House OKs suspension of debt limit for a year. The House has authorized a one-year extension to the government's borrowing authority - until March 16, 2015 - without any conditions by a vote of 221-201. There had been plans to link the debt-cap vote to restoring cuts to military pensions, but the battle-fatigued Republican leadership dropped its demands in order to keep the political focus on Obamacare. The measure now needs to be approved in the Senate.
Chinese exports blow past forecasts but raise doubts. China's exports accelerated to +10.6% on year in January and slayed consensus for a rise of just 2%, while imports increased 10% vs +3%. However, analysts are skeptical: they had expected that the long Lunar New Year holiday would drag on trade last month, whilst other economic data has been disappointing. The concern is that, as in the past, the trade figures could have been boosted by fake transactions as people looked to secretly bring money into China.
Global stocks lifted by Yellen, the House and Chinese exports. Janet Yellen has pledged to retain the Fed's super easy money policies, a GOP-led House has agreed to suspend the U.S. debt ceiling by a whole year with barely a whimper, and China's exports blew past expectations - the sun is shining, the sky is blue and equities the world over were green at the time of writing (see below for more details).
Top Stock News
UAW future at stake as VW workers vote on unionization plan. Workers at Volkswagen's (OTCPK:VLKAF) three-year-old plant in Chattanooga in Tennessee are due to start voting today on a proposal to allow the United Auto Workers to represent them. The ballot, which appears to be too close to call and lasts till Friday, is seen as having a major influence on the future of the union. If the UAW wins, it could target other foreign-owned plants in the South; however, if it loses, its slide towards irrelevancy could continue.
P&G cuts FY14 guidance due to forex volatility. Citing forex volatility in Venezuela, Argentina, Turkey and elsewhere, Procter & Gamble (NYSE:PG) has lowered its FY14 revenue guidance. P&G now forecasts revenue growth of 0-2% vs a prior prediction of 1-2% and core EPS growth of 3-5% vs 5-7%. P&G also expects to incur a charge of $230-280M due to the impact of currency policy changes by the Venezuelan government.
Dow Chemical rejects Loeb's call for major break-up. Dow Chemical (NYSE:DOW) has rebuffed Dan Loeb's call to split its petrochemical operations from its specialty-chemical businesses, saying that after assessing the possibility, such a move wouldn't improve productivity or capital allocation. Instead, it would hurt Dow's value proposition, "which leverages scale, integration costs and technology benefits." Loeb made his call after disclosing three weeks ago that he had bought a $1.3B holding in Dow.
ONO to start IPO process in rejection of Vodafone, Liberty. Grupo Corporativo ONO has confirmed that its board has approved a proposal for the Spanish cable operator to start the process for a €7B ($9.6B) IPO but that directors didn't discuss any buyout proposals. ONO has reportedly rejected offers from Vodafone (NASDAQ:VOD) and Liberty Global (NASDAQ:LBTYA).
Amcol accepts $1.6B offer from France's Imerys. Minerals and materials firm Amcol International (NYSE:ACO) has agreed to sell itself to France's Imerys (OTC:IMYSF) for $1.6B including debt. The offer of $41 a share represents a premium of 12% to Amcol's close of $36.72 yesterday. The acquisition will strengthen Imerys' sales in North America and help it offset the weaker economy in Europe.
Auto companies search for Goldilocks pricing point. The major auto makers have found themselves in a bit of a dilemma. They've been offering discounts in order to clear an increasing amount of unsold inventory in the U.S., which in January reached the highest level since August 2009. However, the industry wants to avoid getting sucked into the kind of price wars that have caused so much trouble in the past.
ING's underlying profit more than doubles. ING Group's (NYSE:ING) Q4 underlying profit jumped to €405M from €163M a year earlier as total core income grew to €6.245B from €5.19B. However, net profit dropped 64% to €539M ($736M), dragged down by a Dutch bank tax and costs related to ING's restructuring plan. Underlying pretax profit at the firm's bank business jumped more than threefold to €904M, lifted by increased interest income and reduced loan-loss provisions. Shares were +4.45% premarket.
Goldman, Deutsche Bank looking to get out of yellow cake. Goldman Sachs (NYSE:GS) and Deutsche Bank (NYSE:DB) are seeking to exit an area of operations that not that many people know they're involved in: trading supplies of raw uranium, or yellow cake. Between them, the companies have built up stockpiles of low-grade uranium larger than those held by Iran. However, with scrutiny of banks' physical-commodities trading increasing and demand low following the Fukushima disaster, the firms are looking to sell their uranium trading desks.
Top Economic & Other News
BOE raises growth forecasts, changes forward guidance. The Bank of England has increased its outlook for the U.K. economy, predicting that 2014 GDP will grow 3.4% vs a previous forecast of 2.8%. However, Governor Mark Carney indicated that the recovery is neither balanced nor sustainable, and with spare capacity high and inflation benign, the degree of stimulus will need to remain "exceptional" for some time. The BOE had said it would keep interest rates low until unemployment falls to at least 7%.
Japanese machinery orders plummet. Japan's core machinery orders, a leading indicator of capital expenditure, plunged 15.7% on month in December vs expectations of -4.1%. "Today's data on machinery cast some doubts on whether the fledgling recovery in business investment will continue," says economist Marcel Thieliant. The government has targeted increased capex as an important element in Japan's battle to end deflation. However, it's worth noting that the data can be somewhat volatile.
Top Ideas: Movers and Great Calls
1) Last week, Upside called for a short play on Clean Energy Fuels (NASDAQ:CLNE), arguing that the retailer's leveraged bet on liquefied natural gas was moving sharply against it. Shares are -16.5% since Upside's call. Read article »
2) On July 3, Soldier of Fortune said that newly spun-off Mallinckrodt Pharmaceuticals (NYSE:MNK) was underfollowed and undervalued. After buying Cadence on Tuesday, the stock is +56.6% since Soldier of Fortune's post. Read article »
Top Ideas To Watch
1) Loan provider Springleaf Holdings (NYSE:LEAF) is poised to benefit from recent regulatory changes, which have opened a profitable niche for the company, writes financial expert Ashleigh Rogers. Read article »
2) Trading the Spread says software provider Guidewire Software (NYSE:GWRE) faces a once-in-a-generation opportunity for profits, as the insurance industry moves on from its 30-year-old programming language. Read article »
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In Asia, Japan +0.6% to 14800. Hong Kong +1.5% to 22286. China +0.3% to 2110. India +0.4% to 20448.
In Europe, at midday, London +0.2%. Paris +0.5%. Frankfurt +0.9%.
Futures at 6:20: Dow +0.2%. S&P +0.2%. Nasdaq +0.25%. Crude +0.6% to $100.53. Gold -0.2% to $1287.
Ten-year Treasury Yield +2 bps to 2.75%.
Notable earnings after today's close: ACC, AEM, AMAT, ANGI, BGC, BGS, CAKE, CBS, CJES, CSCO, CTL, CTRP, CXW, DDR, ECOL, EFX, EXL, FNF, INT, IO, IPI, ITRI, KGC, LF, LPSN, MDLZ, MET, NEWP, NRP, NTAP, NTES, NVDA, REG, RKUS, ROVI, SKX, SPRT, SPWR, STAG, TAL, TCO, TNGO, WFM, Z
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