Samsung profit drops for first time in over two years. Samsung (OTC:SSNLF) suffered its first fall in profits in nine quarters in Q4, with the company's operating income dropping to a provisional 8.1-8.5T won ($7.6-8B) from 8.84T won a year earlier and missing consensus of 10T won. Revenue increased 5.3% to 58-60T won from 56.1T won. The decline in profits comes amid stiff competition at the high and low ends of the smartphone market, and after greater-than-expected bonus payments to workers.
Ireland storms back into international debt markets. Ireland's first bond auction since exiting its EU bailout appeared set to be a blockbuster at the time of writing, with the government reportedly receiving indications of interest worth €9B for a planned sale of €3B in 10-year debt. The demand caused the yield on existing 10-year paper to drop 9 bps to a multi-year low of 3.26% compared with a peak of 15% in 2011.
Top Stock News
China lifts ban on foreign gaming consoles. China's State Council has temporarily lifted a 14-year old ban on the sale of foreign computer-gaming devices, opening the way for Microsoft (NASDAQ:MSFT), Sony (NYSE:SNE) and Nintendo (OTCPK:NTDOF) to enter a market that was worth almost $14B in 2013. "Foreign-invested enterprises" will be allowed to sell machines made in Shanghai's new free-trade zone. Foreign consoles have long been sold illegally in China, although online PC gaming is more popular.
CES bonanza gets underway. The annual Consumer Electronics Show is officially due to kick off in Las Vegas today, although the announcements have already been coming in thick and fast. Samsung (OTC:SSNLF) wants to connect smartphones to fridges and persuade professionals that they can do serious work on tablets. Toyota (NYSE:TM) is excited about fuel cell technology in the U.S., Microsoft (MSFT) has sold over 3M Xbox One devices, BlackBerry (NASDAQ:BBRY) is going to refocus on physical keyboards, and Sony (SNE) has unveiled a waterproof phone. Meanwhile, the car and tech giants want to turn vehicles into mobile devices on wheels.
Top Economic & Other News
Arctic weather causes natural gas prices to heat up. The freezing weather has caused spot prices for natural gas on the East Coast to soar to record highs, with costs at a trading hub in New Jersey surging to as much as $90 per million British thermal units yesterday from just $13.61/mmBtu on Friday. Utilities are absorbing the expenses at the moment, although they could pass the higher prices on to customers later in the year.
Eurozone inflation edges down. Eurozone inflation declined to 0.8% in December from 0.9% in November and came in below consensus that was also 0.9%. The CPI figure remains well below the ECB's target of just under 2%, a trend that has sparked discussion about the threat of deflation in the eurozone. However, ECB President Mario Draghi is unworried, saying last week that there's no urgent need for another cut in interest rates.
German unemployment stable. Germany's adjusted jobless rate held steady at 6.9% in December, as forecast, although the number of unemployed fell for the first time since July, decreasing by 15,000 to 2.965M. "A robust jobs report...provides further support for a strong finish to 2013 from consumer spending," says economist Christian Schulz. That "raises the chances of stronger wage growth in 2014 and thus higher consumption."
South Sudan, rebels finally start ceasefire talks. South Sudan's government has finally begun delayed talks with rebel negotiators in an attempt to end over three weeks of fighting that has left more than 1,000 people dead and caused 200,000 to flee their homes. Meanwhile, Sudan and South Sudan, which is the third-largest oil producer in sub-Saharan Africa, have spoken about forming a joint force to guard the latter's crude fields from rebels.
Growth of healthcare costs remained muted in 2012. National healthcare spending grew less than 4% for the fourth year in a row in 2012, rising 3.7% to $2.8T, a report by the Centers for Medicare & Medicaid Services shows. The authors of the study said the continued slow increase in spending was due to the lingering impact of the recession. They were cautious about whether the trend will continue, or whether growth will return to the higher levels experienced prior to the financial crisis.
Senate confirms Yellen to lead Fed. As expected, the Senate yesterday approved the nomination of Janet Yellen to become the first woman to head the Federal Reserve. The chamber voted 56-26 in favor, with many Senators not able to arrive because of the weather.
Top Ideas: Movers and Great Calls
1) On December 31, Intangible Valuation said that water and coffee delivery specialist Crystal Rock Holdings (NYSEMKT:CRVP) offered 60% upside, due to temporarily elevated costs and an above-market interest rate on its debt. The stock is +22% to date. Read article »
2) Buysider Amit Chokshi called Verso Paper (VRS) a "lotto ticket that might pay off" back in November 2012. Yesterday, shareholders cashed in after an acquisition of competitor NewPage. Shares are +179% since his call. Read article »
Top Ideas To Watch
1) Financial expert Ashleigh Rogers says Westamerica Bancorporation (NASDAQ:WABC) is facing a competitive retail banking market, leading to a fall in revenues, profits and potentially its share price. Read article »
2) Mortgage servicing REIT Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) doesn't carry the same risks as more conventional REITs, while shares appear 40% undervalued, writes Steven Reiman. Read article »
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In Asia, Japan -0.6% to 15814. Hong Kong +0.1% to 22713. China +0.1% to 2047. India -0.45% to 20693.
In Europe, at midday, London +0.3%. Paris +0.3%. Frankfurt +0.5%.
Futures at 6:20: Dow +0.4%. S&P +0.4%. Nasdaq +0.45%. Crude +0.45% to $93.85. Gold -0.1% to $1236.50.
Ten-year Treasury Yield flat at 2.97%.
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