Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:52 AM EST
S&P 500: -7.20; 1,412.30
NASDAQ 100: -9.75; 1,768.50
Dow: -56.00; 12,355.00
NIKKEI 225: -0.66%; 17,178.84 (-113.55)
HANG SENG: -0.56%; 19,333.14 (-109.28)
S&P/ASX 200: -0.44%; 5,865.00 (-26.00)
BSE SENSEX 30: +0.62%; 12,982.98 (+80.35)
FTSE 100: -0.51%; 6,201.40 (-31.90)
CAC 40: -0.61%; 5,462.80 (-33.27)
XETRA-DAX: -0.71%; 6,668.07 (-47.42)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.85%; $59.41 (+$0.50)
Gold: -0.08%; $649.80 (-$0.50)
Natural Gas: -0.51%; $6.88 (-$0.04)
Silver: -0.76%; $12.985 (-$0.10)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Feb. Retail Sales Ex-Autos, Energy Worst Since 2004
The Commerce Dept. just released its February retail figures and they were softer than expected, indicating an economic slowdown is at hand. In the words of ClearView Economics President Ken Mayland, "It appears consumer spending is something short of healthy." By the numbers, U.S. retail spending rose just 0.1% after being flat in January. Driving sales was a strong 0.9% rise in auto sales and a 1.2% hike in gas sales, propelled by higher prices. Wall Street was expecting between 0.2%-0.3% gains, according to MarketWatch and Bloomberg estimates. Retail sales actually declined 0.3% ex-gas and autos, the largest such decline since April 2004.
• Sources: MarketWatch, Bloomberg
• Commentary: Retail Same-Store Sales Roundup • Retailers Post January Same Store Sales
• Stocks and ETFs to watch: Retail HOLDRS ETF (RTH), SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR)
Goldman Sachs' Seventh Straight Beat, Profits Up 29%
Goldman Sachs, the world's largest securities firm, said this morning that its Q1 2007 profit rose 29% on strong trading gains and investment-banking revenues. The company announced earnings of $3.2 billion on net revenue of $12.73 billion, vs. $2.48 billion on $10.43 billion in Q1 2006. EPS were $6.67 vs. $5.08 last year, and substantially better than consensus analyst estimates of $4.97 on revenue of $10.69 billion. In its press release, the company said subprime sector woes do not seem to have affected the broader credit environment, which "remained strong." Goldman shares are down 8.3% since Feb. 20 after subprime worries began to grip the market. Investment banking revenue rose 17% (Goldman is the world's #1 M&A adviser), and equities trading revenue climbed 26%. Goldman's profit-beat is its seventh straight. Shares are up 1.1% to $204.81 in pre-market trading.
Sources: Press Release, MarketWatch, Bloomberg
Commentary: Goldman Sachs: This May Be A Golden Opportunity • Merrill Likes How Fellow Brokers Look • Goldman Sachs Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Goldman Sachs Group Inc. (GS). Competitors: Merrill Lynch & Co. Inc. (MER), Bear Stearns Companies Inc. (BSC), Lehman Brothers Holdings Inc. (LEH). ETFs: PowerShares Dynamic Banking (PJB), streetTRACKS KBW Bank (KBE)
Citi Boosts Bid for Nikko Cordial by 26%
Citigroup has raised its bid for Nikko Cordial, Japan's third largest brokerage, by 26% to ¥1,700/share ($14.57 at ¥116.7/$1) or around $13.35 billion, after four of Nikko's largest shareholders publicly rejected its $10.8b, ¥1,350/share ($11.57) offer, and following yesterday's surprise news that Nikko would not be delisted from the Tokyo Stock Exchange. Citi's new bid came after the Tokyo exchange had closed -- Nikko's shares gained 6.1% on the day to ¥1,490. Citi said it will begin an all-cash tender "as soon as practicable." It currently owns a 4.9% stake. The key question is whether three of Nikko's four largest shareholders, who said they value it at more than ¥2,000/share, will accept the offer. The head of Asian Equity Management at RBC commented, "I think this is likely to be the beginning of some back and forth between the major shareholders and Citi on pricing. The question is whether Citi has a fallback position, at what price will it walk away and if there is another potential buyer out there."
Sources: Associated Press, Bloomberg, Reuters
Commentary: Citi's Bid for Nikko Could Be Stalled as Tokyo Exchange Keeps Nikko's Listing • Nikko Cordial Shareholder Momentum is Turning Against Citigroup • Two More Nikko Shareholders Claim Citi's Bid Unacceptable
Stocks/ETFs to watch: Citigroup (C), Nikko Cordial (NIKOY), Mizuho Financial Group (MFG). Competitors: Mitsubishi UFJ Financial Group (MTU), ABN Amro Holding N.V. (ABN), Nomura Holdings (NMR). ETFs: iShares S&P Global Financial Index Fund (IXG), iShares Dow Jones US Financial Services (IYG), Financial Select Sector SPDR (XLF)
Express Scripts Says Current Caremark Bid is 'Best and Only Offer'
Express Scripts released a press release yesterday saying its current bid for Caremark is its "best and only offer" and that "without confirmatory due diligence," it can not possibly offer more for Caremark. The CVS offer of $24.9 billion, an all-equity bid that includes 1.67 of its own shares as well as a special $7.50 a share cash dividend, is for less than Express's $26.1 billion cash and stock offer, but it has several advantages for Caremark shareholders. The CVS deal already has antitrust clearance and it will close sooner. Express CEO George Paz said in yesterday's press release: "If we were able to identify additional value during confirmatory due diligence... it could result in an increase to our offer price." The Wall Street Journal writes that the likelihood of Express Getting greater cooperation from Caremark is "seen as unlikely." The bidding war for Caremark has been heated due to the fact that the company that wins will gain a stronger position in negotiating discounts from the pharma industry. Yesterday's news sent Express shares higher by $3.52, or 4.57%, to $80.59 as shareholders were relieved the company wouldn't likely be increasing its Caremark bid. Caremark and CVS shares both fell on the news, by 1.94% and 1.9% respectively.
Sources: Press Release, Wall Street Journal, Bloomberg, MarketWatch, Forbes
Commentary: CVS Sweetens Caremark Bid Yet Again to Top Express Scripts • Don't Expect Express Scripts to Bow Out of Caremark Rx Bidding • Desperate Moves in the CVS, Express Scripts, Caremark Tug o' War
Stocks/ETFs to watch: Caremark Rx, Inc. (CMX), Express Scripts, Inc. (ESRX), CVS Corp. (CVS). Competitors: Medco Health Solutions Inc. (MHS), UnitedHealth Group Inc. (UNH), Wal-Mart Stores, Inc. (WMT). ETFs: iShares Dow Jones US Healthcare Provider (IHF), Retail HOLDRs (RTH)
Competition for Spectrum Set to Spread to TV Airwaves
The Washington Post reports a six partner coalition including Microsoft, Google, Dell, HP, Intel and Philips, will provide the FCC with a Microsoft-built prototype device today, which they claim can utilize idle TV channels, or whitespace, and beam the Internet to homes and businesses. The device will reportedly undergo months of testing and if it passes FCC scrutiny, it could be in stores by early 2009, according to the coalition. The FCC (and competitors in the telecom and cable industries facing the threat of new entrants) is concerned whether the use of such spectrum would "not bleed outside its designated channels and interfere with existing broadcasts," according to the Post. An FCC commissioner however, is quoted saying, "These devices have the potential to take the success of the WiFi phenomenon to another level." Google's telecom and media counsel in Washington, said the firm is "very interested in finding ways to create platforms for other broadband connectivity."
Sources: Washington Post
Commentary: Internet Service Providers: Is Net Neutrality Hurting or Helping? • Cable Will Win the Bandwidth Wars • Internet Video: The Evolution From a Push to Pull Economic Model
Stocks/ETFs to watch: Microsoft (MSFT), Dell (DELL), Google (GOOG), Hewlett-Packard (HPQ), Intel (INTC), Philips Electronics (PHG). Competitors: AT&T (T), Verizon (VZ), Comcast (CMCSA), Time Warner (TWX). ETFs: iShares Goldman Sachs Technology (IGM)
Seeking Alpha's news summaries are combined into a pre-market briefing called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only a few seconds to sign up.
Asian Headlines (via Bloomberg.com)
• Asian Stocks Snap Weeklong Rally; Sony Falls on Yen's Gain, Qantas Slips Asian stocks snapped a weeklong rally. Sony Corp. and Honda Motor Co. led Japanese exporters lower after the yen strengthened against the dollar, reducing the value of U.S. sales.
• Ranbaxy Laboratories Bids for Generic-Drugs Division of Germany's Merck Ranbaxy Laboratories Ltd., India's biggest maker of generic drugs, offered to buy Merck KGaA's generic-medicines division, the world's fourth-largest producer, to triple its sales.
• China's Inflation Accelerated in February, Adding Interest-Rate Pressure China's inflation accelerated in February as food prices jumped, adding pressure on the central bank to raise interest rates in the world's fastest-growing major economy.
• Benq's Taiwan Offices Searched by Prosecutors Over Alleged Insider Trading Benq Corp., Taiwan's biggest mobile-phone maker, was searched by prosecutors for alleged insider trading by some employees.
European Headlines (via Bloomberg.com)
• European Stocks Decline on U.S. Loan Concern; Royal Bank, Commerzbank Drop European stocks fell for a second day on speculation that rising loan defaults in the U.S. will hurt earnings at the region's banks.
• German Investor Confidence Jumps More Than Estimated to Eight-Month High German investor confidence rose to the highest level in eight months in March as evidence mounted Europe's largest economy will overcome an increase in sales tax and a slowdown in the U.S.
• HMV Cuts Profit Forecast, Will Close 30 Waterstones Stores; Shares Tumble HMV Group Plc, the U.K.'s biggest music and DVD retailer, cut its profit forecast for the second time in three months after customers switched to the Internet. The shares had a record drop.
• European Union Lawmakers Vote to Curtail Bank Regulators' Power on Mergers European Union lawmakers passed a measure to fight protectionism in financial services by reining in regulators' power to block takeovers.