GOP representatives to meet with Obama. House Republicans are due to hold talks with President Obama today as Washington looks for a deal on the federal budget and debt ceiling. The GOP and Democrats yesterday suggested the possibility of a short-term increase in the debt limit in order to provide time for wider budget talks, with Paul Ryan and Obama among those calling for such a move. Hopes of a solution to the impasse have helped boost EU shares and U.S. stock futures.
Libyan PM freed following kidnapping. Libyan Prime Minister Ali Zeidan has reportedly been released after being seized this morning by former rebels aligned with the interior ministry. Zeidan's kidnapping highlights the difficulty that Libya - which has Africa's largest proven oil reserves - has had in restoring law and order since the fall of Muammar Gaddafi in 2011. Nymex crude oil was +0.3% and Brent +0.4% at the time of writing, but both were down from earlier highs.
China's Li expects GDP of over 7.5% in January-September. Chinese Premier Li Keqiang said his country's GDP probably expanded more than 7.5% in the first nine months of the year, with the economy showing "stronger momentum of steady growth" in the past few months. Everbright Securities economist Xu Gao says the recovery is "obvious in the third quarter, but whether the momentum can be sustained is open to question. The Shanghai Composite fell 0.9% today.
Top Stock News
Microsoft wants to hire new CEO by year-end. Microsoft's (NASDAQ:MSFT) board reportedly hopes to appoint a CEO to replace Steve Ballmer by the end of 2013 and is narrowing down its list of candidates amid preliminary interviews. Directors have spoken with Ford (NYSE:F) CEO Alan Mulally, ex-Nokia (NYSE:NOK) boss Stephen Elop and former top Microsoft executive Paul Maritz. Some candidates have asked not to be on the shortlist, including eBay (NASDAQ:EBAY) chief John Donahoe.
Patriot Coal eyes Chapter 11 exit after major deals. Patriot Coal (OTCQB:PCXCQ) is hoping to emerge from bankruptcy protection by the end of the year after Peabody Energy (BTU) said it would provide $310M to finance the benefits of 3,100 retirees, thereby resolving a dispute over the issue. Peabody will also extend about $140M to Patriot in the form of letters of credit. Meanwhile, Knighthead Capital Management will backstop a $250M rights offering.
Alibaba to shun Hong Kong in IPO. Alibaba Group has decided not to list in Hong Kong, CEO Jonathan Lu has told Reuters, as authorities "need time to study" a dual-class stock structure that would allow the Internet giant's "partners" - a group of founders and senior employees - to maintain control of the board's composition. However, Alibaba hasn't decided on which exchange it will list - it has been speculated that the company will IPO in the U.S. Any flotation could raise an estimated HK$100B ($12.9B) and value Alibaba at up to $120B.
BlackBerry more open to breakup, suitors only want pieces. BlackBerry (NASDAQ:BBRY) is reportedly more open to a breakup as doubts continue to swirl about Fairfax Financial's (OTCPK:FRFHF) ability to obtain the funding for its $4.7B bid. BlackBerry's advisers have approached SAP (NYSE:SAP), Cisco (NASDAQ:CSCO) and Samsung (OTC:SSNLF, OTC:SSNGY) about buying the company, but they're only interested in parts of the firm. Intel (NASDAQ:INTC) could be open to evaluating BlackBerry's patents but nothing else.
Jarden Chairman in talks to buy $1.8B chemicals firm. The London-listed shell company of Jarden (NYSE:JAH) Chairman Martin Franklin has said it is in advanced negotiations to acquire privately held specialty chemicals maker MacDermid. The purchase could be the first in a series of similar deals even though the sector has nothing to do with Jarden's business of consumer products. The WSJ puts the price of the MacDermid deal at $1.8B.
KKR to pay $1.2B for three acquisitions. KKR (NYSE:KKR) has agreed to acquire two manufacturing companies from U.K.-based Melrose Industries for around $1B. KKR is buying Oklahoma-based lifting-equipment firm Crosby Group and Pennsylvania-based Acco Material Handling Solutions, which provides hoists, carts and trailers used in manufacturing. Separately, KKR is making its first investment in Malaysia, agreeing to purchase a "substantial minority stake" in Weststar Aviation Services for 642M ringgit ($200M). Weststar operates offshore helicopter transportation services for energy firms.
Twitter could be eyeing mid-November IPO. An early version of Twitter's (NYSE:TWTR) S-1 states the company's IPO lockup period ends on February 15. Given that lockups typically run for 90 days, the disclosure suggests Twitter is looking to go public on Friday November 15. As it is, the micro-blogging leader has been rumored to be eyeing a pre-Thanksgiving IPO.
Top Economic & Other News
Japan's machinery orders rise to highest since 2008. Japan's machinery orders, a leading capex indicator, reached the highest level in five years in August, climbing 5.4% on month to ¥819.3B ($8.4B) vs no growth in July and topping consensus of +2.9%. The increase is important for Japan's government especially because one of its aims is to boost corporate investment as part of its economic reforms. "Capital spending is on a recovery trend," says Nomura economist Minoru Nogimori. "Japan's economic recovery is looking steady."
Most on FOMC continue to see taper this year. Most members on the FOMC expect the tapering of the Fed's QE program to start this year, the minutes of the September 17-18 meeting show, with the decision not to reduce the bond-buying last month a "close call." FOMC members were aware that the non-taper would be a surprise to the markets. Ultimately - with a number on the committee viewing the latest job data as disappointing - the majority thought it "prudent" to hold steady.
Alpha-Rich Stock Movers and Great Calls
1) On September 16, Stephen Percoco called National Bank of Greece (NBG) a leveraged bet on the Greek/eurozone recovery. The stock is 20.5% since. Read article »
2) On July 9, Stephen Simpson said Cresud's (NASDAQ:CRESY) discount to fair value is steep enough for a compelling investment despite country-level risks. The stock is +22.7% to date. Read article »
Alpha-Rich Stocks To Watch
1) Corning (NYSE:GLW) has significant downside protection and still plenty of growth opportunities. Jeffrey Dow Jones peers in the looking glass and sees 50% upside. Read article »
2) Forest Oil's (NYSE:FST) asset sale has left the cupboard looking bare. With high leverage and a multiple that doesn't match its asset quality, the company could see shares drop 25-45%. Read article »
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In Asia, Japan +1.1% to 14195. Hong Kong -0.4% to 22951. China -0.9% to 2191. India +0.1% to 20273.
In Europe, at midday, London +1%. Paris +1.5%. Frankfurt +1.4%.
Futures at 6:20: Dow +0.75%. S&P +0.9%. Nasdaq +0.8%. Crude +0.3% to $101.92. Gold -0.6% to $1299.50.
Today's economic calendar:
Chain Store Sales
8:30 Initial Jobless Claims
8:30 Import/Export Prices
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
1:00 PM Results of $13B, 30-Year Note Auction
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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