Today - Wednesday, December 4, 2013
6:57 PMChinese 4G licenses handed out, services to start soon
- The Chinese government has finally issued 4G licenses (long anticipated) to China Mobile (CHL), China Unicom (CHU), and China Telecom (CHA), paving the way for commercial service launches to start.
- China Mobile, which has already built out a giant "trial" 4G network, is set to have a 4G partner conference in two weeks that will reportedly feature an iPhone announcement. China Telecom says it will launch 4G services in Q1.
- Notably, the licenses only cover 4G networks relying on the TD-LTE standard (allows for more capacity to be allocated to downlinks than uplinks, if carriers wish). China Unicom and Telecom both want to run networks using the FDD LTE standard, which is far more popular internationally, and say they still plan to request FDD LTE licenses in the future.
- In addition to Apple, Chinese 4G launches are likely to benefit Qualcomm (QCOM). Whereas Qualcomm faces tough competition in the Chinese 3G baseband chip market (particularly on the low-end) and has had royalty collection issues for sales of phones running on China Mobile's TD-SCDMA 3G network, it has a dominant share of the global 4G baseband market, and hasn't had any major 4G collection issues.
- Many think the Chinese government's anti-monopoly probe of Qualcomm is a bargaining tactic aimed at securing 4G royalty rate concessions.
6:56 PMInvestors continue to pour assets into depreciating gold miner ETFs
- Go figure: The Market Vectors Gold Miners ETF (GDX) has now slid ~55% YTD to a five-year low, yet the fund has nearly doubled in size to $6.8B, as investors have added ~$2.5B despite the dismal performance.
- With stocks at record highs, miners may look relatively cheap vs. other sectors, and funds like GDX and GDXJ appeal to many institutional investors who turn to miner equities as their favorite proxy for gold; indeed, the SPDR Gold Trust has lost $23B-plus YTD in assets under management.
- But demand for gold miner funds isn’t always tied to value investors or long-term buy-and-hold types: Direxion Daily Gold Miners Bull 3X Shares (NUGT) has attracted net asset inflows of more than $1.3B despite a difficult year for returns, while the bearish counterpart fund (DUST) has seen YTD net outflows despite gains of ~200%.
- Also: GLDX, GGGG, RING, PSAU, JNUG, JDST.
6:39 PMBarrick's Thornton has no plans to sell Pascua Lama, African Barrick
- Barrick Gold (ABX) confirms Peter Munk will step down from its board at the 2014 annual meeting, expected around April, and co-chairman John Thornton will become sole chairman at that time.
- Thornton tells WSJ that ABX will focus on establishing long-term relationships with Chinese partners but has no current plans to sell its Pascua Lama project or its majority stake in African Barrick Gold (ABGLF, ABGLY), two sources of trouble for the miner in recent years.
- Thornton also says ABX would consider increasing its exposure to copper and silver over time, depending on the price of those metals, dampening rumors that the company wants to sell out of its copper projects.
6:22 PMIntuit buying document site Docstoc, reportedly for up to $50M
- Intuit (INTU) is acquiring Docstoc, a document-focused resource site for small businesses that claims 25M+ registered users. AllThingsD reports the purchase price "could reach $50 million."
- Docstoc offers 20M+ professional documents on its site, along with articles, videos, and other content aimed at SMBs. Some of its content is free, while other material requires subscription plans. The startup also provides a platform for uploading, syncing, and selling user-created documents.
- Docstoc is the latest in a string of SMB-focused acquisitions made by Intuit, which recently obtained $1.025B from the sale of its online/mobile banking software unit (but apparently could've obtained more).
- Other recent acquisitions include workers comp. tech provider Prestwick Services, tax return software firm GoodApril, and Facebook ad/e-commerce services provider Payvment.
6:17 PMCheniere Energy, Pertamina sign 20-year LNG agreement
- Cheniere Energy (LNG) signs a 20-year liquefied natural gas sale and purchase agreement with Indonesia's PT Pertamina, in which Pertamina will purchase ~800K/year metric tons of LNG upon commencement of operations from the LNG export facility being developed near Corpus Christi, Tex.
- Pertamina is the first foundation customer for the Corpus Christi project, and the deal is the first long-term commitment made to procure liquefied natural gas from the international market for delivery into Indonesia.
6:00 PMOn the hour
- S&P 0%.
- 10-yr -0.06%.
- Euro -0.03% vs. dollar.
- Crude +0.08% to $97.3.
- Gold -0.02% to $1242.6.
5:59 PMTeng Yue unwilling to sell 6.8% stake in iSoftStone at proposed $5.45/ADR
- 6.8% shareholder Teng Yue Partners writes a letter to the board of iSoftStone (ISS) calling the current $5.45/ADR (previously $5.85) offer made by a consortium composed of CEO Tianwen Liu and ChinaAMC "wholly unacceptable."
- The fund is unwilling to sell its shares at the price and aims to discuss with the Independent Committee of the board a price at which it would be willing to do so.
5:57 PMSymantec hires Microsoft exec to be new CTO
- Symantec (SYMC) has hired Amit Mital, until recently in charge of Microsoft's Startup Business Group (forecasts tech trends and helps bring new technologies to market), its new CTO. Mital replaces Steve Trilling, who will be "moving to an operational senior leadership role in the company." (PR)
- The CTO change follows a string of executive departures (I, II, III), and comes at a time when CEO Steve Benett is trying to streamline Symantec's product offerings to better contend with hungry security and storage software rivals.
5:49 PMAnadarko, BP ask court to reverse key spill decision
- Anadarko (APC) and BP ask the U.S. Appeals Court in New Orleans to toss out Judge Barbier's finding that both companies were liable under the Clean Water Act for the 2010 Gulf of Mexico oil spill.
- Both companies contend that Barbier improperly decided the issue of liability before trial; APC also says the government is trying to shift the burden to the owners of the spilled oil rather than who’s responsible for the discharge.
- Barbier’s ruling left both companies immediately vulnerable to $1,100/bbl fines.
5:37 PMBroadridge Financial Solutions CFO takes medical leave of absence
- Broadridge Financial Solutions (BR -1.1%) CFO Dan Sheldon takes a temporary medical leave of absence. (8-K)
- COO of the Mutual Fund and Retirement Solutions Group Michael Liberatore will serve as Principal Financial Officer and Corporate Controller David Lissa will serve as Principal Accounting Officer in Sheldon's stead.
5:34 PMTiny pipeline cracks jeopardize giant Kashagan oil field
- Operators of the giant Kashagan oil field in Kazakhstan are scrutinizing microscopic cracks in a steel pipeline as they race to understand the cause of dangerous gas leaks that have forced them to halt output indefinitely and could result in hefty repair costs.
- A prolonged stoppage could be a drag on the finances of consortium members, including Royal Dutch Shell (RDS.A, RDS.B) and Eni (E), and could jeopardize Kazakhstan hopes of using the expected Kashagan windfall - the field is projected to yield 1.5M boe/day when it reaches full capacity - to turn it into a major oil exporter.
- If an investigation of the leaks shows cracks are affecting all the welds because the wrong alloy was selected during construction, the consortium may need to replace the entire pipeline and perhaps other equipment.
5:33 PMStandard Chartered warns of "double-digit drop" in consumer banking profit
- Standard Chartered (SCDRF) warned that the operating profit at its consumer banking unit would suffer a "double-digit drop" this year, the first fall in a decade.
- The bank has fared better than European peers through the financial crisis due to its high exposure to Asia; that exposure is now coming back to bite it, with the bank blaming eroding profitability on South Korea. That unit already wrote down $1B in 1H due to a dispute with regulators and a reduction in its branch network and now sees an operating loss of $200M on the year. Bernstein blew the whistle on the phenomenon back in Aug.
- Shares finished the day shedding 6.5% in London trading.
5:30 PMGeneral Growth replacing Molex in S&P 500; Facebook -1.7% AH
- General Growth Properties (GGP) is replacing Molex (set to be acquired by Koch Industries) in the S&P 500 following the Dec. 9 close. GGP is up 5.4% AH on the news.
- Facebook (FB), rumored to be the next company to be added to be added to the index, is selling off on the news after rising 4% in regular trading.
5:26 PMAvago's guidance in-line, shares -1.6% AH
- Avago (AVGO) expects FQ1 revenue to be down 3%-6% Q/Q due to "typical" seasonal weakness in all of its markets. That spells a revenue range of $693.7M-$715.9M, in-line with a $704.2M consensus.
- Wireless chip revenue (47% of total) rose 19% Q/Q and 10% Y/Y in seasonally strong FQ4. The business has benefited from healthy sales to Apple/Samsung, and strong demand from Avago's 4G power amplifier modules (differentiated by its FBAR filters).
- Wired infrastructure sales (33% of total), boosted by a "stronger than expected" contribution from recently-acquired CyOptics, rose 22% Q/Q and 55% Y/Y. Industrial & Other sales (20% of total) were down 4% Q/Q and up 2% Y/Y.
- FQ3 gross margin was 50.5%, -40 bps Q/Q and -60 bps Y/Y, but above the midpoint of a guidance range of 49%-51%. FQ1 GM is expected to be in a range of 49.5%-51.5%.
- Thanks in large part to CyOptics, opex rose 30% Y/Y, eclipsing rev. growth of 19%.
- FQ4 results, PR
5:23 PMThe Pay-TV industry: Something has to give
- The economic argument is lopsided against the Pay-TV industry (CHTR, CVC, TWC, DISH, DTV) moving to an a la carte system, reasons Needham.
- The investment firm has some staggering estimates which indicate consumers could end up paying significantly more for an unbundled system or see a large number of networks close up shop to limit their choices.
- Working backwards, 180 channels at an average annual programming cost of $280M per year requires a bundled system to create the ad and subscriber revenue to support it.
- Though the math might work out fine and dandy, subscriber losses and a younger generation unfazed by cord-cutting indicates something might need to give.
- The wildcard in the mix: Online TV initiatives from Sony, Google, and Intel as well as the evolution of Netflix (NFLX) will also play a factor.
- Related stocks: CBS, DIS, AMCX, TWX, CMCSA, FOXA, SNI, MSG, DISCA
5:11 PMNewmont Mining selling Nevada site for $83M| Comment!
5:02 PMIcahn ups Nuance stake to 18.72%, shares +1.5% AH
- Carl Icahn is having a busy day. Shortly after announcing a proposal for an Apple buyback vote, the billionaire activist investor discloses he has raised his stake in Nuance (NUAN) to 18.72% from a prior 16.9%. (13D)
- The new vote of confidence comes a couple weeks after Nuance tumbled due to the disappointing guidance provided with its FQ4 report, and two months after Icahn announced an agreement with the voice recognition software leader that landed him two board seats.
- Shares remain down 29% from where they traded when Icahn first disclosed a stake (then 9.3%) in Nuance on April 1.
5:00 PMOn the hour
- S&P +0.03%.
- 10-yr -0.06%.
- Euro +0.03% vs. dollar.
- Crude +0.09% to $97.31.
- Gold +0.03% to $1243.2.
4:59 PMCareer Education completes European ops divestiture| Comment!
4:49 PMCiti and Morgan Stanley lose Buy ratings at Deutsche
- "Given our bias for some dislocation in credit markets near term, further meaningful upside in bank stocks seems less likely. As a result, we are getting more defensive for now," says Deutsche analyst Matt O'Connor, downgrading Citigroup (C) and Morgan Stanley (MS) to Hold amid the coming taper and then end of QE.
- While P/E expansion for the banks in 2014 is probable should economic growth pick up and rates remain low (on a relative basis), says O'Conner, "we worry about the potential combination of widening credit spreads and rising interest rates."
- Citi is off 1% and Morgan 1.2% AH.
- This morning: Goldman removes Citi from its Conviction Buy list.
4:49 PMTJX rating raised at S&P
- S&P lifts its corporate credit rating on TJX Companies (TJX) to A+ from A.
- The outlook is stable.
- S&P says the move "reflects a reassessment of the company's financial risk profile with regards to stronger credit protection measures, which [are forecast to] remain in-line with current levels over the next two years."
4:49 PMThe Walt Disney Company declares $0.86 dividend| 2 Comments
4:49 PMKLA-Tencor slumps due to bookings forecast, takes peers lower with it
- During a Credit Suisse conference talk, KLA-Tencor (KLAC -2.7%) CFO Bren Higgins stated his company's FQ2 (Dec. quarter) bookings could miss the midpoint of its guidance range. The potential shortfall is attributed to a $100M order push-out for reticle inspection tools used in the production of cutting-edge 10nm chips.
- KLA had guided on its FQ1 CC (transcript) for FQ2 bookings of $800M-$950M ($875M midpoint), up from FQ1's $790M and well above revenue guidance of $670M-$730M.
- Susquehanna's Mehdi Hosseini, who rates KLA a Negative, is "puzzled" by Higgins' explanation, given Intel (long at the bleeding edge of chip manufacturing) is the only company investing in 10nm R&D for now - the chip giant is just getting set to mass-produce 14nm chips - and that KLA's reticle inspection bookings have been in the ~$70M range in recent quarters.
- The reticle inspection market has been a weak spot for KLA. However, during an upbeat September conference talk, Higgins said demand was improving.
- Chip equipment sales have been expected to improve in 2014: Trade group SEMI just estimated sales will rise 23% in 2014, after dropping 13% in 2013.
- Several chip equipment peers have followed KLA lower: AMAT -3%. ASML -2.5%. LRCX -2.9%. RTEC -1.5%. MTSN -2.5%.
4:47 PMEnbridge raises dividend by 11%, sees 2014 EPS above consensus
- Enbridge (ENB) increases its quarterly dividend by 11% to C$0.35/share, and announces a 2014 EPS guidance range of C$1.84-C$2.04 vs. C$1.79 analyst consensus estimate.
- ENB is positioned to deliver 10%-12% average annual EPS growth through 2017, and stands at $29B of commercially secured growth capital to be in service by 2017 out of a $36B total growth capital plan, CEO Al Monaco says.
4:44 PMSynopsis -4.1% AH after in-line FQ4, weak FQ1 guidance
- Synopsis (SNPS) shares are down 4.1% AH following a largely in-line FQ4 but weaker-than-expected FQ1 guidance.
- Time-based license revenue grew 12.5% Y/Y to $412.9M, upfront revenue +26.4% to $36.5M, and maintenance revenue -4.9% to $55.5M.
- Management sees FQ1 revenue of $475M-$485M (missing analyst expectations of $504.3M) and EPS of $0.51-$0.53 ($0.62). FY2014 revenue is seen at $2.06B-$2.085B (vs. consensus of $2.09B) and EPS at $2.55-$2.60 ($2.54).
- Conference call at 5pm ET, PR
4:28 PMGuess? -1.7% AH on weak FQ3 comps
- Guess? (GES) shares are now off 1.7% in AH trading following FQ3 results that saw an EPS beat but weak comp results.
- North America retail revenue fell 3.1% Y/Y to $253.8M, with comps plunging 5% Y/Y. Europe revenue decreased 0.8% to $200.9M (-6.6% in local currency). Asia revenue declined 2.8% to $72.7M (and again, declined 5.5% in local currency).
- Management guides for FQ4 revenue of $750M-$770M (vs. consensus of $778.2M) and EPS of $0.74-$0.84 ($0.83) excl. restructuring charges.
- Conference call at 4:30 pm ET, PR
4:20 PMEquinix announces $500M buyback program, shares +1.1% AH
- Equinix (EQIX) has authorized a $500M buyback program that lasts until the end of 2014. At current levels, the program is good for repurchasing 6% of outstanding shares. (PR)
- It arrives at a time when Equinix shares are down 22% YTD in spite of a huge tech stock rally, thanks to a mixture of steep multiples (shares did much better in 2012), REIT conversion worries. and concerns about indirect competition from cloud service providers.
4:20 PMStocks end mostly lower as Dow, S&P on four-day losing streak
- Stocks pared some losses but ended mostly lower in choppy trading, as investors sifted through economic reports for clues about when the Fed would start tapering its stimulus policies.
- Today's data - which included a better than expected ADP employment report and a below-consensus ISM services reading - had a mixed record against economists' forecasts but generally indicated continued growth.
- Treasury yields pushed to their highest levels since mid-September; the 10-year touching 2.85% "triggered another wave of selling," Peter Boockvar said, adding the benchmark yield would go to 3% on a strong payroll number when non-farm payroll data is released Friday.
- Gold gained 2.2% to $1,248.20 after settling at a five-month low yesterday, while Nymex crude oil rose 1.2%, to $97.20.
4:18 PMPuma releases "positive" results from neratinib trial
- Puma Biotechnology (PBYI) is out with top-line data from a Phase 2 study of neratinib in breast cancer.
- The trial design is "based on Bayesian predictive probability that a regimen will be shown to be statistically superior to standard therapy in an equally randomized 300-patient confirmatory trial."
- I-SPY 2's goal is to "address whether adding investigational drugs to standard chemotherapy in the neoadjuvant setting is better than standard chemotherapy."
- The company says the neratinib-containing regimen "resulted in a higher pCR rate compared to the control arm."
- Bayesian probability of superiority: 94.7%, which apparently translates to a p-value of 0.053.
- Long story short, "neratinib is now eligible for the upcoming I-SPY 3 Phase III trial." (PR)
4:09 PMSafeway -1.8% AH, Jana Partners cuts stake by 10.7%
- Shares of Safeway (SWY) fall 1.8% AH after Jana Partners discloses it has reduced its stake by 10.7% to 4.1% of shares outstanding. (SC13D/A)
- Update: The fund writes that it has "reduced the size of its investment ... through regular portfolio management activities" and "is highly supportive of the recent steps taken by [Safeway], in particular ... [Safeway's] commitment to exit the Chicago market, plan to ... focus on its core operations, authorization of a significant share repurchase, and plan to review its corporate structure."
4:08 PMBoard shakeup at Calamos
- Following his August 2012 move to step away from a day-to-day role with the firm, Nick Calamos is exiting the Calamos Asset Management (CLMS) board.
- More importantly, CEO and CIO John Calamos announces his intention to form Calamos Partners as a vehicle to allow senior portfolio managers and executives a stake in private ownership of Calamos Investments. "Over the years, I have sought to align senior portfolio management and executives with the long-term objectives of the firm and interests of our shareholders. Calamos Partners will enable the firm to strengthen its alignments with key talent."
- Press release
- In a bullish piece from January, SA Pro's Thomas Lott did a good job of explaining the interesting ownership structure at Calamos, and why it may be holding the stock back.
4:05 PMDougherty still bullish on BioTelemetry despite sell-off
- Dougherty is out with some commentary on BioTelemetry (BEAT) amid talk of CMS reimbursement cuts.
- "Bottom line, we modeled MCOTTM revenue of $87M for 2014. Roughly 45% of that was reimbursed by Medicare. Assuming a 13.7% Medicare cut suggests a reduction of about $5.3M to revenue next year," analyst Brooks O'Neil says, reiterating a Buy rating and a $15 price target.
- See also: BEAT plunges
4:05 PMDigital Ally spikes into close after business journal covers KCTG deal
- Shares of Digital Ally (DGLY +1.7%) spike 4.4% in the minutes before the close to close the day black after the Kansas City Business Journal rehashes the company's previously-announced win of an initial contract from KCTG and echoes the company's belief that the relationship could drive future business.
4:00 PMAt the close
- Dow -0.15% to 15890. S&P -0.13% to 1792. Nasdaq +0.02% to 4038.
- Treasurys: 30-year -0.62%. 10-yr -0.33%. 5-yr -0.18%.
- Commodities: Crude +1.18% to $97.18. Gold +1.79% to $1242.7.
- Currencies: Euro -0.02% vs. dollar. Yen -0.24%. Pound +0.06%.
4:00 PMIcahn proposal reportedly calls for buyback of "at least" $50B
- David Faber reports Carl Icahn's Apple (AAPL -0.3%) buyback proposal calls for "at least" $50B in share repurchases in FY14 (ends Sep. '14).
- As a "precatory" proposal, the resolution won't be binding even if a majority of Apple shareholder votes are cast in favor of it.
- Meanwhile, Time has published an Icahn cover story that focuses on his Apple efforts. Icahn tells the magazine he filed his proposal on Nov. 26 (thus making it eligible to be voted on at next year's shareholder meeting), and that he remains a supporter of Tim Cook.
- Icahn: "A lot of people say Steve Jobs probably wouldn’t have talked to me, and maybe that’s true ... But I think [Cook] found our conversation sort of interesting. He said, `Look, you’ve accomplished a lot, and we want to listen to you.’”
3:59 PMAg sector strong as RBC starts Mosaic, Agrium at Outperform
- Fertilizer equities are higher following new coverage from RBC Capital, which prefers Mosaic (MOS +3.2%) and Agrium (AGU +2.4%) in the sector.
- MOS and AGU are rated Outperform thanks to to a recent trend toward "improving demand in the potash and phosphate markets" and an expectation for "substantial" returns to holders over the next few years; MOS' solid position in the phosphate market could better position it if others are interested in its potash assets.
- Potash (POT +1.3%), CF Industries (CF +10.7%) and Intrepid Potash (IPI +2.4%) are each started with Hold ratings.
- Also impacting the ag names is news that CF is working with investment banks about creating an MLP.
- ETFs: MOO, CROP, PAGG, VEGI.
3:55 PMDissecting the chase for Time Warner Cable
- Deutsche Bank weighs in on the chase for Time Warner Cable (TWC -1.4%) that has lit a fuse under the entire sector.
- The investment firm thinks only one bidder will emerge - Charter (CHTR +0.1%) with help from Cox or Comcast (CMCSA +0.2%) - but at a deal price lower than $140 per TWC share.
- Previous comments from Liberty Media (LMCA -1.6%) on a "merger of equals" also limits the premium a Liberty-backed bid would pay, notes Deutsche.
3:52 PMPotash sees possible early 2014 bounce in its market
- A bounce in potash markets is possible next year, assuming China steps back into the market and Russia and Belarus paper over differences that have disrupted the market, Potash Corp. (POT +1.4%) says at the Citi basic materials conference.
- A supply contract in Q1 2014 between China and Canpotex - the export arm of Potash, Mosaic (MOS +3.3%) and Agrium (AGU +2.5%) - would set a price floor, then Indian buyers might lock in prices with Canpotex, followed by deals in other markets, setting up a chance for a "nice bounce" in H1 of next year, POT CFO Wayne Brownlee says.
- POT says its decision to cut its workforce by ~18% will lead to cost reductions across the board; it anticipates a one-time cash charge in Q4 of ~$70M.
3:42 PMGoldman suggests buying Goldman
- Trade idea #6 for 2014 from Goldman Sachs is a long position in large cap bank indexes in the U.S., Europe, and Japan. The ETF choice for the U.S. is KBE, while EUFN could work for Europe (better ETFs for European and Japanese banks trade in those markets).
- Faster growth and a steeper yield curve should boost U.S. banks, while those parts of the Japanese economy particularly levered to consumer spending - namely housing and banks - should see support. Europe should see growth of just 1%, but this would be a significant improvement over 2013.
- Goldman also notes bank valuations remain below pre-crisis levels and could see a boost as the overall risk-taking backdrop improves.
- Other relevant ETFs: FAS, XLF, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, PFI, KBWB, RWW, FINU, RYF, PSCF, FNCL, FINZ, IAI
- Previous ideas are here
3:41 PMRetailers reeling as savvy shoppers wait them out
- Retail analysts are wadding up some of the earlier forecasts from the National Retail Federation and ShopperTrak calling for 3%-4% holiday sales growth as more evidence pours in that Q4 could be rough for retailers.
- ConvergEx Group's Nick Colas has one of the more dire reads on the weakening sales trends, saying negative holiday sales growth wouldn't be a shocker.
- What to watch: There's a growing consensus that shoppers equipped with mobile devices and heightened awareness of flash sales sites are more deal-savvy than anticipated. Add that to the pressing inventory issues apparel sellers face and it looks like promotional activity won't let up.
- Related ETFs: XLY, VCR, IYC, SCC, FXD, UCC, RCD, FDIS, PSCD, PEZ.
3:36 PMAuxilium falls on unfavorable district court ruling| Comment!
3:31 PMMcGraw Hill Financial rises on new repurchase authorization
- Shares of McGraw Hill Financial (MHFI +1.4%) rally after the company announces a new 50M share buyback authorization (18% of the float).
- The move "demonstrates [an] ongoing commitment to maximizing shareholder value, and underscores the strength of [the company's] financial position," CEO Douglas Peterson says. (PR)
- Shares of McGraw Hill Financial (MHFI +1.4%) rally after the company announces a new 50M share buyback authorization (18% of the float).
3:29 PMAccess Midstream -4% after secondary offering, Wunderlich starts at Hold
- Access Midstream Partners (ACMP -3.9%) is lower after the pipeline company priced its 6M-unit secondary public offering at $51.45 each, a 4.7% discount to yesterday's closing price.
- Separately, Wunderlich initiated coverage of ACMP with a Hold rating and a $56 price target; while the firm views ACMP's business model as best in class with limited downside risk and top-tier distribution growth, it believes these factors are adequately reflected in the current valuation.
3:23 PMDish Network readies for spectrum bid
- Dish Network (DISH -0.4%) won't face any competition from cellphone carriers Sprint, AT&T, Verizon, and T-Mobile when its bids for spectrum next month, according to information released by the FCC.
- A total of 33 other companies will bid against Dish.
- The master plan of Dish CEO Charlie Ergen in his quest for spectrum still isn't clear.
3:16 PMPfizer cuts 150 jobs in Ireland
- Pfizer (PFE -0.2%) is cutting 150 positions at a plant in Ireland.
- "Ireland remains a key strategic location for PFE with many of our leading and newest medicines manufactured here and the company continues to make investments in the Irish operations," VP Paul Duffy says.
- Nevertheless, loss of exclusivity on some key drugs has apparently conspired with heightened generic competition to create "redundancies."
3:15 PMFifth Third settles SEC accounting charges
- As previously tipped, Fifth-Third Bancorp (FITB -0.2%) agrees to pay $6.5M to settle SEC charges over improper accounting of commercial property loans during the financial crisis. Its CFO at the time, Daniel Poston agrees to pay $100K and has been suspended from practicing as an accountant on behalf of any firm regulated by the SEC.
- SEC Form 8-K
3:14 PMCongressional Democrats pen letter urging higher wages for fast food workers
- Congressional Democrats have written a letter to McDonald's (MCD -0.9%), Burger King (BKW -0.6%), Yum! Brands (YUM +0.1%), Wendy's (WEN -1%), and Domino's Pizza (DPZ +0.7%) management urging the restaurateurs to raise wages for store workers. "Too many hard-working families are being forced to depend on poverty-level wages," the letter, which was signed by 53 members, reads.
- The moves comes as fast-food workers in over 100 cities plan to strike for $15/hour pay tomorrow. President Obama has voiced support for a pending bill that would raise the minimum wage to $10.10/hour from $7.25 and index it to inflation.
- If steam gets behind the movement, fast-food operators could experience significant margin pressure. Employee expenses represented 25.6% of sales at McDonald's in the 9 months ended Sept. 30, for instance, already up from 25.2% in the comparable period in 2012.
3:13 PMUniversal shuts down production on major film after death of star
- Universal Pictures (CMCSA) says it has shut down production on Fast & Furious 7 indefinitely following the death of actor Paul Walker.
- The sixth installment of the series was the highest grossest film of the bunch with a global box office haul of $788M.
- The studio didn't disclose if it will take a write-off or pursue other options with the franchise.
3:08 PMIcahn to make "precatory" proposal to call for Apple buyback vote
- Carl Icahn on (where else?) Twitter: "Gave [Apple] notice we’ll be making a precatory proposal to call for vote to increase buyback program, although not at $150 billion level."
- Icahn, never scared to self-promote, also says he'll be on the cover of the next issue of Time (out tomorrow), which will feature a piece on investor activism.
- Apple (AAPL -0.5%) shares haven't moved much in response to Icahn's comments. Tim Cook has said Apple won't announce any changes to its capital allocation policy before early 2014. Icahn, meanwhile, has been pushing for a $150B expansion of Apple's buyback program, and has said he would "test the waters" regarding a proxy fight if the company ignored his calls.
3:08 PMMebane Faber launches new fund
- Open for trade today is the actively-managed Cambria Foreign Shareholder Yield ETF (FYLD), the global version of Mebane Faber's recently-launched and thus far successful Shareholder Yield ETF (SYLD).
- Faber's methodology relies on what he calls "shareholder yield" - a measure adding buybacks and debt repayment to dividends.
- The new fund's expense ratio is 0.59%, the same as SYLD.
- Other ETFs with a broader idea of what yield is include: TTFS and PKW.
- Global dividend ETFs: IDV, SDIV, DWX, PID, DTN, LVL, FGD, DOO, DOL, DEW, IDOG, HGI, DVYA, IQDF, IQDY, FYLD, IQDE, WDIV, FIEG
3:07 PMGreen Mountain and Starbucks scrap for pod share
- Green Mountain Coffee Roasters (GMCR +2.6%) maintained more of its pod market share over the last four weeks than Starbucks (SBUX -1.2%), according to fresh Nielsen data.
- Unit growth is still strong for pods, up 44%, but pricing in the consumables category fell 5.7% during the latest tracking period - compared to a 4.6% drop for the preceding four weeks and a minor gain during last year's comparable.
3:03 PMCiti still bullish on Ambit despite no AA for quizartinib| Comment!
3:00 PMOn the hour
- Dow -0.4%.
- 10-yr -0.35%.
- Euro 0.% vs. dollar.
- Crude +1.1% to $97.1.
- Gold +2.09% to $1246.3.
2:59 PMCiena rallies on bullish FBR note, peers/suppliers also up
- FBR's Scott Thompson thinks Ciena (CIEN +7%) will deliver a beat-and-raise FQ4 report on Dec. 12, and sees the telecom equipment vendor benefiting from carrier adoption of network architectures that feature "more intelligence and flexibility at the optical layer."
- Thompson sees carriers building more advanced metro optical networks, replete with data centers that enable services such as content caching, app hosting, and advanced mobile messaging. He points to a recent optical switching deal between Verizon and Ciena as an example of how the latter benefits from this trend, and sees a similar deal with AT&T arriving soon.
- At the same time, he cautions optical gross margins "could be under pressure," thanks to aggressive pricing from Infinera (INFN +2%), lengthy deployment times, and the adoption of software-defined networking controllers (CYNI is among the companies providing them) that remove some intelligence from the optical layer.
- Ciena flew higher three months ago following its FQ3 report. The company reported solid demand for its integrated Ethernet switching/optical networking hardware, which now accounts for 56% of revenue.
- Infinera is following Ciena higher, and so are Finisar (FNSR +5.2%), JDS Uniphase (JDSU +3.1%), Fabrinet (FN +1.8%), and AppliedMicro (AMCC +3.9%).
2:59 PMTurquoise Hill founder to participate in rights issue
- Turquoise Hill (TRQ -24.1%) founder Robert Friedland says he plans to participate fully in the company's $2.4B rights issue; the mining tycoon owns a 10% stake in TRQ, which means he would have to pay ~$240M if he takes up his share of the rights issue.
- More than 1B shares are expected to be issued, resulting in a doubling of TRQ's shares outstanding; the rights will stop trading on Jan. 7.
- Also, Friedland, the executive chairman of Ivanhoe Mines (IVAN), says he remains interested in pursuing a secondary listing for that company.
2:50 PMQuestcor possibly hit by Acthar coverage worries| 1 Comment
2:48 PMLowe's still playing catch-up with Home Depot
- Home Depot (HD -0.6%) wins another head-to-head comparison against rival Lowe's (LOW +0.6%) after it landed more market share of Black Friday weekend traffic, 5.6% vs. 4.2%, while spending roughly the same amount on TV advertising in the weeks leading up to the period.
- Lowe's spent $4M for each percentage point of market share (of the top 50 retailers) while Home Depot only doled out $2.9M.
- Comparable stores sales growth trends have been stronger at Home Depot as well this year.
2:41 PMAmerican Capital Mortgage buys servicing outfit
- Talked about during its last earnings report in October, American Capital Mortgage (MTGE +0.5%) has purchased mortgage servicing company Residential Credit Solutions for an as-yet undisclosed amount.
- MSRs provide a new business line for MTGE, and also a natural hedge to the firm's ownership of long-duration mortgages as MSRs have negative duration - they go up in value as interest rates rise (cash flow is more stable as prepayments fall).
- Press release
2:36 PMQuestcor slips as Citron goes back on the offensive
- Questcor Pharmaceuticals (QCOR -1.8%) is weaker on the session on the heels of (another) negative Citron Research piece.
- Citron says it plans to release "a series of articles" about the company "over the coming months," but this particular piece relates to the issue of the FTC, Acthar, and Synacthen (for background on this, see here).
- Ultimately, Citron says the "smoking gun" in terms of whether QCOR's Synacthen acquisition is anti-competitive is a study allegedly cited by the company last year when it was "ramping up its nephrology sales initiative."
- "The referenced study for Nephritic Syndrome specifically stated that Synacthen — not Acthar — was the drug used in the trial. So at that time, QCOR was justifying Acthar's use for Nephrotic conditions specifically because it was a correlate to Synacthen," Citron claims.
- Full report here.
2:34 PMGazprom to explore settlement on EU competition concerns
- Gazprom (OGZPY) will present draft proposals responding to European competition concerns about its pricing and other practices in coming days, the EU's antitrust chief says after meeting with the company's deputy chairman.
- Russia supplies roughly one-third of the EU's natural gas but supplies a large majority of the gas used in eastern European countries.
- The potential breakthrough comes amid heightened tension between Russia and the EU over ties to the Ukraine; the EU has accused Russia of pressuring Ukraine's government into putting on hold a broad trade accord.
2:32 PMSluggish summer new home sales revised down further
- Higher interest rates took more of a bite out of home sales than originally thought, with today's New Home Sales release revising August sales 10% lower than previously reported, and June and July down 0.9% and 4.4%, respectively.
- September sales - which weren't reported last month due to the shutdown - of 354K units (seasonally adjusted) were off 6.6% from August's downwardly revised figure and 7.8% below a year earlier, the first time in nearly 2 years sales fell on a Y/Y basis.
- The October report may have made up for it all - 444K in sales is a whopping 25% higher than September. November's print should be especially noteworthy to see if the big October number gets revised lower, or if sales have truly rebounded from a sluggish summer and early fall.
- XHB -0.9%, ITB -0.8%.
2:32 PMFacebook higher amid S&P 500 hopes; Instagram exec leaving for Snapchat
- UBS thinks Facebook (FB +3.6%) could be added to the S&P 500 as soon as tonight. Deutsche also believes such a move could happen soon.
- With a market cap of $118B and a 2013 revenue consensus of $7.6B, Facebook's inclusion within the benchmark index appears to be just a matter of time.
- Meanwhile, Instagram exec Emily White, who was in charge of the mobile photo-sharing service's nascent ad efforts, is leaving to become the COO of Snapchat. She could return to the fold one day if Snapchat founder Evan Spiegel has a change-of-heart regarding Facebook's (widely reported) buyout overtures.
2:29 PMNew farm bill needed to prevent 'dairy cliff'
- If Congress doesn't get around to passing a new farm bill before the end of the year the USDA will be forced to support higher prices for dairy farmers which would create a disruption up and down the food industry.
- Milk producers could benefit from the changes mandated by the 1949 farm bill - while food sellers could see profits pinched with consumers unlikely to absorb the full amount of price hikes.
- Most analysts think Congress will get its act together in time, but the risk of a stalemate exists.
- Related stocks: SJM, DF, NSRGY, WWAV, LWAY, DNKN, MCD, SBUX, KO, GIS.
2:14 PMBaker Hughes -4% after pointing to Q4 seasonal declines
- Baker Hughes (BHI -4%) shares slide after the energy exploration equipment maker says in a presentation at the Cowen energy conference that Q4 improvements would not be enough to offset "seasonal declines."
- BHI also says it experienced a "significant service disruption" in Iraq on Nov. 9, and expects to lose 6-8 weeks of revenue from the country; at the time of the disruption, Iraq was contributing ~$50M/month in revenue.
2:11 PMFCC chairman suggests Netflix could pay ISPs to improve service quality
- FCC chairman Tom Wheeler, in response to a question about whether ISPs should be allowed to charge service providers who are "data hogs" extra: "I think that we're seeing the market evolve in such a way that there will be variations in pricing, there will be variations in service ... Netflix (NFLX -0.9%) might say, 'I'll pay in order to make sure that my subscriber might receive the best possible transmission.'"
- At the same time, Wheeler, who has previously worked as the CEO for both the U.S. cable and wireless industries' top trade groups, says he supports net neutrality, and is opposed to allowing ISPs to block/limit services.
- Many Web giants, including Google and Facebook, are already paying U.S. ISPs to directly connect to their networks (and thus improve the speed/reliability of user connections). But Netflix has held off, reportedly out of fear of setting a precedent. The company has instead focused on partnering with ISPs (provided they're willing to do so) to build out its Open Connect CDN.
- Previous: Netflix discusses French launch
2:10 PMBioTelemetry plunges, chatter suggests CMS cut worries to blame| Comment!
2:06 PMBeige Book focuses on positive signals
- The economy continued to expand at a "moderate to modest" pace, according to the Fed's Beige Book report that's notably short on negative trends.
- Manufacturing continues to expand and managers are optimistic about the near-term. Retailers are positive about current activity (survey closed on Nov. 22) and "hopeful, but cautious" about the holiday season.
- A number of districts reported an easing in lending standards.
2:00 PMOn the hour
- Dow -0.62%.
- 10-yr -0.36%.
- Euro 0.% vs. dollar.
- Crude +1.28% to $97.27.
- Gold +2.06% to $1246.
1:51 PMISS takes activist investor's side in attempted Telecom Italia board ouster
- Activist Telecom Italia (TI +0.4%) 5% shareholder Marco Fossati, who has voiced concerns that Telefonica's aims do not align with those of shareholders, has won a helping hand from proxy advisor ISS. It has recommended institutional investors back a proposal to remove the company board at a Dec. 20 shareholder meeting.
- Proxy votes are estimated to exceed 9%, while institutional investors hold nearly 50% of the capital base.
- If the coup is successful, shareholders would have to elect a new slate of directors. Fossati's holding company, Findim, has backed a list of 7 new directors presented by Italian asset managers' association Assogestioni.
- Given Telefonica's opposition to the proposal, the board's fate is uncertain. Fossati vowed "We might not have the number of votes ... but we are committed ... This will not finish in December."
1:49 PMMorgan Stanley cuts Accenture and NetApp, ups Western Digital and Brocade
- Citing the impact of faster-than-expected cloud computing adoption, Morgan Stanley's Katy Huberty has downgraded Accenture (ACN -1.9%) and NetApp (NTAP -0.9%) to Equal Weight. Meanwhile, citing more favorable risk/reward, Huberty has upgraded Western Digital (WDC +2.8%) to Overweight and Brocade (BRCD +0.5%) to Equal Weight.
- Concerns about the impact of cloud services on sales of IT outsourcing services such as Accenture's, and enterprise storage hardware such as NetApp's, have been around for some time. Recent numbers (I, II) provided by the companies, and by peers such as IBM and EMC, haven't done much to soothe those fears. Synergy Research recently estimated sales of cloud infrastructure (IaaS) and app platform (PaaS) services rose 46% Y/Y in Q3.
- Accenture now trades at 15x estimated FY14 (ends Aug. '14) EPS exc. net cash, and NetApp trades at just 10x estimated FY14 (ends April '14) EPS exc. net cash.
- Western Digital, whose hard drive sales have been pressured by PC weakness and SSD adoption, recently began shipping its first helium drives (they're lighter, denser, and more power-efficient than traditional drives), in part to better meet the needs of Web/cloud companies.
1:41 PMWisdomTree Small Cap Dividend Fund Surpasses $1 Billion In Assets
- DES follows the performance of the small cap segment of the U.S. dividend paying market and is now the 8th WisdomTree (WETF) fund to cross the billion dollar mark.
- Luciano Siracusano, WisdomTree Chief Investment Strategist, commented,
"By weighting the U.S., small cap market by the dividends companies
pay, WisdomTree has been able to create a potential source of income
for investors looking for alternatives in today's low-interest rate
- This ETF has been on the market since 2006 and has attracted investors with its relatively low expense ratio of 0.38% and an average dividend yield of nearly 3%.
- Other billion dollar WisdomTree funds: DXJ, DEM, DGS, DLN, ELD, DTN, EPI
1:33 PMSuper Bowl ads sold out 2 months before big game
- Fox (FOXA) says it has already sold out all the commercials for the 2014 Super Bowl to be played on February 2.
- The pricing for the ads are reported to be 5% higher than last year with 30-second spots going for $4M a pop. Though some major companies such as GM have balked at the ever-escalating costs of Super Bowl advertising in the past, successful ads have a significant afterlife on the Internet which have boosted brand awareness. Both SodaStream (SODA -0.9%) and Mercedes-Benz (DDAIF) caught a piece of that trend last year.
- Execs with Fox says they have packaged some SB ads with time on other Fox Sports channels including newbie Fox Sports 1.
1:27 PMCantor lifts target on Jazz Pharmaceuticals
- "We believe that even under very conservative generic scenarios there is still time to switch Xyrem to another dosage form," Cantor's Irina Rivkind says, raising the price target on Jazz Pharmaceuticals (JAZZ -0.5%) to $145 from $106.
- The new target is based on a new risk rate in the DCF model and a 1% terminal growth rate versus 0% previous.
- "We also estimate that JAZZ can lever up to approximately 4x 2014 EBITDA of ~$720M to acquire assets," Rivkind adds.
1:21 PMUnilife rebounds as Jefferies defends shares
- Shares of Unilife (UNIS -0.2%) have bounced off morning lows to trade essentially unchanged after a pair of bearish articles pressured the stock early on.
- Jefferies is out in defense, saying that with "the list of announced deals with blue chip companies seeming to grow by the day, UNIS finally appears to be delivering on its promises."
- Buy rating reiterated.
- Price target hiked to $6 from $3.50.
1:21 PMTonix soars as CEO presents at conference
- CEO Seth Lederman makes the case for Tonix Pharmaceuticals (TNXP +29.1%) at the LD Micro VI conference in Los Angeles, though his presentation doesn't appear to contain any new information.
- Webcast and presentation slides
- Results from the pivotal Phase 2b/3 trial of TNX-102 SL for fibromyalgia are expected in 2014 H2, and the Phase 2a trial of the drug for treating PTSD is expected to begin in 2014 Q2.
- Earlier this week: SA Pro's Joe Springer on the opportunity in Tonix.
1:15 PMAMC Entertainment moviegoers to get early grab at IPO shares| Comment!
1:03 PMHeard during Express' earnings call
- Execs with Express (EXPR -22.7%) were on the hot seat today during the firm's earnings call after the firm issued a troubling outlook for Q4 with its earnings report.
- The retailer expects the entire holiday season to be "highly promotional" and management didn't seem to offer up any clear signs of how foot traffic can be improved.
- A 50% increase in the number of members to the company's loyalty program offers one avenue to grow sales, while "new ideas" are also in the hopper.
- Inventory, which rose 18% in Q3, can be managed in Q4 to get the increase back to a single-digit pace. Marketing spend for Q4 is flat compared to a year ago so far.
- Earnings call webcast
1:01 PMMoody's downgrades ION Geophysical to B2, outlook negative
- Moody's downgrades ION Geophysical's (IO -2.4%) rating to B2 from B3 and its $175M senior secured notes to Caa1 from B3 with a negative outlook.
- Moody's cites "weaker fundamental performance than originally anticipated," which leaves the company with less financial flexibility to absorb changes in the "highly volatile and cyclical seismic sector, ... typically the first sub-sector in the oilfield services industry to decline in a down-cycle and the last sub-sector to benefit from an up-cycle recovery."
- The firm also noted that ION's cash balance has eroded below projections while its "litigation exposure has increased." A Texas judge ordered ION to pay an additional $73.1M in damages to WesternGeco back in Oct.
1:00 PMOn the hour
- Dow -0.21%.
- 10-yr -0.38%.
- Euro +0.06% vs. dollar.
- Crude +1.44% to $97.42.
- Gold +2.24% to $1248.1.
12:56 PMLaredo Petroleum says severe weather will hurt Q4 production
- Laredo Petroleum (LPI +2.9%) is the latest Permian Basin producer to say that the effects of severe winter weather continues to materially impact operations and will result in total Q4 production below its earlier guidance.
- Drilling and completion activities have resumed but pervasive power outages have caused more than 50% of LPI's wells to remain shut-in, and the production of many operating wells has been curtailed due to facilities constraints.
12:55 PMPrecious metals reverse to turn sharply higher
- Threatening to sink below $1,200 ounce after the strong ADP jobs report this morning, gold has staged a big reversal to $1,247. Below $19 earlier, silver has also come along for the ride, now at $19.72.
- GLD +2.1%, SLV +3.4%.
- The taper may be coming, but the SF Fed's John Williams is talking about raising the bar even further before the FOMC would consider hiking rates.
- The gold miners (GDX +3.7%) are the best performing sector in the market today.
- PM ETFs: GLD, SLV, IAU, AGQ, PHYS, SIVR, PPLT, PALL, ZSL, USLV, SGOL, UGL, DGP, GLL, DZZ, UGLD, DBS, DGL, DSLV, GLTR, DGZ, PTM, AGOL, DBP, GLDI, DGLD, WITE, SLVO, PGM, TBAR, USV, JJP, UBG, RGRP, LPLT, BLNG, IPLT
- Miner ETFs: GDX, GDXJ, NUGT, SIL, DUST, GLDX, SLVP, GGGG, RING, SILJ, PSAU, JNUG, JDST
12:54 PMBroadcom launches Bluetooth SoC with wireless charging support
- Looking to profit from the nascent wearable computing market and stay a step ahead of Bluetooth chip rivals, Broadcom (BRCM -0.1%) has unveiled a Bluetooth SoC that both supports the low-power Bluetooth Smart standard and (more interestingly) has built-in wireless charging support. (PR)
- The SoC, called the BCM20736, supports wireless charging via the A4WP standard. It also contains a low-power ARM Cortex-M3 CPU core (often found in microcontrollers).
- Rival Qualcomm recently launched its Toq smartwatch, which contains a Bluetooth Smart chip (presumably its own) and wireless charging support. Meanwhile, Samsung (a major buyer of Broadcom's Bluetooth/Wi-Fi combo chips) acquired U.K.-based CSR's Bluetooth chip ops last year, and Apple, widely reported to be working on an iWatch, recently bought low-power Bluetooth chipmaker Passif Semi.
12:38 PMNGL Energy started with a Buy rating at Wunderlich
- NGL Energy Partners (NGL) is initiated with a Buy rating and $37 price target at Wunderlich, which believes units offer an attractive balance of current yield and double-digit distribution growth with the potential for further valuation expansion.
- Since its 2011 IPO, NGL has announced ~$2.9B of acquisitions, significantly exceeding its initial targets and creating a unique and more diversified platform that remains well positioned for growth.
- The firm believes NGL will remain active and continue delivering strong results, with its distribution estimates equating to a five-year CAGR of ~10% through FY 2018.
12:20 PMTopsy seen improving iOS search; Twitter reportedly mulled acquisition
- As analysts and pundits mull Apple's (AAPL -0.6%) surprising purchase of Twitter analytics startup Topsy, plenty of attention has been given to Topsy's advanced search tools, which many consider to be better than Twitter's (TWTR +5%) on-site search capabilities.
- Azeem Azhar, the founder of fellow social analytics firm PeerIndex, thinks Topsy could end up acting as "the search layer for iOS," indexing both social media content and "the best bits of the Web that power Siri and Apple Maps." He points out doing so would reduce (but not eliminate) Apple's dependence on Google.
- TechCrunch, meanwhile, thinks Topsy's search tech and ability to gauge consumer sentiment could improve the quality of the App Store and iTunes' search and recommendation engines. And Gene Munster sees Topsy potentially improving Siri and Maps by integrating data related to current events and trending topics.
- Separately, AllThingsD reports Twitter, which is rallying today along with other Internet momentum names, considered buying Topsy on multiple occasions, out of interest in its search tools. But the microblogging giant ultimately held off, something sources think stems from Twitter's belief it could build some of Topsy's tools on its own.
12:09 PMHigh yield running out of room to rally?
- "High yield simply fares better" in a rising rate environment, says JPMorgan's Peter Acciavatti, as his team sees junk bonds returning 5% in 2014 with default rates remaining below average. "It’s hard to get the market to back up substantially when default rates are as low as they are."
- Not necessarily telling investors to avoid high yield, Morgan Stanley's Adam Richmond nevertheless believes the 4-year junk rally has about run out of steam. "Absolute returns are going to be low by historical standards ... We’re looking at improving growth, low defaults and rates likely rising ... It’s not a terrible environment for high yield, but the issue really is the math.”
- Related ETFs: HYG, JNK, HYS, HYLD, SJNK, PHB, BSJF, SJB, BSJE, BSJD, ANGL, BSJI, BSJG, XOVR, UJB, QLTC, BSJH, SHYG, BSJJ, BSJK
12:08 PMDirecTV investments could spark new sports service
- DirecTV (DTV -0.2%) announces it made an investments in LiveClips and i.TV for undisclosed amounts.
- The technology platforms could help DirecTV develop a service to create personalized sports highlights for subscribers.
- What to watch: The company mentioned the NFL Sunday Ticket package when highlighting the new partnerships. It could be an indication the company plans to re-sign with the NFL following the 2014 season. There has been some speculation that an Internet heavyweight like Google could bid on the content rights.
12:05 PMTurquoise Hill -27% as trading begins on rights issue
- Turquoise Hill (TRQ -26.7%) shares are sharply lower as the rights issued under the miner's recent $2.4B rights issue began trading on a when-issued basis today in Toronto.
- More than 1B shares are expected to be issued under the rights offering, resulting in a doubling of TRQ's shares outstanding.
- TRQ will use the proceeds to repay Rio Tinto (RIO +2%)for a $600M bridge loan and $1.8B in interim funding, and to use any remaining funds for the continued financing of the Oyu Tolgoi copper-gold project; TRQ has stumbled in its negotiations with the Mongolian government over financing for the mine.
12:00 PMOn the hour
- Dow -0.01%.
- 10-yr -0.42%.
- Euro -0.25% vs. dollar.
- Crude +1.11% to $97.11.
- Gold +0.47% to $1226.5.
11:55 AMANSYS acquires chemistry simulation software maker Reaction Design
- ANSYS (ANSS +0.7%) acquires chemistry simulation software developer Reaction Design. Closing is expected in Jan.
- Reaction Design has over 400 customers globally. ANSYS plans to offer Reaction Design's CHEMKIN-PRO gas-phase and surface chemistry software alongside its computational fluid dynamics solutions, aiming the offerings at users who want to improve fuel efficiency of combustion engines.
11:53 AMGoldman Sachs cools a bit on Melco Crown| 2 Comments
11:47 AMONEOK target price raised to $63 at Goldman
- Goldman Sachs raises its price target for ONEOK (OKE +0.1%) to $63 but maintains its Neutral rating, believing much of the good news which has pushed units up 39% since announcing the spinoff of its gas utility business already is priced in; however, the firm thinks OKE's 2015-16 dividend growth guidance of 10% looks conservative.
- Further OKE outperformance will depend on better results at its underlying MLP, ONEOK Partners (OKS -0.3%), Goldman says, seeing 6%-8% average annual distribution growth over the next several years; upside for OKS could come from additional Bakken gathering and processing opportunities.
11:41 AMBOC leaves rates unchanged; frets over too-low inflation
- The loonie (FXC -0.4%) slips to a multi-year low after the Bank of Canada - as expected - leaves its overnight rate at 1%, but sounds a dovish note, noting inflation has moved further beneath the 2% target, "held down by significant excess supply and by the effects of heightened competition in the retail sector, which look to be more persistent than anticipated."
- "The downside risks to inflation appear to be greater."
- The TSX is off 0.3%.
- Canada ETFs: EWC, FXC, CAD, CNDA, FCAN, EWCS
11:34 AMThompson Creek -2.3% after TD points out solvency issue
- Thompson Creek Metals (TC -2.3%) appears to be running out of cash, TD Securities warns, pointing to TC's highly leveraged balance sheet and its unsustainable molybdenum operations at current metal prices.
- TC's long-term solvency is a "major issue" whatever the outcome of the Mt. Milligan ramp-up, the firm says; with a bad ramp-up and even lower metal prices, TC could be pressured to refinance next year.
- The firm maintains its Reduce rating and $0.50 price target.
11:25 AMHanwha higher after announcing partnership, supply deal
- Hanwha SolarOne (HSOL +3.9%) has signed an MOU with Chinese solar project developer Jiangsu Zhongtian (ZTT) to create "a long-term strategic partnership to cooperate in the [downstream solar] business." As part of the deal, ZTT plans to use 150MW worth of Hanwha modules in a distributed energy project. (PR)
- The news comes two weeks after Hanwha announced a deal to supply modules for use in Portuguese solar parks, and two days after the ompany announced it had obtained a new $574M credit facility.
11:20 AMBank of Ireland carries out equity raise
- Talked about for some time now, Bank of Ireland (IRE -2.6%) today moved forward with a €580M equity raise to help fund the redemption of some of the government's preferred stake in the rescued lender. The move allows the bank to sidestep a 25% increase in the amount owed on the preferred stake had it not been redeemed by the end of March.
- Ireland itself is hoping to exit its own bailout on December 15 and the successful share sale should help bolster that plan.
11:15 AMCF Industries jumps after saying it's considering MLP
- CF Industries (CF +9.5%) is today's top gainer on the S&P 500 after saying it is in talks with financial advisers to evaluate an MLP and “MLP-like structures along with other financial options,” according to a presentation at Citi's basic materials conference.
- RBC starts coverage of CF at Sector Perform with a $235 price target, believing modestly lower nitrogen prices will lead to lower although still strong margins.
11:14 AMHeard during Starz' presentation at an investor conference
- Execs with Starz (STRZA +0.6%) gave an inside look at the company's plans during an investor conference this morning.
- CFO Scott McDonald says a favorable renewal of an output agreement with Sony and the expiration of a Disney deal will allow the company to ramp up original programming to 65-75 hours by 2017.
- Despite the increased focus on original content, the company plans to retain strong first-run and popular movies. The goal is to increase Starz standing as a premium service for cable packages.
- McDonald brushed aside questions on if the media concern will entertain acquisition overtures.
- Webcast from BofA's 2013 Leveraged Finance Conference
11:05 AMAscent Solar higher after announcing Volvo pavilion deal
- Ascent's (ASTI +6.3%) solar modules will be used to power Volvo's Pure Tension Pavilion, which the automaker is using to show off its new V60 hybrid car. Thanks to Ascent's flexible panels, the pavilion can be use to charge a V60. (PR)
- Ascent rallied last week after announcing it plans to open three Southern California kiosks to promote its EnerPlex solar accessories.
11:01 AMLululemon keeps it edge despite new rivals
- Lululemon (LULU -1%) has another competitor in the yoga/athletic space as Hennes & Mauritz (HMRZF) struts out some new lines, notes Hedgeye's Brian McGough.
- The retailer reportedly had decent store traffic during the Black Friday weekend with a low level of discounting and has been added to Janney Capital's 2014 Best Ideas List. Despite heavyweights such as Nike, Adidas, Under Armour, and Gap encroaching into LULU's categories - many retail analysts see demand strong enough to sustain the group.
11:00 AMMarkets turn positive after ISM report
- Dow +0.25%.
- 10-yr -0.38%.
- Euro -0.27% vs. dollar.
- Crude +0.62% to $96.64.
- Gold +0.49% to $1226.8.
10:59 AMEssex reportedly offering more than $60 per share for BRE
- Essex Property's (ESS -2.4%) offer for BRE Properties (BRE +13.3%) is higher than a rejected $60 bid from Land & Buildings earlier this year, reports Bloomberg, citing two sources. BRE has been working with Wells Fargo to explore strategic options, including a sale. Essex plans to pay for the purchase with bank financing, a stock offering, and the sale of assets.
- It's been a busy deal year in the REIT sector, with $78B of acquisitions YTD, up 41% from 2012.
- BRE's currently trading at $60.50.
- Earlier coverage
10:57 AMTeva upbeat on NTE business prospects: Bloomberg
- Teva (TEVA -0.4%) is betting its new therapeutic entities business (comprising "reformulated or repurposed" existing drugs) will generate as much as $3B in sales by 2020, Bloomberg reports.
- The company is hoping the NTE business will go some ways towards offsetting lost revenue once Copaxone loses exclusivity.
- While TEVA says it "believes that the NTE process will be an important growth driver," Bloomberg says some analysts (like Bernstein's Ronny Gal) aren't so sure.
- Based on the pipeline, NTEs will include new abuse-deterrent opioids and treatments for schizophrenia and Parkinson’s.
10:57 AMIran mentions U.S. companies for help in developing oil fields
- Iran wants U.S. companies such as Chevron (CVX) and ConocoPhillips (COP) to develop its oil and gas fields, the country's oil minister says, perhaps signaling a readiness to court American business amid a thaw in relations with the West.
- Western companies are still banned by their governments from investing in Iran's oil and gas fields, and this is the first time Iran has named particular U.S. companies it might like to see enter the country.
- In addition to CVX and COP, the minister mentioned European giants BP, Royal Dutch Shell (RDS.A, RDS.B), Total (TOT), Statoil (STO) and Eni (E), and says he is talking to some of them but doesn't say which.
- Though sanctions forced Western companies out of Iran, many also complained of Iran's tough contracts which gave some production from a field but no stake in it.
10:53 AMTeradata falls due to fresh Morgan Stanley downgrade
- Less than two months after cutting Teradata (TDC -5.3%) to Equal Weight, Morgan Stanley has downgraded the maker of data warehousing and business intelligence hardware/software to Underweight. The prior downgrade took place after Teradata issued a big Q3/2013 warning.
- There have been concerns about the long-term impact the adoption of the increasingly popular Hadoop big data/analytics framework will have on Teradata's traditional warehousing solutions (though some argue it's only a minor threat), as well as about the growth seen by Amazon's Redshift warehousing service since its 2012 launch.
10:49 AMGeneral Motors roundup: Market share gains in the U.S., 'compelling' buy for Kyle Bass
- Reviews for the 2015 Chevy Silverado and 2015 GMC Sierra indicate the pickups pose a more serious challenge to the Ford F-series juggernaut and early sales trends suggest that consumers might be agreeing.
- General Motors (GM +2.8%) knocked out a second straight month of gaining market share in the U.S. Though some criticism on channel-stuffing and bloated inventory is being circulated, most automobile analysts think pent-up demand warrants the aggressive production run.
- Bloomberg reports that Hayden Capital Management has taken a stake in the automaker. "GM equity represents one of the most compelling risk/reward situations of any large cap in the world today," notes a presentation slide from the Kyle Bass-founded investment fund.
10:48 AMBanks cited for non-compliance with mortgage settlement
- Bank of America (BAC), Citigroup (C -1.3%), and JPMorgan (JPM +0.5%) each failed at least 2 of 29 metrics used to gauge compliance with the national $25B mortgage settlement, according to a court filing from Joseph Smith, the watchdog overseeing the process. The last report - filed in June - cited JPM, Citi, and Wells Fargo for missing on 3 metrics.
- The failures stem from the complexity of the banks' systems, says Smith, and fixes can be expensive, but all the banks have implemented plans to address to issues.
- In one example, BofA failed on one test as to whether loans were actually delinquent at the time foreclosure was initiated, and another about how quickly it was notifying borrowers of missing documents in their loan modification applications.
10:35 AMMarathon Petroleum -3.1% on spending plans for midstream, retail
- Marathon Petroleum (MPC -3.1%) and MPLX (MPLX -0.7%) outline a plan to invest aggressively in its midstream and retail segments to help balance the volatility of its refining operations. (presentation)
- Over the next three years, MPC expects to invest $640M in midstream assets that are a part of its refining and marketing segment, $2.4B in pipeline transportation including MPLX, and $925M on growing the Speedway convenience store segment.
- "We recognize that earnings volatility is an issue for long-term investors, and we are addressing that by growing more aggressively the segments of our business that produce more stable cash flows," CEO Gary Heminger says.
10:32 AMSonic climbs as William Blair gains confidence in earnings growth| Comment!
10:28 AMGood cheer up and down the casino sector
- Casino stocks are ripping gains as the sector digests more good news on the early start to online gambling in New Jersey and the increased prospect that Japan will relax rules on casino development. Another stellar month in Macau casinos isn't dampening the mood at all.
- Las Vegas Sands (LVS +3.1%) is leading the charge after its credit rating was lifted to investment-grade by S&P.
- Advancers: Caesars Entertainment (CZR) +2.3%, Melco Crown (MPEL) +1.3%, Boyd Gaming (BYD) +2.7%, Wynn Resorts (WYNN) +1.8%, MGM Resorts (MGM) +1.9%.
10:22 AMLiquidity Services extends DoD scrap auction deal, shares rally
- Liquidity Services (LQDT +7%) has obtained a 12-month extension of its scrap auction contract with the DoD. The extension means Liquidity will be "the exclusive sales channel for the disposition of scrap property that is approved for public sale" through June 9, 2015. (PR)
- Investors and analysts have been nervous about the status of Liquidity's contract renewal talks with the DoD, both for its scrap and surplus asset agreements. Benchmark recently expressed concerns about the deal terms Liquidity would get for a surplus renewal, given a more competitive bidding process.
- Shares are recouping some of the huge losses they saw two weeks ago, after Liquidity provided weak FQ1/FY14 guidance to go with mixed FQ4 results.
10:22 AMPremiere Global Services climbs on Powwownow acquisition, guidance update| Comment!
10:17 AMApartment REITs higher on reported bid for BRE
- A check of other multi-family REITs amid news of a $5B bid for BRE Properties (BRE +12.8%) by Essex (ESS -1.8%).
- Equity Residential (EQR +2.2%), AvalonBay (AVB +2.5%), UDR (UDR +2.5%), Apartment Investment and Management (AIV +4%), Camden (CPT +3.2%), Home Properties (HME +3.3%), Mid-America (MAA +1.7%), Post (PPS +4.7%).
10:16 AMEl Paso plunges on disappointing dividend guidance
- El Paso Pipeline Partners (EPB -9.5%) sinks following disappointing dividend guidance for nearly flat distributions over the next five quarters even with a lift from dropdowns.
- At least two firms are issuing downgrades: Morgan Stanley cuts units to Underweight from Equal Weight, and Tudor Pickering lowers its rating to Trim from Hold.
- Other Kinder Morgan companies are lower too: KMI -5%, KMP -1.9%, KMR -1.7%.
10:15 AMSPX divests EGS stake, plans $500M in buybacks, debt reduction
- SPX Corporation (SPW +1.1%) sells its 44.5% stake in EGS Electric Group to Emerson Electric (EMR) for $571M, in a deal that's expected to close in Q1 2014.
- SPX's Q1 results will show an after-tax gain of around $6.50/share in connection to the transaction.
- "The sale of our joint venture interest in EGS is consistent with our strategy to narrow our focus on our flow end markets," SPX CEO Chris Kearney says, adding that "through a combination of the net proceeds from [the] asset sale, planned divestitures of discontinued operations and cash on hand, SPX plans to allocate $500M to share repurchases and reduce gross debt by ~$300M." (PR)
- SPX Corporation (SPW +1.1%) sells its 44.5% stake in EGS Electric Group to Emerson Electric (EMR) for $571M, in a deal that's expected to close in Q1 2014.
10:10 AMApparel retailers sink as concerns mount
- A negative report from Express (EXPR -20.7%) on Thanksgiving week sales isn't going unnoticed by apparel peers.
- The comments from execs with Express mirror some of the concerns of retail analysts on promotional activity in the sector and sluggish foot traffic. Earlier: Nomura warns on inventory challenges.
- Related ETFs: XLY, VCR, FXD, RCD, FDIS, PSCD, PEZ
- Decliners: Francesca's (FRAN) -2.3%, Gap (GPS) -1.6%, Destination XL (DXLG) -1.4%, Pacific Sunwear (PSUN) -3.2%, Buckle (BKE) -1.1%, American Eagle Outfitters (AEO) -2.5%, Aeropostale (ARO) -3.1%, American Apparel (APP) -1.7%, Abercrombie & Fitch (ANF) -1.9%.
10:03 AMMunicipal insurers cheer Illinois pension move
- The monoline insurers all post gains after Illinois lawmakers approve a pension overhaul in which current workers and retirees will bear a chunk of the costs - a move which could prove to be a template for other states/municipalities with similar issues. Needless to say, unions will be headed to court to block the new law from taking effect.
- Yesterday, a judge in Detroit's bankruptcy case ruled pensions are unsecured creditors and thus in line for cuts. Unions and pension funds will surely seek to overturn this as well.
- MBIA (MBI +1.2%), Assured Guaranty (AGO +1.3%), Ambac (AMBC +1.3%)
10:02 AMUnilife falls as TheStreetSweeper, others outline bear case
- Unilife (UNIS -8.1%) trades lower out of the gate, giving back some of the gains the shares logged Tuesday on the heels of the Novartis deal.
- TheStreetSweeper's Sonya Colberg is out today with the "Top 10 Reasons" to be bearish on the stock.
- The full report is available here, but suffice it to say Colberg raises some familiar concerns. Here's an excerpt: "Investors shouldn't read into UNIS press releases that upcoming large revenue streams will necessarily occur. The PRs tend to list minimum volume purchases of UNIS syringes. These minimums are only to preserve exclusivity. No one is obligated to buy a certain volume." (emphasis in original)
- Also out with a bearish take is SA contributor Kerrisdale Capital Management who says "vague supply agreements" are one factor that suggests a "75% overvaluation."
10:00 AMOn the hour
- Dow -0.29%.
- 10-yr -0.41%.
- Euro -0.34% vs. dollar.
- Crude +0.82% to $96.83.
- Gold +0.52% to $1227.2.
9:59 AMSNC-Lavalin seeks to restart work in Libya, despite corruption shadow
- SNC-Lavalin (SNCAF) is trying to pick up work again in war-torn Libya, signaling it is ready to move on from corruption allegations that tie the firm to the Gaddafi dictatorship.
- SNC hopes to restart the Benghazi Lakes and Benina Airport projects, the latter a ~$500M deal to build a new international terminal and runaway.
- SNC has a Libyan presence dating back more than 40 years, but one of its former execs allegedly paid $160M in bribes disguised as consulting fees to Gaddafi's son in exchange for steering major contracts to SNC.
9:57 AMChanos: CGI one of "largest short positions"
- James Chanos counts CGI Group (GIB -1.6%) among his "largest short positions," NewsWeek reports. In a 10-page client memo, Chanos cited declining cash flow, falling new business bookings, questionable accounting practices, and the "PR mess" surrounding Healthcare.gov as reasons for his position.
- An increasing amount of investors are on board the short train: although 1.7% of shares outstanding were shorted as of Nov. 15 on the NYSE, 29.9M shares in Toronto had been sold short (almost 11% of shares outstanding), FactSet data shows.
9:56 AMNetflix discusses French launch with government officials
- Netflix (NFLX +0.8%) execs met with French president Francois Hollande's staff yesterday to talk about a possible launch of the streaming giant's services within France.
- An official within Hollande's office says Netflix "wanted information about the legal conditions that would affect its potential arrival in France," while adding execs are also visiting Germany and other European countries.
- A French launch would be a big one for Netflix, given it would bring Netflix's services to a country with 66M people and a fairly high per capita income. In addition to the U.S., the company has thus far launched in Canada, Latin America, the U.K./Ireland, the Netherlands, and Scandinavia.
- One possible hurdle: French laws currently prevent streaming services from showing a movie until at least three years have passed since its cinema debut.
- Netflix had 9.19M international streaming subs at the end of Q3 to go with 31.1M domestic subs, and expects to end Q4 with 10.1M-10.9M international subs.
9:55 AMRAIT gains after convertible note offering
- RAIT Financial Trust (RAS +1.5%) dove at the open, but is now higher after commencing an offering of 20-year convertible notes.
- Among the uses for the proceeds, RAIT intends to pay off a capped call transaction with an affiliate of the offering's sole book-runner - Barclays. The move is expected to reduce common share dilution upon the potential conversion of the notes.
- Press release
9:52 AMInvestments in programming paying off for media giants
- Higher spending on programming by network owners is paying off immediately in the form of increased revenue from content, according to media analysts.
- The most recent round of reports from Time Warner (TWX -0.4%), CBS (CBS +0.4%), Viacom (VIAB -0.4%), and 21st Century Fox (FOXA -0.8%) show higher program costs were offset by licensing and advertising revenue. Even big sports rights deals from Disney (DIS -0.7%) and NBC (CMCSA) appear to be adding enough profits to justify the steep costs.
- What to watch: A breaking point on programming costs could be seen in the future with the Pay-TV industry (DISH, DTV, CHTR, CVC, TWC) dabbling with smaller bundles for consumers.
- Related ETF: PBS.
9:47 AMBarrick Gold set to unveil key management appointments
- Barrick Gold (ABX +1.3%) reportedly will announce the appointment of well-known Canadian investor Ned Goodman to its board today, and will hire Jim Gowans, a former De Beers Canada CEO, as its COO.
- Founder and long-time chairman Peter Munk also is expected to hand over the role of chairman to his heir apparent, current co-chairman John Thornton.
- The appointment of new directors will be closely watched by investors, some of whom worry that Munk may try to retain influence through boardroom appointments; representatives from some of Canada's biggest pension funds reportedly held a conference call yesterday to discuss potential reactions to today's announcements.
9:42 AMA roundup of tech ratings changes| Comment!
9:36 AMNobody covers the Big Apple like Dunkin' Donuts
- Dunkin' Donuts is the largest retail chain in New York City, according to the Center for an Urban Future.
- The restaurant operator has 515 shops to easily beat out Subway, Duane Reade/Walgreens, and Starbucks.
- What to watch: The East Coast-focus of parent company Dunkin' Brands (DNKN) is being slowly altered as Dunkin' Donuts expands to the West. Store margins are seen as having more upside in new territories.
9:35 AMTowerJazz CEO does not confirm deal to buy Panasonic plants
- TowerJazz's (TSEM) CEO Russell Ellwanger said of media reports claiming the company would buy 3 chip plants from Panasonic (PCRFY) for ~$100M, "I am not confirming about Panasonic but Panasonic is a very, very good semiconductor company with good technologies."
- Ellwanger noted that TowerJazz is keen to find acquisitions that increase capacity through well-run factories, but that "Any type of acquisition we look at would be a few million dollars of cash or equity but nothing more than that."
- The remarks may simply be the drawing of a line in the sand as TowerJazz negotiates with Panasonic, which has long made its intention to divest large parts of its semi operations clear.
9:32 AMMarkets open lower after data
- Dow -0.33% to 15863. S&P -0.47% to 1787. Nasdaq -0.44% to 4019.
- Treasurys: 30-year -0.65%. 10-yr -0.41%. 5-yr -0.24%.
- Commodities: Crude +0.84% to $96.85. Gold +0.43% to $1226.1.
- Currencies: Euro -0.42% vs. dollar. Yen +0.06%. Pound +0.37%.
9:28 AMGoogle roundup: Robotics, YouTube music service, Chrome apps
- The NYT reports Google (GOOG) has quietly acquired seven companies over the last six months in an attempt to "create a new generation of robots." Former Android chief Andy Rubin, reassigned earlier this year to an unspecified role, is spearheading the effort.
- Google is tight-lipped about its plans, but sources say manufacturing and retail applications are being eyed. The NYT observes Larry Page is a proponent of the idea that "technology should be deployed wherever possible to free humans from drudgery and repetitive tasks." The report comes shortly after Amazon made waves with its drone delivery announcement.
- AllThingsD reports the launch of YouTube's anticipated subscription music service has been pushed back to 2014, with a Q1 launch possible. Though YouTube has the licenses it needs to launch, the online video giant is said to be unsatisfied with the current state of the product.
- While music subscription services are nearly a dime a dozen at this point, YouTube's huge base and ability to integrate videos (both official and user-generated) could make it a serious challenger to leaders such as Spotify.
- Fresh off giving Chrome apps the ability to work in local/offline mode on PCs, Google is set to release a toolkit that allows developers to bring Chrome apps to Android/iOS. Creating a larger developer ecosystem for Chrome apps is key to growing Chrome OS' relatively small PC market share.
9:27 AMAccelerated buyback program initiated at Aaron's| Comment!
9:25 AMLigand lifts guidance on higher-than-expected Captisol sales
- Ligand Pharmaceuticals (LGND) rallies 6% premarket.
- The company is out raising its top- and bottom-line guidance for both Q4 and FY13.
- Q4 and FY13 revenues now seen at $14-14.5M (versus previous guidance of $11-12M) and $48-48.5M (versus previous guidance of $45-46M), respectively.
- Q4 and FY13 non-GAAP EPS are now seen at $0.31-0.32 (versus previous guidance of $0.22-0.24) and $0.86-0.87 (versus previous guidance of $0.77-0.79), respectively.
- LGND cites "higher-than-expected sales of Captisol material." (PR)
9:24 AMCoverage launched on JGWPT Holdings
- Underwriter coverage launches on specialty consumer finance provider JGWPT Holdings (JGW) one month after its IPO, and all 5 of the underwriters initiate the stock a Buy. Initially expected to price above $20 per share, the stock came public at $14, and sits at $15.89 today.
- JGW provides lump-sum payments (at discounts) to customers with annuity and lottery payment streams, or legal settlements (J.G. Wentworth might ring more of a bell).
- "The business model is non-market correlated and cash generative," says Deutsche's Yaron Kinar, starting with a Buy at $21 price target. "The company’s roughly 70% market share and track record in structured settlements offer it meaningful competitive advantages in the form of its database, ad spend, financing costs, operating leverage and efficiency, yet it trades at merely half of its comps' valuation."
- The other Buys are from KBW, Credit Suisse, Barclays, and Jefferies.
- Competitors include Imperial Holdings (IFT).
9:20 AMBig jump in ADP jobs data sends stock futures, Treasurys lower
- Stock futures declined further after the ADP employment report, the first of several economic indicators which could give an idea of how Friday's non-farm payrolls number will read, showed a higher than expected 215,000 jobs added during November; S&P -0.3%, Dow -0.2%.
- The major averages look to avoid a fourth straight loss, which hasn't happened since September; the S&P 500 and Dow are now below their respective 1,800 and 16,000 levels.
- The ADP data has caused some jitters on tapering expectations; Treasurys sold off, sending the 10-year yield higher by nearly 6 bps to 2.84%.
- European and Asian markets are mixed so far.
- Still ahead: new home sales for Sept. and Oct., ISM non-manufacturing, EIA petroleum inventories, Fed Beige Book.
9:17 AMCleveland Research: Sears comp trends experienced "sharp deterioration" in Nov.
- Sears' (SHLD) domestic comp trends experienced a "sharp deterioration" in Nov., according to channel checks by Cleveland Research.
- The firm believes that market share is shifting back to J.C. Penney on apparel, with Sears' suppliers reducing 2014 revenue forecasts.
- Shares are now down 5.5% pre-market, continuing a slide which began after news broke yesterday afternoon that Eddie Lampert has pared his stake in the retailer.
9:12 AMJ.C. Penney roundup: 2-year comp stack not so dandy, shares lower on reversal
- Wells Fargo doesn't think the double-digit comp growth shown by J.C. Penney (JCP) is as impressive as some are making it out to be.
- A look at the two-year stack of comparable store sales shows November was down 27.3% which is only a minor improvement over Q3's 29.6% decline.
- With J.C. Penney's cash burn rate still at a formidable level, the question still remains: Will Q4 sales accelerate fast enough?
- JCP -3.7% premarket in an abrupt turnaround.
9:10 AMNoble Energy makes new discoveries in deepwater Gulf of Mexico, offshore Israel
- Noble Energy (NBL) +1.2% premarket after announcing discoveries at the Dantzler exploration well in the deepwater Gulf of Mexico and at the Tamar Southwest exploration well offshore Israel.
- The Dantzler well encountered more than 120 ft. of primarily crude oil pay; discovered gross resources at Dantzler are now estimated at 55M-95M boe.
- Tamar Southwest, NBL's eighth consecutive discovery in the Levant Basin, encountered ~355 ft. of net natural gas pay.
9:08 AMOculus' Microcyn HydroGel lands new 501(k) clearance, shares soar
- Oculus Innovative Sciences (OCLS) more than doubles, rising 155% before the bell.
- The company announced a scar management 501(k) clearance for HydroGel.
- Partner Quinnova Pharmaceuticals is planning a Q2 2014 launch.
- OCLS also says it is "working with its international distributors and partners to bring this new scar product to patients throughout the globe." (PR)
9:00 AMFutures maintain losses after data, Treasuries sink
- S&P -0.21%.
- 10-yr -0.42%.
- Euro -0.3% vs. dollar.
- Crude +1.04% to $97.04.
- Gold +0.34% to $1225.
9:00 AMJefferies hikes price target on UnitedHealth| Comment!
8:58 AMTamar partners sign $105M nat gas deal with Delek Israel
- The partners in Israel's Tamar natural gas field sign a seven-year deal to sell $105M worth of gas to Delek Israel, which owns and operates gasoline stations across the country and plans to start selling compressed natural gas at its stations in coming years.
- Tamar, which began production in March, is estimated to hold more than 280B cm of gas; Noble Energy (NBL) owns a 36% stake in the field, while Delek Group (DGRLY, DLKGF) holds a 31.25% stake through its units Avner Oil (AVOGF) and Delek Drilling (DKDRF).
8:47 AMPandora higher after gaining listeners and market share in Nov.
- Pandora (P) is ahead 2.6% in the premarket after monthly metrics show gains on both a yearly and monthly basis in the face of iTunes Radio.
- Active listeners of 72.4M as of the end of November is up 16% Y/Y, and up from 70.9M in October.
- Pandora's share of total U.S. radio listening of 8.44% is up from 7.17% a year ago, and from 8.06% in October.
- Listener hours of 1.49B is up 18% Y/Y, and up from 1.47B October.
- Press release
8:45 AMPetrobras: Fuel price adjustments not automatic under new mechanism
- Petrobras (PBR) says changes to domestic gasoline and diesel prices in Brazil won't be automatic under its new pricing mechanism; adjustments will be based on international fuel prices, foreign exchange rates and whether the fuel was refined in Brazil or imported.
- PBR's initial pricing proposal, made in October, had called for automatic fuel-price adjustments at regular intervals.
- Investors have been frustrated by PBR's lack of details about how fast or how far it will go to stop subsidizing domestic fuel prices; the new pricing plan, announced Friday, will allow fuel prices to rise to international levels "over an appropriate period."
- Shares, which have dropped more than 11% in two days, -1.2% premarket.
8:41 AMNo coup in Thailand: Navy chief
- Nothing to see here. "There will be no coup as we believe the tension is easing and everything will be back to normal soon," Thailand's navy chief says, allaying fears that the country may see its 19th attempted military coup in the past 80 years.
- Although Prime Minster Yingluck Shinawatra's government continues to trade harsh words with opposition leader Suthep Thaugsuban, the administration's willingness to allow protesters to enter government ministries is seen as a sign that violent upheaval is likely off the table.
- Thai shares (THD, TTF, TF) are relatively calm, slipping 0.5% in Bangkok.
- Elsewhere in the region, markets in Indonesian (IDX, EIDO, IDXJ) and the Philippines (EPHE) slide more than 1% each.
- Nothing to see here. "There will be no coup as we believe the tension is easing and everything will be back to normal soon," Thailand's navy chief says, allaying fears that the country may see its 19th attempted military coup in the past 80 years.
8:36 AMFord could see halo effect from new Mustang
- The age-old battle between the Ford (F) Mustang and Chevrolet Camaro takes a new twist tomorrow when the redesigned Mustang is unleashed in global markets.
- By market share, Camaro has raced past Mustang, but the iconic car also has a "halo" effect which has helped the Ford brand.
- What to watch: Though a "bit" player in the larger picture of global Ford sales, by entering a purely American car - instead of a watered-down European couple - Ford can make a strong design statement that could help sales of other models.
8:35 AMDeutsche Bank bans traders from multi-party chat rooms
- The ban for traders in fixed income took effect this week, says a Deutsche (DB) spokesman (currency traders were barred back in February), and comes as the bank (along with others) today was fined nearly $1B for allegedly colluding to rig derivative markets.
- A number of other banks have also banned traders from these chat rooms and JPMorgan is considering doing the same.
8:27 AMBlack Friday sales soar at AutoNation
- AutoNation (AN) CEO Mike Jackson says the company saw a 40% gain in sales during the Black Friday weekend.
- The company says pent-up demand held back by government shutdown worries in September and October were unleashed during the late November period.
- U.S. November Auto Sales recap.
- CNBC interview with AutoNation's Mike Jackson
- AN +1.5% premarket.
8:27 AMOncoMed looks to extend big rally
- After nearly doubling on Tuesday, shares of OncoMed Pharmaceuticals (OMED) add another 7% in premarket trading.
- Today's catalyst looks to be Jefferies, where analyst Thomas Wei is out with a $46 target (from $27).
- Wei likes the Celgene (CELG) deal and says it "validates demcizumab and [the] cancer stem cell platform [and] relieves OMED of any near-term financing risk."
- For more on the CELG deal, see here
8:26 AMMechel gets covenant holidays on $1.8B in loans| Comment!
8:25 AMBig ADP print sends 10-year yield up to 2.84%
- Bond prices tumble after November ADP jobs prints at 215K, beating expectations of 185K. Additionally, October is revised higher by 54K jobs to 130K.
- November's 215K gain is the highest since November 2012's 276K.
- Full report
- The 10-year yield is up 5 bps to 2.84%, and TLT -0.7%, TBT +1.5%.
- Stock index futures turn lower, the S&P 500 (SPY) -0.3%.
- Treasury ETFs: TBT, TLT, TMV, SHY, IEF, TBF, PST, EDV, TTT, TMF, TLH, ZROZ, SBND, IEI, DLBS, TYO, DTYS, VGLT, UST, BIL, SHV, UBT, TBX, TLO, VGSH, VGIT, GSY, LBND, DTYL, SCHR, TYD, SCHO, ITE, TENZ, TYBS, TUZ, FIVZ, DTUL, SST, DTUS, TBZ, DFVL, DLBL, DFVS, TYNS
- S&P 500 ETFs: SPY, IVE, SH, SSO, SDS, IVV, SPXU, UPRO, VOO, RSP, RWL, EPS, IVW, SPYG, RPG, SPYV, BXUB, RPV, VOOG, VOOV, TRND, SFLA, BXUC, FTA, BXDB
8:25 AMWalgreen November Sales
- Walgreen (WAG) reports Nov sales rose 4.1% Y/Y to $6.07B.
- Total comparable store sales rose 3.2% during the month, calendar day shifts impacting 1.5%, generic drug introduction impacting 0.6%.
- The company opened 22 stores during Nov. (incl. 9 relocation).
- FQ1 Sales increased +6.0% to $18.35B, Comparable store sales rose 5.5%.
8:21 AMSears Holdings -4.4% premarket after Lampert cuts stake
- Shares of Sears Holdings (SHLD) are setting up early for a tough day.
- News broke last night that Eddie Lampert sold a significant number of shares and that J.C. Penney might have nabbed a few customers from Sears stores in November.
- A dismal read from Express on Thanksgiving weekend sales is also fouling sentiment on the entire retail sector.
- SHLD -4.4% premarket.
8:19 AMCytRx rallies after conference presentation
- CytRx (CYTR) trades 6% higher in premarket action.
- Investors seem pleased with Tuesday's presentation at the LD MICRO Main Event Conference in L.A.
- The company discussed aldoxorubicin, reviewed some data from on-going Phase 2 trials, and talked a bit about the upcoming Phase 3 study (Q1 2014 is planned start).
- CYTR also presented a timeline, outlining "numerous upcoming catalysts."
- Those interested can view the full presentation here.
8:17 AMEgypt promises to pay $1.5B arrears to foreign oil firms
- Egypt promises to pay $1.5B of the $6B it says it owes foreign oil companies, hoping the announcement will revive confidence in an economy battered by three years of political upheaval.
- Financial disclosures by firms including BP, Apache (APA), BG Group (BRGYY, BRGXF) and TransGlobe (TGA) show Egypt owed them more than $5.2 billion at the end of 2012.
- Egypt has repeatedly promised to repay arrears to the oil companies since Morsi's removal in July.
8:14 AMMain Street exits portfolio investment
- Main Street Capital (MAIN) has fully exited its debt and equity investments in Van Gilder Insurance Corporation amid the sale of the company to USI Insurance Services.
- Main Street made its initial investment in Van Gilder in 2011, consisting of $8.2M in debt and $2.5M in equity, and has realized an IRR of 16.2% since.
- Press release
8:14 AMPricier whiskeys boost results at Brown-Forman
- Brown-Forman (BF.A, BF.B) reports it grew sales in emerging markets by 7% during the first half of its fiscal year.
- Margins expanded during the period as the product mix for the company improved.
- The Jack Daniels brands saw underlying sales growth of 10%, while sales for super-premium whiskey blend Woodford Reserve increased 27%.
8:08 AMPlug Power skyrockets after business update
- Plug Power (PLUG) soars in early trading after the company provides a positive business update.
- The alternative fuel cell provider says it has seen an extra $17.8M in orders since a previous update on October 8 and that it's on track for a "blowout" quarter. Revenue of $30M-$40M for Q4 is now forecast.
- PLUG +53.1% premarket.
8:00 AMU.S. Futures decline ahead of Jobs and Trade data
- S&P -0.16%.
- 10-yr -0.14%.
- Euro +0.07% vs. dollar.
- Crude +1.03% to $97.03.
- Gold +0.09% to $1221.9.
8:00 AMWilliams suggests Fed Funds rate lower for longer
- Concerned markets aren't getting the message the taper and end of QE does not mean the Fed is ready to boost the Fed Funds rate, San Francisco Fed chief John Williams says he would support revising FOMC guidance.
- "My view would be that we would not be raising the funds rate even if the unemployment rate was below 6.5%, as long as inflation continued to be low, for some time ... I would get our communication around this post-6.5%, the sooner the better."
- Williams will not be a voter on the FOMC until 2015 (he will be an alternate next year), but is seen as a close ally to incoming chair Janet Yellen.
8:00 AMWal-Mart's marketing spend delivers
- Wal-Mart (WMT) got the most marketing bang for its buck of major retailers during the Black Friday shopping period, according to data culled from Placed.
- The Bentonville concern spent $1.7M on TV advertising for every percentage point of market share it earned during the Black Friday period to easily best Target ($2.4M), Kmart ($4.6M), Kohl's ($5.4M), and Macy's ($8.1M).
7:56 AMSBA Communications in $645M deal to add 2,000+ Brazil wireless sites
- SBA Communications (SBAC) announces an expansion of operations in Brazil with the acquisition of 2,007 additional wireless sites for ~$645M at current exchange rates.
- Oi SA (OIBR), one of Brazil's largest telecommunications service providers, and its affiliates, will enter into a long-term lease with SBA for antenna space on each of the sites.
- SBA expects the sites will contribute ~R$110M of cash leasing revenue and R$70M of tower cash flow to results during 2014, and anticipates the transaction will be immediately accretive to AFFO/share.
7:50 AMExpress -17.9% premarket on weak guidance
- Express (EXPR) reports e-commerce sales rose 29% to $71.2M during Q3 to help the retailer to a 5% gain in overall comp sales.
- Gross margin rose 60 bps to 32.9% of total sales as a stronger product mix helped offset an "extremely challenging" and promotional retail environment, but wasn't enough to meet analyst estimates.
- Shares of Express are getting hammered in premarket action, down 17.9%, as weak guidance and disappointing Thanksgiving week sales are disclosed by the company.
7:44 AMEvercore cuts eBay from a Buy
- Acknowledging EBAY's large addressable markets and reasonable valuation, analyst Ken Sena cites the potential for "sustained take-rate pressure within Payments and a higher level of investment across segments" as reason for cutting to Hold from Buy.
- "While we do not see valuation risk at these levels, we do suspect the potential for further negative estimate revisions, including its 2015 guidance ... In the U.K., we see retailers more effectively competing on customer conveniences, becoming savvier with respect to payment fees, and exploring partnership opportunities to address multi-channel needs. While multi-channel partnership opportunities are good for eBay, we see more risk of higher investment at a potentially lower take-rate."
- Shares -0.9% premarket
7:40 AMHeadaches continue for KFC in China
- A survey of Chinese consumers finds 40% say they have concerns about the levels of antibiotic use in chickens used by Yum Brands' (YUM) KFC chain.
- A marketing message from the company intended to soothe consumers appears to be backfiring with some reports indicating it's actually keeping the chicken chain linked to the issue.
- KFC same-store sales in China were flat for November.
- Also in the background: Bird virus concerns in Hong Kong.
7:36 AMHomeAway acquires Australian vacation rental group| Comment!
7:29 AM2-notch upgrade for U.S. Bancorp at Goldman
- "We expect USB's revenue growth to reaccelerate in 2014, and when it does we expect it can recapture its premium multiple," says analyst Richard Ramsden, upping the bank to Conviction Buy from Hold with price target raised $4 to $44.
- His team also expects USB to be at the top of the class when the stress test results are released in March.
- Earlier: Goldman makes space for USB by dropping Citi from the Conviction Buy list.
7:24 AMCiti gets 2-notch downgrade from Goldman
- Goldman cashes in its chips on its Conviction Buy call of Citigroup (C), downgrading 2 notches to Hold after a 27% move for the stock since being added to the list at the start of the year.
- Other than the outsized capital returns, all of the other catalysts for owning the stock have been priced in, says analyst Richard Ramsden. "With the introduction of much more onerous capital rules for large-cap banks (LCR, Basel 3 CCAR, supplementary leverage ratio), we see risk that Citi's capital return story will be more muted in the near term than we had previously expected."
- Shares -1% premarket
7:23 AMDover offloads another unit in deal worth up to $200M
- Dover (DOV) has agreed to sell its Zurich-bsaed DEK Printing Machines unit to Hong Kong listed ASM Pacific Technology (ASMVF) for an initial $170M and another contingent payment of $30M.
- DEK provides materials deposition technologies and support services, including printing-equipment platforms, stencils, precision screens and mass imaging processes used primarily in the electronics industry.
- The deal, which is expected to close in mid-2014, is the latest in a series of transactions that Dover has been carrying out. Others include the spin-off of the company's Knowles unit and the sale of two business lines to LTX-Creedence. (PR)
7:17 AMSales trends worsened during FQ2 for Bob Evans
- Bob Evans (BOBE) reports same-store restaurant sales fell 1.9% during FQ2 on a trend that worsened during the course of the quarter.
- The restaurant operator notes remodeled stores performed better than older stores.
- Cost of sales rose 30 bps to 24.1% of net sales due to increased discount activity and some higher commodity costs.
7:17 AMFutures flat as stocks look to break losing streak
- Stock index futures are flat ahead of the ADP jobs report at 8:15 ET, and as equities look to break a 3-day losing streak.
- Europe's off moderately and in Asia, the Nikkei dove 2.2% while Shanghai gained 1.3% overnight.
- The 10-year Treasury yield is up one basis point at 2.80%, and gold continues its move toward an eleven-hundred handle, off 0.6% to $1,213 per ounce.
- Index ETFs: SPY, QQQ, IVE, SH, DIA, SSO, SDS, PSQ, IVV, SPXU, UPRO, VOO, QID, TQQQ, DOG, RSP, SQQQ, DXD, QLD, RWL, EPS, UDOW, SDOW, DDM, IVW, SPYG, RPG, SPYV, BXUB, RPV, VOOG, QQEW, QQQE, VOOV, TRND, SFLA, BXUC, FTA, QQXT, BXDB, TNDQ
7:12 AMApparel retailers face inventory challenge
- The inventory levels of apparel retailers in the U.S. stand at alarming levels, according to Nomura Equity Research.
- By most accounts, the group didn't perform well over the Black Friday weekend after entering the holiday shopping season at high inventory levels.
- Retailers such as Macy's (M) and Gap (GPS) may have an edge with their strong online fulfillment programs, but the early starts to the shopping season exacerbate inventory issues. Some retail chains will start selling spring lines in late December forcing a more promotional stance on older items.
- On watch: AEO, ANF, ARO, JCP, JWN, KSS, URBN, LTD, APP, TLYS, GES, BKE, CHS, ASNA, CWTR, ANN, CBK, NWY, CACH, BODY, WTSL, CATO, BEBE, DDS.
7:00 AMOn the hour
- S&P flat%.
- 10-yr -0.14%.
- Euro +0.03% vs. dollar.
- Crude +1.29% to $97.28.
- Gold -0.62% to $1213.2.
6:59 AMFord's Goldilocks approach to production
- Ford (F) continues to draw praise for its management of inventory, seen as slightly more conservative than some other major automakers.
- The automaker's inventory level is at 91 days, but plans are already in place to curb production this quarter - while Chrysler and GM are taking a more aggressive stance.
- "It’s not about pure volume, it’s profit and volume," notes Edmunds.com's Michelle Krebs.
6:59 AMMedicines Company buys anti-infections firm for up to $474M
- Medicines Company (MDCO) has acquired Rempex Pharmaceuticals, a developer of treatments for multi-drug resistant infections in hospitals.
- Medicines paid $140M upfront and will pay another $334M in milestones.
- Rempex's products include Carbavance, which has completed Phase 1 dose-escalation studies in normal subjects and is expected to enter registration trials next year.
- Another pharmaceutical is Minocin IV, which has already been approved. (PR)
6:46 AMMondelez International latest U.S. company to float bonds in Europe| 1 Comment
6:00 AMAsian indices mixed, Europe advances on back of PMI readings, await U.S. data
- Japan -2.17%.
- Hong Kong -0.76%.
- China +1.31%.
- India -0.70%.
- London -0.26%.
- Paris +0.21%.
- Frankfurt -0.01%.
5:51 AMEU Commission fines banks €1.71B for rate-rigging
- As flagged, the EU Commission has fined international banks €1.71B for the manipulation of inter-bank interest rates, including.
- The banks fined are Citigroup (C) [€70M], Deutsche Bank (DB) [€726M], Royal Bank of Scotland (RBS) [€391M], JPMorgan (JPM) [€79.9M] and Societe Generale (SCGLF) [€446M].
- UBS (UBS), Barclays (BCS) and Citigroup helped expose the cartels and so received immunity for their violations. UBS avoided a fine of €2.5B and Barclays €690M, while Citigroup's was €55M lower as a result.
- The EU has opened proceedings against HSBC (HSBC) and Credit Agricole (CRARF), as well as against JPMorgan (JPM), for Euribor infractions. JPM's fine is for Tibor violations. (PR)
5:27 AMWorld stocks mixed
- Asian shares are mixed while European equities and U.S. stock futures are mostly higher as investors digest variable services PMI readings and wait for a host of economic reports out the U.S.
- The Nikkei slides 2.2% on what appears to be severe profit-taking after the index finished at a six-year high yesterday.
- China rises 1.3% on the heels of the PBOC saying it will launch reforms in Shanghai's free-trade zone in the next three months.
- Hong Kong -0.75%, India -0.7%.
- EU Stoxx 50 flat, London +0.1%, Paris +0.3%, Frankfurt +0.2%, Milan -0.1%, Madrid +0.3%.
- U.S. stock futures: Dow +0.1%. S&P +0.1%. Nasdaq +0.2%
5:07 AMEurozone ekes out growth of 0.1% in Q3
- Eurozone Q3 GDP is confirmed at +0.1% on quarter vs +0.3% in Q2.
- On year, GDP fell 0.4% vs -0.5%. (PR)
- Retail sales -0.2% on month in October vs -0.6% in September and consensus of flat.
- On year, sales -0.1% vs +0.3% and +0.9%. (PR)
- The euro is flat at $1.3587.
- FXE, VGK, EUO, FEZ, ERO, EU, EPV, IEV, EZU, DRR, HEDJ, FEU, EUFX, UPV, ULE, FEP, ADRU, URR, FEEU, DBEU, FIEU
4:57 AMEU to fine banks €1.7B for manipulating interest rates
- The EU Commission will reportedly fine a group of leading multinational banks €1.7B for rigging inter-bank interest rates in what would be the largest antitrust penalty that the commission has ever levied.
- The banks to be fined include all the old favorites - Citigroup (C), Deutsche Bank (DB), Royal Bank of Scotland (RBS), JPMorgan (JPM) and Barclays (BCS), as well as Societe Generale (SCGLF).
- The banks have admitted liability in return for a 10% reduction in their punishment.
- However, HSBC (HSBC) and Credit Agricole (CRARF) are contesting the proposed sanctions from the EU and are set to be formally charged today.
- UBS (UBS), which paid $1.5B to U.S. and U.K. authorities for similar sins, is escaping a penalty, as it alerted the EU to the Libor and Tibor cases.
- EU Competition Commissioner Joaquin Almunia is due to announce the penalties at a press conference at 5:30 ET.
4:40 AMTorrid growth in U.K. services sector eases a little
- U.K. services PMI dropped to 60 in November from 62.5 in October and missed expectations of 62.
- Activity and new business continued to rise at "historically sharp rates," says Markit.
- Service providers added extra staff, while backlogs rose steadily.
- The PMI surveys for services, manufacturing and construction indicate that GDP is on track to grow more than 1% in Q4.
- However, one note of caution is that inflation reached the highest rate since May 2011 as service providers reacted to increasing costs.
- The FTSE 100 is +0.1% and the pound is -0.25% at $1.635. (PR)
- ETFs: FXB, EWU, GBB, EWUS, FKU, DXPS, DBUK
4:19 AMEurozone business activity loses momentum
- Eurozone services PMI slipped to 51.2 in November (flash 50.9) from 51.6 in October.
- Composite PMI fell to 51.7 (flash 51.5) from 51.9.
- Activity in Germany, Ireland and Spain grew, while it contracted in Italy and France.
- The eurozone recovery "lost some momentum in November," says Markit. "It's clearly a concern that the rate of growth remains so fragile."
- The survey indicates that the bloc's economy is on course to grow by just 0.2% in Q4.
- The euro is -0.1% at $1.3578. (PR)
- ETFs: FXE, VGK, EUO, FEZ, ERO, EU, EPV, IEV, EZU, DRR, HEDJ, FEU, EUFX, UPV, ULE, FEP, ADRU, URR, FEEU, DBEU, FIEU
4:11 AMGrowth in German business activity speeds up
- German services PMI jumped to a ten-month high of 55.7 (flash 54.5) in November from 52.9 in October.
- Composite PMI rose to a 2 1/2 year peak of 55.4 (flash 54.3) from 53.2.
- New business grew at the fastest pace since June 2011.
- "Services joined manufacturing in recording robust output growth and a faster upturn than one month earlier," says Markit. "Overall, private sector companies saw the steepest output expansion since mid-2011, while improving new-order flows provide a signal that the German economy is set to finish the year in positive fashion."
- The DAX is +0.3% while the euro is flat at $1.3586. (PR)
- ETFs: EWG, BUND, GERJ, BUNL, FGM, BUNT, DBGR, GGOV, DXGE
4:02 AMFrance in danger of return to recession
- France's services PMI dropped to 48 in November (flash 48.8) from 50.9 in October.
- The composite index fell to 48 (flash 48.5) from 50.5.
- The figures add to data that show manufacturing PMI declined to 48.4 last month.
- "Weak demand and confidence again weighed on new business inflows, while jobs were cut at the sharpest rate in seven months," says Markit. "The latest data highlight the risk of a further contraction in GDP during the fourth quarter, which would tip France back into recession."
- The CAC 40 (EWQ) is +0.2% and the euro is -0.1% at $1.3581. (PR)
3:52 AMItaly services activity dives
- Italy's services PMI unexpectedly contracted in November, tumbling to 47.2 from 50.5 in October and badly missing consensus of 50.2.
- The drop in factory in activity comes even as manufacturing PMI rose to a 2 1/2 year high of 51.4 last month.
- "November's renewed decline in service-sector activity raises serious doubts over whether Italy will exit from recession in the final quarter, especially given the degree to which activity fell and how new business inflows have also shown considerable weakness," says Markit.
- The FTSE Mib is +0.1%, while the euro is -0.05% at $1.3582. (PR)
- ETFs: EWI, ITLY, ITLT
3:41 AMIrish recovery process continues with €1.84B sale of bank stake
- The Irish government is exiting Bank of Ireland, which it bailed out during the financial crisis, by selling €1.3B of preferred shares to investors and another €537M to the bank.
- BOI is offering €580M worth of stock to help finance its purchase of the government's holding.
- Overall, the government expects to have recovered €5.9B from its rescue of BOI, representing a handy profit on the €4.8B that was provided.
- "This transaction will build further confidence in Ireland’s recovery and will strengthen Ireland's return to normal market funding," said Finance Minister Michael Noonan.
- ETF: EIRL
3:26 AMSpain's services sector returns to growth
- Spanish services PMI surprisingly moved into growth territory in November, rising to 51.5 from 49.6 in October and topping consensus that was also 49.6.
- The increase comes after a fall in unemployment last month but is also in contrast to an unexpected contraction in manufacturing PMI.
- The IBEX 35 (EWP) is +0.2%, while the euro is -0.05% at $1.3582. (PR)
3:18 AMJapan prepares "$181B" stimulus package
- Japan has reportedly been putting together an ¥18.6T ($181B) stimulus package to offset the impact of a rise in sales tax that is due to take place in April.
- The government will use tax revenue to finance the spending and forgo raising new debt.
- The proposals include ¥5.5T in fiscal spending, local-government investments, and ¥10T in loans to small- and medium-sized businesses.
- The package will add to a ¥20T yen plan that Prime Minister Shinzo Abe unveiled earlier this year. The headline figure of the latest program may include spending that's already been committed - as is often the case in Japan - so actual new investment may be smaller.
- Meanwhile, Bank of Japan board member Takehiro Sato said that he doesn't see the need to increase the BOJ's monetary stimulus to counter the effect of the VAT hike, and that loosening policy further may even be harmful.
- Sato's comments come amid speculation that the bank could boost its stimulus next year, which helped the Nikkei close at a six-year high yesterday.
- Today, though, the index is -2.15%, while the yen is flat at 102.55.
2:52 AMIllinois legislature OKs pension overhaul
- Illinois' Senate and House have approved a revamp of the state's retirement system, one of the most underfunded in the country with a gap of almost $100B.
- The plan is designed to fully fund Illinois' five pension systems by 2044 by saving an estimated $160B over 30 years. Workers and retirees face cuts, the retirement age for younger staff will rise, and the state will increase its payments by $60-70B.
- Unions are strongly opposed to the proposals and intend to go to court to stop them from being enacted. One argument is that the overhaul violates the state constitution by lowering pension benefits.
- Still, the Illinois revamp could provide a template for municipalities that are grappling with similar problems. Chicago, which has a pension shortfall of $19.5B, has been watching the situation with interest. (Previous)
- ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, MLN, HYMB, BABZ, XMPT, BABS, SHM, SUB, PRB, SMB, PVI, SMMU, MUAF, MUAE, MUAD, MUAG, VRD, MUAC, GMMB, RVNU
1:57 AMGrowth in China's services sector slows
- China's HSBC services PMI slipped to 52.5 in November from 52.6 in October.
- Composite PMI increased to an eight-month high of 52.3 from 51.8.
- Employment in the services sector expanded for the third consecutive month.
- "However, the moderation of new business and prices-charged growth implies that the underlying growth momentum started to soften," HSBC says. (PR)
- The official services PMI dropped to 56 from 56.3.
- ETFs: FXI, PGJ, GXC, FXP, HAO, CYB, YINN, CNY, TAO, CHIQ, CHIX, MCHI, YANG, PEK, CQQQ, XPP, QQQC, DSUM, YAO, CHXX, ASHR, CHII, CHXF, FXCH, ECNS, CHIE, YXI, CHIM, KWEB, KFYP, TCHI, FCA, CHLC, CHNA