Markets set to reopen. Stock, bond and derivatives markets are due to reopen this morning following the hiatus caused by Hurricane Sandy, with NYSE (NYX) saying its building and systems are undamaged. The combination of the end of the month and pent-up trading demand should bring a hectic day, except that Lower Manhattan faces four more days without power, while New York's subway is likely to be out of service for another few days as well, affecting the commute in to the trading floors.
Companies in focus following superstorm. The insurance sector will probably be closely watched as stock trading resumes today. William Blair notes that last year's Q4 losses from Irene at Chubb (CB), Allstate (ALL) and Tower Group (TWGP) represented more than 50% of expected Q4 EPS estimates. Other companies that have been or could be affected include FedEx (FDX) and GM (GM), as well as power utilities such as Consolidated Edison (ED) and FirstEnergy (FE). On the plus side, Nuclear plants appear to have passed the readiness test, while the likes of Home Depot (HD) could benefit also.
Disney to buy Lucasfilm for $4.05B. Disney (DIS) has agreed to acquire Lucasfilm for $4.05B in cash and shares. Disney intends to breathe new life into the Star Wars franchise, and plans to release Episode 7 of the saga in 2015 and more films after that. Disney spent a similar amount on Marvel Entertainment and has wrung more value out of that purchase within three years than even the most bullish analysts forecast.
Top Stock News
Potash eyes $15B Israel Chemicals. Potash Corp (POT) has been in talks with the Israeli government, including holding a meeting with PM Benjamin Netanyahu, about acquiring Israel Chemicals (OTCPK:ISCHY), which has a market cap of $15B. Potash Corp already holds a 13.84% stake in Israel Chemicals (ICL) and has long wanted to increase that, but has met government and regulatory opposition. Israel Corp (OTC:IRLCF) owns 52.3% in ICL.
Barclays profit jumps but faces more probes. Barclays' (BCS) Q3 adjusted pretax profit jumped 29% to £1.73B, which was in line and boosted by an impressive performance at its investment bank. However, the company disclosed two more investigations in the U.S.: the SEC and DOJ are looking at whether Barclays violated the Foreign Corrupt Practices Act, and the Federal Energy Regulatory Commission is investigating the bank for the possible manipulation of power prices from 2006-2008. Shares were -1.6% premarket.
Panasonic makes loss of almost $9B. Panasonic's (PC) FQ2 net loss widened to ¥697.98B ($8.77B) from ¥105.8B last year and vs forecasts for a profit of ¥3.85B, while revenue dropped 12% to ¥1.82B. Earnings were hurt by weak sales of consumer-electronics products and large restructuring costs. The electronics giant will write off ¥238B in goodwill related to mobile phone, solar panels and small lithium batteries operations, and now predicts a full-year loss instead of a profit.
AB InBev core profit up almost 11% to $3.98B. Anheuser-Busch InBev's (BUD) Q3 EBITDA jumped 10.6% to $3.98B but missed forecasts. while revenue rose 9.1% to $10.27B. Volumes slipped 0.3%, and beer sales to U.S. retailers 0.4%, led by a 7% drop in Budweiser sales. Western Europe profits rose 9.7% on a comparable basis, but AB InBev lost market share in Brazil because of price increases.
PVH to reunite "House of Calvin Klein" in $2.9B deal for Warnaco. Phillips-Van Heusen (PVH) has agreed to acquire Warnaco (WRC) for about $2.9B in cash and stock in a deal that "reunites the House of Calvin Klein." Based on PVH's last closing stock price, the transaction is worth $68.43 a share, representing a 34% premium over Warnaco's close on Friday. PVH has also received commitments for $4.33B in financing from Barclays (BCS), Bank of America (BAC) and Citigroup (C), some of which PVH will use for the merger.
Office Depot prepares its defenses. Office Depot (ODP) has approved a poison pill that goes into effect if a person or group acquires 15% or more of the company's shares without the board's approval. The move is doubtlessly aimed at Starboard Value, which recently disclosed a 13.3% stake, and is calling on the office supply chain to streamline operations.
Top Economic & Other News
Eurozone unemployment continues to march higher. The eurozone unemployment rate rose to another record high of 11.6% in September from 11.5% in August and vs consensus of 11.5% also. The total number of unemployed increased by 146,000 to 18.49M. As you would expect, Southern Europe continues to bear the worst of it, with Spanish and Greek rates topping 25%.
Spain gains strength in fight against bailout request. Spain’s central government budget deficit narrowed to 4.39% of GDP in January-September from 4.77% in January-August as revenue from sales tax (VAT) jumped 11% on year in September after an increase took effect. The fall in the deficit could help Spain resist calls for a bailout and achieve its target of reducing the overall public sector deficit to 6.3% this year.
In Asia, Japan +1% to 8928. Hong Kong +1% to 21642. China +0.3% to 2069. India +0.4% to 18505.
In Europe, at midday, London -0.1%. Paris +0.4%. Frankfurt +0.7%.
Futures at 7:00: Dow +0.4%. S&P +0.6%. Nasdaq +0.4%. Crude +0.9% to $86.42. Gold +0.5% to $1720.80.
Today's economic calendar:
7:00 MBA Mortgage Applications
8:30 Employment Cost Index
9:00 Treasury Refunding Quarterly Announcement
9:45 Chicago PMI
12:45 PM Fed's Williams: U.S. Economic Outlook and Monetary Policy
3:00 PM USDA Ag. Prices
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