Starbucks steams higher after earnings beat. Starbucks (SBUX) FQ4 earnings topped expectations as net profit edged up to $359M, EPS came in at $0.46 and revenue climbed 11% to $3.36B, while the company also raised its FY13 EPS estimates. Last quarter, growth in China/Asia Pacific led the regional performances with a 10% increase, although EMEA lagged with a 1% decline. NBG's Brian Sozzi can't help but notice that the coffee player's 21.4% operating margins are a bit more lush than even Apple's (AAPL) retail stores. Starbucks' shares steamed 7.25% higher premarket.
Unemployment rate seen rising as election looms. The last major piece of economic data before the election is due out this morning, with economists expecting that nonfarm payrolls increased by 125,000 in October. While that would be up from September's 114,000, it's still all very anemic and shouldn't be enough to bring down the unemployment rate at any great speed. Indeed, that figure is expected to rise to 7.9% after the surprise fall to 7.8% in September, which aroused its fair share of skepticism.
StanChart nears $300M deal on Iran ties. Standard Chartered (SCBFF.PK) is close to finalizing an agreement with U.S. authorities to pay a fine of around $300M to resolve probes into its Iranian dealings, Reuters reports. The bank is negotiating the deal with the Manhattan DA, the Treasury, the NY Fed and the DOJ. Any penalty would add to the $340M StanChart agreed to pay in an agreement with the NY Department of Financial Services.
Top Stock News
iPad mini goes on sale but without the frenzy. The iPad mini has gone on sale today, but without the long queues and frenzy that normally accompany the launch of a new Apple (AAPL) product. That's possibly because the specifications aren't as good as that of the iPad, while the models on sale don't include the chips that support high-speed cellular Internet. Those are due in a couple of weeks.
Misery continues for Alcatel-Lucent as it swings to net loss. Alcatel-Lucent (ALU) slumped 10.8% premarket after saying it swung to a Q3 net loss of €146M ($188M) from a profit of €194M last year, while revenues slipped 2.8% to €3.6B. Alcatel-Lucent was hurt by operators cutting spending on networks, particularly in Europe. The telecom-equipment provider ended the quarter with €4.7B in liquidity and is reviewing options to strengthen its balance sheet.
RBS makes net loss as insurance mis-selling provisions rise. RBS's (RBS) Q3 operating profit jumped to £1.05B from £2M last year, but the bank made a surprise net loss of £1.38B vs a £1.23B profit last year after taking an extra £400M provision for the mis-selling of loan insurance. That brings the total RBS has set aside to £1.7B, with the bank not being able to say that "there won’t be further" provisions. RBS may also face "material fines" over its alleged Libor manipulation.
Citigroup, JPM among the biggest TBTF banks. Citigroup (C), Deutsche Bank (DB), HSBC (HBC) and JPMorgan (JPM) will have to hold an extra 2.5% of Tier 1 Capital on top of the 7% minimum required under Basel III rules, regulators said yesterday. Barclays (BCS) and BNP Paribas (BNOBF.PK) will need an extra 2%, while eight banks, including Bank of America (BAC) and Goldman Sachs (GS), will need 1.5%. Overall, 28 banks are considered "global systemically important" and have to hold extra capital.
AIG earns net profit of $1.9B. AIG (AIG) swung to a net profit of $1.9B in Q3 from a loss of $4B a year earlier, while EPS of $1 and revenue of $8.75B beat consensus. AIG's insurance operations almost doubled their pretax profit to $1.6B, with Property & Casualty results benefiting from lower catastrophe losses and higher investment income. However, premiums, deposits and other considerations at Life & Retirement dropped 18.6% to $4.8B, mostly due to low interest rates. Shares were -0.85% premarket.
eBay to try again in cracking China. eBay (EBAY) reportedly plans to make another attempt to succeed in the fiercely competitive Chinese market by forming a partnership with luxury retailer Xiu.com, with the tie-up to be announced on November 12. eBay, which retrenched in China in 2007, is going in with both eyes wide open: it indicated in January that it expects to make losses on new sites in most countries for at least a year.
Costco to sell Green Mountain coffee pods. Green Mountain Coffee Roasters (GMCR) has struck a deal for Costco (COST) to start selling single-serve coffee pods for Green Mountain's Keurig brewing system in December. It's a boost for Green Mountain as it faces competition from the likes of Starbucks (SBUX) and as its patents expire.
Israel sends mixed messages over Potash Corp deal for ICL. Israel's Ministry of Finance yesterday said it's not considering Potash Corp's (POT) attempt to acquire Israel Chemicals (ISCHY.PK), which is worth around $16B, due to "professional reservation." The ministry's comments came days after it was reported that PM Benjamin Netanyahu had instructed staff to examine the issue. Israel's due to hold an election in January, so don't expect a decision before then.
Companies return to bond market with offerings of almost $12B. Having been prevented from issuing bonds earlier this week because of Hurricane Sandy, companies jumped into the market with a vengeance yesterday, raising almost $12B worth of debt. BP (BP) with a $3B deal and General Dynamics (GD) with $2.4B led the way, although AbbVie - soon to be spun off from Abbott Labs (ABT) - delayed a $10B offering until next week.
Top Economic & Other News
Greek coalition hits rough waters over tax dodgers. Greece's government is becoming increasingly fragile as a storm over a list of tax evaders engulfs Evangelos Venizelos, the head of the Pasok party, a coalition member. Venizelos is under scrutiny for his role in the government deciding not to pursue the alleged dodgers. The row comes ahead of a parliamentary vote on €13.5B of further austerity, which is necessary for Greece to receive its next tranche of aid.
Value of White House rises. One thing that is better off than it was four years ago is the White House, says real-estate Web site Zillow (Z), which estimates that the building's value has risen 1.5% to $284.9M. “The areas that have weathered the housing downturn the best have four industries that are prevalent: healthcare, government, education and military — and D.C. has all four of these in spades,” says Zillow's Stan Humphries.
In Asia, Japan +1.2% to 9051. Hong Kong +1.3% to 22111. China +0.6% to 2117. India +1.0% to 18755.
In Europe, at midday, London flat. Paris -0.2%. Frankfurt flat.
Futures at 7:00: Dow -0.1%. S&P -0.1%. Nasdaq -0.05%. Crude -0.8% to $86.39. Gold -0.2% to $1715.50.
Today's economic calendar:
Monster Employment Index
8:30 Nonfarm payrolls
10:00 Factory Orders
9:45 ISM New York Business Index
See full real-time earnings coverage »
Wall Street Breakfast is sent out by email for free -- Get it now »