Early Closing Times for Monday
U.S. markets will close early Monday for the holidays.
The NYSE, Nasdaq and Amex stock exchanges all close at 1:00 (assumed EST).
At the Nymex, Comex closes at 12:30, the Nymex closes at 1:30, and electronic trading ceases at 5:15 (assumed EST).
At the CME, floor trading in everything except indexes closes at 12:00; indexes close at 12:15. Electronic trading follows a similar schedule (assumed CST).
The CBOT will phase early closing in agricultural, financial and equity pits starting at noon; electronic trading ends soon thereafter. Dow-AIG and metals trading is normal (assumed CST).
Apple Set to Sell Five Million iPhones by Mid-January - media
Apple (AAPL) expects to hit five million global iPhone sales by the start of MacWorld in mid-January, according to media reports. Website 9to5Mac says that about one million phones have already sold in Europe, despite reports of slow sales. Apple's stated goal has been to sell 10 million iPhones by the end of 2008; reaching the halfway point this early would represent a remarkable sales rise, perhaps propelled by the $200 pre-holiday price reduction from $599 to $399.
Retail Software Vendor Retalix May Be Target - report
Food and fuel retail software solution provider Retalix (RTLX) may be an acquisition target, according to a Globes report Monday. CEO Barry Shaked recently met with representatives of UK retailer Torex (principal shareholder is Cerberus) and with General Atlantic (MSCC), sources say. Torex's principal shareholder is Cerberus. Sources say Retalix is looking for a price that is "a significant premium" to its current $16.18. Retalix reportedly considered a sale or merger with VeriFone (PAY) last year.
Gov't Report to Accuse eBay of Colluding With Ticket Racketeers - Observer
A U.K. government report due in January will accuse internet auction site eBay (EBAY) and others of colluding with black marketers to obtain choice seats for big-ticket sporting events and concerts, which are then sold to fans at inflated prices, the Observer reported Sunday. "There's a huge criminal element involved in this business," music promoter Harvey Goldsmith said. "They send hundreds of people out to buy tickets at the venues or over the phone, then have a cache of tickets they sell for as much as they can through these secondary agencies. They are taking total advantage of the gullible public who believe in the rigidity of these websites." Other complaints include fraudulent and undelivered tickets. This weekend eBay was advertising over than 8,000 tickets to see the Spice Girls and Six Nations rugby matches, the Observer says. A cross-party group of MPs will demand a clampdown, including forcing eBay and others to open their books to prove tickets come from fans with spares, as the websites claim, and not from organized 'touts.' Web-based event ticket sellers include Live Nation (LYV) and IAC/InterActiveCorp's (IACI) Ticketmaster.
JPMorgan, Deutsche Bank to Open CME Rival - WSJ
A consortium including JPMorgan (JPM) and Deutsche Bank (DB) plans to launch a competitor to CME's (CME) Chicago Mercantile Exchange in some of its most lucrative futures contracts, the Wall Street Journal reported Monday. One of the motives behind the move is to help Wall Street investment banks lower their trading fees, in the face of what they see as the CME's ability to overcharge due to its near-monopoly position in U.S. futures trading after its merger with the Chicago Board of Trade earlier this year. Investment houses use futures contracts extensively to hedge positions and to take directional bets on equity markets, fixed income vehicles, and commodities. The exchange will be backed by a dozen firms including Merrill Lynch (MER), Credit Suisse (CS), Citigroup (C), and Bank of America (BAC), the Journal says. Bond-trading specialist eSpeed (ESPD) will supply the underlying technology. Its CEO, Paul Saltzman, head the new venture. The presence of a viable competitor could put pricing pressure on the CME.
No Formal Swiss Investigation of UBS, For Now
UBS AG (UBS) is said to be facing possible scrutiny from Switzerland's bank regulator (the Federal Banking Commission [EBK]), according to a report by the Financial Times on Sunday. EBK spokesman Alain Bichsel confirmed an earlier media report that the EBK intends to uncover the circumstances behind the massive subprime-related writedowns at UBS. However, in a subsequent report by Bloomberg, Mr. Bichsel is cited praising UBS's responses to its losses and clarifying that the EBK's first priority is to cooperate with UBS to address any problems, followed by a "second step" of looking into how the situation developed once it is more quiet. "It's not an investigation in the legal sense," added Mr. Bichsel. Two weeks ago Monday, UBS announced an additional $10B of subprime-related writedowns, while embracing an $11.5B capital infusion from the Government of Singapore Investment Corp. and an undisclosed investor from the Middle East (full story). Separately, last Friday the Wall Street Journal reported UBS was included among firms being examined by the SEC regarding mortgage-securities valuation methods (full story). UBS closed fractionally lower on Friday in New York at $45.28.
Additional Reading: Handy Guide to SWF Investments in Financial Firms • UBS AG F2Q07 Earnings Call Transcript
HSBC Plans In-House Reinsurance Moneymaker
The Independent in London reports HSBC (HBC) plans to cut costs and boost revenues by managing more insurance risk on its own books instead of relying as heavily on reinsurers, who the company determined are not as financially strong as the bank itself, given its "scale and diversity." HSBC estimates up to $40M in cost savings by the end of 2009 from retaining more group premiums through its Bermuda-based captive insurance company. In addition, HSBC sees an opportunity to generate hundreds of millions of dollars in revenues within three to five years by utilizing its Dublin-based reinsurance arm. Clive Bannister, group managing director of insurance at HSBC: "In the old days, you had two ways of getting rid of risk: you didn't write it or you reinsured it. We are now retaining more risk in two places." Mr. Bannister said the bank's strategic partners will include AIG (AIG), Zurich (OTC:ZFSVY) and Aviva . HSBC had over 100 insurance suppliers until recently. HSBC's ordinary shares were last up 0.3% to 853.00 pence in morning trading. ADRs of HSBC gained 1.6% to $84.64 on Friday.
Additional Reading: HSBC to Move SIVs to Balance Sheet, Provide $35B in Funding
Online Sales Grow, But Luxury Items Suffer
Online shopping for the period Nov. 1 to Dec. 21 grew 19% from a year ago, to over $26 billion, according to data from comScore Networks. Spending on one-time favorites jewelry and flowers fell from a year ago, while furniture and appliances sales grew 70%. “We are continuing to see online spending strength as we get deeper into the season, with the most recent five-day span ending December 21 exhibiting a 25-percent growth rate versus year ago,” said comScore Chairman Gian Fulgoni. ComScore analyst Andrew Lipsman says a weak U.S. economic outlook is most noticeable in decreased spending on luxury items: “In better economic conditions, that category was growing faster.” Jewelry and watches sales were down year-over-year; flower sales fell 19%. “Maybe in these tough times with the economy, people are looking for things that may be a little more utilitarian,” one industry executive said. "I have never seen consumers more cautious, more bargain driven, more savings obsessed than I have this year," Britt Beemer, founder and chairman of American Research Group, said.
Another huge growth category was video games/consoles and accessories, which grew 129%. Book sales are up 16%. Also notable, comScore says households with annual income over $100,000 are spending 28% more online; middle class ($50k-$100k) are spending 17% more; while those with less than $50,000 in income have increased spending by just 10%. Citigroup analyst Mark Mahaney notes that the unknown factor in sales growth is how heavy discounting will hit retailers' bottom lines: “The level of promotions online has certainly increased,” he said, “and that will clearly be a negative drag on profits.”
Retail ETFs Consumer Discretionary SPDR ETF (XLY), Retail HOLDRS ETF (RTH) and ST SPDR RETAIL ETF (XRT), among others (Retail and Consumer Goods & Services ETFs) offer U.S. investors broad retail exposure.
Additional Reading: U.S Holiday Sales Recession-Proof? • Retail Sales Softer (Ignore the Surveys)
Online Jeweler Ice.com to Receive $47M Capital Investment - NYT
Despite soft online jewelry sales (Online Sales Grow, But Luxury Items Suffer), Montreal-based Ice.com, who says its sales are still growing, will announce Monday a $47 million capital investment led by Polaris Ventures, the New York Times reports. Polaris' managing partner Alan Spoon, former president of the Washington Post Company (WPO), will be named to Ice's board. Polaris previously backed Akamai (AKAM), among others. Average order size at Ice.com has jumped to $285 from $220. “I talked to someone else in the industry who said sales were soft, but we’re bucking the trend,” said CEO Shmuel Gniwisch. He says holiday sales have been strong. Publicly-traded jewelry retailers include Blue Nile (NILE), Zale (ZLC), Tiffany & Co. (TIF), Bidz.com (BIDZ) and Overstock.com (OSTK).
Teva Boosts Guidance on Ulcer Drug Launch; Wyeth Says It Will Sue
Generic drug giant Teva Pharmaceutical (TEVA) boosted its 2007 EPS guidance to $2.34-$2.36, from a previous "higher end" of $2.20-$2.30. Teva said the improvement was due to its launch of a generic version of ulcer drug Pantoprazole Sodium Delayed Release Tablets in 20 and 40 mg doses, which are AB-rated to Wyeth's (WYE) erosive GERD treatment Protonix DR Tablets. The brand product had annual U.S. sales of about $2.5 billion, it said. The launch comes with a 180-day period of marketing exclusivity. Teva is in the midst of patent litigation with Wyeth and Altana over the product. Wyeth said Monday it will pursue damage claims for losses that occur from the Teva launch. "We believe our patent is valid and enforceable and that Teva will be required to compensate Wyeth for the substantial damages caused by Teva's violation of our patent rights," it said. Teva shares gained 3.7% in Tel Aviv trading.
Hong Kong, China, Australia Post Strong Pre-Holiday Gains Monday
Asian markets rallied Monday. The Hang Seng climbed 1.82% in a shortened session. China's Shanghai Composite was up 1.4%. Japan was closed for a public holiday. "I'm surprised at the strength today," said BNP Paribas' Miles Remington. "I think last week's move on interest rates on the mainland wasn't particularly aggressive and people are taking heart with that." Sydney's S&P/ASX 200 added 1.2% and South Korea's Kospi was up 2%. China Mobile (CHL) climbed 2.9%. Rival China Unicom (CHU) gained 3.6%. CNOOC (CEO) was up 3.5%. PetroChina (PTR) gained 2.2%. China Life (LFC) was up 2.5%. "We expect some more upside this week, especially since there will not be any deterioration in the U.S. subprime situation towards the year-end and there shouldn't be any unexpected credit tightness from China. So news-wise it's neutral to positive," said UOB Kay Hian Holdings' Steven Leung.
ACTIONABLE BARRON'S CALLS
Hyperlinks are to our full Annotated Barron's Summaries
Eight Preferred Stocks With Attractive Yields
Yields on preferred stocks of many financial-sector companies are up about 1% since the summer after financial issues fell out of favor amid an ongoing credit crisis.
Consolidated Water Investors Could Take a Bath
CWCO's rich share price anticipates continued growth, which may prove difficult if it is unable to reach an agreement with major customer the British Virgin Islands.
Corporate Staffer Robert Half Is a Total Bargain
While economists peg the odds of a 2008 recession at about 30%, the decline in staffing stocks reflects a 75% probability; Deutsche Bank analyst Brandt Sakakeeny says he's shocked by the beating Half has taken.
Deck the Halls With Trex
Despite a housing slump and high commodity prices, Trex has managed to cut inventory and production costs, and significantly improve its product quality.
Expect Huge Mobile Broadband Growth
Barron's Plugged-In editor Mark Veverka says mobile broadband is "one of the most compelling economic and technological trends of our time."
MUST-READS ON SEEKING ALPHA TODAY
|U.S. Market:||Greenspan's Christmas Carol Warning|
|Housing:||The Subprime Meltdown's Alphabet Soup|
|Long Idea:||Three High Yield Stocks To Buy Now|
|Short Idea:||The Trouble With Turnaround Stocks|
|Internet:||Live Nation's Ambitious Plan: Take That, Ticketmaster|
|Chips:||Analyzing Micron's Downside|
|Gadgets:||Research in Motion is the Talk of the Town|
|Healthcare:||Walgreen's Health Improving|
|Biotech:||Biogenerics: Not Yet a Reality in the U.S.|
|Retail:||Jack in the Box Still Looks Tasty|
|Transport:||Union Pacific Story Holds Up|
|Gold:||A Closer Look At the Gold Price Chart|
|Energy:||LDK Solar: The Naked Shorting Crime|
|Financial:||First Marblehead: Mea Culpa|
|ETFs:||Investing in Biotech ETFs|
|Small-Caps:||Three Smallcap Stock Picks|
|Jim Cramer:|| Latest stock picks|
|Transcripts:||Walgreen Company F1Q08 • Circuit City FQ307 • H&R Block F2Q08 • ConAgra Foods F2Q08|
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