Apple's net profit drops but earnings beat forecasts. Apple's (NASDAQ:AAPL) FQ4 net profit fell to $7.5B from $8.2B a year earlier, although revenue rose 4% to $37.5B and beat consensus, as did EPS of $8.26. iPhone volumes rose sharply following the introduction of new models in September, although iPad shipments were flat and those for the Mac fell. On the earnings call, Apple CEO Tim Cook said the company will announce any changes to its capital allocation early next year. The comments come as Carl Icahn clamors for a new $150B buyback. Shares were +0.2% premarket after slipping late yesterday.
UBS, others sent requests in forex-manipulation probes. UBS (NYSE:UBS) and other firms have "received requests from various authorities relating to their foreign exchange businesses," the Swiss bank said in its Q3 earnings report (see below). UBS launched an internal investigation into the matter in June following a media report about "widespread irregularities." Earlier this month, Switzerland's financial regulator said it was investigating unnamed banks over the issue.
World shares mixed ahead of FOMC meeting. U.S. stock futures were flat-to-lower at the time of writing but European shares were higher ahead of the first day of a two day FOMC meeting, when the Fed is expected to keep its bondbuying program at $85B a month. The Stoxx Europe 600 Banks index was -0.3% following earnings results from some heavyweights in the sector (see below).
Top Stock News
BP's profit falls 26% but shares jump 5%. BP's (NYSE:BP) shares gushed 5% higher in premarket trading after Q3 underlying replacement profit dropped to $3.7B from $5B a year earlier but exceeded forecasts of $3.4B. BP raised its dividend by 5.6% to 9.5 cents a share, and said it intends to sell another $10B in assets within two years and use the money for payouts to shareholders.
Morgan Stanley wants to buy back more stock. Looking to boost its returns on equity, Morgan Stanley (NYSE:MS) is reportedly in discussions with the Fed to allow the bank to repurchase more stock in 2014. Any program would add to the $500M that the firm received permission for earlier this year. Morgan Stanley hasn't decided how much it will ask for, although its thinking could become clearer after it receives details about Fed stress tests this week.
UBS swings to profit but legal costs add up. UBS (UBS) swung to a Q3 net profit of 577M Swiss francs ($644.2M) from a loss of 2.13B francs last year - which was hurt by impairment charges - and topped consensus of 537M francs. The results this year included provisions of 586M francs for litigation, regulatory and similar matters, but also a 222M franc tax benefit. UBS, which, as noted, is the target of a forex probe, has been told by the Swiss financial regulator to put more money aside to cover its legal and other liabilities. Shares were -5% premarket.
Lloyds underlying profit +83%, but net loss widens to £1.3B. Lloyds (NYSE:LYG) underlying Q3 pretax profit jumped 83% to £1.52B and surpassed predictions of £1.46B as impairments for bad debt dropped 47% to £670M. However, the U.K. bank's net loss widened to £1.3B from £374M a year earlier after the firm booked a £750M charge to cover compensation payments for the mis-selling of loan insurance, taking the total amount that the bank has set aside to over £8B. Still, Lloyds has started discussions with regulators about re-starting dividend payments. Shares were -2.1% in London at the time of writing.
Deutsche Bank's profit hit by legal costs, trading slump. Deutsche Bank's (NYSE:DB) Q3 net profit tumbled 94% to €41M ($56M), badly missing consensus of €430M. Earnings were partly hurt by a €1.2B increase in litigation provisions to €4.1B, while revenue from trading debt and other products dropped 48% to €1.29B vs expectations of €1.59B. Shares were -1.8% premarket.
Michael Kors replacing NYSE Euronext in S&P 500. Michael Kors (NYSE:KORS) will join the S&P 500 on Friday and replace NYSE Euronext (NYSE:NYX), which is being sold to IntercontinentalExchange (NYSE:ICE).
Top Economic & Other News
Spanish retail sales grow for first time in over three years. Spanish retail sales increased for the first time since June 2010 in September, growing 2.2% on year vs -4.8% in August and topping consensus of -0.6%. However, analysts are expressing caution, as sales were hit in the comparable period last year by a hike in sales tax. The IBEX 35 was +0.5% at the time of writing.
Chinese money market rates continue to rise despite PBOC action. The People's Bank of China has injected 13B yuan ($2.13B) into the country's money markets via open market operations, resuming such action for the first time in two weeks. However, while the move may have been designed to ease fears that the PBOC was planning to dramatically tighten monetary policy, repo rates anyway rose again. The one-week increased to a three-month high of 4.947% and the overnight to a four-month peak of 4.446%. The Shanghai Composite fell 0.2%.
Indian central bank raises key rate. As expected, the Reserve Bank of India has increased its key lending rate to 7.75% from 7.5%, having raised the rate in September by a quarter-percentage point also. However, the RBI reduced the marginal standing facility rate to 8.75% from 9%. Prior to the decision, data showed that wholesale inflation climbed to 6.46% in September, above the bank's target of 5%. The RBI warned that inflation will remain high in the coming months.
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In Asia, Japan -0.5% to 14326. Hong Kong +0.2% to 22847. China -0.2% to 2129. India +1.7% to 20929.
In Europe, at midday, London +0.3%. Paris +0.3%. Frankfurt flat.
Futures at 6:20: Dow flat. S&P flat. Nasdaq -0.1%. Crude -0.3% to $98.32. Gold -0.5% to $1345.50.
Ten-year Treasury Yield -2 bps to 2.51%.
Today's economic calendar:
FOMC meeting begins
7:45 ICSC Retail Store Sales
8:30 Producer Price Index
8:30 Retail Sales
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
1:00 PM Results of $35B, 5-Year Note Auction
Notable earnings before today's open: ACI, ACT, AET, AGCO, AGN, ALLT, ALR, AME, AMTD, APD, BP, CIE, CMI, CRS, CRY, CVLT, CYNO, DAN, DDD, DIN, ECL, ETR, EXAS, FDP, FIS,FLWS, GOV, GT, HCP, HRS, HUN, ICON, IIVI, IVR, JBLU, JCI, LLL, LYB, MDC, MSO, MWV, NGD, NOK, OXY, PAG, PBI, PCAR, PFE, RTIX, SCHN,SNH, ST, SUI, TECH, TRI, TRW, TWI, UBS, UDR, UTHR, VLO, VSH, WM, X, XRAY, XYL
Notable earnings after today's close: ACMP, AFG, AFL, AJG, AMP, AUY, BGFV, BIDU, BWLD, BXP, CACI, CALX, CAP, CBG, CBI, CBT, CEMP, CLD, CRL, CRUS, CVD, CZR, DLB, DLR, DWA,EA, EIX, ENTR, FEIC, FISV, FLEX, GILD, GNW, GPRE, HTS, IACI, INVN, KIM, LNKD, LOCK, LOPE, MOVE, MWA, MX, NANO, NBIX, NUVA, PRXL, QCOR, QGEN,RBCN, RPXC, RRC, RYL, SFLY, SIMG, SKT, SM, SONS, SWI, TGI, TRLA, TTWO, UHS, ULTI, VPRT, VRTX, WBMD, WNC, WSH, WU, XCO, XXIA, YELP
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