Stock euphoria calms after dovish Fed taper. Asian equities were mixed and European shares were in the green at the time of writing following the Fed's candy coated announcement that it's cutting its bond-buying program by $10B a month to a mere $75B. What's got investors particularly giddy is that the Fed emphasized that it will keep interest rates at minimum levels for a while to come. The Nikkei jumped 1.7% to 15859, its highest close in six years, although Chinese shares fell on rising money market rates (see below). U.S. stock futures were lower after Wall Street soared yesterday.
AZN, Bristol in diabetes deal worth up to $4.1B. AstraZeneca (NYSE:AZN) has agreed to acquire Bristol-Myers Squibb's (NYSE:BMY) holding in the companies' diabetes joint venture for an initial $2.7B and as much as $1.4B in additional payments. The transaction will strengthen AstraZeneca's earnings potential at a time that it's being hit by patent expirations. Bristol, which is reversing a relatively recent deepening of its diabetes involvement, will receive funds that it can use to develop treatments in other fields, including cancer.
Oracle earnings beat expectations. Oracle's (NYSE:ORCL) FQ2 results topped Street forecasts and its FQ3 guidance was in line, prompting hopes that the corporate-software giant is on course to revive growth that's been hit by stuttering IT expenditure. Net income dropped 1% to $2.6B, adjusted EPS came in at $0.69, and revenue rose 2% to $9.3B. Software license/cloud subscription sales, which drive future services revenue, slipped 1% to $2.4B, while hardware sales dropped 3% to $714M, although that's an improvement from FQ1's 14% slump. Shares were +1.2% premarket.
Top Stock News
Boeing loses out on $4.5B Brazil deal. Boeing (NYSE:BA) has lost out on a 10-year $4.5B contract to supply 36 fighter jets to Brazil, which has chosen Saab's (OTC:SAABF) Gripen over the U.S. plane maker's F-18 Super Hornet. Saab was picked because it agreed to share more technology and because many of the parts would be made in Brazil. When announcing the deal, the country's defense minister sidestepped a question over whether the Edward Snowden spying revelations - about which Brazil is furious - were a factor.
Dish mulls bid for T-Mobile. Dish (NASDAQ:DISH) is reportedly weighing a bid for T-Mobile US (NYSE:TMUS) and won't stand idly by if Sprint (NYSE:S) makes an offer. Dish Chairman Charlie Ergen, thwarted this year in his efforts to buy Sprint/Clearwire and still looking to make use of Dish's 4G spectrum, has repeatedly stated he's open to a merger with T-Mobile.
GE sees sales growth of up to 5% in 2014. GE (NYSE:GE) expects total revenue growth of 0-5% in 2014 as the conglomerate continues to shift its focus onto its industrial business. GE forecast that organic revenue at the unit will rise 4-7%, which should offset a fall at finance subsidiary GE Capital. The firm targets boosting the share of profit at the industrial division to 70% of the total by 2015 from an estimated 55% this year.
Citigroup chooses AIA for lucrative life-insurance deal. Citigroup (NYSE:C) has chosen Hong Kong's AIA Group (OTCPK:AAIGF) to sell life insurance through the U.S. bank's network of 600 branches in 11 Asia-Pacific countries in an exclusive 15-year deal. While financial terms of the agreement weren't provided, Bloomberg reports a source as saying that it could generate up to $20B in revenue, including in commissions and upfront fees. China, India and Australia are among the markets that are part of the deal.
Target hit by credit card breach. An unknown number of Target (NYSE:TGT) customers shopping during the Black Friday weekend had their credit card information stolen in an "extensive" breach of the retailer's security, the WSJ reports. The theft may have occurred through software installed at machines that customers use to swipe their cards when paying.
Facebook, Zuckerberg, others to face lawsuit over IPO. District Judge Robert Sweet has ruled that Facebook (NASDAQ:FB), CEO Mark Zuckerberg, COO Sheryl Sandberg and dozens of banks should face investor lawsuits that accuse the social-media site of concealing revenue warnings from its IPO registration statement prior to its listing in May 2012. It was information that Facebook gave to its underwriters' analysts. The defendant banks include Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS) and JPMorgan (NYSE:JPM).
Top Economic & Other News
Senate passes budget bill. President Obama is set to sign a two-year $1.01T budget bill into law after the Senate passed the legislation yesterday by 64-36. However, now the fight starts in the Senate and House Appropriations committees about how to spend the money, with one flashpoint sure to be funding for Obamacare. Congress has until January 15 to resolve any differences in order to avert another partial government shutdown.
China acts to avert credit crunch. The People's Bank of China has made an emergency injection of liquidity into the country's financial system after money market rates started to spike again due to lack of action by the PBOC earlier and increasing demand for money because banks need it for year-end regulatory requirements. The seven-day repo rate climbed 72 bps to 7.02% after jumping 153 bps yesterday, helping to drag the Shanghai Composite down almost 1%.
Gold, silver tumble following Fed taper news. Gold futures have dropped below $1,200 an ounce for the first time since June following the Fed's decision to taper its QE program by $10B a month, although bullion was at $1,204.70 at the time of writing, down 2.45%. Prices have dropped around 28% this year and are heading for the first annual decline in 13 years. Silver was -3.7% at $19.32.
Alpha-Rich Stock Movers and Great Calls
1) On December 6, Mike Arnold highlighted asset sales and a looming restructuring as catalysts to drive shares of Spanish media conglomerate Prisa (NYSE:PRIS) higher. The stock is +20.3% to date. Read article »
2) Energy expert Richard Zeits noted on October 7 that a recent asset sale by North American energy company Forest Oil (NYSE:FST) had left the company still over leveraged yet without its highest-quality acreage. Shares have fallen steadily are -36.2% since Zeits' call. Read article »
Alpha-Rich Stocks To Watch
1) Madalena Energy's (OTCPK:MDLNF) pending asset sales in Argentina could lead to a doubling or tripling of the share price, given cautious optimism toward the value of oil- and gas-rich acreage in the country, says Mike Winston. Read article »
2) Tech expert Ashraf Eassa says semiconductor maker Cavium Networks (NASDAQ:CAVM) has 65% upside given continued growth in its specialty networking business and its potential as an acquisition target. Read article »
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In Asia, Japan +1.7% to 15859. Hong Kong -1.1% to 22889. China -0.95% to 2128. India -0.7% to 20709.
In Europe, at midday, London +1%. Paris +1.4%. Frankfurt +1.4%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq -0.2%. Crude -0.2% to $97.64. Gold -2.45% to $1204.70.
Ten-year Treasury Yield flat at 2.89%.
Today's economic calendar:
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Existing Home Sales
10:00 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
1:00 PM Results of $29B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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