3M announces $12B buyback. 3M (NYSE:MMM) is launching a $12B stock buyback program that will replace the diversified-machinery company's existing authorization and is good for repurchasing 14% of its outstanding shares. 3M spent $5.2B on buybacks in 2013, including $1.7B just in Q4. Will the firm issue new debt to pay for the additional repurchases? It ended Q4 with $4.9B in cash/investments and $6B in debt. Shares rose 1% in post-market trading.
Eurozone business activity strengthens again, Spain charges higher. Eurozone composite PMI rose to 52.9 in January from 52.1 in December as the services print edged up to 51.6 from 51. Of particular note, Spain's composite PMI hit a 6 1/2 year peak of 54.8. "Spain and Ireland are now seeing robust growth, undergoing their strongest phases of expansion since 2007, while Italy is also returning to growth and France's business sector is also showing signs of stabilizing," Markit says.
Asian, EU stocks mostly up, U.S. futures slip. Asian and European shares have mostly risen as markets enjoy a break from a global sell-off that has been going on for about two weeks. The Nikkei increased following strong earnings reports, while encouraging PMI data has helped keep much of Europe higher. However, there are doubts about the sustainability of today's gains. "Opinions remain divided on whether this week's rally is anything more than a 'dead cat bounce'," say analysts at BNP Paribas. Perhaps reflecting those doubts, U.S. stock futures were lower premarket.
Top Stock News
Syngenta's net profit -11%, hit by increased costs, writedown. Syngenta's (NYSE:SYT) 2013 earnings missed analyst expectations as net profit fell 11% to $1.64B, although the agrochemicals company's sales rose 3% to $14.69B. Syngenta's earnings were hurt by reduced trait royalty income, a rise of $175M in seed production expenses following the U.S. drought in 2012, and a seeds inventory write-down of $170M. The company intends to intensify its focus on "cost and capital efficiency" and plans to cut $1B a year by 2018. Shares were -3.6% premarket.
Morgan Stanley resolves MBS litigation for $1.25B. Morgan Stanley (NYSE:MS) has agreed to pay $1.25B to resolve litigation that Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) brought against the bank over the sale of mortgage-backed securities. Morgan Stanley will take a charge of $150M to boost its legal reserves in connection with the settlement, which will reduce Q4 earnings by $0.05 vs. a previously reported EPS of $0.50 excluding special items.
JPMorgan shells out another $614M to resolve litigation. JPMorgan (NYSE:JPM) will pay $614M to settle allegations that it violated the False Claims Act by "knowingly originating and underwriting non-compliant mortgage loans" for insurance coverage by the FHA and the Department of Veteran's Affairs. As part of the deal, JPMorgan has admitted that it approved thousands of loans that weren't eligible for FHA/VA insurance over more than a decade and that it failed to inform the agencies when it "discovered more than 500 defective loans that never should have been submitted."
Netflix to spend $3B on content, $500M+ on marketing in 2014 Netflix (NASDAQ:NFLX) plans to invest nearly $3B on content in 2014 and $6.2B over the next three years. The company also intends to spend $500M+ on marketing this year, while it is reportedly plotting a major European expansion as well. For reference, Netflix is expected to generate 2014 revenue of $5.4B and it has just announced a $400M debt offering.
Top Economic & Other News
Eurozone retail sales tumble. Putting a dampener on any optimism that the encouraging eurozone PMI data may have engendered, Eurostat reports that retail sales volumes in the bloc slumped a greater-than-expected 1.6% on month in December after rising 0.9% in November. Consensus was for a drop of 0.5%.
Broad coalition backs Keystone XL oil pipeline. A bipartisan group of U.S. senators and House members has stepped up pressure on the White House to approve the Keystone XL pipeline (NYSE:TRP), holding a press conference at the Capitol where they were joined by labor leaders. "This pipeline is essential. The time for study is over," said Senator Mary Landrieu, a Louisiana Democrat whose presence was a reminder of the dilemma facing President Obama, who is being pushed by several Democrats up for re-election in November to commit to Keystone.
Farm bill heads to Obama following Senate approval. The Senate has voted 68-32 to approve a five-year farm bill that includes spending of $956.4B over 10 years and savings of $23B. The measures cut food stamps by $8.6B over the next decade and end a $5B annual crop-subsidy program, with insurance becoming the main source of farm aid. With the House having authorized the bill, it is due to go to President Obama for his signature.
Obamacare to cause major reduction in hours worked - CBO. Obamacare could lead to a fall in the number of hours worked by the equivalent of 2M full-time jobs by 2017, the Congressional Budget Office has forecast. The healthcare law could prompt some people, especially those on lower salaries, to restrict the amount of time they work so that they will still be eligible for health subsidies.
S&P cuts Puerto Rico to junk status. S&P has reduced Puerto Rico's rating to BB+ and maintained a negative outlook for the debt-laden commonwealth, citing a reduced capacity to access liquidity to fund its operating deficit. Even though Puerto Rico is planning to issue debt, it "will remain constrained in the medium term," S&P says. Moody's and Fitch are threatening to drop Puerto Rico to junk status as well.
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In Asia, Japan +1.2% to 14180. Hong Kong -0.6% to 21269. China closed. India +0.2% to 20261.
In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt -0.2%.
Futures at 6:20: Dow -0.1%. S&P -0.2%. Nasdaq -0.2%. Crude +0.9% to $98.03. Gold +0.5% to $1257.20.
Ten-year Treasury Yield -1 bps to 2.62%
Today's economic calendar:
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
9:00 PMI Services Index
9:00 Treasury Refunding Quarterly Announcement
10:00 ISM Non-Manufacturing Index
10:30 EIA Petroleum Inventories
Notable earnings after today's close: AFFX, AIZ, AKAM, ALL, ARMK, ATML, AVNR, BDN, BKD, BMR, BOFI, CALD, CBG, CINF, CNW, DIS, DRIV, EDMC, ENS, ENTR, FEIC, FISV, FLT, FMC, FORM,GEOS, GIL, GLUU, GMCR, GPRE, IRBT, KIM, LNC, MAA, MRO, MTD, MTGE, NXPI, OESX, ONVO, ORLY, OSUR, P, PAA, PMT, PNNT, PRU, QUIK, RE, RLD,SCSS, SFLY, SNCR, SPF, SRCL, SWI, SWIR, SWM, THG, TQNT, TSO, TTMI, TWO, TWTR, TYL, UHAL, WGL, WNC, XL, YELP
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