MARKET CURRENTS
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MARKET CURRENTS
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Friday, May 25
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7:35 PM Speaking on the issue of increased financial regulation, Goldman's Jim O'Neill asks rhetorically: “Is it really that entirely desirable to have financial stability at the expense of everything else? I sort of think you want your investment bank to be a little unstable.” - pure Goldman gold. [Financials, U.S. Economy] 20 Comments
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7:08 PM Responding to a report from The Verge that Google (GOOG) had acquired H-P's (HPQ) webOS team, H-P clarifies that "some key members" of the team working on the webOS-based Enyo app development platform have left the company, but "the majority of the engineering and leadership team remains." It adds the Enyo team is looking to hire new engineers. [Tech] 4 Comments
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7:00 PM Want to buy banks? Look at some of the regionals, says Dick Bove. The big universals are dealing with a multitude of issues that impede their competitiveness, while community banks are being weighed down by regulations that are driving them out of the business. Firms in the middle tier however, are growing their key commercial and industrial lending portfolios while their competitors have had to pull back. His picks: US Bancorp (USB), PNC Financial (PNC) and Capital One (COF). [Financials, Quick Ideas] 7 Comments
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6:52 PM Buying Nokia (NOK) under $3 today is like buying Ford under $2 in '09, argues SA's Jacob Steinberg. As was the case with Ford back then, Nokia commentary is filled with talk about market share losses, cash burn, and credit rating downgrades. However, also like Ford back then, Nokia maintains a powerful brand and significant cash reserves, and is rolling out compelling new products. [Tech, Quick Ideas] 4 Comments
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6:37 PM Is Google Wallet (GOOG), off to a sputtering start, a victim of its dependence on NFC technology? Not only are NFC chips found in only a small (albeit growing) percentage of phones, the technology requires an ecosystem that doesn't exist, in part due to rival agendas. Meanwhile, PayPal (EBAY) is rolling out an app-based service that allows users to pay before walking into a store, and Starbucks has had success with a solution that scans barcodes appearing on a phone's display. Then there's Square. [Tech] 1 Comment
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6:15 PM Red flag for the U.S. economy? Lending during Q1 fell by more than $56B Q/Q, or 0.8%, a reversal from three consecutive quarters in which lending expanded. While lending to larger commercial and industrial customers continues to rise, nearly all other types of loans declined, including those to small businesses. [Financials, U.S. Economy] Comment!
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6:10 PM Is the “cult of the equity” dead? Institutional investors have slashed their equity holdings over the past decade. Stocks have not been this far out of favor in over a half a century. “Ultimately what is going on is that fundamental tenets of capitalist society are being questioned,” says Allianz's Andreas Utermann. This is stunning in light of overwhelming evidence that, in the long run, equities outperform. From 1900 to 2010, they beat inflation by 6.3% a year in the U.S., compared with only 1.8% for bonds. [U.S. Economy, Global & FX] 16 Comments
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6:01 PM Quest Software (QSFT -0.1%) shares dived in the final minutes of trading to $25.15 after Reuters reported Dell (DELL) is expected to reach a deal to buy the company, perhaps as soon as this weekend, but at a price of $23-$26/share. Before the story broke, Quest traded as high as $26.73 on a Bloomberg report that mentioned Dell's interest, but didn't name a price. Reuters adds Dell's post-earnings crash led a prior deal to fall apart. [Tech, On the Move, M&A] Comment!
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6:00 PM On the hour: S&P -0.56%. 10-yr +0.33%. Euro -0.12% vs. dollar. Crude +0.09% to $90.75. Gold +0.95% to $1572.25. Comment!
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5:55 PM Now that he owns 7.6% of Chesapeake (CHK), what can Carl Icahn accomplish? Having Icahn around can at least stiffen the spines of the other shareholders, and he's seeking the removal of four board members. But his best results typically come when the company he targets ends up selling itself - and CHK, with its complicated capital structure, wouldn't be an easy sell. [Energy] 2 Comments
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5:52 PM Though Apple (AAPL) continues to heavily promote Siri - it just hired John Malkovich to do some ads - the voice assistant service, which is powered by Nuance's (NUAN) voice recognition technology, remains a lightning rod for criticism. Disgruntled user Jon Friedman calls Siri a "gimmick for self-indulgent people with a tremendous amount of time on their hands." "Steve would have lost his mind over Siri," a former Apple employee recently told Adam Lashinsky. [Tech] 6 Comments
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5:48 PM May has been a truly awful month for stocks. How awful? The Dow has enjoyed only four up days so far this month, the first month with so few positive trading days since September 1903. Recent history doesn't offer much hope for near-term relief, as the S&P has shed more than 2% during the four trading days after Memorial Day in each of the last two years. [Quick Ideas] Comment!
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5:41 PM Morningstar's Theo Francis takes a look at the 14-A filed by Dell (DELL) for its July 13 stockholder meeting, and finds some interesting details. Among them: Michael Dell's compensation package for the year rose over 3x to $16.1M, in spite of his company's less-than-stellar performance; $2.7M was spent on security for Dell and his family; and services chief Stephen Schukenbrock received $1.9M in relocation benefits in order to move 200 miles. [Tech] 2 Comments
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5:25 PM A mild, dry winter during 2011-12 plus continued advances in unconventional drilling enabled producers to boost oil production from North Dakota’s Bakken formation to record highs, ConocoPhillips (COP) says. This month, North Dakota surpassed Alaska to become the second oil-producing state in the U.S., following Texas. [Energy] Comment!
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5:19 PM On a week when Yahoo's (YHOO) Axis visual search engine/mobile browser gave it some much-needed positive ink, the company is shutting down its Livestand mobile reader app. Livestand had mixed reviews, and never gained a huge following in the face of competition from Flipboard, Pulse, Google Currents, and several other rivals. [Tech] Comment!
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5:10 PM The sharp fall in crude oil prices typically is seen as a negative for equities, since it reflects worries over weakening global economies, but the outperformance of the Dow Transports hints that falling crude eventually may be a boon for stocks. If crude’s sharp drop really reflected slowing demand, shouldn't transports be falling at least as fast as the broad market, as they did in late 2008 and mid-2011? [Quick Ideas] 2 Comments
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5:08 PM Engadget's review of Samsung's (SSNLF.PK) Galaxy S III is positive, but far from glowing. The device's performance, camera, and display are praised, but its software, which Samsung has heavily emphasized, is found lacking, and the site declares HTC's One X a better high-end Android (GOOG) option. The Verge is more enthusiastic, calling the S III a "technological triumph." Though Samsung currently looks unstoppable in the Android market, it's worth remembering HTC looked the same way a year ago. [Tech] 4 Comments
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5:00 PM On the hour: S&P -0.56%. 10-yr +0.33%. Euro -0.12% vs. dollar. Crude +0.09% to $90.75. Gold +0.95% to $1572.25. Comment!
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4:55 PM Thanks to Nokia's (NOK) Lumia releases, Windows Phone (MSFT) managed to account for 4.1% of Western European smartphone sales in Q1, per IDC. Android (GOOG) had 55% of the market, the iPhone (AAPL) 25%, and BlackBerry (RIMM) devices 9% (down from 17% a year earlier). A Microsoft exec recently claimed Windows Phone had 7% of the Chinese smartphone market. Nokia's high-end Lumia 900 was launched early in Q2. [Tech] 14 Comments
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4:47 PM ARM (ARMH) can hold its own against Intel (INTC) as the latter company enters the mobile app processor market, argues UBS' Gareth Jenkins, who's upgrading shares to Buy. Among Jenkins' arguments: 75% of the top smartphone apps are specifically written with ARM-based processors in mind; the company continues to innovate with solutions such as its big.LITTLE architecture; and Intel has to compete with 15+ app processor vendors (most of whom use ARM CPU cores). (also) [Tech, Quick Ideas] 2 Comments
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4:41 PM Forest Laboratories (FRX) says it's decided to discontinue the development of apadenoson, its experimental agent for cardiovascular imaging procedures. The company had obtained the compound in its $1.3B acquisition last year of Clinical Data, and had previously said it expected to launch the product by 2014. The agent was being tested in a late-stage clinical trial, but the trial was recently terminated. The company failed to give a reason in its filing with the SEC . [Healthcare] Comment!
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4:38 PM Specialty chemicals manufacturer Albemarle (ALB) -1.5% AH after announcing it will increase global prices for all grades of ibuprofen by an estimated 15% effective immediately, or as contracts allow. [On the Move] Comment!
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4:28 PM FalconStor Software (FALC) says its CFO Bryan Urquhart is resigning from position effective immediately. Louis Petrucelly has been promoted to Vice President of Finance, and appointed Treasurer and Acting CFO. Petrucelly was most recently the company's Director of Finance. [Tech] Comment!
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4:28 PM Shares of Amylin Pharmaceuticals (AMLN +8.4%) finished markedly higher on reports that the company, which is on the sales block, was already receiving bids from Sanofi (SAN) and Merck (MRK) in excess of $25 per share. [Healthcare, On the Move, M&A] 1 Comment
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4:21 PM It's not just founder Mike Lynch who's leaving H-P's (HPQ +2.6%) Autonomy unit: an anonymous exec tells Reuters 15%-20% of Autonomy employees (about 250 people) have left since H-P struck a $10B deal to buy the company last August. Discussing Autonomy's eye-opening FQ2 license revenue drop, the exec says issues related to handling sales leads played a role. "We have had to do things the HP way and the HP way has proved to be cumbersome." (earlier) [Tech] Comment!
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4:10 PM Market recap: Stocks stumbled in listless pre-holiday trading, with no news to ease fixation on Spain (I, II, III), where regional banks are struggling and government bond yields are shooting higher. Still, all three top indexes posted their best weekly gains this month, snapping a three-week losing streak. Advancers and decliners finished nearly even on the NYSE. [Top Stories] Comment!
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4:06 PM Indian carrier Bharti Airtel has invested $165M for a 49% stake in a Qualcomm (QCOM) subsidiary that bought $1B worth of Indian 4G spectrum licenses in 2010. Qualcomm was finally granted the licenses, which will be used by Bharti in its TD-LTE 4G network build, earlier this month. Bharti's price suggests Qualcomm may have to take a write-down on its purchase. The company's investments have often gone awry - FLO TV and Globalstar are two prominent examples. [Tech] Comment!
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4:05 PM Dorman Products (DORM +2.9%) finishes the day solidly in the green after being upgraded to Buy from Hold in a coverage transfer at BB&T earlier today. [On the Move] Comment!
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4:04 PM Carl Icahn discloses a 7.56% stake in Chesapeake Energy (CHK +1.5%) via 13D filings. Icahn: "If you continue to arbitrarily refuse the request we have made for shareholder representation, we, as activists, will immediately take whatever 'actions' we feel are necessary to protect the value of this company." [Energy] 10 Comments
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4:00 PM At the close: Dow -0.72% to 12440. S&P -0.39% to 1316. Nasdaq -0.07% to 2838.
Treasurys: 30-year +0.47%. 10-yr +0.34%. 5-yr +0.08%.
Commodities: Crude +0.13% to $90.78. Gold +0.96% to $1572.45.
Currencies: Euro -0.14% vs. dollar. Yen +0.07%. Pound +0.06%. Comment! -
3:54 PM Baxter International (BAX -0.5%) says the results from two large, international multicenter trials it conducted show that a low glucose peritoneal dialysis regimen favorably impacted metabolic measures important for end-stage renal disease patients with diabetes, including blood glucose control and selected lipids. The combined results were presented at the 49th Annual European Renal Association - European Dialysis and Transplant Association congress in Paris. [Healthcare] Comment!
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3:51 PM India's oil minister says a decision will be made on gasoline rates in a few days, as the country's government faces a barrage of criticism over an 11.5% increase in the price of the fuel. The minister doesn't specify whether prices will be cut, but says the recent increase was necessary due to a weak Indian rupee and higher global crude oil prices. [Energy, Global & FX] Comment!
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3:50 PM U.S. Commodity Funds is cutting the management fee on its Copper Index Fund (CPER) by 31.5% to better compete against iPath's Pure Beta Copper ETN (CUPM). Both funds are tiny - less than $3M in assets (JJC is the gorilla in the sector) - but CPER is an ETF as opposed to the ETN structure of the other offerings. [Commodities] Comment!
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3:42 PM Cracker Barrel (CBRL +0.3%) still hovers in positive territory after being upgraded to Buy at Argus on the back of its better than expected Q3 report and guidance. [Consumer] Comment!
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3:37 PM Did S&P tip that Spain's Popular might be next in line for a bailout, asks the WSJ's David Enrich. He notes the bank is mentioned in the same breath as Bankia regarding government support in the S&P downgrade report. Enrich on the Bankia chronology: "Last summer, IPO. Last month, 'well capitalized.' Last week, €10B hole. Today, €19B bailout." [Global & FX, Financials] 6 Comments
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3:34 PM Fresh off a big contract win to provide hardware and software for China National Petroleum's Turkmenistan gas fields, Recon Technology (RCON +12.2%) shares spike again on rumors of a potential contract with Sinopec (SNP). [Tech, Energy, On the Move] Comment!
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3:31 PM Sealed Air (SEE -0.8%) appoints Carlisle (CSL) executive Carol Lowe as its new CFO, starting next month. [On the Move] Comment!
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3:29 PM The Dow's slide extends to triple digits a half hour before the close, off 101 points or 0.8%. The S&P is faring better, off 0.4%, the Nasdaq -0.3%. European markets are open on Monday, the U.S. is not. 2 Comments
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3:25 PM Time Warner (TWX +0.3%) has popular sports website Bleacher Report on its radar, according to the WSJ. Discussions between reps from TWX and the VC-backed venture have been ongoing, although other bidders may also be in the picture. [Consumer, M&A] Comment!
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3:24 PM Cowen says when you consider the potential of Threshold Pharmaceuticals (THLD -0.2%) pancreatic cancer drug TH-302, the stock is definitely undervalued. The firm estimates the sales potential for the drug in the U.S. alone is close to $1.5B. [Healthcare, Quick Ideas] Comment!
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3:06 PM Human Genome (HGSI +0.6%) should still see a higher bid , says Baird, noting they "remain confident" that a higher bid will emerge despite Glaxo's (GSK +0.3%) indication it will suspend the tender offer while the company's poison pill is in effect. The firm met with management and said their calculations point to a bid closer to $20. [Healthcare] Comment!
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3:06 PM With mounting losses in its home market, Spain's Banco Santander (STD) is under political pressure to unload at least a portion of its profitable Brazilian unit. Likely bidders might be Banco do Brasil (BDORY.PK) or Bradesco (BBD). Shares of Santander's Brazilian unit have been on the rise this year in anticipation of the sale. [Financials] Comment!
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3:00 PM On the hour: S&P -0.48%. 10-yr +0.34%. Euro -0.14% vs. dollar. Crude +0.22% to $90.86. Gold +0.96% to $1572.45. Comment!
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2:57 PM Shares of Vera Bradley (VRA +6.7%) move higher ahead of the company's earnings report slated to be released next week. The word from traders is that shares hit oversold territory as they etched out multi-year lows earlier this week on pesky concerns about luxury spending in the U.S. [On the Move, Consumer] Comment!
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2:53 PM Despite the recent pullback ahead of management's tempered guidance expectations yesterday, Teva (TEVA -0.2%) shares should still be avoided, says Piper Jaffray. The firm sees limited visibility for the company's generics businesses and lowers its price target to $44 from $45. [Healthcare] 2 Comments
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2:52 PM Extorre Gold Mines (XG +12.3%) approves the adoption of a shareholder rights plan, effective immediately but subject to shareholder ratification within six months in order to remain in place. [Commodities, On the Move] Comment!
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2:51 PM Maxwell Technologies (MXWL -11.4%) is plunging to new multi-year lows following a downgrade to Neutral from Wedbush. The firm says its checks indicate new competition in Maxwell's ultracapacitor business from China's Lishen, while adding it believes Lishen's sales go against the spirit of its outsourcing partnership with Maxwell. (previous) [Tech, On the Move] Comment!
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2:47 PM A shareholder group led by NY State Comptroller Thomas DiNapoli urges Chevron (CVX) to settle a 20-year legal battle against indigenous people in the Ecuadorian rainforest. But the Ecuadorian court's damage award in the alleged dumping of oil waste - $18B - isn't chump change, and CVX says the case is fraught with fraud. [Energy, Global & FX] 4 Comments
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2:44 PM Medicis (MRX +1.3%) gains on positive comments out of Goldman earlier today. The firm says the company is one of the most likely M&A targets in its peer group, and notes that its growth potential is under appreciated. It reiterats a Buy rated with a $45 price target. [Healthcare, On the Move] Comment!
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2:44 PM Central bankers are keeping it low-key for now, writes Saxo Bank's Steen Jakobsen, but they're surely realizing they've fallen behind the curve. China is slowing precipitously, the rest of Asia is suffering from a cutoff in credit as EU banks pull back, and, of course, there's Europe. The central banks aren't going to sit on their hands forever. He's buying GLD, GDX, and HYG. [Global & FX, Commodities] 11 Comments
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2:38 PM Brazil's Embraer (ERJ) says it is preparing a bid to sell light attack aircraft to the U.S. Air Force by the end of June. The U.S. government cancelled a $355M contract with ERJ in February; a sale would have been the first deal between ERJ and the U.S. Air Force. Barron's sees the no. 3 aircraft maker as a long-term opportunity for investors willing to ride out short-term turbulence. Comment!
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2:35 PM Shares of Dollar Thrifty (DTG +3.3%) jump higher off of a report that it's closing in on seeing a new offer from Hertz Global (HTZ +2.1%). It appears the biggest hurdle in the long-anticipated deal - finding a buyer for assets Hertz will need to divest - may have been finally cleared. [On the Move, Consumer] Comment!
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2:30 PM Facebook (FB) is reportedly interested in buying Opera Software, maker of the namesake browser. Opera's mobile base (NetMarketShare estimates it has a 12% share of mobile browsing, though that's down sharply Y/Y) could be of interest to Facebook, which is reportedly prepping a smartphone and continues to push its HTML5 mobile app platform, which allows apps to be accessed through a browser regardless of OS. Update: A source tells The Next Web Opera is talking to suitors, but doesn't know if Facebook is one of them. (earlier) [Tech, M&A] 1 Comment
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2:18 PM "No decision has been taken" on whether Formula One will go through with a $10B listing on the Singapore stock exchange, says Chairman Peter Braback. The Facebook situation certainly weighs, and the sale of a 21% stake earlier this week to BlackRock and Norway's SWF may take pressure to list off of owners CVC Partners. [Global & FX] Comment!
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2:17 PM Not much equivocation from Marc Faber, who sees a "100% certainty" of a global recession in 2013. Though global stocks are ready to rebound in the short term, and markets would launch a relief rally if Greece exits the euro, a recession is sure to come thanks less to Europe's travails but from a "meaningful slowdown" in India and China. [Global & FX, Quick Ideas] 2 Comments
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2:17 PM Though Pandora (P -1.3%) rocketed higher yesterday on the back of an FQ1 beat and better-than-expected guidance, Jim Edwards sees the continued surge in Pandora's operating expenses as more evidence its business model isn't working. Pandora's royalties to copyright owners, which roughly increase in proportion with its listener hours, rose 91% Y/Y in FQ1, well above revenue growth of 58%. Better ad monetization is Pandora's only hope for eliminating this gap. [Tech, Quick Ideas] Comment!
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2:15 PM S&P says Delta Air Lines (DAL +1.6%) could see a ratings upgrade if its finances improve, as the agency shifts its outlook to positive from stable on the carrier. Delta still has three notches to go before its credit rating reaches investment grade. [Consumer] Comment!
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2:12 PM America's Car-Mart (CRMT -8.9%) slides after reporting a mixed FQ4 result late yesterday, beating on a per share basis but coming up shy on revenue. Despite the mixed result, net profit actually jumped 15% as the used-car seller recorded stronger volume and selling prices. [Earnings, On the Move] Comment!
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2:05 PM Home Depot (HD -0.1%) sees some insider buying action from director Armandi Codina with the exec picking up ~$999K worth of shares at an average buy price of $48.37. [Consumer] Comment!
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2:00 PM Legal software firm EPIQ Systems (EPIQ +4.9%) jumps after William Blair starts coverage with an Outperform. The firm notes EPIQ now generates 2/3 of its revenue from the growing e-discovery software market, rather than its legacy bankruptcy administration solutions. Guidance Software (GUID) also participates in the e-discovery market. (Q1 results) [Tech, On the Move, Quick Ideas] Comment!
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2:00 PM On the hour: Dow -0.34%. 10-yr +0.29%. Euro -0.09% vs. dollar. Crude +0.24% to $90.88. Gold +0.95% to $1572.35. Comment!
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1:47 PM BMC Software (BMC +2%) spikes a little after InformationWeek reports tech giants and P-E investors have expressed interest in buying part or all of the company. The tech companies aren't specifically named, but are said to be from a list that includes Dell, Cisco, Oracle, EMC, and IBM. Activist investor Elliott Associates is pushing for a sale, but BMC has thus far resisted its efforts. Rival Quest Software (QSFT +4%) is rallying on reports Dell is in talks to buy the company. [Tech, On the Move, M&A] Comment!
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1:46 PM More dysfunction at Sirius XM Radio (SIRI +0.1%): The company reports in a SEC filing that Leon Black won back his seat on Sirius' board - despite seeing more shareholders vote against re-election than voted in favor. The CEO of Apollo Global Management benefited from the fact that no alternative candidates were on the ballot. [Consumer] 2 Comments
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1:39 PM Alexion Pharmaceuticals (ALXN -0.8%) dips after pricing its 5M share secondary offering at $93.02 per share. [Healthcare] Comment!
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1:36 PM Chip design software firm Mentor Graphics (MENT -12.7%) tumbles after missing FQ1 revenue estimates. The decline comes even though Mentor's FQ2 guidance (revenue of $240M and EPS of $0.17) is largely in-line with estimates, and its FY13 EPS guidance of $1.37 is above a $1.33 consensus (revenue guidance of $1.1B is in-line). It could provide more ammo for 15% owner Carl Icahn, whose efforts to force a sale have thus far been stymied. [Tech, Earnings, On the Move] Comment!
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1:31 PM Is Best Buy (BBY +1.9%) getting full credit from investors for its increasing role as an iPhone seller? A note from Gene Munster tips off that the company gets paid $25 to $75 for new iPhone subscribers and contributes significantly to the channel as apparently not everyone runs straight home to buy an iPhone online after getting a little touchy-feely at BBY stores. [Consumer] 1 Comment
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1:11 PM Riverbed (RVBD +6.1%), which was down 44% from the time it issued a bleak Q1 report and Q2 guidance, is rallying after Gabelli's Hendi Susanto started coverage with a Buy and $30 PT. The firm is bullish due to the growth potential of the WAN optimization hardware market, in which Riverbed has a ~50% share, and which the company estimates is only 15%-20% penetrated. Susanto also notes rival Blue Coat was sold at much higher multiples than what Riverbed currently trades at. [Tech, On the Move, Quick Ideas] 1 Comment
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1:10 PM Illinois Tool Works (ITW +1.2%) gets a lift from an upgrade by JPMorgan to Overweight. The firm says ITW is committed to overhauling the diversified manufacturer's business portfolio. The company's performance has been weighed down by too many slow-growing businesses and a highly decentralized corporate structure, and recent activist moves to restructure its business indicate the company is making tangible moves to reinvent itself. [On the Move] Comment!
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1:02 PM S&P cuts its ratings on five Spanish banks, and affirms the ratings on another nine. Santander (STD) and BBVA aren't touched, but remain on "CreditWatch with negative implications." [Global & FX, Financials, Breaking News] 3 Comments
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1:00 PM On the hour: Dow -0.31%. 10-yr +0.31%. Euro -0.12% vs. dollar. Crude +0.14% to $90.78. Gold +0.52% to $1565.65. Comment!
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12:55 PM What now? After Sycamore Partners backed off a deal to purchase the company at $3.05 a share, Talbots (TLB -38.1%) faces the moment of truth - nobody wants to buy it. Focus Investment Banking's Abe Garver says the company has already talked to every potential buyer without any positive results, while the advertised turnaround isn't on track with 90 stores closures and falling comparable-store sales the lead stories. [Consumer, On the Move] Comment!
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12:55 PM With credit conditions worsening abroad, Brazil makes it easier for three of the country's giant firms - VALE, Petrobas (PBR), and Electrobas - to tap the state development bank for funding. Together, the three make up 25% of the Bovespa index, which is +1.3% today. EWZ +2.2%. [Global & FX] Comment!
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12:52 PM Mobile devices now make up 20.2% of U.S. web traffic, according to ad network Chitika - smartphones account for 14.6%, and tablets, which are seeing traffic grow especially quickly, make up 5.6%. Such growth, which AT&T (T) and Verizon (VZ) claim justifies their spectrum-purchase attempts, begs the question of how long carriers can maintain their muted capex spending - infrastructure providers such as ERIC, ALU, JNPR, FFIV, ALLT and PKT badly hope there's a pickup. (also) [Tech] Comment!
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12:51 PM Watson Pharmaceuticals (WPI -0.1%) says it's filed an application with the FDA to market a generic version of Auxilium Pharmaceuticals (AUXL +1.1%) Testim 1% gel, a testosterone replacement therapy. [Healthcare] Comment!
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12:49 PM Three lunchtime reads:
1) Is QE3 just around the corner?
2) Humbler horizons: America's potential GDP - and its limits
3) Why $1600/oz. is my price at which to return to the gold standard [U.S. Economy, Commodities] Comment! -
12:49 PM Elan (ELN +7.6%) shares see notable strength following positive comments on the potential of the company's Alzheimer's drug Bapineuzumab: The FDA is signalling "they will be very reasonable about getting something to patients that has a modicum of benefit," Chairman Robert Ingram says. Also goosing shares is mention of ELN as a takeover target: "If an offer comes, we can't ignore it..." [Healthcare, On the Move] Comment!
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12:46 PM With the 0.88% yield on its 10-year paper apparently not doing the trick, Japan signs up super-popular all-girl band AKB48 to help hawk JGBs to the citizenry. The group will headline a summer campaign composed of a number of other Japanese celebrities. [Global & FX] 1 Comment
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12:34 PM In-line with an earlier rumor, Chinese sites are reporting iPhones will sold in China will come with Baidu (BIDU) search support starting next month. No word on whether Baidu will replace Google as the default option - it was previously suggested Baidu wouldn't. Though a dominant player in Chinese PC search, Baidu was recently estimated to have only a 35% share of Chinese mobile search, in spite of support from many local phone vendors. [Tech] Comment!
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12:33 PM Hudson City Bancorp (HCBK) could fetch a 31% premium to its current price in a sale to an acquirer "that could take substantial liability marks," reckons Stern Agee's Matt Kelley. Continued to be mentioned as a possible bidder is New York Community Bancorp (NYB). [Financials, M&A] Comment!
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12:30 PM Procter & Gamble (PG +0.4%) says it will add latches to its mini-packs of detergent in order to make them safer after reports of children mistaking them for candy proliferated. [Consumer] Comment!
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12:27 PM WESCO International (WCC -1.4%) slips on a tepid initiation by Wunderlich earlier this morning, starting the shares with a less than stellar Hold rating and a price target of $64 per share. Wunderlich says the weak rating is driven by a below-consensus 2012 EPS view largely resulting from revenue growth 80-90 bps slower than Street projections. The firm adds that near-term macro factors could present 2H12 challenges given the emergence of slowing business spending over the past five to six months. [On the Move] Comment!
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12:19 PM Android's (GOOG) tablet market standing receives another hit (previous) courtesy of Cisco (CSCO), which says it will no longer invest in its Cius enterprise tablet line. Instead, the company will focus on providing IP communications software for mobile devices via its Jabber and WebEx families. Cisco's move comes as enterprise iPad (AAPL) usage takes off, both due to corporate purchases and IT's "bring your own device" (BYOD) trend. [Tech] 4 Comments
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12:14 PM Maxwell Technologies (MXWL -10%) takes a big hit from a downgrade to Neutral at Wedbush, citing elevated competitive and supply chain risks. The firm esentially is throwing in the towel on the current year, as evidenced by the slashing of its price target to $8 from $20. [On the Move] 1 Comment
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12:13 PM Airbus (EADSY.PK) considers a plan to put larger seats on aisle seats of new A320a so that carriers can earn extra revenue on passengers that want (or need) extra space. The move would mark yet another incremental step in the industry toward a pay-for-services-used model that Spirit Airlines (SAVE +1.6%) seems to be making a splash with. [Consumer] Comment!
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12:07 PM Spain looks set to inject another €19B into Bankia, giving the government about a 90% ownership stake in the troubled lender. This is in addition to €4.5B in preferred shares the government owned and flipped into common 2 weeks ago. The new capital will go towards upping provisions against losses in the bank's real estate portfolio. [Global & FX, Financials] 3 Comments
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12:01 PM Education stocks continue to bounce around wildly as select names are viewed as susceptible to the whims of an ongoing Senate debate on extending a 3.4% federal student loan rate - set to expire if a deal isn't worked out. While the Democrats and Republicans block each other's proposals, analysts reading the tea leaves say a deal will get done to avert upsetting parents (voters) before November's elections. COCO +9.7%, NAUH +15.1%, CECO +8.2%, EDMC +7.2%. [Consumer, On the Move] Comment!
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12:00 PM Groupon (GRPN) bear Rocky Agrawal has obtained an e-mail suggesting the company will launch a credit-card reader that charges a fee of just 1.8%, along with a $0.15 transaction charge. This compares with a fee of 2.75% for fast-growing Square, and 2.7% for solutions (I, II) from PayPal (EBAY) and Verifone (PAY), but with no transaction charge. Consider this part of Groupon's efforts to brand itself as a broader solutions provider for local merchants, rather than a mere daily deals company. [Tech] Comment!
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12:00 PM On the hour: Dow -0.15%. 10-yr +0.25%. Euro -0.11% vs. dollar. Crude +0.35% to $90.97. Gold +0.51% to $1565.45. Comment!
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11:59 AM In "a moment of major promise and considerable danger," Royal Dutch Shell (RDS.A) will begin drilling test wells off the coast of northern Alaska in July, opening a new frontier in U.S. oil exploration. "We never expected a Democratic president... to open up the Arctic Ocean for drilling," Sierra Club's Michael Brune laments. [Energy, U.S. Economy] 4 Comments
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11:57 AM Home values increased 0.7% in March and stand 1.8% lower Y/Y, reports Zillow. Rents rose sharply, up 1.6% on the month and 3.2% Y/Y. The report also shows a big decline in foreclosures, confounding ideas they were set to increase following the settlement between the banks and the states in February. [U.S. Economy] Comment!
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11:47 AM The labor crunch in Canada’s oil patch is not yet as bad as it was leading up to 2008, but Matt Underhill warns it could become far worse if firms do not adapt and expand their recruiting tactics. A recent report found Canada’s energy industry would need 40K more people in the next few years just to replace those planning to retire. [Energy] Comment!
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11:39 AM European shares close green for the 2nd consecutive session after a day of swings. Stoxx 50 +0.4% (gained about 1% on the week), Germany +0.4%, France +0.4%, Italy +0.4%, Spain +0.3%, U.K. flat. Euro flat at $1.2526 after earlier sliding to a $1.24 handle for the first time in 2 years. [Global & FX] Comment!
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11:38 AM Neowin.net provides details about Dell's (DELL) first Windows 8 (MSFT) tablet. The specs appear ho-hum: a 10.1" display, a dual-core Intel (INTC) Clover Trail CPU with integrated graphics; dual cameras; a solid-state drive; and a thickness of 0.4" (the new iPad is at 0.37") . Expect H-P, Nokia, and about a dozen or so Asian OEMs to launch similar hardware, only with some models sporting ARM-based (ARMH) CPUs instead. (more on Windows 8) [Tech] 2 Comments
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11:36 AM SunOpta (STKL -0.5%) says it's selling its Canadian natural health products distribution business to an affiliate of Banyan Capital Partners for CDN $14.7M. Banyan will pay cash on closing of CDN $14M and provide a CDN $700K note which is contingent on future EBITDA earnings targets. The deal is expected to close early in June. [Healthcare] Comment!
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11:34 AM Mario Monti invites Germany's Merkel, France's Hollande, and Spain's Rajoy to Italy for a summit following the June 17 Greek elections. Merkel has reportedly accepted the offer. Its seems like the sort of news floated to show the leaders are unconcerned about much happening between now and then. [Global & FX] Comment!
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11:29 AM Rue21 (RUE +7.8%) pops after its Q1 results beat Street estimates late yesterday on an 18% Y/Y jump in revenue. Net earnings rose 21% on record strong sales growth and better margins. Net sales increased to $205M from $172M in the prior-year period. Additionally, the company has authorized a $50M share repurchase program. [Earnings, On the Move] Comment!
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11:21 AM GreenHunter Energy (GRH +4.2%), fresh off announcing an enhanced Eagle Ford presence through the development of seven new salt water disposal wells, says it has expanded its Appalachian equipment assets to service oil and gas operators active in the Marcellus and Utica shale plays. [Energy, On the Move] 2 Comments
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11:13 AM EMC (EMC +0.9%) edges higher following a positive Barron's column. The storage giant's cloud exposure, recent product refresh, 80% VMware (VMW) stake, and ability to weather a recession are praised. EMC slumped yesterday on account of rival NetApp's (NTAP) disappointing July quarter guidance. [Tech, Quick Ideas] 1 Comment
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11:12 AM Analysts at Pritchard Capital say insiders at energy companies such as Newfield (NFX), W&T Offshore (WTI), Bill Barrett (BBG), Swift Energy (SFY) and Hess (HES) have been buying shares. While not a guarantee of a bottom, the firm finds the trend encouraging and "a sign that the stocks are presenting some very good values at current levels." [Energy, Quick Ideas] 1 Comment
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11:10 AM Both the Canadian and Aussie dollars are considered (rightly or wrongly) commodity currencies, but traders - by a large margin - are placing bets the loonie will perform better than the aussie as China slows, the RBA cuts rates, and the BoC stands pat or even hikes. FXA vs. FXC this year. [Global & FX] Comment!
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11:01 AM After bouncing a little yesterday, Facebook (FB -3.7%) is selling off again after Capstone Investments started coverage with a Hold, citing concerns about its valuation and the performance of its premium ads. It was reported yesterday Facebook, whose ad sales efforts have come under fire, will allow advertisers to buy premium ads via its site, or through third parties. This is likely to boost demand, but could come at the cost of lower ad rates. Zynga (ZNGA -4.4%) is also lower. [Tech, On the Move] Comment!
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11:00 AM On the hour: Dow -0.27%. 10-yr +0.27%. Euro -0.16% vs. dollar. Crude +0.27% to $90.91. Gold +0.27% to $1561.75. Comment!
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10:59 AM The EU escalates its fight with Argentina, filing a formal complaint with the WTO challenging the country's import regulations. EU officials say Argentina's decision to nationalize Repsol's local YPF unit was only the most recent in a series of moves by Cristina Kirchner's government that have harmed foreign investors and manufacturers. (earlier) [Global & FX] 1 Comment
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10:58 AM Shares of PDI (PDII +3.1%) are higher this morning after the company says it's landed a contract with a new customer to provide promotional services across multiple communications channels that will target primary care physicians. The contract, subject to FDA product approval, is expected to generate total revenue to PDII of approximately $57M over the next two years, with $10M - $12M to be recorded in H212. [Healthcare, On the Move] Comment!
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10:58 AM UTX received about $38B in orders at relatively tight spreads to Treasurys on its $9.8B bond offering, which is being used to fund the $18.4B acquisition of Goodrich (GR). The sale was the largest this year and the 6th largest on record. That's how it's done Facebook, write Andrea Johnson and Danielle Robinson. [Financials] Comment!
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10:48 AM B&G Foods (BGS +2.6%) trades higher after the company is featured prominently on CNBC's Mad Money as a defensive play with an attractive growth potential and lush 4.9% yield. [Consumer, On the Move] 1 Comment
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10:40 AM General Motors (GM +0.6%) discloses in a SEC filing that the wife of its CFO is a partner in an ad agency that received $600K in services last year. The company says that although transaction has been properly ratified, all the required procedures covering related party transactions weren't followed. [Consumer] Comment!
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10:39 AM Russian mobile carrier VimpelCom (VIP -10.9%) slumps after receiving an injunction from Russian antitrust regulators that stems from a ruling shareholder Telenor illegally acquired preferred shares of VimpleCom from fellow carrier Weather Investments. As a result, a VimpelCom subsidiary is barred for paying dividends, and the powers of its board and auditors have been suspended. This, in turn, has led VimpelCom itself to defer a dividend payment. (previous) [Tech, On the Move] 1 Comment
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10:39 AM JPMorgan gives some added traction to Eastman Chemical (EMN +1.7%) this morning after the firm upgraded the stock to Overweight, citing valuation and free-cash-flow growth. The firm also raises its price target to $58 from $57. [On the Move] Comment!
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10:37 AM S&P cuts its credit rating on Exterran (EXH -2.6%) to B+ from BB, citing weakness in the energy service provider's domestic contract compression and international fabrication businesses that have hurt EXH's operating performance and increased its debt leverage. [Energy, On the Move] Comment!
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10:33 AM A number of shipping stocks run up gains after Frontline's earnings report paints the beat-up sector in a more favorable light. Though shippers still remain highly-susceptible to any signs of global economic malaise, oversupply issues seem to be slowly self-correcting in the industry. Advancers: SFL +6.2%, OSG +4.8%, NEWL +2.4%, NMM +2.7%, DRYS +1.5%. [Consumer, On the Move] Comment!
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10:27 AM Uroplasty (UPI +9.6%) pops after its FQ4 results beat estimates on narrower losses. Global sales increased 39% Y/Y, while sales in the U.S. grew by 63%. The higher U.S. numbers were driven by a 79% increase in sales of its Urgent PC Neuromodulation System, and a 53% jump in sales of its Macroplastique. Separately, JMP Securities upgraded the shares to Outperform on the back of the better-than-anticipated report. [Healthcare, Earnings, On the Move] Comment!
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10:26 AM Salesforce.com (CRM +1%) rises a little on an upgrade to Outperform from Oppenheimer. The firm strikes a bullish tone on the enterprise cloud software space in general, and praises its favorites in the group for having "disruptive technologies." It also sees the flurry of M&A activity witnessed in the space over the last year continuing. Other recommended names: CNQR, KNXA, CTCT, DWRE, CARB, and (though cloud is only a small % of its sales) ORCL. [Tech, Quick Ideas] Comment!
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10:24 AM Chesapeake (CHK +1.8%) shares open higher on news of Carl Icahn's bet on the company, but Antoine Gara reminds that the Icahn rumors aren't a reason for investors to start buying. With or without Icahn, asset sales are the make or break issue as CHK tries to bridge a big funding gap. Also worth noting: The last time Icahn held a big CHK stake, he was in and out with barely a ripple. [Energy, Quick Ideas, On the Move] 1 Comment
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10:18 AM Satellite imagery firms DigitalGlobe (DGI +9.1%) and GeoEye (GEOY +6.5%) are spiking on rumors of a higher bid for DigitalGlobe. The company, which now trades at $17.12, turned down a $17/share offer from GeoEye earlier this month. [Tech, On the Move, M&A] Comment!
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10:18 AM The Treasury declines to name China a currency manipulator in its semi-annual exchange rate report to Congress (a report the Treasury usually waits until Happy Hour to release). [Global & FX] 1 Comment
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10:11 AM The S&P 500 +0.2%, gets a little bounce following the better-than-expected consumer sentiment print. At 79.3, it's the highest read since October 2007. The improvement was led by a big rise in the current conditions index (to 87.3 from 82.9), but expectations declined to 71.7 from 72.3. [U.S. Economy] 4 Comments
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10:10 AM Eastman Chemical (EMN +1.9%) wins approval from the EU to buy Solutia (SOA +0.5%) for $3.4B. EMN has said it expects the merger to be immediately accretive and the group would save ~$100M/year in costs by the end of next year. [M&A, On the Move] Comment!
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10:10 AM Goldman recommends buying Allergan (AGN +0.2%) on its recent pullback, saying the company is well positioned with its diversified portfolio, emerging market exposure, and high growth potential. The firm reiterates its Buy rating with a $106 price target. [Healthcare] 1 Comment
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10:07 AM Mattress stocks run hot after Piper comes out with comments tipping off that April sales numbers look strong. Gainers: Mattress Firm (MFRM) +5.7%, Select Comfort (SCSS) +6.7%, Sealy (ZZ) +5.6%, Tempur-Pedic (TPX) +6.1%. [On the Move, Consumer] 1 Comment
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10:03 AM Piper's Gene Munster details the reasons he sees Apple (AAPL -0.6%) reaching $1,000 over the next couple of years. Among them: a completely redesigned iPhone; an Apple TV set going for $1,500-$2,000; limited iPhone subsidy cuts (partly due to the low churn rates of iPhone users); continued margin strength; China demand; soaring tablet sales; and enterprise Mac/iOS adoption. [Tech, Quick Ideas] 19 Comments
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10:02 AM "Another bazooka" may be necessary for Spanish banks facing deposit withdrawals, sitting on big losses on their government paper holdings, and having €85B of maturing debt in Q2 and Q3. The trouble is banks have little left in the way of collateral for further LTRO borrowing. They need QE, not another LTRO, writes Nomura. [Global & FX, Financials] 1 Comment
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10:00 AM On the hour: Dow -0.05%. 10-yr +0.21%. Euro +0.10% vs. dollar. Crude +0.44% to $91.06. Gold +0.72% to $1568.75. Comment!
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9:57 AM Internal devaluation (otherwise known in the EU as austerity) is far more painful than external devaluation (letting the currency go), finds Morgan Stanley after aggregating past results from these options. Sadly for the Club Med states, this hasn't yet been an option, but what happens if the voters get a gander at the data? [Global & FX] 1 Comment
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9:56 AM An EU ban on Iran's oil could have major consequences for European oil companies in Asia, as the way many oil transactions are carried out in Asia could result in the companies inadvertently breaking the rules. Even best efforts to comply with the sanction law could be undermined by a widespread industry practice of blending fuel oil from several sources. [Energy, Global & FX] Comment!
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9:53 AM Nordstrom (JWN +0.5%) plans to spend $140M on IT this year to help boost its ability to integrate mobile point-of-sale devices at stores. Management at the company are attempting to take customer service to a new level that includes mobile interaction with favored customers. [Consumer] Comment!
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9:43 AM Gulfport Energy (GPOR +2.9%) is upgraded to Outperform by RBC Capital, which notes shares have been cut nearly in half due to concerns over GPOR's Utica shale play. But Utica drilling is going well, the firm says, and should ultimately bring good economics with even relatively modest assumptions. GPOR has the most leverage to Utica of any public E&P, with 62,500 net acres. [Energy, Quick Ideas, On the Move] Comment!
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9:42 AM Quest Software (QSFT +4.3%) jumps to $26.26, 14% above IVP's $23/share buyout price, following a Bloomberg report that Dell (DELL) is interested in the systems management software vendor. Following Dell's recent crash, Quest's market cap is nearly equal to 10% of Dell's. A Dell buyout could lead to interest from another IT giant in Quest rival BMC Software (BMC +1.1%), which is under pressure to sell itself. [Tech, On the Move, M&A] Comment!
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9:42 AM New York Mortgage Trust (NYMT -4.5%) prices a secondary offering of 2.75M shares at $6.65/share (yesterday's close $6.93). (PR) [Financials, On the Move] Comment!
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9:33 AM Verizon Wireless' (VZ, VOD) spectrum purchases from cable providers will likely be approved in spite of intense scrutiny and criticism, analysts and industry insiders maintain. Verizon's offer to sell blocks of 700 MHz. spectrum are seen as an adequate compromise (though T-Mobile isn't interested). However, yesterday, Senator Herb Kohl wrote a letter expressing concerns about the purchases, and the accompanying reseller deals. The FCC's review of the deal is set to end on August 7. [Tech, M&A] Comment!
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9:31 AM At the open: Dow -0.11% to 12516. S&P +0.06% to 1321. Nasdaq +0.05% to 2841.
Treasurys: 30-year +0.4%. 10-yr +0.21%. 5-yr +0.1%.
Commodities: Crude +0.1% to $90.75. Gold +0.44% to $1564.35.
Currencies: Euro -0.1% vs. dollar. Yen -0.01%. Pound 0.%. Comment! -
9:27 AM The punch in the gut that Hasbro (HAS) will take over Paramount Pictures' late decision to delay the release of G.I. Joe: Retaliation gets a little clarity with an estimate from Needham that $50M-$100M in revenue will get pushed into 2013 from 2012. Insiders say that tepid social networking buzz for the movie and the threat of getting crushed by The Avengers both factored into Paramount's decision to pull the plug. [Consumer] Comment!
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9:23 AM Curious in a country drowning in production overcapacity, Beijing gives the green light for Baosteel Group to build a 10M ton/year steel project in Guangdong province. Trying to stimulate growth, the government has indicated it will fast-track a number of other investment projects this year (Baosteel submitted this one for approval in 2008). [Global & FX] 1 Comment
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9:15 AM H-P's (HPQ) webOS team, its fate in limbo since the company ended hardware development for the platform, is being acquired by Google (GOOG), The Verge reports. Possible reasons for Google's interest: the ability to use elements of webOS' UI in Android; the commercialization of the Enyo app development platform; and the fact Android design chief Matias Duarte previously worked on webOS. Chances are Google paid a lot less than H-P's prior asking price of $1.2B. (HPQ layoffs) [Tech, M&A] 2 Comments
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9:15 AM Market preview: Stock futures slip along with European bourses as shares of Spain's Bankia were suspended from trading ahead of a board meeting to approve a recapitalization plan. S&P -0.2%. Barring further unwelcome headlines in a headline-driven market, today's trading action could be light ahead of the three-day weekend. Still ahead: UofM consumer sentiment. Comment!
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9:15 AM Frontline (FRO) moves up 6.7% premarket after its Q1 report smashes the expectations of analysts. The company says the oil tanker market is recovering faster than it anticipated. [On the Move, Consumer] Comment!
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9:05 AM With a record of poor shareholder returns, why do the TBTF banks (JPM, C, BAC) even exist, writes Sheila Bair. Capital markets certainly wouldn't finance such "unstable behemoths" if it weren't for their de facto government backstop. Jamie Dimon can provide a better return to shareholders by recognizing his bank is worth more in smaller pieces. [Financials] 61 Comments
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9:00 AM On the hour: S&P -0.3%. 10-yr +0.23%. Euro -0.20% vs. dollar. Crude -0.25% to $90.43. Gold +0.3% to $1562.15. Comment!
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8:59 AM Talbots (TLB) drops 23.1% in premarket trading after announcing that its exclusivity agreement with Sycamore Partners expired with no deal in place. The company says it's now seeking strategic alternatives. Also: FQ1 earnings. [On the Move, Consumer] 1 Comment
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8:58 AM At the top of Goldman Sachs' VIP List of 50 stocks most important to hedge funds is Apple (AAPL), followed by GOOG, ESRX, MSFT, QCOM, C, GM, PCLN, JPM and LMCA. Leading the list of the firm's top 50 short positions is JNJ, XOM, INTC, IBM, AMZN, T, CVX, VZ, DUK and DIS. [Quick Ideas] 12 Comments
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8:48 AM Standard & Poor's upgrades its credit rating for El Paso Pipeline Partners (EPB) into investment grade territory, to BB- from BBB, citing the company's growing size and asset diversity, and expectations that its new Kinder Morgan parent will manage it more as a stand-alone MLP. [Energy] Comment!
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8:44 AM Catalan President Artur Mas appeals to Madrid for a rescue, saying his region (home to Barcelona) is running out of debt financing options. "We don't care how (Madrid helps), but we need to make payments at the end of the month." The euro falls to session lows at $1.2510. [Global & FX, Breaking News] 51 Comments
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8:39 AM Green Mountain Coffee Roasters (GMCR) independent director Douglas Daft has resigned from the board for personal reasons, according to a SEC filing. The company says it won't replace the open seat - preferring to go with a board of eight members instead of nine. Shares of GMCR -0.2% premarket. [Consumer] Comment!
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8:38 AM Falling jet fuel prices could save airlines ~$5.5B, yet analysts have failed to recognize the sector's huge growth potential and continue to substantially undervalue airline stocks, J.P. Morgan says. The firm expects net profits to rise ~20% at Alaska Air (ALK), ~40% at JetBlue (JBLU) and Southwest (LUV), and over 50% at US Airways (LCC) and United Continental (UAL). [Consumer] Comment!
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8:35 AM "Greece is a failed state," says incoming Deutsche Bank co-CEO Jurgen Fitschen, speaking at a conference. Moving on to Spain, he says the numbers needed to revive the country's banks are "staggering." (earlier on Bankia, where the bailout size keeps growing) [Global & FX] Comment!
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8:29 AM Procter & Gamble's (PG) plan to offer consumers small lightweight packets of detergent in place of powder or liquid versions hits a snag after doctors around the country report a growing number of poisoning cases related to the products. The issue appears to be that the brightly-colored packets of detergent are being mistaken by children for candy and ingested. [Consumer] 5 Comments
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8:27 AM BP confirms its Nabucco pipeline project to import natural gas from Azerbaijan to Europe will take on a far more limited scope and reach only Europe's border with Turkey. The decision appears to mark the end of a key strategic initiative that had political backing from the EU and U.S. to reduce Russian dominance over European gas supplies. [Energy, Global & FX] 2 Comments
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8:26 AM There Will Be Blood. A knock at the door could mean jackpot for Kansas farmers in certain areas, where oil companies are offering up to $1,250/acre for mineral rights that were going for $25/acre a year ago. One beneficiary could be John Deere (DE) as formerly strapped farmers swap their old equipment for new. [U.S. Economy] Comment!
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8:25 AM Tsakos Energy Navigation (TNP): Q1 EPS of -$0.19 beats by $0.05. Revenue of $66.2M (-7.6% Y/Y) misses by $3M. Shares +3.1% premarket. (PR) [Earnings, On the Move] Comment!
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8:19 AM Christopher Matthews is the latest to sound the death knell on Best Buy (BBY) and RadioShack (RSH) with a take that delves right into the Death-by-Amazon thesis on the big-box retailers. Though he notes the well-documented competitive pressures the Internet brings down on the companies, it's also the seismic shift in consumer buying trends as integrated devices reduce electronics buying needs that sits as a tough overhang on sales to overcome. [Consumer] 5 Comments
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8:17 AM MIT's Billion Prices Project, which spent much of 2010 and 2011 showing inflation at a higher rate than official numbers - is now showing inflation falling faster than the CPI data. It's annualized pace has fallen below 2% while the government pegs it closer to 3%. [U.S. Economy] Comment!
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8:15 AM Rosetta Genomics (ROSG) -10.4% premarket to $14.59 after saying it will sell 570,755 shares to investors at $11.50/share, a 29% discount to its Thursday closing price. The molecular diagnostics firm's stock has skyrocketed tenfold since May 16 and more than doubled in just the past two days. [Healthcare, On the Move] Comment!
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8:05 AM "Monti couldn't reform (his) own country, now he will deliver substantial changes in (the) EU treaty that requires loss of sovereignty for 17 nations," asks Uldis Zelminis, responding to the Italian PM's confidence he can persuade the EU to go for common eurobonds. [Global & FX] 1 Comment
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8:00 AM Wal-Mart (WMT) says it's seeing good results with a pilot program of small-sized stores called Walmart Express. Execs say the stores are showing profits and the company could roll out hundreds more in the near future. Designed to catch spur-of-the-moment shoppers and small enough to tuck into tight spaces, Walmart Express stores could pose a threat to Walgreen (WAG), CVS Caremark (CVS), and Rite Aid (RAD) in the future. [Consumer] 6 Comments
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8:00 AM On the hour: S&P +0.02%. 10-yr +0.13%. Euro +0.27% vs. dollar. Crude +0.34% to $90.97. Gold +0.27% to $1561.75. Comment!
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7:56 AM Mario Monti's insistence he can bring Germany around to acting in the EU's "common good" may rest on support from Merkel's domestic opposition parties, which are far more disposed to liability sharing. They believe they have the blueprint for such with a so-called European redemption fund floated back in November. [Global & FX] 2 Comments
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7:51 AM Are regional carriers on the way out? The Cranky Flier blog dissects Delta Air Lines' (DAL) deal to buy 88 717s from Southwest Airlines to draw the conclusion that the carrier will "slash and burn" regional 50-seater flights that it runs under the Chautauqua, Comair, ExpressJet, Pinnacle, and Skywest banners. Not only are the routes to small cities money-losers, but a new union contract with pilots limits the number of small aircraft they will fly. [Consumer] 1 Comment
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7:37 AM The real nightmare scenario for the EU power elite is what if Greece exits EMU and thrives, says BNY's Simon Derrick. If Greece leaves, devalues, collapses, and then quickly rebounds (a la Iceland, though it was never part of the eurozone), the other struggling states (and their electorates) are sure to take notice. [Global & FX] 17 Comments
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7:25 AM The three board members who oversaw risk at JPMorgan (JPM) were notable for their lack of experience at managing risk at financial institutions. The Bank of Dimon is the only one of the TBTF crowd that doesn't have someone a bit closer to the industry on its risk committee. [Financials] 5 Comments
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7:20 AM KeyBanc downgrades Lululemon (LULU) to Hold from Buy. Concerns from analysts focus on valuation seen as too pricey in light of a more cautious view on high-end U.S. consumers - bolstered by earnings reports from Ralph Lauren and Tiffany. Shares +55.7% YTD. [Consumer] 2 Comments
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7:14 AM More on Comcast's (CMCSA) bid for MSNBC.com (previous): An exec with NBC News confirms that discussions and due diligence are ongoing in the deal for Comcast to buy out Microsoft's 50% stake in the website. A key point for negotiations centers on MSNBC.com securing strategic placement on the MSN.com website. [Consumer] Comment!
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7:14 AM Vietnam cuts its benchmark interest rate 100 bps to 12% on the heels of a report showing inflation has slowed to 8.34%. The central bank had been on cycle of rate hikes as inflation printed more than 20% last summer. Shares rose 1.6% last night. VNM +24% YTD. [Global & FX] Comment!
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7:05 AM European shares can't hang on to a sizable early rally and turn lower midday. Stoxx 50 -0.4% after being up more than 1%. Leading to the downside is Spain, -0.9%, as Bankia again heads to the well. Germany is the best performer, flat. The euro +0.4% to $1.2580. Comment!
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7:01 AM Heinz (HNZ) sees a pair of analyst downgrades after reporting Q1 results and scaling back its outlook for growth rates, with Jefferies downgrading to Hold and JPMorgan taking its rating down to Neutral. [Consumer] 1 Comment
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7:00 AM On the hour: S&P +0.01%. 10-yr +0.13%. Euro +0.33% vs. dollar. Crude +0.36% to $90.99. Gold +0.29% to $1562.05. Comment!
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6:56 AM The CME cuts margin requirements for trading gold contracts by 10%, the 2nd reduction this year as volatility in the metal's price declines. The margin required for one contract will drop to $9,113 to $10,125, effective May 29. GLD +0.2% premarket. [Commodities] 3 Comments
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6:55 AM Toyota (TM) wants to sell more than 1M subcompact cars in emerging markets by 2015 as it makes a push to boost profits by utilizing local production. The company plans to come out with 8 new low-priced subcompact models to sell in more than 100 countries in order to help it achieve sales goals. [Consumer] Comment!
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6:54 AM Lehman Brothers (LEHMQ.PK) confirms a report that it has agreed to buy the 26.5% stake it doesn't own in Archstone from Bank of America (BAC) and Barclays (BCS) for $1.58B. As expected, Sam Zell's Equity Residential (EQR), which was also battling for the apartment giant, will receive a $150M break-up fee from Lehman and the two banks. [M&A, Top Stories] Comment!
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6:47 AM Royal Caribbean (RCL) plans to increase its cruises out of China to last all year long and bring another ship to the region amid rising demand. Analysts forecast Chinese tourism revenue will jump 14% annually for the next nine years. [Consumer] Comment!
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6:34 AM U.S. stock futures point up on improved signals from Europe. S&P +0.3%, Dow +0.2%. [U.S. Economy] Comment!
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6:00 AM Overseas: Japan +0.2%. Hong Kong +0.3%. China -0.7%. India +0.1%. London -0.1%. Paris +0.3%. Frankfurt +0.8%. Comment!
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5:37 AM Total (TOT) and Inpex Japan's (IPXHF.PK) are seeking $20B in loans for Ichthys, their Australian LNG project, Reuters reports. It would be the largest set of project finance loans in the world, although it's made more attractive by Inpex already having secured sales contracts with Japanese utilities who need a replacement of nuclear power. [Energy] 1 Comment
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5:27 AM While some top execs take huge payments despite failing, Apple (AAPL) CEO Tim Cook is giving up $75M in dividend income by excluding himself from a program that enables staff to accumulate dividends on their restricted stock units that are still vesting. Cook has 1.125M such units that are due to vest over the next 10 years. (8-K) [Financials, M&A] Comment!
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5:13 AM Citigroup (C) sells a 10.1% stake in Turkey's Akbank (AKBTY.PK) for $1.15B as part of the U.S. bank's program to sell assets in order to meet Tier 1 capital requirements. Citigroup will hold a remaining 9.9% stake for 3 years. The bank will take a post-tax $243M loss on the sale, having bought the 20% holding in 2007 for $3.1B. (PR) [Financials, M&A] Comment!
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5:02 AM After 2 days of talks, the most that Iran and the P5+1 could agree to yesterday was to meet again in Moscow in June. Teheran wants the right to enrich uranium and the sanctions scrapped, particularly the looming oil embargo, before it stops its march to nuclear weapons. The West says Iran must first shut down its enrichment program. [Energy] 3 Comments
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4:44 AM Dell (DELL) is in talks to buy Quest Software (QSFT), Bloomberg reports, as the PC maker continues its strategy of shifting its focus to higher-end business customers. In March, Quest agreed to sell itself to P-E firm Insight for $2B, or $23-a-share, although it then received other offers during a "go-shop" period. [Tech, M&A, Top Stories] Comment!
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4:31 AM EU shares are higher for a second day as bargain hunters step into a market that was beaten down by fears over Greece earlier this week, and on hopes of another injection of ECB liquidity. Euro STOXX 50 +1%, London +0.6%, Paris +0.9%, Frankfurt +1.2%, Milan +1.25%, Madrid +1%. [Top Stories, On the Move] Comment!
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4:04 AM The slow-motion train wreck continues in Greece, with police urging citizens to keep their money in the banks rather than sowing the seeds for a wave of home thefts. Greek banks have seen almost 25% of their deposits drained out over the last two years, and are likely to be shored up today or Monday with €18B of bailout funds that are weeks overdue. [Global & FX, Financials] 2 Comments
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3:51 AM The euro hit a 22-month low against the dollar yesterday, and has lost 5% in the last 3 weeks after barely moving against the dollar for most of the year. There's no end of reasons, though a notable downward driver is confirmation from some of Europe's biggest fund managers that they've been dumping euro assets on Grexit concerns. [Global & FX] 1 Comment
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3:41 AM Bankia shares are suspended in Madrid amid reports the Spanish lender plans to ask for a government bailout of over €15B following a board meeting later today. [Global & FX, Financials] Comment!
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3:22 AM Syngenta (SYT) and several community water systems agree to settle U.S. litigation related to the herbicide atrazine in order to end the business uncertainty and expense of a long legal battle. The settlement will cost Syngenta $105M. The charge is partly covered by provisions and the impact on earnings will be ~$0.5/share. Comment!
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2:36 AM Fannie Mae (FNMA.OB) has narrowed its search for a chief executive down to two candidates, sources say, with Fannie's general counsel Timothy Mayopoulos in the lead. To get Mayopoulos, Fannie Mae may have to renege on its promise to cap exec pay at ~$500K. The other candidate is Radian (RDN) CEO S.A. Ibrahim. Comment!
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1:40 AM With the focus so strongly on Europe, it has been easy to miss the data pointing to economic trouble in China, India, South Africa, Brazil and elsewhere. The specter of renewed crisis looms large if activity is slowing in sync around the globe and not just in isolated regions. [Global & FX, U.S. Economy] 2 Comments
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12:49 AM Yuanta Financial says it has pulled out of talks to buy Taiwanese Ta Chong Bank, dealing a blow to Carlyle's (CG) plans to exit the underperforming investment in a sale that could have been worth ~$1.25B. (previously) [Financials, M&A] Comment!
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12:43 AM Express Scripts Holding (ESRX) is less than two months into digesting its massive Medco purchase but is already seeing some early benefits. From the large (lower-priced deals from manufacturers) to the small (adopting Medco's postage-rate strategy), chief medical officer Steven Miller says "there's much more of their stuff coming over than in a typical integration." [Healthcare] Comment!
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12:00 AM Friday's economic calendar:
5:30 Fed's Plosser: Monetary Policy
9:55 Reuters/UofM Consumer Sentiment Comment!
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