McKesson to buy German peer in $8.3B deal. McKesson (MCK) has agreed to acquire a 50.01% stake in German peer Celesio from diversified holding company Franz Haniel & Cie. The U.S. pharmaceuticals distributor will also launch an offer for Celesio's remaining traded shares and convertible bonds, with the whole transaction valued at $8.3B. Celesio has welcomed the offer. McKesson said the deal will help improve its supply chain efficiency; it could also strengthen the company's purchasing power, especially with generic drug makers.
China October flash PMI beats estimates. China's October HSBC Flash PMI rose to 50.9 from 50.2 in September and topped forecasts of 50.4, with new orders hitting a seven-month high of 51.6. The data is welcome news after an unexpectedly weak read on exports earlier this month raised questions about the vitality of the Chinese growth engine.
Mixed report from AT&T. AT&T's (T) Q3 net profit rose to $3.81B from $3.63B and EPS of $0.66 topped analyst expectations by a cent, although revenue of $32.15B slightly missed forecasts despite edging up 2.2%. While the results were almost in line, says analyst Craig Moffet, "the bigger picture (is that) AT&T is struggling to grow." AT&T's mobile unit added 363,000 net postpaid subscribers in Q3, which was better than last year but well below Verizon Wireless' (VZ) 927,000 new customers. AT&T's shares fell 0.1% in after-hours trading.
Top Stock News
U.S. prepares action vs JPMorgan over Madoff. In what would be an almost unheard of move when it comes to U.S. banks, the FBI and the U.S. attorney's office are in talks with JPMorgan (JPM) about imposing a deferred prosecution agreement over allegations that the firm turned a blind eye to Bernie Madoff's Ponzi scheme, the NYT reports. Authorities would suspend criminal charges against JPMorgan - which is also in talks with regulators over mortgage bonds - but impose a fine and other concessions, and warn the bank over any future misconduct.
Countrywide found guilty in U.S. mortgage suit. A federal jury has found Bank of America's (BAC) Countrywide unit liable for defrauding Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) by selling them thousands of defective mortgages. The judge will determine the amount of the penalty - the U.S. has requested $848M, the gross loss to the GSEs as calculated by its expert witness. The suit centered on Countrywide's High Speed Swim Lane program, which, the government argued, the bank instituted in August 2007 to keep the music playing as the property market fell apart.
Stryker says hip recall could cost up to $1.13B. Stryker (SYK) expects to spend between $700M and $1.13B to resolve litigation and other costs related to last year's recall of its Rejuvenate and ABG II hip implants. The amount could be nearly double the company's previous estimate.
Amazon losses seen narrowing, Microsoft's EPS seen rising. Amazon (AMZN) and Microsoft (MSFT) are due to release quarterly earnings after the bell. As is its wont, Amazon is expected to post a Q3 loss per share of $0.09 vs a loss of $0.60 last year even though its revenue is seen jumping 21.4% to $16.76B. Microsoft's FQ1 EPS is projected to have edged up to $0.54 from $0.53 and its revenue is forecast at $17.79B, up 11.1%.
DOJ probes nine leading banks over MBSs. The Department of Justice is reportedly investigating nine major banks over the sale of problematic mortgage bonds, although the probes are for civil infractions rather than criminal ones. The banks include Bank of America (BAC) - which, as noted, has just lost a related court case - Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and Wells Fargo (WFC). The inquiries span U.S. attorney's offices from California to Massachusetts, and come as JPMorgan (JPM) tries to reach a multi-billion dollar settlement over the issue.
Wal-Mart rejigging China ops. Wal-Mart (WMT) intends to open up to 110 facilities in China from 2014-2016, adding to the 30 it has opened this year. The plan comes despite the retailer closing 11 outlets and looking to shut another 15-30 over the next 18 months.
Top Economic & Other News
Chinese repo rates jump as PBOC looks to fight inflation. The People Bank of China has refrained from injecting liquidity into money markets for a third consecutive session, adding to concerns that it's clamping down on inflation, which hit 3.1% in September. The PBOC's lack of action has meant that 58B yuan ($9.53B) has drained from the country's interbank market this week. In reaction, China's seven-day repurchase rate - a benchmark for short-term funds - rose 65 basis points, the biggest rise since July 29, to 4.67%. Chinese stocks dropped 0.8%.
Eurozone continues to recover slowly, PMI data indicates. Eurozone manufacturing PMI inched up to 51.3 in October from 51.1 in September, and while the services and composite readings fell, they still indicated expansion. The figures imply that the eurozone economy grew at a quarterly rate of 0.2% at the start of Q4, says Markit, "suggesting an ongoing, albeit sluggish, recovery." The data also reflects "signs of economic recoveries becoming more entrenched in the periphery, as well as ongoing expansion in Germany and stabilization in France."
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In Asia, Japan +0.4% to 14486. Hong Kong -0.7% to 22836. China -0.8% to 2165. India -0.2% to 20725.
In Europe, at midday, London +0.4%. Paris +0.2%. Frankfurt +0.6%.
Futures at 6:20: Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude +0.4% to $97.27. Gold +0.1% to $1335.90.
Ten-year Treasury Yield flat at 2.51%
Notable earnings before today's open: AB, ABB, ACAT, AIXG, ALK, ALV, ALXN, AN, ASPS, AVT, BC, BEN, BG, BLL, BMS, BSX, CAB, CAJ, CAM, CCE, CELG, CFX, CL, CLI, CMS, CRI, CS, CSH, CVE, CWEI, DFT, DLX, DNKN, DO, DOW, DST, ELN, EQM, EQT, ERIC, ESI, F, FAF, FLIR, GG, GNC, GNRC, HERO, HOT, HSY, ICLR, IMAX, IP, JNS, KKR, KMT, LAZ, LEG, LTM, LUV, MCK, MDP, MDSO, MGI, MJN, MMM, MO, NBL, ODFL, ORI, PACR, PCP, PDS, PHM, POT, PTEN, PVR, QSII, RCI, RCL, RDWR, RS, RTN, RYN, SEIC, SHPG, SIRI, SJR, SLAB, STC, TDY, TKR, TROW, UA, UFS, USG, VCI, VDSI, VLY, VNTV, WAB, WCC, WRLD, XEL, XRX, YNDX, ZMH
Notable earnings after today's close: AAN, AFOP, AHT, AMCC, AMZN, BAS, BCOV, BJRI, BLDR, BMRN, CA, CB, CERN, CINF, CLF, COG, COLM, CPWR, CTCT, DECK, DV, ECHO, ELY, EMN, ESRX, FET, FII, FLS, FR, FSL, GRT, IM, INAP, INFA, KBR, KLAC, LOGM, LSCC, MCRS, MKTO, MSFT, MTW, MXIM, N, NCR, NR, NTGR, OUTR, PFG, POL, QLGC, RGC, RMD, SIMO, SPN, SYNA, TCO, THRX, VR, VRSN, WDC, WOOF, WYNN, ZNGA
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