Apple strikes iPhone deal with China Mobile. It's finally happened: Apple (AAPL) has entered into a multi-year agreement with China Mobile (CHL) to sell the iPhones 5S and 5C to the latter's 760M subscribers. Importantly, the devices will work on China Mobile's new 4G TD-LTE network and its existing 3G TD-SCDMA infrastructure. Analysts estimate that Apple will sell an extra 10-24M handsets, although headwinds include the popularity of cheap and large Android phones in China. Notwithstanding, Apple's shares were +3.2% premarket.
Chinese shares end losing streak. The Shanghai Composite has closed up 0.2% and ended a run of nine consecutive sessions of losses, its longest losing streak since 1994. Shares rose despite another spike in short-term interest rates even though the People's Bank of China provided a further emergency injection of money on Friday, having refrained from providing liquidity earlier this month (see below for more). Market watchers say that the increase in money market rates is also due to seasonal demand for cash from banks, which might help account for the small recovery in stocks today.
Uncertainty reigns as health deadline looms. Today is the deadline for people to sign up for health insurance that is due to take effect on January 1. However, much uncertainty exists among insurers and consumers, due to government decisions to delay some of Obamacare's most important provisions, a result of the fiasco that has been the Healthcare.gov Web site. The NYT profiles how Obamacare has hit those in the middle class who earn too much to be eligible for subsidies.
Top Stock News
Machinists to vote on amended Boeing proposal. Boeing (BA) machinists will vote on the company's revised contract offer in a ballot that union leaders had initially ruled out. Boeing's amended proposal reportedly includes signing bonuses and "some concessions." Last week, several workers in Washington state marched on union hall demanding a vote on the deal. Should the machinists approve the agreement in the ballot, which is due on January 3, Boeing would most probably build the 777X in the Seattle area.
Darden to feel more pressure as Starboard buys stake. Activist investor Starboard Value has reportedly bought a 5.6% holding in Darden Restaurants (DRI) just days after the latter said it intends to spin off its Red Lobster operations following pressure to restructure from another shareholder, Barington Capital Group. However, Darden's plan is not enough for Starboard or Barington, which have similar but not identical demands. These include Darden creating a real-estate investment trust (REIT) for its property holdings and further breaking itself up. Shares were +3.7% premarket.
Weekend retail activity falls; Target a focus. The number of transactions at Target (TGT) stores slid 3-4% over the weekend compared with the same pre-Christmas period last year, retail consultancy Customer Growth Partners estimates. The fall comes after Target disclosed that hackers accessed the information of up to 40M payment cards, although the drop may anyway be part of an overall trend: RetailNext estimates that overall sales fell by a mid-single-digit percentage at brick-and-mortar stores on Friday and Saturday even as retailers offered heavy discounts to lure shoppers.
VimpelCom mulls options for Italian mobile unit, including sale. VimpelCom (VIP) is considering selling Italian mobile unit Wind, merging it with a rival, or refinancing its $14B of debts, the FT reports. The Russian telecom carrier has held talks with Hong Kong based Hutchison Whampoa, the parent company of Wind competitor Three. However, the discussions didn't turn into negotiations over a merger or sale.
YRC looks to raise $275M. YRC Worldwide (YRCW) could reportedly make a filing today to raise $250M in equity and at least $25M in convertible debt that is being provided by several unnamed investment firms. The trucking company will use the money to meet a $69M loan repayment that is due in February, while it is also looking to delay the due date of $124M in debt that matures in March 2015. YRC's fundraising would come ahead of next month's employee ballot over a new five-year contract that is crucial for debt refinancing to occur.
Staying sharp during Christmas week. While Christmas week often tends to get written off as a non-event for the stock market, says SA author Quoth the Raven, it is open for business for most days and investors may want to pay attention to what is due to take place. For those "that want to stay sharp, because 'money never sleeps,'" QTR provides the week's itinerary.
Top Economic & Other News
Japan unveils ¥95.88T budget. Japan's government has adopted a record ¥95.88T ($921B) budget for the fiscal year starting in April, which will include increased spending on social security, defense and public works. However, the government is also trying to limit further growth of its massive debt, and it will reduce the issuance of new revenue bonds to ¥41.25T from ¥42.9T this year. Economist Yoshimasa Maruyama is not convinced. "The government must cut spending to reach the planned target of a surplus in 2020," Maruyama says.
Municipal debt in China doubles in two years. Local-government loans in China almost doubled to 19.9T yuan ($3.28T) in 2010-2012, a state think tank estimates. Total central and local government debt was almost 28T yuan at the end of 2012, representing 53% of GDP. In an effort to rein in the ballooning debt, China's central bank refrained from injecting liquidity into the money markets earlier this month, which is what has helped cause the latest spike in short-term interest rates (see above).
Fed marks 100 years since creation. Today is the 100th anniversary of President Woodrow Wilson signing the Federal Reserve Act, which led to the establishment of the central bank. "The law sought to end bank failures by creating a central banking system," writes John Phelan in the WSJ. "But a century later, the Federal Reserve has become an enabler of the financial havoc it was designed to prevent." Predictably, Paul Volcker, Alan Greenspan and Ben Bernanke have a more positive take.
Alpha-Rich Stock Movers and Great Calls
1) On December 10, BuyTheDip SellTheRip noted that for-profit educator Career Education Corp. (CECO) offered a large margin of safety and a cheaper valuation after the sale of international assets. The stock is +18.8% to date. Read article »
2) Whopper Investments wrote on October 21 that ALJ Regional Holdings (OTCPK:ALJJ) was poised to gain after its acquisition of customer care specialist Faneuil allowed for the utilization of its significant tax asset. Shares are +51.9% since his call. Read article »
Alpha-Rich Stocks To Watch
1) Medical device maker Syneron-Candela (ELOS) has growing sales and has launched multiple new products while trading at what is set to be a substantial discount to a soon-to-be-public competitor, writes Value Advisors. Read article »
2) Chris DeMuth Jr. calls the contingent value rights for Sanofi (SNY) drug Lemtrada his best idea for 2014, as international sales could lead to returns of almost 200%. Read article »
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In Asia, Japan +0.1% to 15870. Hong Kong +0.5% to 22922. China +0.2% to 2090. India +0.3% to 21143.
In Europe, at midday, London +0.3%. Paris flat. Frankfurt +0.4%.
Futures at 6:20: Dow +0.3%. S&P +0.4%. Nasdaq +0.7%. Crude -0.4% to $98.96. Gold -0.8% to $1194.20.
Ten-year Treasury Yield -1 bps at 2.9%.
Notable earnings before today's open: PNY
Notable earnings after today's close: CAMP
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