Wall Street Breakfast

by: SA Editors
SA Editors
Seeking Alpha's flagship daily business news summary, gives you a rapid overview of the day's key financial news. It is published before 7:00 AM ET every market day and delivered to over 900,000 email subscribers.

A one-page summary of this morning's key market- and stock-moving stories. Headlines link to the original article. Use Wall Street Breakfast as a starting point, and check the original before trading.

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Wholesale Prices Fall, but Some Signs of Inflation Persist [New York Times]

Summary: A sharp drop in gasoline helped push wholesale prices down in September at the fastest pace (1.3%) in three years, the Labor Department reported yesterday: the Producer Price Index [PPI] measures what businesses charge one another for finished goods. But core PPI (minus energy and food) increased 0.6%, its largest jump in nearly two years. The mixed numbers left investors with mixed feelings about the economy and inflation; the stark core-rise suggests inflation is still enough of a concern that the Fed won't be considering lowering short-term lending rates any time soon. Some economists downplayed the core-PPI rise, seeing it as a result of a sudden rise in car prices. The Commerce Department reported that industrial production unexpectedly fell 0.6% in September; another cooling sign for the economy. Stock were down and Treasury-bonds were up in yesterday's trading. Importantly, today the Labor Dept. will release its Consumer Price Index [CPI], a vital inflationary measure; economists expect a healthy 0.2% rise in the core rate.
Related links: The Greenberg Indicator: Mixed Signals on This MarketDavid Fry's Daily Market OutlookOptions Trader: Tuesday WrapupImplications of a Softer PPI
Potentially impacted stocks and ETFs: iShares Lehman 1-3 Year Treasury Bond ETF (NYSEARCA:SHY), iShares Lehman 7-10 Yr Treasury Bond ETF (NYSEARCA:IEF), iShares Lehman 20+ Year Treasury Bond ETF (NYSEARCA:TLT) • S&P 500 Index (NYSEARCA:SPY), NASDAQ 100 Trust Shares ETF (QQQQ), iShares Russell 2000 Index ETF (NYSEARCA:IWM)

The World's Biggest Real Estate Deal [Business Week]

Summary: Tishman Speyer, in a joint venture with BlackRock's real estate division won a bidding war for the most expensive real estate deal ever in the U.S. MetLife sold the 80 acres of Stuyvesant Town in Manhattan (the adjacent Peter Cooper Village was also part of the deal), consisting of 18 square blocks and home to about 25,000 apartment residents, for $5.4 billion. This amount exceeds MetLife's target of nearly $5 billion, and is expected to result in an after-tax profit of about $3 billion. Some are saying Tishman Speyer and BlackRock overpaid and will face difficulty in generating a high return on investment. The mostly middle-class residents are concerned about rent hikes, but Tishman Speyer's CEO Jerry Speyer told AP, "No one should be concerned about a sudden or dramatic shift in this neighborhood's make-up, character or charm."
Related links: MetLife Press ReleaseAP Coverage on Forbes.com • Jim Cramer recently called MetLife "best of breed" • WSJ on MetLife's Plan to Sell (Summary)
Potentially impacted stocks and ETFs: MetLife (NYSE:MET), BlackRock (NYSE:BLK), PowerShares Dynamic Insurance ETF (NYSEARCA:PIC), streetTRACKS KBW Insurance ETF (NYSEARCA:KIE)


Intel Q3 Profit Falls [Reuters]

Summary: Intel's Q3 net profit fell to $1.3 billion, from $2 billion in Q305, a 35% decline. The company said this drop was due to price cuts sustained during an intense price war with AMD. According to Intel CFO, now that Intel has regained market share back from AMD, a truce has been called and microprocessor prices will "firm up" in the fourth quarter. News of the truce pushed shares back up 2%. Intel predicted that Q4 revenue would fall between $9.1 billion and $9.7 billion, in line with analyst expectations. Intel has been working hard to crank up profit growth, with both product development as well as cost cutting measures like layoffs and sale of unprofitable subsidiaries.
Related links: Business Week: Intel's AMD Troubles Continue • Bloomberg: Intel's Third-Quarter Profit, Sales Slump on Market Share Loss Intel's Results: How Does It Affect Next Quarter’s Guidance?AMD's Chinese Market Share Quadruples Conference Call: Intel Q3 2006 Earnings Call Transcript • Chart: Digital Logic Semiconductor Manufacturer Stocks - Quarterly Earnings Growth
Potentially impacted stocks and ETFs: Stocks: Intel (NASDAQ:INTC), AMD (NYSE:AMD) • ETFs: iShares Goldman Sachs Semiconductor Index (IGW), SPDR Semiconductor (NYSEARCA:XSD), Semiconductor HOLDRs (NYSEARCA:SMH)

Motorola's 3Q Sales Miss Forecast [AP]

Summary: Motorola's stock sank more than 7% in after-hours trading following its Q3 earnings announcement yesterday. Although Motorola added nearly 4% to its global market share now at 22.4% compared to the same quarter last year, its revenue of $10.6 billion -- a 17% y-o-y increase -- came up short of analysts' consensus and its own target. The 45% drop in its net income to $968 million, or 39 cents/share, was in-line with expectations. A Prudential analyst comments, "We believe that Motorola is a well-positioned handset vendor. However, increasing market share while improving operating margins at the same time may prove difficult to achieve over the longer term." Part of its sales shortfall and lower profit can be attributed to the rollout of the Krzr phone, an update to its Razr handset.
Related links: Motorola Comments on Sales ShortfallMotorola Earnings Press ReleaseMotorola Stock Discounting Market Share Gains Ahead of Earnings?Motorola Deploying Cell Phone KiosksAnalysts Applaud Motorola's Buyout of Symbol • Conference call transcript: Motorola Q3 2006
Potentially impacted stocks and ETFs: Motorola (MOT), Nokia (NYSE:NOK), Palm (PALM), Research in Motion (RIMM); Motorola represents a significant percentage of assets in the following ETFs: Broadband HOLDRs (NYSE:BDH), iShares Goldman Sachs Networking (NYSEARCA:IGN), iShares Goldman Sachs Semiconductor (IGW), Wireless HOLDRs (NYSEARCA:WMH)

IBM Posts 5 Percent 3Q Revenue Gain [AP]

Summary: Before IBM reported its quarterly earnings yesterday, no one would have expected the company's crucial global computer services business, which accounts for more than half its revenue, to come up short and still have IBM beat forecasts. Yet, that's exactly what happened, with impressive 3Q sales increases in its hardware and software lines, including mainframes and web applications. Quarterly profits came in at $2.22 billion, or $1.45 a shares - well above the $1.35 consensus expectation reported by Thompson Financial. Revenue rose 5% to $22.62 billion, up from $21.53 billion a year earlier despite a global services revenue increase of just 2.7%. Hardware sales improved 8.9%, driven by a 25 percent gain in the mainframe business, while software revenue increased 8.5%. According to Bob Djurdjevic, an industry analyst with Annex Research, "The mainframe (computer) revival is especially impressive." In after-hours trading yesterday, investors pushed shares of I.B.M. to $91.33 — up more than 5% - a new 52-week high. Still, analysts voiced concern during the conference call about the continued disappointment with IBM's global services business - something which will potentially affect future earnings if it is not rectified.
Related links: IBM Q3 2006 Earnings Call TranscriptSell-Side: IBM Will Beat On EarningsDespite Sluggish PC Sales Big Blue Remains a Good BetAcquisitions Lift Earnings 47% at I.B.M. (NYSE:NYT) • IBM Net Climbs Amid Rebound In Services Unit (WSJ)
Potentially impacted stocks and ETFs: DIAMONDS Trust Ser (NYSEARCA:DIA), Internet Architecture HOLDRS (NYSE:IAH), iShares Goldman Sachs Technology (NYSEARCA:IGM), iShares Dow Jones US Technology (NYSEARCA:IYW), iShares S&P Global Technology Sect. (NYSEARCA:IXN)

Video Game Wars Moving Online [New York Times]

Summary: The PlayStation 2 continues to be the best selling game console even following the release of Microsoft's Xbox 360 last year. Sony won the last round for console market share with about 60%, while Microsoft and Nintendo each had a 20% share. Both the PS2 and Xbox 360 have on-line communities totaling an estimated 3 million users each. Microsoft has invested hundreds-of-millions of dollars in its Xbox 360 network, and charges game players an annual usage fee of $50. Sony plans to offer its on-line gaming services free of charge in a more "open" format, with further details expected at a media event tomorrow. Nintendo will offer on-line features, but is emphasizing them less than it is its new Wii console's unique controller, expected to attract a broader audience to gaming. The key question is how important on-line gaming is for consumers, and if a console's on-line network can be influential enough to sway consumers. Sony may have the upper hand if it allows for free multi-player on-line gaming while offering a separate e-commerce site that will be fee-based, and thus generate revenue.
Related links: Sony Spin FactorWho Will Profit From the Gaming Console Wars?Sony PS3 Shortage Inevitable This ChristmasPlayStation 3 Mania: Stores Already Sold-Out of Pre-OrdersSeeking Alpha's Game Consoles Sector
Potentially impacted stocks and ETFs: Microsoft (NASDAQ:MSFT), Nintendo (OTCPK:NTDOY), Sony (NYSE:SNE), Activision (NASDAQ:ATVI), Electronic Arts (ERTS), Take Two (NASDAQ:TTWO), THQ (THQI), BLDRS Asia 50 ADR ETF (NASDAQ:ADRA), iShares Goldman Sachs Technology Index ETF (IGM), iShares Goldman Sachs Software Index ETF (NYSEARCA:IGV)

EMC's Profit Falls on Options; to Cut 1,250 Jobs [Bloomberg]

Summary: EMC Corp. reported that its third-quarter profit fell by a third on stock option and research expenses, and the world's largest producer of data-storage hardware plans to cut 1,250 jobs, reducing its workforce by 4%. Net income fell from $421.7 million to $283.7 million. Sales increased 19% partly due to the company's new security unit created after the recent acquisitions of RSA Security and Network Intelligence. EMC has spent $7 billion on acquisitions in the past three years to expand into more efficient data storage and software.
Related links: EMC's Results in its Own WordsEMC Beats Q3 Estimates, But Growth Concerns Pressure SharesYour Emcee for EMC: Fool by Numbers [Motley Fool] • EMC to Regroup, Reform, Relaunch [MSNBC]
Potentially impacted stocks and ETFs: EMC Corp. (EMC) • Competitors: Overland Storage (NASDAQ:OVRL), Hewlett Packard (NYSE:HPQ), Dot Hill Systems (NASDAQ:HILL), LSI Logic Corporation (NYSE:LSI)

Level 3 Elopes with Broadwing [Business Week]

Summary: Level 3 announced on Tuesday plans to acquire Broadwing, a telecom provider company, for $1.4 billion. The move strengthens Level 3's balance sheet as well as its bandwidth capacity. These upgrades could make it a more attractive, though also more expensive, acquisition for Google. Such a merger has been recently making the rounds on the rumor mill. Level 3's now upgraded coast-to-coast fiber optic network would help Google realize its dream of ad-supported wireless Net service for the masses, in addition to efficiently getting more YouTube into more people's homes. Last year, Level 3 sold Google $300 million worth of fiber-optic capacity. The company also sells to a number of other tech companies, including Yahoo!, Microsoft and AOL. Level 3 CEO Jim Crowe has denied the Google acquisition rumors. Analysts have suggested that in the wake of the Broadwing deal, which will be complex and will entail many integration issues, a deal with Google is unlikely any time soon.
Related links: Level 3's Acquisition of Broadwing Corp. Should Improve its Finances While Increasing Network Reach Is Level 3 Communications Google's Next Acquisition Target? • TMCnet.com: Broadwing Deal May Signal an End to Level 3's String of Acquisitions
Potentially impacted stocks and ETFs: Stocks: Level 3 (NASDAQ:LVLT), Broadwing Corp. (BWNG), Google (NASDAQ:GOOG), Global Crossing (NASDAQ:GLBC), Verizon Communications (NYSE:VZ), Sprint Nextel Corporation (NYSE:S), Lucent Technologies Inc. (LU) • ETFs: PowerShares Dynamic Networking (NYSEARCA:PXQ), iShares Goldman Sachs Networking Index (IGN)


Ford Gets Cut Off by a Top Supplier As Detroit Squeezes Parts Makers [Wall Street Journal]

Summary: In the battle between U.S. auto manufacturers and their suppliers, parts maker Colin & Aikman fired a shot at Ford last week. The two were reputedly engaged in a pricing dispute of several million dollars over interior parts when Collins & Aikman cut off deliveries to Ford, resulting in the latter stopping production in one of its Mexican assembly plants. In this specific drama, Collins & Aikman asked Ford for price increases due in part to rising plastic costs, threatening last week to stop shipments; after shutting down the Mexican plant, Ford ultimately gave in to Collins & Aikman's demands. Beyond this case, however, there has been a long history of tension between manufacturers suffering from substantial loss of market share and their suppliers, some of the largest of which--Collins & Aikman included--are in Chapter 11. As part of their bankruptcy proceedings, parts makers have been pushing back against the auto manufacturers' pricing pressure, renegotiating contracts and attempting to improve their pricing power. According to Ford's head of North American operations, the company has had to postpone expected commodity-cost savings by a couple of years as so many of its suppliers are in Chapter 11 proceedings.
Related links: Tough Times for Auto Parts Makers Should ContinueWhy Japanese Cars Earn $2400 More EachDetroit is Out of LuckThrowing In The Towel On Ford
Potentially impacted stocks and ETFs: Ford (NYSE:F), General Motors (NYSE:GM), DaimlerChrysler (DCX). Auto parts manufacturers: Johnson Controls (NYSE:JCI), Magna International (NYSE:MGA), TRW Automotive Holdings (NYSE:TRW).


Reuters Q3 Revenue Up 4.6%, To Sell Factiva Stake [Reuters]

Summary: Reuters Group Plc. reported underlying revenue growth of 5.3% during the most recent quarter, adding full-year growth would be at the top of the previously stated range (5-6%). Third-quarter revenue was $1.18 billion, ahead of the average view projected by a group of 10 analysts polled by Reuters. In other Reuters-related news, the London-based provider of financial news and data announced it was selling its 50% stake in archival news service Factiva to Dow Jones & Co. Inc. for $153 million in cash and $7 million in Factiva preferred stock. The sale gives Dow Jones full ownership in Factiva. The two had formerly been partners in Factiva's ownership. According to Reuters CEO Tom Glocer, his company's "underlying revenue growth of 5.3 percent demonstrates that Reuters' core business is responding well to favorable market conditions."
Related links: Reuters' Slow Comeback (RTRSY)Reuters CEO: Old Media Must Incorporate Bloggers, Citizen Journalists (RTRSY) • Dow Jones & Company Inc Q2 2006 Earnings Conference Call Transcript (DJ) • Dow Jones to Take Full Control of Factiva, Buying Reuters Stake (WSJ)
Potentially impacted stocks and ETFs: New York Times (NYT), The McClatchy Company (NYSE:MNI)

Viacom to Send Video to China’s Internet [New York Times]

Summary: Viacom's MTV Network will provide TV and music video content to Baidu.com, one of China's biggest Internet companies and one of the most widely visited sites in the world. The deal represents the most substantial attempt ever to get American entertainment content into China. It also builds on Viacom's similar arrangement, inked two months ago with Google, to distribute ad-supported videos over the Internet. China is the fastest-growing Internet market, second only to the U.S., and 70% of its users are under 30 -- making them an ideal market for MTV.
Related links: Web Video Market: Who Will Win The Big Ad Money?Nielson/NetRatings: TV Broadcasters Should Put Content On WebViacom Forges Online-Video Deal With China's Baidu to Boost MTV [Wall Street Journal]
Potentially impacted stocks and ETFs: Viacom (NYSE:VIA), Baidu (NASDAQ:BIDU), Google (GOOG) • First Trust IPOX 100 Index Fund (NYSEARCA:FPX), Select Sector SPDR Consumer Discretionary (NYSEARCA:XLY)


Lilly to Acquire ICOS Corp. for $2.1 Billion Cash [Bloomberg]

Summary: The Pharmaceutical company Eli Lilly & Co.has announced plans to acquire ICOS Corp. for $2.1 billion. Lilly will pay $32 a share, one-third higher than ICOS' average closing price in the last 90 days for its partner in the impotence drug, Cialis. Lilly CEO Sidney Taurel is confident that the move will be a "significant addition to sales in 2007," and will spur earnings growth. Lilly will own 100% of Cialis, whose sales increased by 34% this year.
Related links: 'Obvious' Buyout: Lilly Paying $2.1B For Cialis Partner ICOSViagra Vs. Cialis Cialis plots $100 million marketing blitz; Lilly and Icos to focus on drug's 36-hour effects
Potentially impacted stocks and ETFs: Eli Lilly (NYSE:LLY), Icos (ICOS) • Competitor: Pfizer (NYSE:PFE)

FDA Approves New Type Of Diabetes Drug [Reuters]

Summary: The Food and Drug Administration [FDA] has approved Merck's new drug, Januvia, to treat Type-2 diabetes. The drug is the first to treat the disease without causing weight gain and is believed to have blockbuster potential. The drug will compete directly with Novartis's drug Galvus, which is awaiting FDA approval. Both drugs are dipeptidyl peptidase IV, or DPP-4, inhibitors, which help the body lower its blood sugar level. Type-2 diabetes affects 7% of the American population and over 200 million people around the world. MRK shares closed yesterday at $43.96 — their highest level since the company pulled arthritis drug Vioxx from the market in September 2004 over cardiac concerns.
Related links: FDA Clears Drug That Treats Type 2 Diabetes in a New WayDrug Companies Threatened By Proposed Patent LegislationMerck: Worth a Look as a Defensive Play
Potentially impacted stocks and ETFs: Merck (NYSE:MRK), Novartis (NYSE:NVS) • Pharmaceutical HOLDRs Trust (NYSEARCA:PPH), iShares Dow Jones U.S. Pharmaceuticals Index Fund (NYSEARCA:IHE), iFirst Trust Morningstar Dividend Leaders Index Fund (NYSEARCA:FDL), Shares Dow Jones US Healthcare Sector Index Fund (NYSEARCA:IYH)

Johnson & Johnson 3Q Profit Rises [AP]

Summary: Johnson & Johnson reported impressive 3Q earnings yesterday, beating analyst expectations and raising its earnings estimate for the year. The news, reported early in the trading day, sent shares up 1.77% to close at $66.08 - a new 52-week high. Behind the beat quarter: increased profit of 9%, or 94 cents a share (vs. 85 cents a year ago), on strong sales of its prescription drugs and of consumer products overseas. Revenues totaled $13.3 billion, up 8% from last year's 3Q period. Analysts surveyed by Thomson Financial were expecting income of 93 cents per share and sales of $13.1 billion. In addition, J&J reported sales pf medical devices and diagnostics rose 7%. So far in FY2006, J&J has reported net income of $8.9 billion, or $2.99 per share, on revenue of $39.6 billion versus its year ago earnings (through the first 3 quarters) of net income of $7.96 billion, or $2.65 per share, on revenues of $37.9 billion.
Related links: Johnson & Johnson — 73 Consecutive Years of Sales Increases!Changes to Berkshire Hathaway's Holdings: J&J in, Lexmark OutJ&J: Pfizer Acquisition Will Enable Continued GrowthStrong Sales of Drugs Raise Profit 9% at J.& J. (NYT) • J&J Profit Rises On Drug Strength (WSJ)
Potentially impacted stocks and ETFs: Pfizer Inc. (PFE), Boston Scientific Corp. (NYSE:BSX), Novartis (NVS), Abbott Laboratories (NYSE:ABT), Schering-Plough Corporation (SGP), Merck & Co., Inc. (MRK), iShares Dow Jones US Pharmaceutical Indx. (IHE)


CME's Acquisition of CBOT Will Affect Big Pool of Investors [Wall Street Journal]

Summary: The biggest deal (yet) in a global consolidation of the financial exchanges is yesterday's blockbuster merger which sees Chicago Mercantile Exchange Holdings buying its smaller rival CBOT Holdings Inc. for about $8B, giving the new conglomerate a book value of $26B. The mergers accelerate the rapid growth of investment's hottest sector, derivatives: contracts whose value is derived from the movements in other financial instruments such as stocks and bonds. Last year almost 10 billion derivatives contracts were bought and sold on worldwide; the business barely existed 20 years ago. Derivative trading grew almost 18%/year between 2002-2005. The CME's most popular contract is its Eurodollars; CBOT, once famous for its grains and meats, is now dominated by its Treasury-bond futures. Both exchanges trade options alongside the outrights. The underlying value of their combined daily volume is a staggering $4.2T. Previous attempts at merging had been stonewalled by floor-traders, who once owned the places (CME went public in 2002, CBOT in 2005). The deal comes on the heels of June's NYSE/Euronext NV merger. By late 2008, the CME plans to close its trading floor and move its remaining pits to the CBOT, meaning only two major U.S. exchange floors remain, it and NYSE. They anticipate initial pretax savings of $125M/year through shutting down one floor and combining electronic platforms; there is hope that savings will be passed-through to customers in lower commissions fees. The deal must undergo regulatory review by the Commodity Futures Trading Commission, the Securities and Exchange Commission, and the Justice Department, but analysts say it's unlikely it will be derailed. Repetitive contracts, such as CME interest-rate futures and CBOT bonds, will be combined. Each CBOT Class A share will get 0.3006 share of CME Class A common; CBOT shareholders can elect to receive cash. CME could issue up to 15.9M new shares as part of the deal. Of the up to $3B in cash it could spend, it would raise about $2B in new debt. CME will own from 69%-80% of the combined company ("CME Group Inc."), depending on CBOT shareholders' decision on whether to accept cash or stock.
Related links: In related articles, WSJ diagrams the offerings of each exchange, solicits the feedback of Chicago traders and Wall Street analysts, and weighs whether commission prices will rise or fall, merger conference call transcriptCME /CBOT to Merge Into $25B Derivatives ExchangeMating Season for the Big ExchangesWhy I'm Long-term Bullish on the ExchangesTokyo Stock Exchange Favors Euronext-NYSE DealCombined ICE-NYBOT Looks AttractiveExchanges Rally on CBOT, CME Deal (Reuters)
Potentially impacted stocks and ETFs: Chicago Mercantile Exchange Holdings (NASDAQ:CME), CBOT Holdings Inc. (BOT), NYSE Group Inc. (NYSE:NYX), Nasdaq Stock Market Inc. (NASDAQ:NDAQ), International Securities Exchange Inc (ISE) • ETFs: First Trust IPOX-100 Index (FPX), iShares Dow Jones US Broker-Dealers Index Fund ETF (NYSEARCA:IAI) and streetTRACKS KBW Capital Markets (NYSEARCA:KCE) each have approx. 5% holdings in CME

Banks See Profits, Rising Pressures [Wall Street Journal]

Summary: Wells Fargo recorded a very strong quarter yesterday. Highlights: Revenue grew 5% to $8.93 billion, below consensus projections of $8.99 billion; costs grew 4% to $5.08 billion; 20% ROE was highest since Q1 2004; net income grew 11% from $1.98 billion (58 cents a share) a year earlier to $2.19 billion (64 cents a share). But the general picture arising from seven regional banks to report so far is far from optimistic. Banc of America Securities analyst John McDonald commented: "They're making the numbers, but the quality of earnings is starting to deteriorate, with increased reliance on cost-cutting, share repurchases and lower tax rates". Net interest margin was down at five of the banks, with Sovereign Bancorp recording the sharpest decline. Rising interest rates combined with the strong stock market have resulted in the banks also suffering from depositors shifting into more expensive instruments such as CDs or transferring deposits to more stock-savvy investment managers. Additionally, as reflected in WFC's increase in loan charges as a percentage of average loans, warning bells are beginning to chime on the borrowers' end.
Related links: Wachovia Disappoints on Revenue • WSJ's Coverage of Banks' Earnings • Reuters: Wells Fargo, US Bancorp lead higher bank profits
Potentially impacted stocks and ETFs: Wells Fargo (NYSE:WFC) • U.S. Bancorp (NYSE:USB) • SunTrust Banks Inc. (NYSE:STI) • National City Corp. (NCC) • KeyCorp (NYSE:KEY) • AmSouth Bancorp (ASO) • iShares Dow Jones US Regional Banks Index Fund (NYSEARCA:IAT) • iShares Dow Jones US Financial Sector Index Fund (NYSEARCA:IYF) • iShares Dow Jones US Financial Services Index Fund (NYSEARCA:IYG) • Regional Bank HOLDRs Trust (NYSEARCA:RKH) • Vanguard Financials ETF (NYSEARCA:VFH) • Select Sector SPDR Financial (NYSEARCA:XLF)


International Real Estate Gets Its Very Own ETF [Wall Street Journal]

Summary: State Street Corp.'s State Street Global Advisors recently filed with the Securities and Exchange Commission to launch an exchange-traded fund based on real-estate securities in 23 countries; until now all the real-estate ETFs in the U.S. market followed domestic stocks. The filing doesn't say what annual fees will be; analysts say they would be surprised if it were more than 0.6% of assets. The fund will own no U.S. stocks, following the Dow Jones Wilshire exUS Real Estate Securities Index: The index returned 33% over the past three years, 23% over the past five years and 9% over the past 10, but since it was only introduced in March, its numbers are based almost entirely on hypothetical back-tests and not actual results. Despite boasting holdings in 23 countries, nearly 60% are concentrated in just three: Australia (20%), the United Kingdom (19%), and Japan (18%). The top nine countries comprise more than 90% of the index's overall value.
Related links: StateStreet's 16 (Proposed) ETFsBeware New Real Estate Investment ProductsREIT ETFs -- Comparative AnalysisAs Housing Falls, REITs RiseREITs: These Few Should OutperformREITs: High Valuation, Questionable Value
Potentially impacted stocks and ETFs: State Street Corp. (NYSE:STT), Dow Jones & Company Inc. (DJ) • ETFsstreetTRACKS Wilshire REIT (NYSEARCA:RWR), Vanguard REIT Index VIPERs (NYSEARCA:VNQ), iShares Dow Jones US Real Estate ETF (NYSEARCA:IYR), iShares Cohen & Steers Realty Majors ETF (NYSEARCA:ICF), CBRE Realty Finance Inc. (NASDAQ:CBF)

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