Wednesday, December 11, 2013
8:15 PMBDCs aren't our peers, says American Capital
- Don't call us a BDC, says American Capital (ACAS) CEO Malon Wilkus, presenting at the JPMorgan SMId Cap Conference. BDCs, says Wilkus - there are 63 of them out there, about half public - are finance companies with virtually 100% of their assets in third-party companies. Only about 15% of American Capital's assets are in loans to companies not under its control.
- Webcast and presentation slides
- Presentation transcript
- "We invest in the equities of the middle-market companies; virtually no other BDC has invested in that way. So those aren't really our peers, but people do perceive them as our peers, and they are paying out a sizable dividend ... we don't pay any dividend at all."
- So who do we compare you to, asks an analyst in attendance. "We look most like a diversified growth company, diversified holding company," says Wilkus. Think Roper Industries (ROP). Think Danaher (DHR) - much bigger, but in structure and operations, very similar.
- "We don't call [our investments] subsidiary companies ... we have to call it a portfolio company, but really they're operating subsidiaries of ours. We control them. As I showed, we have an operations team with 10 former Presidents and CEOs and they're constantly working in those companies to help grow them and develop them."
7:12 PMYahoo faces uproar over partial e-mail outage
- On Facebook, Twitter, and elsewhere, complaints are piling up about a two-day service outage affecting millions of Yahoo Mail (YHOO) users. Though Yahoo previously stated a fix was expected to arrive by 4:30PM ET, the issues are continuing. Moreover, a dearth of communication from Yahoo for much of the outage has made a bad PR situation worse.
- The downtime won't help Yahoo's efforts to halt Mail's share losses to Gmail. It comes two months after Yahoo provided Mail with a big revamp that included the introduction of Gmail-like conversation threads and 1TB of free storage.
6:57 PMCisco roundup: Citi downgrade, set-tops, UCS servers
- Citi's Ehud Gelblum, who just started coverage on Cisco (CSCO) with a Sell, says he's concerned about core routing competition from Alcatel-Lucent, as well as potential data center switching share loss as companies embrace non-proprietary solutions.
- Tough core/edge routing competition from Alcatel and Juniper likely contributed to 13% Y/Y service provider order drop Cisco reported last month. But the company has been maintaining its dominant position in data center switching. IDC thinks Cisco had a 62.3% share of the Ethernet switch market in Q3, and a 65.9% share in the growing 10-gig segment.
- Cisco is counting on its new Insieme platform - praised for its performance and rich feature set, criticized for its proprietary nature - to head off competition from software-defined networking platforms that enable the use of the "open" hardware Gelblum is concerned about.
- Reuters notes Cisco is facing growing pressure to unload its set-top unit, which saw a 20% Y/Y sales drop in the Oct. quarter. Cisco partly blames the drop on an IBM-like decision to shun low-margin deals, and says a stronger focus on cloud-based pay-TV video solutions will help right the ship.
- Cisco is set to roll out next-gen UCS servers that will be optimized for analytics applications and carrier cloud services, among other things.
- The UCS line, differentiated by its built-in networking gear and strong virtualization performance, has been a bright spot for Cisco. UCS sales rose 44% Y/Y in the Oct. quarter, and IDC estimates Cisco's server share is up to 5%.
6:46 PMAir Canada to buy Boeing single-aisle jets in $6.5B deal
- Air Canada says it will buy 61 new Boeing (BA) 737 Max aircraft to replace its aging fleet of Airbus single-aisle jets, a significant win for Boeing from a customer that has long operated Airbus planes.
- The deal is valued at $6.5B at list prices, before discounts customary in such large deals; in addition to the commitment for the 61 jets, Air Canada also holds options and rights to buy another 48.
- Air Canada secures early delivery positions from Boeing, with deliveries expected to begin in 2017, with the arrival of its first two jets; the 737 Max is scheduled to first enter service with Southwest Airlines earlier that year.
6:34 PMCN Rail's Mongeau: Moving dangerous goods by rail "integral to our way of life"
- Canadian National Railway (CNI) chief Claude Mongeau says he appreciates concerns about moving dangerous goods by rail through urban areas in the wake of last summer's Lac-Mégantic disaster, but he says it would be impractical to reroute the shipments because many of the goods are integral to the way we live.
- While much of the focus has been on the movement of crude oil, even more dangerous and flammable goods are moved every day - styrene to make shoes and rubber, polypropylenes that make eyeglasses and other plastics, chlorine to purify water, propane for home use.
- Despite a string of recent derailments, the CEO says CNI has one of the best safety records among large North American rails.
- "The dangerous goods we move are worth $25B... and we move them very safely," Mongeau says.
6:31 PMColdwate Creek -10.8% AH after Q3 report; plans further store closures
- Coldwater Creek (CWTR) shares reverse gains and are now down 10.8% AH following a mixed Q3 in which the retailer continued its struggle in a "highly competitive" retail environment.
- The company closed 1 retail store, 1 factory store, and 1 spa in Q3, ending with 343, 36, and 7 respectively. Coldwater expects to close up to 10 more retail stores by the end of the fiscal year.
- CEO Jill Dean observed: "In response to the disappointing performance of our fall merchandise, we took swift action early in the third quarter to adjust our holiday assortment, and we experienced a meaningful improvement in full-priced selling as holiday product flowed into stores starting in mid-October. During the quarter we also implemented a cost reduction program, which is expected to generate $20-$25 million in expense savings next year."
- As of Nov. 2, cash totaled $6.8M, down from $31.3M in Oct. 2012, while inventory decreased 5.6% Y/Y (and 1.6% Y/Y per square foot) to $152.7M. The company burned $23M in operating cash in the past 3 quarters.
6:22 PMWabtec expands share repurchase program by $50M
- Wabtec's (WAB) board authorizes a $50M expansion to the company's share buyback program to $200M.
- The program had $45M remaining under the previous authorization, with Wabtec having repurchased $38M in shares in 2013.
- If executed, the expansion would reduces shares outstanding by 0.8% as of today's closing price.
6:18 PMComputer Sciences receives Wells notice from SEC
- Computer Sciences (CSC), which has already seen certain non-U.S. employees and ex-employees receive Wells notices from the SEC's enforcement division, discloses the company itself received a Wells notice today. (8-K)
- As CSC states, a Wells notice indicates the SEC plans a civil action or administrative proceeding against a company or individual, but doesn't amount to a formal accusation or wrongdoing. The company says it remains in talks with the SEC about a possible settlement.
- The SEC began probing CSC's accounting in 2011. The IT services firm paid $97.5M earlier this year to settle a shareholder suit related to its accounting issues.
6:05 PMOnline coupon/promo site Ebates reportedly planning 2014 IPO
- Bloomberg reports Ebates, a provider of digital coupons and other promotional services for online retailers (the company gets paid via affiliate fees), has hired JPMorgan (lead underwriter) and BofA/Merrill to take it public next year.
- The report comes shortly after many online retailers posted solid strong Black Friday and Cyber Monday sales. It also comes five months after Ebates rival RetailMeNot (SALE) delivered a strong IPO.
6:00 PMOn the hour
- S&P +0.08%.
- 10-yr -0.05%.
- Euro +0.01% vs. dollar.
- Crude +0.17% to $97.57.
- Gold flat% to $1251.9.
5:54 PMChevron unveils $39.8B 2014 capex program, ~$2B less than 2013
- Chevron (CVX) announces plans for a $39.8B capital spending budget next year, ~$2B less than expected for 2013, which it says was a relative peak year for such spending.
- The bulk of the new capex program is budgeted for upstream crude oil and natural gas exploration and product projects, with only 8% of spending planned for downstream businesses that manufacture, transport and sell gasoline and other fuel products.
- CVX also expects 2014 will represent a peak year for spending on its Australian liquefied natural gas projects as they move closer to starting production.
- Separately, former Utah governor and U.S. ambassador to China Jon Huntsman is named to the company's board.
5:53 PMOld Dominion, Brunswick replacing Arch Coal, Regis in S&P 400
- Old Dominion (ODFL) and Brunswick (BC) will be replacing Arch Coal (ACI) and Regis (RGS) in the S&P MidCap 400 following the Dec. 20 close. The latter companies will take the positions held by the former ones in the S&P SmallCap 600.
- Also: Teradyne, which is getting kicked out of the S&P 500 to make room for Facebook, will replace Scholastic (SCHL) in the S&P 400. Scholastic, in turn, will replace Lincoln Educational (LINC) in the S&P 600.
- ODFL +0.7% AH. ACI +0.9%.
5:47 PMProthena +5.3% AH, inks collaboration deal with Roche for Parkinson's antibodies
- Prothena (PRTA) shares jump 5.3% AH after the company enters a worldwide collaboration deal with Roche to develop and commercialize antibodies targeting alpha-synuclein, including PRX002, Prothena's Parkinson's treatment (expected to enter Phase I trials in 2014).
- In the U.S., the companies will share all development and commercialization costs, as well as profits, on a 70%-30% basis in favor of Roche. Outside America, Roche will have sole development responsibility and pay Prothena "up to double-digit royalties."
- Under the agreement, Prothena will receive an upfront payment of $45M, with the company eligible for additional payments of up to $380M contingent on development/sales milestones and up to $175M in ex-U.S. commercial milestone payments.
5:43 PMReuters: Morgan Stanley launches sale of U.S. oil terminal business
- Morgan Stanley (MS) has launched a formal effort to sell its controlling stake in U.S. oil terminal and transport business TransMontaigne (TLP), Reuters reports, in what appears to be its first definitive step toward disassembling its vast energy trading group.
- The TransMontaigne MLP includes 48 fuel terminals with nearly 24M barrels of storage capacity on the Gulf coast, in Florida, the Midwest and across the Southeast, including along the strategically important Colonial Pipeline that ships gasoline and diesel from the Gulf to the East Coast.
- Stanley's trading division accounts for ~60% of the MLP's revenues due to long-term contracts to use its terminals, and some of these contracts could be sold as part of the package.
- A number of potential buyers including Qatar, a Chinese oil major and Russia's Rosneft have been rumored in the past year, but this report says likely potential buyers include MLP subsidiaries of major refiners or midstream companies.
5:38 PMGenVec +23.6% AH after RAC approves initiation of CGF166 phase I study
- GenVec (GNVC) shares spike 23.6% AH after the company discloses the National Institutes of Health's Recombinant DNA Advisory Committee unanimously approved the initiation of a Phase I study of CGF166, an adenoviral vector engineered to express the atonal gene in patients with severe hearing loss. (8-K)
- CGF166 uses GenVec's adenovectors tech and is being developed by the Novartis Institute for Biomedical Institute under a research collaboration and license agreement with GenVec.
- An investigational new drug application is expected to be filed in Jan.
5:27 PMViolin Memory CTO leaves company
- Violin Memory (VMEM) CTO Jonathan Goldrick has left the company, Business Insider reports. A company spokesperson told the site, "I can confirm Jonathan has left on good terms. His responsibilities are being shared by Violin's Founder and CTO Jon Bennett and CTO Som Sikdar."
- Rumors have swirled that CEO Don Basile could leave soon as well. Violin's spokesperson: "that is a rumor, and we cannot comment on rumors."
- Given Violin's torrent of struggles (shares are down 61.4% since highs notched after its foray into the public markets at the end of Sept.), and Fusion-io's own problems, Nimble Storage (NMBL), which set its IPO price range at $16-$18, may get a chilly reception by investors.
5:24 PMFacebook, Alliance Data, Mohawk joining S&P 500
- Better a week late than never. Facebook (FB) will be joining the S&P 500 following the Dec. 20 close, and will also be added to the S&P 100. The social networking giant is replacing test equipment vendor Teradyne (TER).
- Alliance Data Systems (ADS) and Mohawk Industries (MHK) are also joining the S&P 500 following the Dec. 20 close. They're replacing Abercrombie & Fitch (ANF) and JDS Uniphase (JDSU).
- FB +3.9% AH. MHK +2.4%. ANF -0.8%. JDSU -0.6%.
5:11 PMIBM exec offers cautious macro view
- IT services demand "depends on what the economic climate is, and that has not been very encouraging," says Erich Clementi, head of IBM's Global Technology Services (GTS) unit. "Europe has shown signs of recovery. North America has been a little more uncertain.”
- The remarks comes less than two months after a big Q3 revenue miss blamed on a mixture of macro issues (particularly in emerging markets) and sales execution.
- Though IBM's services backlog was flat Q/Q and up 2% Y/Y in Q3 to $141B, GTS revenue fell 4% Y/Y and global business services revenue fell 5%. Together, the businesses accounted for 59% of IBM's revenue, and 51% of its op. profit.
5:11 PMIAMGOLD suspends dividend, shares -2.3% AH
- IAMGOLD (IAG) -2.3% AH after suspending future dividend payments until further notice.
- CEO Steve Letwin says the company is taking the action to preserve its balance shee and allows it to conserve cash and ensure the flexibility needed "to take advantage of opportunities when they arise."
- IAG joins the likes of Barrick Gold (ABX) and Kinross Gold (KGC), which cut or suspended their dividends earlier this year.
5:01 PMOn the hour
- S&P -0.02%.
- 10-yr -0.04%.
- Euro flat% vs. dollar.
- Crude +0.02% to $97.42.
- Gold -0.02% to $1251.7.
4:58 PMathenahealth stumbles on weak 2014 outlook
- athenahealth (ATHN) reaffirms its FY13 outlook and provides guidance for FY14.
- FY13: Adjusted EPS of $1.05-1.15 on revenue of $580-615M.
- FY14: Adjusted EPS of $0.98-1.10 on revenue of $725-755M.
- Consensus for 2014 is $1.38/share on sales of $765.28M.
- CFO Tim Adams is "very excited about growth opportunities and [is] pleased to present an ambitious financial plan for fiscal year 2014." (PR)
- Investors don't seem so excited: ATHN -12% AH.
4:51 PMSunEdison issues Q4 warning, shares -7.7% AH
- SunEdison (SUNE) now expects its chip wafer division, soon to be spun off in an IPO, to post Q4 revenue of $205M-$215M, down from prior guidance of $220M-$230M. The company blames "continued market weakness." Pricing and market share are said to be largely unchanged. (PR)
- SunEdison is also cutting its Q4 solar systems sales forecast to 209MW-234MW from a prior 234MW-264MW. However, the cut is simply due to a decision to keep more projects on the company's balance sheet. Completed systems guidance is unchanged at 209MW-234MW, and guidance for systems retained on SunEdison's balance sheet has been raised to 100MW-110MW from 75MW-80MW.
- Separately, SunEdison is announcing a debt refinancing effort. The company plans to sell $800M worth of convertible senior notes (half due in 2018, the other half in 2021), and use the proceeds to redeem $550M worth of 7.75% senior notes due 2019 and a $200M term loan sporting a 10.75% interest rate.
4:48 PMUNS Energy +30% AH after Fortis agrees to acquire for $60.25/share
- UNS Energy (UNS) agrees to be acquired by Fortis (FRTSF), Canada's largest investor-owned gas and electric distribution utility, for $60.25/share, a 31% premium to today's closing price.
- The $4.3B deal, which includes the assumption of ~$1.8B in debt, would provide additional capital and new resources for UNS subsidiaries including Tucson Electric Power and UniSource Energy Services.
- Fortis serves more than 2.4M through its electric utilities in five Canadian provinces and two Caribbean countries, a natural gas company in British Columbia, and a gas and electric utility in New York.
- UNS +30.2% AH.
4:48 PMExelis to spin-off military and government services business
- Exelis's (XLS) board authorizes a plan to spin-off its military and government services business, Exelis Mission Systems. Completion is expected in summer of 2014.
- Exelis will focus future investments on strengthening its Critical Networks, ISR & Analytics, Electronic Warfare, and Aerostructures ops.
- Exelis is expected to generate $3.4B in revenue in 2013 after a pro forma adjustment for the spin-off, with a "meaningful appreciation in its growth and operating margin profile" as well as diversification of non-U.S. defense customers to 50% from 30% currently.
- Exelis Mission Systems' pro forma 2013 revenue is estimated at $1.5B. Division President Kennett Hunzeker will lead the spun-off entity.
- Conference call at 8:30am ET tomorrow
4:33 PMToro Investment ups NQ Mobile stake
- The chief investment officer of Toro Investment Partners discloses his firm has upped its NQ Mobile (NQ -4.6%) stake since Nov. 12. Toro, which has written bullish SA columns about NQ more than once, disclosed a 5% stake in the Chinese mobile software vendor on that day.
- Though closing sharply lower on a down for equities, NQ managed to recoup a decent chunk of the morning losses it saw after SA contributor Robert Zangrill questioned the company's financials and accused it of "round tripping" revenue.
4:27 PMVera Bradley -3.1% AH, now halted; issues less-than-flowery Q4 guidance
- New Vera Bradley (VRA) CEO Robert Wallstrom is having a tough go after the women's apparel maker beat expectations in Q3 but issued dour Q4 guidance. He noted: "based on recent trends, we are lowering our fourth quarter outlook ... Although we face a persistently challenging retail environment, we are working diligently to make improvements in our organization that will enable us to stabilize the business and generate more consistent sales and earnings growth over the long term."
- Direct segment revenue grew 7.1% to $68.9M, driven by an 18% jump in sales at company stores (with 20 full-price and 4 outlet locations opened in the past year). Indirect revenue plunged 17.3% Y/Y to $61.2M due to "cautious ordering." E-commerce revenue declined 7.8%.
- Comps declined 6.5% Y/Y "due to lower traffic and underperformance of the product offering."
- Gross margin fell to 55.3% due to sales of lower-margin products and increased promotional activity, a 270 bp decline from Q3 2012.
- Management expects Q4 revenue of $145M-$150M (-9.3% Y/Y at the midpoint), a far cry from analyst expectations of $159.1M, and EPS of $0.44-$0.47, vs. analyst expectations of $0.56. Gross margin is expected to decline 340-380 bp Y/Y.
- Shares are halted until 4:35pm ET, but 24.6K shares went off AH down 3.1% from the close.
- Conference call at 4:30pm ET, PR
4:23 PMImmunoCellular cut in half as ICT-107 misses primary OS endpoint
- ImmunoCellular (IMUC) collapses 50% AH.
- The company is out with results from a Phase 2 study of ICT-107 in newly diagnosed glioblastoma multiforme.
- ICT-107 showed statistically significant PFS superiority over placebo. K-M curves (entire sample of 124 patients): Favors ICT-107; HR of 0.56; p=0.014; median PFS increase was two months. K-M curves (per-protocol population): Favors ICT-107; HR of 0.53; p=0.0074; median PFS increase was three months.
- OS K-M curves fail to hit statistical significance. OS was the primary endpoint. Summary (intent-to-treat): HR of 0.87; p=0.58. Summary (per-protocol): HR of 0.79; p=0.40.
- For more, see here.
4:22 PMMFA Financial cuts dividend by 9%
- MFA Financial cuts its quarterly dividend by $0.02 to $0.20 per share. It will be paid on Jan. 31 to shareholders of record on Dec. 31. Q3 core EPS was $0.18. The annualized yield is 11.2%.
- The board approves a 6M share increase to the buyback authorization. There are 850K shares left in the previous 4M share plan.
- Shares -0.4% AH
- Press release
4:20 PMStocks slump after budget deal sparks taper fears, S&P falls below 1800
- Stocks ended with steep losses, with the S&P 500 and Nasdaq posting their biggest drops in nearly five weeks, as investors find it more likely the Fed will decide to taper its bond buying policy next week following the congressional budget deal.
- With big gains this year, taper worries provide as good a reason as any to take profits, and low trading volumes caused volatility to be somewhat exacerbated.
- The Russell 2000 continues to pace the retreat; the small-cap index is lower by 3.6% so far this month, while the S&P 500 extends its December decline to 1.3%.
- Industrials were whacked after Joy Global missed estimates and provided weak guidance, and home builders also took a beating.
- Treasurys sold off, pushing the yield on the 10-year Treasury note up to 2.844%; crude oil futures gave back most of yesterday's gains, settling at $97.44 after U.S. gasoline inventories jumped far more than expected.
4:17 PMDish lower; investment firm reportedly buying LightSquared spectrum
- The WSJ reports distressed investment firm Centerbridge Partners has reached a tentative deal to buy bankrupt LightSquared's spectrum, GPS interference concerns and all, for $3.3B. Centerbridge will reportedly assume $1.7B worth of liabilities as part of the deal.
- Dish (DISH -1.2%) had submitted a $2.2B bid for LightSquared, with hopes of growing its high-frequency spectrum portfolio (and thus its investment/dealmaking flexibility) as it continues evaluating its 4G network options. Charlie Ergen has stated a merger with T-Mobile USA is possible, and Sprint has left the door open to a network-sharing deal.
4:16 PMGood timing: NorthStar launches secondary offering
- NorthStar Realty Finance (NRF) takes advantage of today's 20% moonshot in the stock, launching a 50M share secondary. Part of the proceeds will fund the cash portion of an approximately $400M portfolio of manufactured housing communities under contract. The rest will be for other potential investments.
- Shares -4.2% AH
- Press release
4:08 PMBNSF's Ice to take CEO reins in January| 2 Comments
4:02 PMAt the close
- Dow -0.81% to 15843. S&P -1.12% to 1782. Nasdaq -1.47% to 4001.
- Treasurys: 30-year -0.51%. 10-yr -0.26%. 5-yr -0.17%.
- Commodities: Crude -1.14% to $97.39. Gold -0.69% to $1252.4.
- Currencies: Euro +0.18% vs. dollar. Yen -0.41%. Pound +0.41%.
4:00 PMHilton IPO price reported to be $20
- The buzz on the street is that Hilton Worldwide (HLT) will price its IPO at $20 per share.
- The expected range for the hotel operator's public launch was $18 to $21.
- The IPO is expected to be the 2nd largest of the year amid reports of hot demand.
- At Blackstone (BX) it will be the cause for the popping of corks. The Hilton IPO is expected to reap paper profits of $8B to mark the 2nd biggest P-E payday of all-time.
4:00 PMJuniper software/security division chief resigns
- Bob Muglia, head of Juniper's (JNPR -1.3%) Software Solutions Division (SSD), has resigned. No replacement has yet been named. (8-K)
- SSD. whose sales mostly revolve around Juniper's slumping security hardware/software unit, accounted for 21% of the company's Q3 revenue. Sales fell 15% Y/Y to $246.3M, with security revenue dropping 18% to $144.3M and routing software revenue dropping 49% to $14.6M (services revenue rose 2%).
- Muglia's departure could be tied to Juniper's recent CEO change. It comes as Juniper makes a big push into the software-defined networking (SDN) controller space, via its open-source OpenContrail controller.
3:58 PMEPA official says exceeding 10% ethanol in fuel isn't feasible
- Shares of ethanol makers slide as an EPA official tells a congressional panel it’s not feasible for gasoline refiners to use as much ethanol next year as had been mandated, which is why the agency proposed easing the requirement.
- Producers of ethanol, biodiesel and advanced biofuels have criticized the EPA’s proposal, saying it undercuts a growing, domestic industry.
- ADM -1.5%, BIOF -3%, GPRE -3.8%, REGI -4.8%, SYNM -5.7%, PEIX -9.6%, KIOR -12.8%.
3:51 PMBarron's: Forestar trades at a big discount to NAV
- The 20% dip in Forestar (FOR +1.7%) shares since mid-October looks like a buying opportunity, Barron's writes, as FOR sells lots and realizes income from its oil and gas properties over the next year.
- FOR, which owns 132K acres of real estate in 10 states including in attractive markets in Texas, is on track to sell ~1,900 residential lots this year, more than double last year's 926 lots, and production in its burgeoning oil and gas unit is up 170% Y/Y.
- Proceeds from a recent equity offering, which raised $145M, while dilutive, will further develop FOR's real estate and energy properties in 2014, which could lead to a higher NAV over time.
3:50 PMGoldman taking share in equity issuance
- "The most notable positives to us were permission to continue to trade sovereign bonds for proprietary purposes, permission to invest in non-covered entities such as wholly owned subsidiaries, joint ventures, and acquisition vehicles such as business development companies, and the ability to hedge risk related to individual as well as aggregated positions of the banking entity," opines Susquehanna's Doug Sipkin about the Volcker rule. He also notes the timeline - the rules become effective on April 1 and conformance starts on July 21, 2015.
- Goldman Sachs (GS -1.3%) and Morgan Stanley (MS -2.1%) are most impacted by the rule, says Sipkin, but Goldman - thanks to greater capital efficiency, wider bid-ask spreads, and best-in-breed status in IB - should be just fine.
- Sipkin expects Q4 results to begin showing this, helped by a "torrid" pace of equity issuance. Goldman's share of equity issues YTD is 11.8% vs. 8% a year ago. "The equity business in Q4 is likely seeing its best quarter since prior to the credit crisis."
- Previous: Mike Mayo says Morgan Stanley is more wealth manager than trading shop now, and should cruise through the Volcker rule.
3:47 PMHome Depot: We have same-day delivery too
- Home Depot (HD +0.4%) tells investors and analysts attending a conference that it's spending $300M in supply chain and tech improvements aimed at boosting online sales.
- Another goal of the program is to give the company some limited options for same-day delivery to customers and professional contractors.
- An exec with Home Depot thinks 100K items could be in the pool of products available for same-day delivery.
- Sensibly, the company won't be using drones to deliver buzz saws and dry wall.
- Earlier: Amazon launches same-day delivery in San Fran.
- Home Depot Investor and Analyst Conference webcast
3:40 PMKeystone seen as bigger for oil sands producers than builder TransCanada
- The U.S. decision on the Keystone XL pipeline is becoming more critical for oil sands producers such as Canadian Natural Resources (CNQ) and Suncor (SU) than pipeline builder TransCanada (TRP); for producers, Keystone is the earliest export line scheduled to ease bottlenecks which have helped push Canadian heavy crude $27/bbl below the U.S. benchmark.
- CNQ, with 120K bbl/day of capacity booked on Keystone XL, may gain 5% while other producers such as SU, Cenovus (CVE), Husky Energy (HUSKF) and Imperial Oil (IMO) may rise if the State Department’s review is positive, Cormark predicts, while a negative report could spur a 3% drop for CNQ.
- On the other hand, Keystone XL is only worth C$1.50 to TRP shares whether or not the project is approved, as the company has invested in other projects, according to some analysts.
- John Podesta’s return to the White House places a Keystone opponent within Pres. Obama's inner circle, although he supposedly is recusing himself from issues surrounding the controversial project.
3:38 PMPlenty of room for mortgage insurers to grow market share
- Much has been made of the FHA pulling back from the mortgage insurance market, leaving opportunity for the private MI providers like Radian (RDN -1.9%), MGIC Investment (MTG -3.2%), and Genworth (GNW -0.9%), along with newer entrants like Essent Group (ESNT -1.2%) and NMI Holdings (NMIH -1.8%).
- Presenting at the Goldman conference today, Radian reminds (slide 13 of presentation) private MI market share spent most of the pre-bust decade at 70%-80% before falling to just just 20% in 2009 and 2010. It's risen since, but only reached 51% in Q3. "And the FHA in fact continues to make statements about pulling back," says CEO Sanford Ibrahim.
- Conference transcript
3:33 PMRuby Tuesday lower amid confusion over Goldman role
- Ruby Tuesday (RT -6.2%) goes to the pains to release a statement making it clear it did not originate the rumor that Goldman Sachs has been retained to help the restaurant operator explore strategic options.
- Shares are down sharply off the development, although some analysts see the denial as a non-denial. After all, execs just said they didn't leak the news, they didn't confirm that the Goldman boys weren't in the house.
3:25 PMBloomberg: Fischer has accepted Vice Chair role at Fed
- Former Bank of Israel Governor Stanley Fischer has been offered the #2 spot at the Federal Reserve by the White House, according to Bloomberg, which also reports a source as saying he's accepted.
- Prior to taking over at the Bank of Israel in 2005, Fischer had stints as a professor at MIT (where Bernanke and Draghi were students), the World Bank, the IMF, and as Vice Chairman at Citigroup. He was born in what is now Zambia and holds both U.S. and Israeli citizenship.
- From a panel discussion on Nov. 19: "Without the Fed, we’d have had a much deeper recession ... Without the extraordinary things that it’s done, the economy would be in much worse shape today and we need to remember that.”
- On QE: “Precisely how to get out of it, at what speed to get out of it, is a much harder thing to measure and to calculate."
3:25 PMNew Twitter-Comcast 'SeeIt' button draws interest of media players
- An initiative started last month by Comcast (CMCSA -1%) to utilize a "See It" button on Twitter to help users watch a show or buy tickets via its Fandago property appears to be catching on.
- The service could see a major expansion as early as Q1 that allows Twitter users who tweet "SEEIt" to have an automatic button embedded in their message that can send users directly to a show online or through video on demand. In some cases, the SEEIt button will act as a remote control for users' set top boxes.
- The SEEIt service is seen as a way to boost ratings metrics and potentially advertising rates for shows which light up social media.
- Signing up for the Twitter-Comcast service: Disney (DIS), Discovery Communications (DISCA), Fox Networks (FOXA), Cablevision (CVC), Charter (CHTR), Time Warner Cable (TWC).
3:08 PMBroad slide in equity REIT sector
- The equity REITs are particularly weak today as the 10-year Treasury yield heads higher by 4 basis points to 2.85%. Senior Housing (SNH -2.3%), Omega Healthcare (OHI -2.6%), American Realty Capital (ARCP -1.7%), Stag Industrial (STAG -2%), Equity Residential (EQR -1.4%).
- Retail and shopping center/mall REITs also have the weak retail traffic numbers to mull over: Realty Income (O -1.4%), National Retail (NNN -2.8%), Simon Property (SPG -1.4%), General Growth (GGP -2.6%), Kimco (KIM -2.6%), Brixmor (BRX -0.8%).
3:08 PMDeutsche Bank talks utilities, adjusts targets
- Deutsche Bank is out with some commentary on the utilities going into year-end.
- Analyst Jonathan Arnold says that with the group "set to finish the year last among sectors for the second straight year, it is surely tempting to argue for a rebound in 2014."
- Nevertheless, Arnold thinks that "with the Fed exit still [upcoming] and a continuing overhang from challenging power business fundamentals, investors have plenty of reason to proceed with caution."
- Rundown: ETR cut to Hold from Buy, price target cut to $64 from $70; DUK reiterated at Buy, price target hiked to $76 from $74; PCG reiterated at Buy, price target cut to $46 from $48.50; CPN reiterated at Buy, price target cut to $23 from $24; AEP reiterated at Hold, price target raised to $50 from $48; D reiterated at Hold, price target raised to $66 from $64; DTE reiterated at Hold, price target lifted to $72 from $71; NU reiterated at Hold, price target lifted slightly.
3:00 PMOn the hour
- Dow -0.53%.
- 10-yr -0.23%.
- Euro +0.21% vs. dollar.
- Crude -1.11% to $97.42.
- Gold -0.64% to $1253.
2:59 PMIndustrials and homebuilders lead market decline
- The two worst-performing sectors on a down day are industrials (XLI -1.4%) and homebuilders (XHB -1.5%), (ITB -1.9%).
- Industrials are taking a hit after Joy Global (JOY -6.3%) missed earnings estimates and provided disappointing guidance. "With a limited number of projects that can book in time to help 2014, we continue to see both the need and opportunity to lower the cost base in our business," says the company. Caterpillar (CAT -1.2%).
- Homebuilders continue to digest Toll Brothers' (TOL -1.8%) "leveling in demand" comments from yesterday's earnings results - in the 19 weeks since August 1, business has been flat vs. last year, and in the first 5 weeks of FQ1 (beginning Nov. 1) business has also been flat from 2012 (though Hurricane Sandy makes a tricky comparison).
- CEO Doug Yearley on the earnings call (transcript): "There's just not a lot of action [this time of year]. We still feel like pent-up demand is building, demographics are on our side, affordability is in place, and we are cautiously optimistic about the spring season, which begins the end of January."
- Lennar (LEN -2.3%), D. R. Horton (DHI -3%), KB Home (KBH -3.1%), Hovnanian (HOV -3.3%)
2:59 PMFBR starts Cameco at Market Perform amid favorable long-term outlook
- Cameco (CCJ -1%) is initiated with a Market Perform rating and $24 target price at FBR Capital, driven by CCJ's leading position in the nuclear energy industry, solid production growth profile, high-quality asset base and a strong long-term contracting book.
- FBR has a favorable longer-term outlook for the uranium industry, given the 71 nuclear reactors under construction, which alone reflect ~23% of the current annual demand.
- In the near term, however, the industry remains plagued by an oversupply situation, idled nuclear reactors in Japan reducing demand and building up utility stockpiles, all of which could keep pricing below economic return levels and lead to industry-wide production cuts.
- ETFs: NLR, NUCL
2:53 PMDunkin' Donuts tries new concepts as it expands
- Dunkin' Donuts (DNKN) continues to explore new real estate concepts as it stays on a track to double its store count over 20 years.
- A new restaurant in Virginia will have a "drive-thru" window. Other strategies include free-standing restaurants, end-caps, and in-line sites.
- The brand appears to be strong as it heads into new territories in the West. Experian reports 11% of all respondents say they go to the donut and coffee chain.
2:47 PMDeutsche downplays alleged "price war" for Gilead, AbbVie HCV drugs
- "The biggest U.S. drug benefits manager plans to start a price war over a new generation of hepatitis C treatments that will cost $1,000 a pill, in a bid to drive down spending on the medicines," Bloomberg said Tuesday, tying comments made by Express Scripts (ESRX -0.5%) CMO Steven Miller to pricing for Gilead's (GILD -2.1%) sofosbuvir and upcoming HCV treatments from AbbVie (ABBV +1.2%).
- Deutsche's Robyn Karnauskas thinks the comments might have been taken out of context given that "the CMO did not mention GILD or any other company/drug."
- Other takeaways from Deutsche's conversation with ESRX: The company says it "spoke about various formulary changes and [while] HCV might be one of them, this is not something new [as it] works on formularies everyday."
- Also: ESRX says it does not "comment on drug/companies specifically. For Gilead drug, the internal committee still has to vote."
2:43 PMFinisar upsizes, prices convertible debt offering; shares edge higher
- Finisar (FNSR +0.7%) has upsized its offering of convertible senior notes due 2033 to $225M from a prior $200M. Underwriters now have a $33.75M overallotment option, up from a prior $30M. (PR)
- The notes carry an interest rate of just 0.5%, and have an initial conversion price of $30.18. That represents a 39% premium from current levels. Finisar can't redeem the notes before Dec. 22, 2018.
2:42 PMGold producers' balance sheets would weaken below 1250/oz., TD says
- Gold producers' balance sheets appear relatively stable with gold prices at ~$1,250/oz. but would weaken further on lower prices, TD Securities says in an analysis of miners' sensitivity to changes in gold prices.
- At $1,100/oz, companies with the highest forecast ratio of net debt to total capitalization include Barrick Gold (ABX -2.5%), Newmont Mining (NEM -1.9%), Agnico Eagle Mines (AEM -2.5%) and Detour Gold (DRGDF +3.3%).
- TD's top picks include Eldorado (EGO -3.1%), Goldcorp (GG -1.5%), B2Gold (BTG -3.7%), Primero Mining (PPP -0.6%) and Silver Wheaton (SLW -2%).
- ETFs: GDX, GDXJ, NUGT, DUST, GLDX, GGGG, RING, PSAU, JNUG, JDST.
2:30 PMVeeco discloses CFO's retirement, shares only down slightly
- Veeco (VECO -0.3%) CFO David Glass, 54, will be retiring in six months or less. The LED/solar equipment maker has hired a recruiting firm to help find a replacement. (8-K)
- Glass has been Veeco's CFO for more than three years. His retirement follows a lengthy accounting review that ended last month with the filing of Veeco's 2012 10-K and multiple 10-Qs.
2:25 PMPhilip Morris makes a move in Russia
- Philip Morris International (PM +0.4%) and Japan's Tobacco International announce that they will each acquire stakes in Russian cigarette distributor Megapolis.
- Megapolis claims a 70% market share in the Russian tobacco market. The nation is more fertile ground for tobacco companies with 40% of the adult population identifying themselves as smokers.
- Both deals are expected to close in 2014 and involve investments of around $750M.
2:19 PMWorthington to close Baltimore steel plant, shares -2.5%
- Worthington (WOR -2.5%) discloses that its Baltimore steel facility will close by the end of its 2014 fiscal year ending May 31, concluding it can more efficiently service its Mid-Atlantic customers from other company facilities and partners.
- With the consolidation of the steel industry, many of the mills that previously supplied the Baltimore plant have closed, negatively impacting the supply chain there, WOR says.
2:18 PMDolby higher after announcing deals with Fox, Anchor Bay
- 20th Century Fox and Anchor Bay Entertainment plan to have digital content made available via the UltraViolet DRM platform support Dolby Digital Plus (DLB +3.8%) audio. (PR)
- UltraViolet, which allows purchased movies/TV shows ti be downloaded and streamed onto multiple devices, has seen a mixed reception: Disney, Apple, and certain other firms have withheld their support, and users have complained about DRM restrictions and confusing download procedures.
- But with most major studios supporting UltraViolet and offering digital copies with Blu-ray/DVD purchases, the platform could still generate healthy licensing sales for Dolby. Shares are making new 52-week highs, and are up 29% YTD.
2:12 PMCelgene, Agios extend cancer collaboration
- Agios Pharmaceuticals (AGIO -4.4%) and Celgene (CELG -2.2%) extend the exclusivity period tied to a strategic cancer metabolism collaboration agreement (originally struck in 2010) by a year.
- Terms call for CELG to retain its exclusive option on any drug candidates that come out of the AGIO cancer metabolism pipeline until April of 2015.
- CELG is making an upfront payment of $20M to AGIO. (PR)
2:00 PMOn the hour
- Dow -0.33%.
- 10-yr -0.18%.
- Euro +0.23% vs. dollar.
- Crude -1.25% to $97.28.
- Gold -0.33% to $1256.9.
1:55 PMNetflix outperforms following Citi PT hike
- Citi's Mark May, who started coverage on Netflix (NFLX +0.9%) with a Neutral in July, has raised his PT to $390 from $355, albeit while maintaining his original rating.
- May declares Netflix "the largest and most innovative company in the Internet TV sector," and is lifting his broadband penetration and Netflix subscriber forecasts for the streaming giant's international markets.
- He now expects Netflix's international sub base to post a 39% CAGR from 2013-2016, up from a prior 31%, and is modeling 15% growth for later years. May also continues to expect a $1/month U.S. price hike in 2016.
- Shares are trading higher on a down day for the Nasdaq. They're up 296% YTD.
1:53 PMPolish airline to receive nearly $33M from Boeing: Reuters| Comment!
1:46 PMGW Pharmaceuticals gets patent for use of cannabinoids in glioma| 1 Comment
1:40 PMPhotronics climbs on bottom-line beat in FQ4, management remarks on 2014
- Photronics (PLAB +12.2%) shares climb after a bottom-line beat in FQ4.
- The market may also be happy about positive comments by management looking forward. CFO Sean Smith said on the conference call that although the company is not issuing specific guidance, it "expect[s] to see substantial growth" in Q2 and Q3 of 2014.
- When asked about the quarter's strength in the mainstream ops and its sustainability, Smith observed that it is "a bright spot for us year-over-year," with a slight revenue increase in a market where units are "clearly decreasing. So we're picking up market share there. And our objective is to continue to do that."
1:37 PMRetail shopping traffic poor last week: ShopperTrak
- Brick-and-mortar retail sales fell 2.9% Y/Y for the week following Black Friday, according to ShopperTrak.
- The mark is less than impressive with the compact holiday shopping season supposed to make the comparable to last year a bit easier. Even worse, the consumer research firm reports a 21.6% drop in retail shopper traffic for the week of December 2 to December 8.
- Though post-Cyber Monday letdown, wintry weather, and an early Hanukkah played a factor in the poor retail sales week - forward momentum appears lacking with only two weeks left before Christmas.
- Related ETFs: XLP, XLY, VDC, XRT, VCR, RTH, PBJ, RETL, PEJ, IYK, FXG, IYC, SCC, FXD, RHS, UCC, PMR, UGE, RCD, PSL, PSCC, SZK, FDIS, FSTA, PSCD, PEZ.
1:28 PMJA Solar announces management shakeup, shares drop
- JA Solar (JASO -3.9%) COO Jian Xie is set to "assume broader leadership" within the company, and become its president. CTO Yong Liu will take over Xie's current job. (PR)
- In addition, CFO Min Cao is being reassigned to the role of chief strategy officer. Replacing him is Herman Zhao, who was JA's CFO from 2006-2008 and has since been the CFO of two other companies.
1:26 PMLow-volatility not as cheap as it used to be
- An MSCI study argues the low-volatility trade is a long way off from being a crowded one and says scalability isn't an issue, but the report, says Brendan Conway, didn't examine the market impact - i.e., the real world friction a large money manager might see moving in and out of positions.
- Then there's valuations - the study found low-volatility stocks had an average P-E ratio of 18.1x vs. 19.5x for all stocks from 1992-2012. But now the stocks making up the iShares MSCI USA Minimum Volatility ETF (USMV) trade at 18.5x earnings vs. the S&P 500 at 16.5x. Globally, it's similar, with the iShares MSCI All Country World Minimum Volatility ETF (ACWV) at 18.5x earnings vs. the MSCI ACWI ETF (ACWI) at just 16.5x.
- "[O]ver the past 10 years, the cheapness or 'valueness' of developed market low volatility stocks seems to have diminished. As of May 1, 2013, the earnings yield and B/P ratio data indicate that low volatility strategies have become more expensive than the market cap-weighted core indices," says Research Affiliates' FeiFei Li.
- Related: SPLV
1:20 PMGM wins case over medical benefits for old Delphi subsidiary
- General Motors (GM -0.3%) doesn't owe $450M in medical benefits for Delphi Automotive retirees which it contracted for before it filed for bankruptcy, according to a new ruling.
- Though GM won the case, the judge did hint that the automaker might have a "moral obligation" to make good on the payment.
1:05 PMChinaCache trades up: Wedge thinks 4G will drive profitability
- ChinaCache (CCIH +1.1%) shares trade up after Wedge Partners sees China Mobile's 4G launch will help the CDN services provider turn profitable in Q3 2014.
- Analyst Jun Zhang notes that CCIH "has become a top pick of multinational companies such as Apple, General Motors, Microsoft, etc. ... 70% of China Mobile's mobile CDN services were provided by ChinaCache."
- And gross margins, which have been pressured by intense price competition in the fight for market share between ChinaCache and China Netcenter through 2012, may reach stable ground as the 2 have reached a "fairly stable" duopoly structure that incentivizes developments in new technology rather than price competition.
- Wedge sees a minimum upside of 50% in shares, given that "ChinaCache should have at least 1.5 times sales valuation before it turns profitable." CCIH's much larger peer, Akamai, trades at 5.3x TTM Sales, although it has much better margins.
1:04 PMBond outflows surpass all-time record
- Investors have pulled $70.7B from bond mutual funds YTD, according to TrimTabs - that's more than the $62.5B pulled amid the serial Fed rate hikes and bond market rout of 1994.
- Since June alone, investors have pulled $164.5M out of bond funds, and three of the four largest monthly outflows ever have occurred this year.
- Broad fixed-income ETFs: AGG, BOND, BND, BSV, BIV, BLV, SCHZ, LAG, SAGG, ILTB, ISTB, GBF, GVI, MINC, FWDB, GIY
1:03 PMMicrosoft reportedly thinking of offering Windows Phone/RT for free
- Fresh off writing about a Nokia Android phone project, The Verge reports Microsoft (MSFT -1.6%) is thinking of eliminating licensing fees for Windows Phone and RT, and focusing on monetizing the platforms via ads and services subscriptions.
- In practice, such a move would make it cheaper to license Windows Phone than Android (GOOG), given Microsoft collects significant Android royalties from top OEMs.
- Though Windows Phone has achieved a double-digit smartphone unit share in certain European and emerging markets, IDC estimates the OS only had a 3.6% global share in Q3, thanks in large part to small U.S. and Chinese shares. With regards to the latter, it's worth noting Microsoft doesn't collect royalties on a large portion of Chinese Android shipments, particularly those form white-label OEMs.
- RT, meanwhile, has fallen flat since its 2012 launch. PC OEMs have largely abandoned the ARM-based (ARMH) OS, which may be merged with Windows Phone down the line, to focus on building Windows 8 and Android tablets.
1:02 PMHispanic networks make some noise
- The latest batch of TV viewing data for the week ending on December 1 reveals an interesting trend.
- Four of the eight highest rated shows on Rentrak's Stickiness Index are from Hispanic networks.
- Broadcasters Univision and Telemundo (CMCSA) both had two shows on the list.
- Related: Univision mulls over IPO.
1:00 PMOn the hour
- Dow -0.53%.
- 10-yr -0.07%.
- Euro +0.32% vs. dollar.
- Crude -0.77% to $97.75.
- Gold -0.31% to $1257.2.
12:52 PMTesoro -1.8% despite positive comments after analyst day
- Tesoro (TSO -1.8%) apparently didn't offer enough good news at yesterday's analyst day, as shares tumble despite the general perception from the meeting as "incrementally positive."
- The key messages in the meeting surrounded progress of the synergy capture from the Carson acquisition, continued margin improvement through feedstock and product optimization and driving additional logistics growth.
- TSO sees rail unloading capacity along the U.S. west coast for North Dakota crude oil growing to nearly 1M bbl/day through 2015; TSO's $100M rail-to-barge project in Washington is the largest of the offloading projects announced so far.
- Imperial Capital raises its TSO price target TSO to $63 from $57, and Howard Weil lifts its target to $66 from $62.
- Other refiners are lower too: VLO -1.3%, PSX -0.7%, MPC -1.8%, WNR -2.6%, HFC -1.6%, ALJ -1%, NTI -0.2%, DK -1.9%, CLMT -2.7%.
12:40 PMWBI Investments to enter ETF business
- WBI Investments is set to become a new player in ETFs, prepping a lineup of dividend bond and equity ETFs:
- WBI AbsoluteCore Shares Global SMID Growth ETF
- WBI AbsoluteCore Shares Global SMID Value ETF
- WBI AbsoluteCore Shares Global SMID Yield ETF
- WBI AbsoluteCore Shares Global SMID Select ETF
- WBI AbsoluteCore Shares Global Large Growth ETF
- WBI AbsoluteCore Shares Global Large Value ETF
- WBI AbsoluteCore Shares Global Large Yield ETF
- WBI AbsoluteCore Shares Global Large Select ETF
- WBI AbsoluteCore Shares Tactical Bond ETF
- WBI AbsoluteCore Shares Tactical High Income ETF
12:36 PMIshares' actively-managed short-term bond fund gets nearer to launch| Comment!
12:35 PMAmazonFresh launches in San Francisco
- As rumored, the AmazonFresh (AMZN -0.7%) same-day/grocery delivery service is launching in San Francisco. The $299/year service, which launched in L.A. in June and has been in Amazon's hometown of Seattle for some time, promises same-day or early morning delivery for 500K+ items for $35+ orders.
- With high population density and per capita income levels, and a very tech-savvy customer base, S.F. is a logical expansion market for AmazonFresh, which has been dubbed a "Trojan horse" meant to underpin Amazon's same-day delivery efforts. An NYC launch might happen in 2014.
- Google and eBay have already launched same-day services in S.F. Unlike Amazon, both companies are relying on partnerships with retail chains.
12:31 PMU.S. Steel defended at Morgan Stanley, but shares -1.7%
- U.S. Steel (X -1.7%) has edged lower since Morgan Stanley went against the grain with its upgrade a month ago, so the firm is out defending its optimistic view.
- On skepticism over X's cost cutting program, the firm believes management was right when it decided to not set a concrete cost savings target; as a result, the firm thinks each individual cost savings announcement over the coming year will be its own incremental positive catalyst, and the dispersion of announcements will make life more difficult and less predictable for short sellers.
- The firm also says the impact of lower iron ore prices will be more than offset by improvements to earnings power from Project Carnegie cost savings, fixed cost absorption, and enhanced pricing power as operating rates rise.
12:25 PMGannett ticks up on UBS Conference revenue, EPS commentary
- Gannett (GCI +1.2%) shares tick up after management provides a strategic update at the UBS Global Media and Communications Conference: "Based on the trends thus far in the quarter ... we are comfortable with the higher end of [a $0.63-$0.67 estimate] range," CFO Victoria Harker said.
- The company also provided an update on Q4 broadcasting revenue expectations, forecasting a 20% Y/Y decline after excluding an additional week in Q4 2012. The Q4 comparison was "challenged by a record level of political spending in the fourth quarter last year." Stripping out political spend, broadcasting revenue is expected to be 17% higher Y/Y.
- As was previously announced, Gannett will expand a pilot program that integrated USA Today into print and e-editions of 4 local newspapers and was "embraced enthusiastically by subscribers" to 35 markets in early 2014.
12:20 PMIcahn Enterprises tumbles for a 2nd day
- "If Carl Icahn is selling, do you want to be buying," asks Andrew Bary in Barron's. "Probably not." Icahn Enterprises (IEP -13.6%) extends yesterday's big post-secondary offering decline as Bary reminds the stock trades at a hefty premium to NAV of about $75 per unit.
- While it might be worth some premium to invest alongside Carl Icahn, says Bary, 80% is probably far too much (it's less since the article was published!).
- By contrast, you can invest with the Tisch family in Loews (L -1.3%) at a discount to NAV, and Berkshire Hathaway (BRK.A, BRK.B) trades at just 1.3x book.
- "Icahn can do the math and he seems to think the company's units are at least fully priced given the equity offering, which will add to his war chest as he pursues his distinctive brand of activist investing."
12:16 PMSocGen cuts Nokia to Hold, upgrades Ericsson to Buy
- Eleven months after upgrading Nokia (NOK -1.8%) to Buy, SocGen has cut shares to Hold.
- Nokia, which is up 78% since SocGen issued its upgrade, is selling off following the downgrade. The ratings cut is overshadowing a bullish coverage launch from Citi (made as part of a broader sector launch).
- In tandem with downgrading Nokia, SocGen has upgraded mobile infrastructure rival Ericsson (ERIC +0.8%) to Buy. Ericsson's YTD gains are far smaller than Nokia's.
12:11 PMPDC Energy -6.7% after unveiling $647M capex budget for 2014
- PDC Energy (PDCE -6.7%) slides after announcing a 2014 capital budget of $647M, targeting organic growth within its inventory of liquid-rich projects in the core Wattenberg Field and Utica Shale.
- Production for 2014 is seen averaging 9.5M-10M boe/day, up 34% Y/Y, with 60% in crude oil and natural gas liquids; guidance includes a reduction in dry gas volumes due to the anticipated closing of the sale of its shallow Upper Devonian assets and the suspension of drilling in its Marcellus Shale assets.
12:08 PMLimited impact for MCO names from budget deal: Deutsche
- "Any hopes of a roll-back of the 2% Medicare sequestration cuts were dashed as more details of the plan were revealed over the course of the evening," Deutsche's Scott Fidel notes, referencing the new U.S. budget agreement.
- "In fact," Fidel continues, "under the budget deal the 2% Medicare payment cuts will actually be extended by two years through 2023."
- Nevertheless, Deutsche doesn't think anyone was expecting much in the way of a roll-back anyway, and as such, the bank sees limited impact for MCO names.
- AET, CI, HNT, HUM, UNH, WLP
12:08 PMBlackRock: Stay nimble
- "2014 is the year to squeeze more juice out of risk assets. But investors should be ready to discard the fruit when it starts running dry," says BlackRock's Ewen Cameron Watt in the firm's 2014 Investment Outlook. "Beware of traffic jams: easy to get into, hard to get out of."
- Behind the view is the idea central banks (U.S., U.K, Canada, China, to name a few) are poised to begin tightening monetary policy.
- BlackRock doesn't believe stocks are yet in a bubble, but its "risk indicator" - measuring enterprise value against earnings adjusted for volatility - is nearly as high as just before the dotcom bust. "The ratio of the two is the key. High valuations combined with low volatility can make for a lethal mix. This market gauge sounded the alarm well before the Great Financial Crisis."
- Broad large-cap ETFs: PRF, VUG, VTV, SDOG, VV, SCHX, MGK, DEF, SCHG, SCHV, PWV, FLAG, MGV, DOD, JKD, FEX, EQL, IWY, EZY, JKE, PWB, IWX, FTC, JKF, EEH, SPXH, TRSK, SFK, FWDD, PXLC, ALTL, PXLV, GVT, RWG, FNDX, PXLG, IELG
12:06 PMNQ Mobile slumps; SA contributor criticizes financials, conflicts of interest
- While relying heavily on baseball analogies, SA contributor Robert Zangrill takes aim at NQ Mobile's (NQ -7.1%) financial metrics, as well as various conflicts of interests he sees in the company's business dealings.
- Zangrill notes NQ has grown its revenue/employee by 817% over the last five years, and estimates the company is "on pace to generate about 20% more in revenue per computer than any other software company did in 2012."
- These eye-popping figures lead Zangrill to believe NQ is either "lying about its revenue, or ... has discovered the greatest business model ever - one that requires no capital investment, no assumption of risk, not even the headache of having to deal with additional employees."
- Much like Muddy Waters, Zangrill also thinks NQ is "round tripping" revenue via deals with affiliated parties. Among other things, he points out NQ relies on a payment processor owned by its former marketing chief, and has multiple directors with ties to a major Asian billing software provider.
- Shares are currently down ~50% from where they traded before Muddy Waters' allegations arrived in late October.
12:00 PMMarkets slide further on budget deal
- Dow -0.45%.
- 10-yr -0.06%.
- Euro +0.27% vs. dollar.
- Crude -0.8% to $97.72.
- Gold -0.12% to $1259.6.
11:55 AMUBS out positive on new Cardinal, CVS JV
- Cardinal Health (CAH +0.6%) "expects the JV to be neutral to EPS in FY14 (ending in June), but should be accretive in FY15, w/ greater accretion in FY16," UBS notes, referring to the new generic sourcing entity the company has created with CVS Caremark.
- Analyst Steven Valiquette sees a $0.10-0.22 pro forma EPS opportunity by 2016.
- Price target raised to $77 from $70.
11:55 AMBP says Shah Deniz FID on Trans Atlantic Pipeline expected Dec. 17
- The BP-led (BP +0.6%) Shah Deniz consortium likely will make the financial investment decision on the Trans Adriatic Pipeline on Dec. 17, a BP official says.
- In June, the consortium - which also includes Statoil (STO), Total (TOT) and Azerbaijan state-owned Socar - chose TAP to transport natural gas from Shah Deniz in Azerbaijan via Turkey, Greece, Albania, across the Adriatic Sea and into Europe.
- The final shareholder structure in the planned Trans Anatolia natural gas pipeline also will be made clearer next week; sources have said TOT may not pick up an option to acquire a 5% stake in the pipeline, while STO may take a smaller stake than its option for a 12% holding.
11:46 AMDeutsche a fan of NorthStar spinoff plan
- "We believe the separation of the asset management business will create value for shareholders, as the management company will trade at higher multiples than the traditional mortgage REIT and real estate business," says analyst Stephen Laws, reiterating his Buy rating on NorthStar Realty (NRF +16.2%) after the announced spinoff plan for the asset management business.
- His $12.50 price target is a "conservative valuation" given it values the asset management business at 12x 2014 cash available for distribution - the low end of a likely range of 12-18x. He also believes CAD is likely to show continued expansion thanks to growth in the non-listed REIT business as well as potential new income streams from managing additional funds.
- Earlier coverage
11:44 AMWho isn't testing drones?
- Deutsche Post's DHL successfully tested drone delivery of one of its packages at a facility in Germany, according to Slashdot.
- Though Amazon (AMZN -0.2%) started a little bit of a firestorm when CEO Jeff Bezos brazenly predicted drone delivery within four or five years, the approach of the delivery giants (FDX, UPS) has been more tempered and pivots on using them at distribution centers or on campuses as a cost-cutter - instead of dropping deliveries at doors.
- Analysts can't quite figure out where Bezos' head is on the drone issue (FAA, privacy, terrorism, scale vs trucks) other than thinking every billionaire is allowed a pet project or two.
11:27 AMBig stock gains this year bode well for next ... or not
- 2014 could be a good year for stocks if history going back to 1927 holds, says LPL's Jeffrey Kleintop, who finds double-digit average positive returns in the years following 25-30% gains for the S&P 500. In fact, he says, most big years were followed by several years of strong advances.
- Mark Hulbert - focusing on the DJIA and going back to the late 1890s - finds the advantage following 20% plus gains disappears. "The stock market’s odds in a given year are almost completely independent of what it did in the previous year."
- S&P 500 and DJIA ETFs: SPY, SH, DIA, SSO, SDS, IVV, SPXU, UPRO, VOO, DOG, RSP, DXD, RWL, EPS, UDOW, SDOW, DDM, BXUB, TRND, SFLA, BXUC, BXDB
11:21 AMGevo -27% after raising $25M to restart biofuel plant
- Gevo (GEVO -27.7%) plunges to 52-week lows after pricing a public offering of 18.53M common shares at $1.35 each.
- Funds raised by the offering will be used to restart biofuel production at its facility in Luverne, Minn., and repay $5.1M in long-term debt; Gevo halted production of isobutanol in Luverne in Sept. 2012 after contamination issues prompted an adjustment of its manufacturing process.
- Gevo cancels plans to issue convertible senior notes.
11:18 AMDon't count out Barbie
- Retailers appears confident that Barbie dolls will see a large rise in demand this holiday season as they return to stocking the long-time favorite.
- The blonde dolls were the number one imported toy this year, according to a report on the contents of shipping containers entering the U.S.
- Barbie ended a streak of sales losses for Mattel (MAT -1.3%) in Q3 with a moderate 3% gain and could post an even better number in Q4.
11:17 AMSpotify launches new mobile service, adds 20 markets; Pandora drops
- Spotify has launched its rumored free/ad-supported mobile library streaming service. As expected, the service (unlike Spotify's ad-supported PC offering) doesn't provide unfettered access to Spotify's giant music library. Rather, it allows users to stream tracks from a particular artist or featured playlist in shuffle mode.
- Pandora (P -3.9%), whose Web/mobile radio platform has headed off threats from Spotify, Apple, and others, is selling off.
- Spotify has also announced it's launching its services in 20 new Latin American and Central/Eastern European markets. For now, Pandora is only available in the U.S., Australia, and New Zealand.
11:09 AMFreeport McMoRan target upped to $45 at Nomura, citing catalysts ahead
- Freeport McMoRan (FCX +0.6%) is reiterated with a Buy rating and a new $45 price target, u;p from $38, at Nomura, which cites citing significant catalysts and growth drivers ahead.
- Nomura sees stock valuation potential of $55-$60 by 2017 depending on the extent of the potential MLP opportunity and future copper prices, which will influence the pace of debt reduction at FCX in 2015-17.
- The firm adjusts its FY 2013 EPS estimate to $2.54 from $2.60 and maintains its 2014 EPS outlook at $3.25.
11:08 AMARC Group climbs after Brean provides first coverage: a Buy and $25 PT
- Shares of ARC Group Worldwide (ARCW +12.7%) climb after Brean Capital provides the first analyst coverage on the name, initiating the stock at Buy with a PT of $25.
- Analyst Ananda Baruah adds another voice to a heated debate of whether ARCW should garner a 3D play valuation, calling the stock "an attractive asset and an intriguing addition to our advanced technology sector coverage along with Buy-rated 3D Systems and Buy-rated Stratasys."
- Baruah sees 10%+ revenue and 15%-20% EPS growth in store for the company, with operating margin expansion opportunities.
- Upside includes potential for multiple expansion due to the secular attractiveness of ARCW's core Metal Injection Molding market and a "further embrace" by the company of 3D printing, automation, and robotics.
11:08 AMJewelry companies try to engage NFL viewers
- An expected rise in weddings next year could be a nice gift for Signet (SIG -0.9%), Zales (ZLC -0.8%), and Blue Nile (NILE -0.8%). Wedding-watcher site TheKnot.com maintains a surprising number of couples waited out having a wedding date ending in a "13" due to superstitions.
- The companies are using advertisement during NFL football to pitch their case with grooms-to-be. TV spending for the jewelry sellers is expected to show big growth in Q4 with the NFL a large focus.
11:00 AMOn the hour
- Dow -0.47%.
- 10-yr -0.12%.
- Euro +0.21% vs. dollar.
- Crude -0.65% to $97.87.
- Gold -0.27% to $1257.7.
10:58 AMMicron, SanDisk slip; Hynix plant to reportedly be operational next month
- MKM reports the Wuxi, China SK Hynix (HXSCL) DRAM plant that was badly damaged in a September fire will be operational by mid-January, well ahead of the mid-2014 timeframe forecast by others.
- Micron (MU -2.1%) is slipping, as is SanDisk (SNDK -1.5%), which benefits when NAND flash capacity gets reallocated to deal with DRAM shortages.
- Micron and SanDisk rallied on Monday amid a flurry of positive DRAM sales, pricing, and supply-related news.
- Samsung (SSNLF, SSNGY), the world's largest DRAM manufacturer (37.1% Q3 share per DRAMeXchange), fell 1.4% overnight in Seoul. Hynix rose 0.8%.
10:56 AMBulls way on top in latest II poll
- This week's Investor's Intelligence poll nearly tips over with bulls - the Bulls minus Bears read rising to a nose-bleed 43.9%, the 96th percentile of reads going back to 1972.
- It's a bearish signal as previous prints in this range have pointed to losses in the weeks following, but Ryan Detrick points out the declines - on average - have tended to be minor.
- 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
10:54 AMStrong luxury sector has a few cracks
- Though most signs have pointed to strong demand from luxury buyers this holiday season, there are a few concerns about the Henrys. The set of spenders known as "High Earners Not Rich Yet" could be peeling back a little bit.
- China-focused Tiffany (TIF -0.4%) and brand-strong Michael Kors (KORS -0.9%) are expected to skate through just fine - but Nordstrom (JWN -0.1%), Ralph Lauren (RL +0.6%), and Coach (COH -0.2%) could feel a Henry-pinch.
10:50 AMAegis reiterates bullish outlook for Auxilium
- Peyronie's is "tailor-made for [the company's] urology-focused specialty sales force," Aegis says, regarding the new PD indication for Auxilium Pharmaceuticals' (AUXL -1.3%) Xiaflex.
- Analyst Ram Selvaraju also notes that "the significantly higher number of vials of Xiaflex required to treat each Peyronie's disease patient is likely to translate into much greater revenue per patient in this indication vs. Dupuytren's contracture."
- Buy rating and $33 target maintained.
10:48 AMRosetta Stone acquires B2B language software maker Tell Me More for $28M
- Rosetta Stone (RST +0.9%) acquires Europe-focused, B2B language-learning software company Tell Me More for €20.75M ($28M).
- 95% of Tell Me More's €18.5 million ($25 million) business is focused on corporate and higher education verticals, with a significant presence in Europe as well as in China.
- The company has more than 3K customers worldwide and offers solutions covering 9 languages.
- Rosetta stone expects to achieve significant cost synergies by streamlining the 2 companies' sales forces under the Rosetta Stone brand and taking advantage of Rosetta's scale.
- Management expects the acquisition to contribute bookings of $25M-$27M in 2014. The impact to EBITDA is seen at $3M-$4M after excluding $3M-$4M in integration costs. Beyond 2014, the company sees "modest top-line growth" and EBITDA margins of 25% or greater.
10:44 AMNanoString Tech rallies on expanded availability for breast cancer diagnostic test
- NanoString Technologies (NSTG +16.2%) is enjoying a strong session after announcing that the Prosigna Breast Cancer Prognostic Gene Signature Assay will be available nationwide in Q1 2014.
- LH and DGX have "chosen to add the Prosigna Assay to their comprehensive suites of breast cancer diagnostic tests," NSTG notes. (PR)
- Meanwhile, Baird is out with an upgrade to Outperform from Neutral. Price target is now $18 (from $12).
10:38 AMSummer Street defends Avanir after trial miss
- Summer Street is out positive on Avanir Pharmaceuticals (AVNR -19.9%) as the shares sell-off on a Phase 2 miss for AVP-923 in central neuropathic pain.
- "Once the trial enrollment was cut in half we did not think the trial was powered for statistical significance," analyst Carol Werther says, adding that "a neuropathic pain indication cannot be ruled out when positive Phase 3 results have been published in patients with type 2 diabetes."
- Werther is also upbeat on Nuedexta.
- Buy rating maintained.
- Price target cut to $10 from $17.
10:32 AMLabCorp sees its price targets cut after delivering weak guidance
- Analysts are beginning to weigh in on shares of Laboratory Corporation of America (LH -9.1%) after the company's guidance disappointed investors on Tuesday evening.
- Canaccord has cut the shares to Hold from Buy. Price target slashed to $91 from $115.
- Credit Suisse takes its price target to $92 from $104.
10:30 AMSpecialty apparel retailers draw P-E interest
- Winter jacket maker Canada Goose sold off a majority of its share to Bain Capital for an undisclosed amount.
- The development follows a move by higher-end rival Moncler to list shares on the Milan stock exchange.
- What to watch: Bain isn't the only P-E firm taking an interest in specialty apparel retail as a number of other companies have been snapped up. The prospect of building global lifestyle companies off of strong brands is starting to draw even more interest. The trend could set up well for some beat-up names such as Lands' End (SHLD), L.L. Bean, Eddie Bauer, and Coldwater Creek (CWTR).
10:29 AMMonsanto deal with Novozymes aims to accelerate new crop products
- Monsanto (MON) is teaming up with a Danish biotech Novozymes (NVZMF, NVZMY) to develop microscopic organisms that help plants grow and resist pests, a move that could enable it to circumvent some concerns over its genetically modified seeds.
- MON will pay $300M as part of the deal, in which the companies plan to combine their efforts to cultivate beneficial bacteria; they will split the cost of development equally and each get 50% of the profits from sales.
- The idea of using microbes for plants hasn't caught on yet in part because many of the largest farmers are used to growing crops with synthetic fertilizer, scientists say.
10:29 AMCrossroads Systems climbs on SA Pro bull articles
- Shares of Crossroads Systems (CRDS +15%) climb after SA Pro's Valuable Insights lays out the bull case (embargoed until 10am ET tomorrow) for why the stock carries a "massively asymmetric risk-reward profile."
- The potential of near-term profitability with new management at the helm, a valuable IP position (a case also laid out by SA Pro contributor Markman Advisors), and the growth of a high-margin product could spell large upside for the company, which sports a $31.4M market cap.
10:26 AMCiti adds Duncan Hennes to board
- Citigroup (C -1.1%) adds plenty of banking and hedge fund experience with its new board member, Duncan Hennes. Co-founder of bank advisory firm Promontory Financial Group, Hennes was previously CEO of Soros Fund Management, and a treasurer at Bankers Trust, where he led the consortium rescuing and taking over Long Term Capital Management in 1998.
- Press release
10:20 AMAutohome the latest Chinese Web IPO to fly higher
- After pricing its 7.82M-share IPO at $17, above a range of $14-$16, Autohome (ATHM) opened at $30.16 and is currently at $29.97, up 76.3%. The Chinese automotive site owner currently has a market cap of $3.12B, or over 20x its likely 2013 sales (given recent growth rates).
- Over the first nine months of 2013, Autohome had revenue of $101M (+49% Y/Y), and net income of $55M. The company had over 7.7M registered users as of Sep. 30, and over 2.4M automobile listings.
- Other recent successful Chinese Web IPOs: Qunar, 58.com, 500.com
- F-1, IPO preview
10:15 AMHydrogen fuel cells vs. electric vehicles: Too early to call
- Toyota (TM -0.8%) remains positive on the prospect that falling costs of fuel cell batteries will help it make the segment the future of eco-friendly cars.
- The automaker sees selling 5K-10K units when the FCV Concept goes on sale in 2015.
- In the long-term, Toyota thinks fuel cell vehicles will be competitive on price against zero-emission cars. The automaker targets 2030 as a date mass-production will be in place by.
- What to watch: 2014 could see a ramping up of the rhetoric between Tesla Motors (TSLA -0.5%) and hydrogen fuel cell backers such as Toyota, Hyundai (HYMLF), and Mercedes-Benz (DDAIF). Most automobile industry analysts see the confrontation as really an engineering battle with development too early in the game to accurately predict a winner.
10:09 AME-House falls on $180M proposed convertible note offering
- E-House (China) Holdings (EJ -4.3%) shares fall after the company proposes to offer $180M in convertible senior notes due 2018 ($20M overallotment).
- The company intends to use $20M to repurchase shares and $50M to pay the premium of a zero-strike call option to a counterparty (the instrument will serve as a hedge for investors in the notes). Remaining funds will be used for general corporate purposes.
10:06 AMHusky Energy sets $4.8B capex budget for 2014
- Husky Energy (HUSKF +1.1%) says it plans capital spending of ~C$4.8B in 2014, slightly less than in 2013, and is track for substantial production growth next year, helped by the start of production from the Liwan Gas Project in the South China Sea.
- Husky sees 2014 output averaging 330K-355K boe/day, vs. estimated 2013 production of 312K boe/day; its five-year compound annual production growth target through 2017 is 5%-8% through 2017.
10:02 AMBAML sees shift to industrial names
- "Warehouses over townhouses" is one of BAML's ten themes for 2014 - highlighting a potential shift away from consumer-driven stocks to industrial and commercial names.
- "If revenue growth continues to accelerate as we expect, corporations are likely to invest in their businesses by spending some of the cash accumulated on their balance sheets. This capex cycle, combined with improving global economic growth, is likely to benefit stocks in more industrial and cyclical parts of the economy over those that are more dependent on the consumer. In our view, this has already started, but probably is in its early stages."
- An attached chart shows this outperformance beginning to creep in in Q3.
- If the thesis is correct, investors may want to be sellers of Consumer Discretionary (XLY), Health Care (XLV), and Financials (XLF), and buyers of Tech (XLK), Energy (XLE), Industrials (XLI), and Materials (XLB).
- Related ETFs: FAS, XLF, IYH, FAZ, XLE, XLV, ERX, XLI, XLY, XLB, OIH, VHT, VDE, ERY, UYG, DIG, DUG, VFH, VCR, UYM, VAW, IYE, CURE, VIS, IGE, IYM, IYF, RXL, FXH, SEF, SMN, PXJ, IYG, PXI, IYJ, FXO, PFI, PSCH, KBWB, PSCE, FXD, UXI, MATL, PYZ, PRN, FXN, FXZ, RYE, RWW, FINU, FHLC, RYH, DDG, FXR, RCD, RTM, RYF, FIDU, SBM, SIJ, PSCF, PTH, FDIS, FENY, RGI, FNCL, RXD, PEZ, PSCD, PSCI, PSCM, FMAT, FINZ
10:02 AMSmith & Wesson execs see strong industry trends
- Smith & Wesson (SWHC +5%) trades higher following its FQ2 report and early look at FQ3 projections.
- Execs with the company say they expected the big drop in November for NCIS background checks, a trend they see continuing through May of next year. They note the upcoming comparables run up against an enormous period of demand and they still see industry trends as positive.
- Related stocks RGR, CAB.
- Earnings call transcript
10:00 AMMarkets slide under pressure on budget deal
- Dow -0.25%.
- 10-yr -0.18%.
- Euro +0.19% vs. dollar.
- Crude -0.56% to $97.96.
- Gold -0.1% to $1259.9.
9:58 AMNorway adds six more planes to fighter jet order| 1 Comment
9:56 AMA roundup of tech ratings changes
- Ruckus (RKUS +2.9%) has been started at Buy by Craig-Hallum. Stephens started coverage at Overweight yesterday afternoon, Goldman upgraded shares to Buy on Dec. 2, and Stifel launched coverage at Buy on Nov. 27.
- Demand Media (DMD +9.3%) has been upgraded to Market Perform by JMP.
- Radware (RDWR +2.5%) has been upgraded to Outperform by Wells Fargo.
- E2open (EOPN +2.2%) has been started at Buy by Janney.
9:51 AMRio Tinto says it has already exceeded its 2013 cost savings target
- Rio Tinto (RIO -0.5%) tells investors it has already exceeded its 2013 target of cutting $2B of operating costs, and says it will prioritize paying down debt next year.
- CEO Sam Walsh says Rio's transformation to generate more value for shareholders is well underway but notes that the company remains conservative about its targets in hopes of over-delivering rather than under-delivering on its promises.
- Rio has slashed spending plans, including the amount allocated to exploration for new mines, and is in the midst of selling non-core assets to reduce its debt burden; it has said it would cut capital spending 50% to $8B by 2015 from last year's level.
9:49 AMThe uneasy relationship between Amazon and discount-tracking sites
- A niche industry of Amazon (AMZN -0.4%) deal-watching sites has popped up to give consumers yet another crack at squeezing the e-commerce giant for deals.
- Sites such as Camelcamelcamel.com, Keepa.com, and Thetracktor.com will alert users via e-mail when items hit a certain price and have more detailed data than larger well-known coupon sites like DealNews and Slickdeals.
- How does Amazon react to the margins-squeezers? The company provides sales data directly to the sites and pays a referral fee for purchases made from them.
- Execs with the retail upstarts realize the uneasy relationship with Amazon might not go on forever, but they have a neat back-up plan: Track Wal-Mart's (WMT +0.2%) deals and prices.
9:40 AMXbox One sales top 2M; Microsoft may go ahead with Android project
- Eight days after Sony (SNE) announced it had sold 2.1M+ PlayStation 4 units since its Nov. 15 launch, Microsoft (MSFT) says it has sold 2M+ Xbox One units since its Nov. 22 launch.
- A spokesman says the One, whose $499 price tag had worried some observers, is selling at a faster clip than the Xbox 360 did following its launch, and is sold out at most retail locations.
- Nomura had previously suggested 3M-4M 2013 One sales were likely; Microsoft's latest figure suggests it's on its way to hitting that range. The firm had also cautioned the Xbox unit could lose over $1B in 2013 after accounting for all expenses.
- CPU/GPU supplier AMD has been estimated to receive $110 per One shipment.
- Separately, AllThingsD has followed up on The Verge's report about a Nokia low-end/custom Android phone by stating "there is a sense" within Nokia that Microsoft "may be willing to pursue the project."
- A Nokia source states the phone's software "has a look more similar to Windows Phone than to the 'squircle' icons used on the Asha," and would deliver Microsoft services (Bing, Skype, etc.). The latter may be a necessity, given Google won't allow its own services to be provided with a "forked" version of Android.
9:36 AMGlaxo to pump $330M into UK capacity
- GlaxoSmithKline (GSK +0.1%) is set to make a $330M investment in UK manufacturing, which should help with Relvar ramp.
- The move is being attributed to the country's "patent box" initiative, under which companies are, in Reuters' words, "offered a reduced rate of corporation tax on income derived from patents."
9:34 AMSunTrust agrees to sell asset management unit
- Asset management unit RidgeWorth Capital manages about $50.6B in assets (vs. $189,4B for the entire bank) and contributed about $25M to SunTrust's (STI -0.1%) YTD net income.
- The business is being sold to RidgeWorth employees and an investor group led by Lightyear Capital for up to $245M at closing and another $20M based on retention of certain assets. SunTrust estimates an after-tax gain on the sale of $50M.
- Press release
9:33 AMMarkets adopt cautious approach, opens slightly higher
- Dow +0.07% to 15985. S&P -0.02% to 1802. Nasdaq +0.01% to 4061.
- Treasurys: 30-year -0.19%. 10-yr -0.12%. 5-yr -0.06%.
- Commodities: Crude -0.53% to $97.99. Gold -0.12% to $1259.6.
- Currencies: Euro +0.21% vs. dollar. Yen -0.18%. Pound +0.28%.
9:25 AMThe NRF pushes for quick passage of budget deal
- The National Retail Federation issues a statement in which it says it approves of the early (relatively) short-term budget agreement in Congress. The organization says it urges a quick passage of the legislation.
- The retail industry faces a significant risk if a budget stalemate were to occur. A swipe of President Obama's pen on the spending bill could offer some late holiday season support to consumer sentiment.
- Related ETFs: XLY, XRT, VCR, RTH, RETL, IYK, IYC, SCC, FXD, UCC, PMR, UGE, RCD, FDIS, SZK, PEZ, PSCD
9:24 AMJDS Uniphase buying Network Instruments for $200M
- JDS Uniphase (JDSU) is acquiring Network Instruments, a provider of network analysis/performance monitoring hardware for enterprises and data centers, for $200M in cash. The deal is expected to close within 45 days. (PR)
- Network Instruments competes with Riverbed's (RVBD) Opnet unit and NetScout (NTCT), among others; the deal could rekindle M&A hopes for the latter. Network Instruments had revenue of $40M over the last 12 months, and (per JDS) addresses $1B+ worth of markets growing at a 13% clip.
- JDS asserts Network Instruments' products complement its carrier-focused network analysis/monitoring products, and will help it create new offerings as "enterprise and carrier network performance management requirements converge."
- JDSU +0.7% premarket
9:24 AMEmulex to cut 10% of workforce, streamline engineering ops, close Bolton facility
- Emulex (ELX) implements a restructuring plan, reducing its workforce by 110 employees, or ~10% of total headcount, consolidating certain engineering activities, and closing its Bolton engineering facility.
- The company expects the transition to be completed by the end of FY2014. It is part of a broader $30M cost cutting plan the company announced, potentially at the behest of activists including Elliott Management.
9:20 AMStocks lack definition, investors wary of Fed move after budget deal
- Stocks are set to open little changed, as investors continue to express caution that the Fed could soon scale back its bond buys following the new budget deal in D.C.
- Since political dysfunction has been seen as an impediment to growth, some believe the budget deal, along with recent upbeat labor market data, gives the Fed added incentive to start tapering as early as next week's policy meeting.
- Joy Global -5% after missing earnings forecasts and lowering guidance; Mastercard +4% after boosting its dividend, announcing a share buyback and saying it will initiate a 10:1 stock split.
- Stocks in Shanghai and Hong Kong led losses in Asia, while European markets trade mostly higher.
- Treasury prices ease lower; the benchmark 10-year yield ticks up to 2.819%.
9:15 AMAnalysis: A Discovery Communications-Scripps deal is no sure thing
- Sterne Agee doesn't think Discovery Communications (DISCA) will end up buying Scripps Networks Interactive (SNI).
- The investment firm rates the chances of a deal at 10% with the Variety report perhaps overstating the level of interest by Discovery to buck up.
- SNI has peeled back some of its gains with some of the bloom off the rose, up 5.9% premarket.
9:02 AMBP, Reliance Industries aim to quadruple gas output in India by 2020
- BP and joint venture partner Reliance Industries (RLNIY) will invest up to $10B to quadruple their natural gas output in India from the current level of ~12M metric cubic meters/day by 2020, the head of BP's Indian unit says.
- Production from India's east coast KG-D6 block, the country's richest gas deposit, has declined from nearly 70M metric cubic meters/day in 2010; the companies have cited geological complexities as the main reason for the output fall.
9:01 AMOn the hour
- S&P +0.04%.
- 10-yr -0.09%.
- Euro +0.06% vs. dollar.
- Crude -0.17% to $98.34.
- Gold -0.07% to $1260.2.
8:53 AMJefferies bullish on eHealth
- Jefferies starts eHealth (EHTH) at Buy.
- Analyst David Styblo thinks the company's "long-term growth trajectory is underappreciated."
- "Its leading online health insurance marketplace positions the company to generate 2013-17E revenue, EBITDA, and EPS CAGRs of 20%, 30%, and 40%," respectively, Styblo says.
- Price target is $56.
8:49 AMCB&I reaffirms 2013 guidance, sees 2014 EPS and revenue in-line
- CB&I (CBI) reaffirms guidance for 2013, seeing EPS of $4.00-$4.35 vs. $4.16 consensus estimate and revenue of $10.7B-$11.2B vs. $11.17B consensus.
- Issues in-line guidance for 2014, seeing EPS of $4.80-$5.65 vs. $5.16 consensus estimate and revenue of $12.6B-$13.2B vs. $12.98B consensus. (Investor Day slides)
- CBI +1.9% premarket.
8:48 AMDimon pleased uncertainty over Volcker out of the way
- No surprise, but costs will rise and returns will decline at the big banks thanks to the Volcker rule, says Jamie Dimon (JPM), presenting at the Goldman financial services conference. Even if JPM's target ROE of 16% falls to the area of 14%, Dimon is confident in the bank's optimization efforts.
- "I'm glad that we now have certainty ... we'll be able to manage with Volcker."
- To review: Compliance with the near-1K-page rule has been delayed until July 2015.
- One must not forget to play the game: Dimon admits he lost track of keeping up with relationships with regulators the last several years. He says he will send "thank you" notes to congressional leaders for making a budget deal. To Paul Ryan and Patty Murray: "Thank you, thank you, and god bless you."
8:43 AMUrban Outfitters busts out of retail malaise
- Urban Outfitters (URBN) gains after disclosing it's running a rosy-sounding mid single-digit comp for FQ4.
- What to watch: The solid report isn't expected to give a lift to the sector, according to analysts. The out-performance compared to other mall-based retailers could be based on the company's vibrant e-commerce business and an assortment that is seen as fashion-forward.
- URBN +4.1% premarket to $37.20.
8:42 AMSpectrum Pharma outlines Marqibo, Folotyn studies
- Spectrum Pharmaceuticals (SPPI) is up 5% in premarket action.
- Out Wednesday morning are what the company calls "encouraging" data from Marqibo and Folotyn studies.
- Results from a Phase 2 study suggest Marqibo could have utility in the treatment of diffuse large B-cell lymphoma" (front-line). Summary: Marqibo substituted for Vincristin in R-CHOP; ORR, 95%; CRR, 90%; 10-year PFS, 64%; 10-year OS, 87%.
- As for Folotyn, data suggest the drug "may provide benefit to patients with early stage peripheral T-cell lymphoma." (PR)
8:36 AMGramercy resumes preferred payments
- Gramercy Property Trust (GPT) declares a catch-up dividend in the amount of $10.23524 per preferred share, representing all accrued and unpaid payouts on the stock from Oct. 2008 until Oct. 15, 2013.
- The board declares quarterly preferred dividends of $0.50781 per share for the period from Oct. 15 through Jan. 14.
- Management reiterates its intention to initiate common stock dividends in 2014 Q1.
- Press release
8:36 AMViacom's Paramount lets Ron Burgundy run wild
- Anchorman 2 is forecast to almost double the box office haul of the original movie to earn $165M for Paramount (VIAB).
- Like the original, the film is expected to have a healthy afterlife on Netflix, streaming, and DVD as it registers as a cult classic.
- Paramount has unleashed one of the largest viral marketing campaigns in history with the buildup to the film including mobile games, museum exhibits, Dodge commercials, a naming of a business school at a college (?), and a Ben & Jerry's ice cream flavor which all feature Will Ferrell in character as Ron Burgundy.
- Ferrell and director Adam McKay are well-entrenched in the creation of Internet buzz through their Funny or Die website, but have rattled Hollywood with the extraordinary lengths they have gone to with Anchorman 2.
- Ron Burgundy on Sportscenter
8:34 AMEncana to spend $2.4B-$2.5B in 2014, grow liquids production by 30%
- Encana (ECA) says it plans to increase natural gas liquids production by 30% in 2014, focusing three-quarters of its planned $2.4B-$2.5B capital spending in 2014 on the Montney, Duvernay, DJ Basin, San Juan Basin and Tuscaloosa Marine Shale regions.
- Total cash flow is expected at $2.4B-$2.5B; sees natural gas production of 2.6B-2.8B cf/day and total liquids production between 70K-75K bbl/day.
- Plans to conduct an IPO of its Clearwater Royalty business in 2014.
8:25 AMAlibaba signals delay in IPO plans
- Likely signaling a sizable delay in the timing of its IPO, Alibaba is reportedly seeking to extend the draw-down period of an $8B loan to December of next year (from January).
- "We have plenty of cash on the balance sheet and there is no need to draw down at this time, so we are extending the availability of funds to maintain flexibility," the company says.
- YHOO -0.6% premarket
8:23 AMCytRx reports positive top-line data from aldoxorubicin STS trial
- CytRx (CYTR) is out with top-line results from a Phase 2b study of aldoxorubicin in first-line metastatic, locally advanced or unresectable STSs.
- Summary (intent-to-treat analysis): Median PFS for aldoxorubicin, 8.4 months; median PFS for doxorubicin, 4.7 months.
- Summary (blinded central lab review): Median PFS for aldoxorubicin, 5.7 months; median PFS for doxorubicin, 2.8 months.
- OR rate: 25.4% for aldoxorubicin, 5.4% for doxorubicin.
- "These results are extraordinary for a single agent treating these chemotherapy-resistant tumors," the study's principal investigator says. (PR)
- CYTR +32% premarket.
8:16 AMMoody's cautiously watching Lands' End spinoff
- Moody's is reportedly keeping a sharp eye on the plan by Sears Holdings (SHLD) to spin off Lands' End.
- The ratings agency issued a report yesterday saying the spinoff could have "negative credit implications" but didn't fire off any ratings changes.
- SHLD +1.1% premarket, as shares hope to break a 9-session losing streak.
8:16 AMCameron adds $750M to stock buyback program
- Cameron (CAM) says it plans to increase its stock buyback program by an additional $750M, bringing its total remaining repurchase authorization to $1.04B.
- CAM also intends to add debt to its capital structure in the near term while continuing to maintain a strong investment-grade profile.
- Shares +0.9% premarket.
8:11 AMEcho Therapeutics rises on Chinese licensing deal for Symphony System
- After rallying 8% Tuesday, shares of Echo Therapeutics (ECTE) are up some 26% in premarket action.
- The company has inked a licensing, development, and commercialization agreement with Medical Technologies Innovation Asia for the manufacture and distribution of the Symphony CGM System in China, Hong Kong, Macau, and Taiwan.
- Medical Technologies Innovation will take on the development, marketing, and manufacturing costs for the Chinese market, and will also be responsible for "obtaining regulatory approval for the product in the licensed territories."
- Medical Technologies Innovation is also entitled to $1.5M in development cost reimbursement, payable in ECTE stock.
- The companies will share any net sales of the system in the region. (PR)
8:08 AMWalter gains after MSR acquistion
- Walter Investment Management (WAC) is up 1.7% premarket after agreeing to buy MSRs with about $30B in UPB from "a large national depository."
- The portfolio consists of about 270K accounts - projected to be 99% current - and includes more than 100K HARP-eligible mortgages. The transfers are expected to occur in staged boardings in the first three quarters of 2014.
- Management's plan is to acquire MSRs with UPB of about $62B, and, to date, the company has entered into agreements for about $54B.
- Press release
8:08 AMCostco lower after expenses cut into profits
- Costco (COST) slips in early trading after an increase in expenses cut into profitability during the retailer's FQ1.
- Retail analysts are still finding plenty to like in Costco's report. For starters, amid a promotional retail atmosphere selling margin was higher and membership income grew at a nice clip during the period.
- An important note on Costco (h/t SA contributor The Investment Doctor): This year's FQ1 doesn't include Black Friday like it did last year.
- COST -2.5% premarket.
8:01 AMOn the hour
- S&P +0.05%.
- 10-yr -0.12%.
- Euro +0.04% vs. dollar.
- Crude -0.15% to $98.37.
- Gold -0.52% to $1254.5.
7:59 AMRio Tinto says no environmental impact from two radioactive spills
- Rio Tinto (RIO) says there is no environmental impact from two separate incidents in which radioactive slurry spilled from its operations in Namibia and Australia.
- Rio experienced a low-grade slurry spill at its Ranger uranium mine in Australia's Northern Territory, just days after a similar incident occurred at its Rossing uranium mine in Namibia.
- The causes of the incidents are under investigation.
7:59 AMLakewood outlines Opko short thesis
- On watch Wednesday morning are shares of Opko Health (OPK).
- Lakewood Capital has published its OPK short thesis on Seeking Alpha.
- Ultimately, Lakewood thinks "the shares are worth 75-100% less than where they are currently trading."
- "We believe it is unlikely shareholders will ever see a profit out of OPK," the firm says, adding that in their opinion, OPK "has become little more than a day trading vehicle."
- See also: OPK slides on Lakewood short position; StreetSweeper defends OPK
- Full SA article
- Full Lakewood report
7:58 AMMedia watch: Mergers on the left, mergers on the right
- Analysts think a combination of Discovery Communications (DISCA) and Scripps Networks (SNI) would make a strategic fit due to the complementary nature of their programming. It's a common theme in the sector as negotiations over licensing deals and carriage fees gets easier with scale.
- The merger activity within the sector is seen as a recognition that the Pay-TV industry is set to see more major changes. One of the biggest takeaways from the UBS Global Media and Communications Conference this week was that programmers such as Disney (DIS), Time Warner (TWX), and CBS (CBS) are prepared to work out deals with virtual MPVD (online TV) players that emerge from the tech industry.
- Merger scuttlebutt: DirecTV (DTV)-Dish Network (DISH), Madison Square Garden (MSG)-Time Warner, Charter (CHTR)-Time Warner Cable (TWC).
7:55 AMNorthStar flies on spinoff plan
- NorthStar Realty (NRF) is now ahead 16.7% in the premarket following its plan to spin off its asset management business.
- The conference call is set for 10 ET, but the presentation slides are currently available.
- Certainly working at the moment is page 14 of the presentation which compares NRF's P/E multiple (8.3x) with that of what it picks out as competitors - Real Estate Managers (19.4x), Small Traditional Asset Managers (19.9x), MLP GPs (35.1x), and Altisource Asset Management (AAMC) at 50.1x.
- The comps may or may not make sense, but if NorthStar Asset Management is anything like the Altisource Asset Management spinoff, investors would be wise to get in early ... in size. AAMC's more than a 10-bagger since being spun off from Altisource Portfolio Solutions (ASPS) one year ago.
7:43 AMMarathon Oil to buy back more shares, announces $5.9B capex budget
- Marathon Oil (MRO) says it will increase its remaining stock buyback authorization to 2.5B, and announces a $5.9B capital spending budget for 2014, more than 60% percent of which is directed toward its liquids-rich North America resource assets.
- MRO plans to accelerating Eagle Ford and Bakken rig activity 20% each, including drilling 80-90 net new Bakken wells, and expects to double activity for the Oklahoma Woodford.
- Plans to market U.K. and Norway assets to continue its portfolio optimization strategy.
- Expects production to average 405K-430K boe/day in 2014, excluding production from Alaska and Libya.
7:41 AMMoody's buys Amba Investment Services
- Boosting the research and analytical capabilities offered by Moody's Analytics, Moody's (MCO) acquires Amba Investment Services for an undisclosed amount of cash.
- About 10 years old, Amba is known for providing outsourced investment research and analytics to financial institutions. It's expected to generate about $39M in revenue this year.
- The deal isn't expected to have a material impact on Moody's EPS.
- Press release
7:37 AMFisker Automotive cruising through bankruptcy
- The bankruptcy case for Fisker Automotive Holdings is plugging right along after attorneys convinced the judge to speed up the pace of the case.
- Newly-formed Hybrid Tech Holdings is the company looking to take over the assets of Fisker on the other side of bankruptcy. The entity is led by Hong Kong tycoon Richard Li.
- Previous: Fisker dies but Karma EV might live
7:32 AMGroupon gains amid positive sell-side calls
- Wells Fargo upgrades to Groupon (GRPN +2.4%) to Buy and raises its price target to $13-$14 from $5-$6. "We believe Groupon is positioned well to take continued share in the massive local commerce market," says analyst Trisha Dill. "We are bullish on the company’s strategy to transform into a “pull” marketplace, away from its daily deals legacy, and early indications suggest this transition is gaining traction."
- Morgan Stanley's Scott Devitt - after meetings with management - said the company is making progress on becoming a unique mobile commerce marketplace.
- He thinks it's a $15 stock by the end of next year thanks to improved deal quality and density in the U.S. and improvements internationally. Near-term, the site redesign is a positive tailwind.
- Earlier coverage from Devitt
7:32 AMSavient assets to be sold to Crealta Pharmaceuticals
- Bankrupt Savient Pharmaceuticals (SVNTQ) has agreed to sell substantially all of its assets to Crealta Pharmaceuticals for $120.4M.
- The figure is more than double the stalking horse bid of $55M made by Sloan Holdings.
- The assets include Krystexxa, Savient's uric acid-specific enzyme for treating chronic gout.
- The transaction is subject to approval by the bankruptcy court, which is due to hold a hearing about the agreement on Friday. (PR)
7:21 AMFDA grants priority review to Sanofi's Gaucher drug
- The FDA will carry out a priority review of Sanofi's (SNY) Eliglustat pill for Gaucher disease, a rare genetic disorder in which sufferers are deficient in an enzyme that breaks down a certain type of fat. That can lead to potentially fatal organ and bone problems.
- The FDA will now rule on whether to approve Eliglustat within six months instead of ten.
- The agency's move comes after the European Medicines Agency validated a marketing authorization application for Eliglustat in October.
- Analysts have forecast that Eliglustat, which would become the first oral treatment for Gaucher's disease, could generate annual sales of $517M by 2018. Other therapies include Sanofi's Cerezyme injection, Shire's (SHPG) Vpriv and Pfizer's (PFE) Elelyso.
- Sanofi shares are +1% in Paris.
7:16 AMLloyds fined $46M over sales program
- The £28.04M penalty is the largest ever by the U.K.'s Financial Conduct Authority (formerly the Financial Services Authority) for retail conduct. The regulator accused Lloyds (LYG) of failing to properly manage its compensation program so financial advisors - in order to meet sales targets - were not encouraged to push products on customers they didn't really need.
- “The findings do not make pleasant reading,” says Tracey McDermott, the F.C.A.’s director of enforcement and financial crime. “Financial incentive schemes are an important indicator of what management values and a key influence on the culture of the organization, so they must be designed with the customer at the heart.”
7:12 AMHome Depot lifts some financial targets
- Home Depot (HD) issues a business update and highlights some strategic priorities.
- The company reaffirms 2013 sales and EPS guidance as it sees comparable store sales growth of 7% for the year.
- Financial targets for 2014 include sales growth of 5%, operating margin expansion of 70 bps, and EPS growth of 17%. Only 8 new stores are expected to be added to Home Depot's store count during the period.
- In 2015, operating margin of 13% is set as a target with the home improvement retailer on a pace to exceed its previous target early.
- HD +0.1% premarket
7:08 AMFutures edge lower
- Stock index futures are slightly lower in what - at the moment - is looking like a 3rd consecutive slow day of action.
- Europe's up moderately and Asia posted sizable losses overnight, the Nikkei, the Hang Seng, and Shanghai all off more than 1%.
- The 10-year Treasury yield is up one basis point at 2.82%, and gold's flat at $1,258 following yesterday's big rally.
- 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, QQEW, VOOG, QQQE, VOOV, TRND, SFLA, BXUC, QQXT, FTA, BXDB, TNDQ
7:03 AMDemand for guns in the U.S. slows down
- Demand for guns in the U.S. is in a downward swing as it appears more likely that Congress won't enact legislation to ban semiautomatic rifles.
- In November, federal background checks on potential gun purchasers were 10% lower Y/Y.
- Despite sales trends which are starting to slow, manufacturers and retailers have seen more women become buyers.
- Sector watch: SWHC earnings
- Related stocks: RGR, SWHC, CAB
7:03 AMMore on Joy Global FQ4: Impairment charge hits net profit
- Joy Global's (JOY) net profit from continuing operations plunges 87% to $26.8M, due to a $155M pretax asset-impairment charge.
- Bookings -19% to $1.1B.
- Sales breakdown: underground mining equipment -16% to $696.3M; surface mining equipment -36% to $536M.
- Guidance: FY 2014 EPS $3-3.50, below consensus of 3.68; revenues $3.6-3.8B vs $3.8B.
- To carry out further restructuring actions in 2014, which will cost $15M.
- Shares -2.7%. (Previous) (PR)
7:00 AMMarkets lower ahead of budget deal
- S&P -0.09%.
- 10-yr -0.07%.
- Euro +0.04% vs. dollar.
- Crude -0.1% to $98.42.
- Gold -0.27% to $1257.7.
6:55 AMBig licensing deal for Sony in India
- Sony (SNE) scores a licensing deal which will see it represent and manage the distribution of Warner Music's catalog in India.
- Execs with Sony think the digital music opportunity in India is enormous.
- The company's recent purchase of Parlophone Label Group makes it an even more formidable player in global markets.
6:00 AMEurope stock slightly higher ahead of U.S. Budget
- Japan -0.62%.
- Hong Kong -1.71%.
- China -1.49%.
- India -0.39%.
- London +0.09%.
- Paris +0.60%.
- Frankfurt +0.13%.
5:30 AMWorld shares mixed following U.S. budget deal
- Global equities are mixed as markets mull the impact of U.S. Congressional leaders agreeing to a budget deal.
- Such an agreement would normally be construed as a good thing, but not so when there's the Fed's QE to consider.
- "The deal...would certainly have the potential to bring forward the prospect of tapering," says Interactive Investor's Rebecca O'Keeffe. This, in turn, would weigh on stocks.
- Asian shares are lower, with profit-taking also affecting shares. Japan -0.6%, Hong Kong -1.7%, China -1.5%, India -0.4%.
- EU Stoxx 50 +0.3%, London +0.1%, Paris +0.7%, Frankfurt +0.2%, Milan -0.2%, Madrid +0.5%.
- U.S. stock futures: Dow flat. S&P flat. Nasdaq -0.05%.
5:09 AMCisco fails in challenge to Microsoft-Skype deal
- The European Union's General Court, the bloc's second highest court - has rebuffed a request by Cisco (CSCO) to revisit the EU's approval of Microsoft's $8.5B acquisition of Skype in 2011.
- Cisco argued that the deal led to a monopoly and that the EU should have demanded concessions from Microsoft.
- However, the judges disagreed. "The merger does not restrict competition either on the consumer video communications market or on the business video communications market," the judges said.
- Cisco can now appeal to the EU Court of Justice.
4:56 AMStates' income to edge up this fiscal year
- States' revenues are projected to increase 0.8% in FY 2014 - which began in October - sharply down from a 5.7% rise in FY 2013, the National Association of State Budget Officers says.
- Major reasons for the slowdown include tax cuts and a one-time surge in revenue last year following a change in federal laws.
- Spending is poised to rise 3.6% vs 4.3% a year earlier, with both increases below the historical average growth rate of 5.6%.
- The level of "rainy day funds" for emergency spending will decline to $56.7B in states that have passed their budgets from $67B. Hiring is not expected to increase. (PR)
- Muni ETFs: MUB, HYD, PZA, MUNI, TFI, ITM, MLN, HYMB, XMPT, SHM, SUB, PRB, SMB, PVI, SMMU, VRD, GMMB, RVNU
4:36 AMEU agrees on plan for dealing with failing banks
- European finance ministers could be creating the conditions for a future run on banks after agreeing on a framework for winding down failing firms in the sector.
- Crucially, major depositors will be a first port of call if a bank needs cash to shore up its finances, as happened in such brutal fashion in the bailout of Cyprus earlier this year.
- Money could then be taken from a country's national resolution fund, which could request assistance from the funds of other nations. Eventually, a common European-wide fund would be created.
- ETF: EUFN
4:13 AMFDIC OKs plan for taking over failing financial firms
- The board of the Federal Deposit Insurance Corp. (FDIC) has authorized a draft plan on how the agency would break up large financial firms that are about to collapse and without a taxpayer bailout.
- The FDIC has the authority to take over failing banks under the 2010 Dodd-Frank rule in order to limit the impact of any collapse on the financial system; the regulator would keep the operating parts of an institution open, prioritize creditor repayments - although this includes imposing losses as well - and it would recapitalize a firm.
- The agency is now seeking public comment on the plan.
- ETFs: FAS, XLF, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, PFI, KBWB, RWW, FINU, RYF, PSCF, FNCL, FINZ
3:59 AMRBS finance chief quits after just 10 weeks
- RBS (RBS) Finance Director Nathan Bostock has resigned after just 10 weeks in the job and is returning to Santander (SAN), where he has held several senior roles.
- Bostock will become the chief risk officer and deputy CEO at Santander's U.K. operations, which are set to be spun off at some point and separately listed.
- Bostock's departure is the latest blow for RBS as it carries out a review of its operations; last month, for example, IT problems left over 1M customers stranded.
- Shares are -1.6% in London.(PR)
3:44 AMGM to end Australian production in four years
- GM (GM) intends to follow in Ford's footsteps and halt manufacturing in Australia by 2017.
- GM will take pretax charges of $400-$600M in Q4, while 2,900 workers will lose their jobs.
- "The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market, and arguably the most competitive and fragmented auto market in the world," outgoing GM CEO Dan Akerson said.
- GM's decision will leave Toyota (TM) as the last major car manufacturer in Australia, although the latter might now also leave. The move will "place unprecedented pressure on the local supplier network and our ability to build cars in Australia," Toyota said.
- The country's car industry is now in serious danger of collapse; it supports over 40,000 workers and 150 supplier companies. (PR)
- Australia ETFs: EWA, AUSE, FAUS
3:27 AMJapanese machinery orders recover smartly
- As expected, Japanese machinery orders rose 0.6% in October vs -2.1% in September.
- On year, bookings +17.8% vs +11.4% previously and consensus of +15%.
- The figures "should ease concerns that the fledgling recovery in business...(investment) has already come to an end," says Economist Marcel Thieliant. Q3 GDP was revised down earlier this week, partly due to lower-than-expected business expenditure.
- Core orders topped ¥800B for the third consecutive month for the first time since 2008. The trend "points to a renewed rise in capital spending" in Q4, says Thieliant.
- The Nikkei is -0.6%, while the USD-JPY is -0.2% at ¥102.60. (PR)
- ETFs: DXJ, EWJ, FXY, YCS, JGBS, JGBD, DFJ, JYN, NKY, DBJP, EZJ, EWV, YCL, SCJ, JSC, JPP, JGBL, ITF, DXJS, JGBT, JPNL, JPNS, FJP
3:14 AMCostco EPS misses forecasts| 1 Comment
2:23 AMGerman CPI returns to growth
- As expected, German CPI rose 0.2% on month in November following a drop of 0.3% in October.
- On year, inflation edged up to 1.3% from 1.2%.
- Harmonized CPI +0.2% on month vs -0.3%.
- On year, HCPI +1.6% vs +1.2%.
- All the figures are as expected.
- As in the previous months, the low rate of inflation was mainly due to the falling prices of mineral-oil products, although these contrasted with rising electricity costs.
- Food inflation was still substantial for some products, although the overall increase in expenses has slowed.
- The euro is flat at $1.3765. (PR)
- ETFs - Stocks: FGM, EWG, GERJ, EWGS, DBGR. Bonds: BUNL, BUNT, BUND, GGOV
12:38 AMFacebook wants to become a news hub, users feel differently
- "The gap between ... two Facebooks (FB) — the one its managers want to see, and the one its users like using today — is starting to become visible," writes AllThingsD's Mike Isaac in a report examining the social networking giant's efforts to evolve into a news/information hub.
- But while Mark Zuckerberg wants his company to be "the best personalized newspaper in the world," its users still largely see it as a place to keep in touch with friends/family and "share a funny, viral story or LOLcat picture." Viral, "low-quality" content often receives far more clicks than "high-quality" news pieces.
- This disconnect has reportedly led Facebook to hold off on rolling out its media-heavy news feed overhaul (announced in March) to most users, and for engagement to stall among those users who have received the update.
- An update amounting to "a less drastic change" is now reportedly being prepped. Ahead of that move, and in spite of the click rate data, Facebook has updated its news feed algorithm to show more "high-quality" stories.
- Meanwhile, Twitter (TWTR), while still having a far smaller active user base, has evolved into a news hub for many of its users, and is trying to make the most of this status.
- Isaac's report arguably drives home the challenges Facebook contends with as it tries to keep users (inc. younger ones) tiring of its traditional fare engaged, and without alienating the hundreds of millions of users content with the status quo.