together a new start-up, a national chain
> of MAASL schools (Mandarin As A Second Language).
祝贺
After the money runs out, do we let them die or do we spend another $80 Billion to prop them up?
Might as well send every consumer $30,000 - $35,000 and say buy yourself a new car. I wonder how many would run to a GM dealer. Would you?
On Nov 16 10:28 AM Old Trader wrote:
> I'm hard at work, putting together a new start-up, a national chain
> of MAASL schools (Mandarin As A Second Language).
Not certain what you posted...just hope it was complimentary, LOL.
On Nov 16 10:32 AM spald_fr wrote:
> On Nov 16 10:28 AM Old Trader wrote:
On Nov 16 10:57 AM LaurenNicole wrote:
> There is already a very popular kids show teaching this...is it only
> coincidence that my three year old can ask for a drink in Chinese
> now?
> spald, Not certain what you posted...just hope it was complimentary, LOL.
It's supposed to be "Congratulations".
Let me try erstwhile, phonetically:
Ne sommadoh shee doh booheh zwo.
LOL right back atcha.
* Thomas Hoenig gets it.
* Let GM/Opel fail!! No American tax $$ to Opel!!!
On Nov 16 09:46 AM Dave M. wrote:
> Go witness the outrage (message boards set up) of the Delphi non-union
> employees who had their pensions slashed while the unionized employees
> did not. That's Obama filling the pockets of certain Americans in
> a discriminatory fashion. Hope and change on a selective basis. Makes
> me sick.
On Nov 16 09:34 AM Kolk Abuk wrote:
> GE's planned 50-50 joint venture with Aviation Industry Corporation
> (AVIC) of China illustrates a fundamental leverage that finance has
> over good sense where national interests are concerned. From AVIC's
> own website here:
>
> www.avic.com.cn/EN/cop...
>
> "China Aviation Industry Corporation (AVIC) is an ultra large state-owned
> enterprise and an investment institution, authorized and managed
> by the Central People’s Government...
>
> AVIC develops in series fighter, fighter bomber, bomber, transport,
> trainer, reconnaissance aircraft, helicopter, attack aircraft, general
> aviation aircraft, UAV, etc. It also develops engines and missiles,
> such as turboprop engines, turbo-shaft engines, turbojets, turbofans,
> air-to-air missiles, air-to-surface missiles and ground-to-air missiles.
> It develops and builds brand aircraft including J-10, FBC-1, FC-1,
> L-15, JL-9, etc., brand engines such as Taihang, Qinling, Kunlun,
> etc. It provides advanced aviation-weaponry to Chinese military forces."
On Nov 16 09:56 AM Shaggieman wrote:
> “ How bad is it when a $1.5 billion GM loss is an improvement? How
> the mighty have fallen. ”
Take a little risk will you. Sell off to get back to top notch home entertainment products at reasonable cost. Do something that makes YOUR competition nervous. You're already in the hole, you may as well dig a little deeper to get this ship back on course. Make me want to buy your products as I wanted to yesteryear.
And even if they stuck to civilian aircraft-- would YOU personally fly on some Chinese-built tinn can?
On Nov 16 12:00 PM Socialism cannot compete! wrote:
> So...no national security concerns there with GE "joint venturing"
> with AVIC. :( How in h#ll have we allowed this to continue???<br/>
GE's China deal is the handwriting on the wall for the U.S.'s last truly competitive industries: aviation and defense. GE may be trying to get secure access to markets for its big goods, not to mention the resources (rare earths?) needed to feed them.
UBS' turnaround plan will have to include a sale of its PaineWebber unit, as its clientele are too downmarket for Swiss tastes.