MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Friday, May 17
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9:35 PM Of the €208.2B in non-performing loans Spanish banks have refinanced (in order to avoid recognizing them as NPLs), nearly half are treated as though they are not distressed, dubiously eliminating the need to take provisions against them, FT says. These banks have until September to reclassify restructured loans under tougher guidelines, a mandate that will likely necessitate fresh provisioning at some institutions. Between them, Santander (SAN), BBVA, and Caixabank (CAIXY.PK) had €76B in refinanced debt on their books at the end of last year. [Financials, Global & FX] 5 Comments
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9:17 PM The European investigation (I, II) into oil benchmark pricing raises rarely voiced questions about the appropriate way to set prices. FT notes that Platts' reporters cover 400+ wholesale energy prices everyday and the information available to them is limited to what commodities houses and Big Oil are willing to disclose. The process is complicated by the fact that myriad factors ranging from small discrepancies in quality to the type of hull on transport tankers, make the process inherently subjective. Nevertheless, the ordeal looks quite a bit like the Libor and ISDAFIX probes: a benchmark to which trillions of dollars of assets are tied is determined by key players away from the public eye. [Commodities, Energy] Comment!
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8:42 PM If they "want to succeed in Vietnam, they have to change the way they serve," one customer says of Starbucks' (SBUX) brewing methods at its Ho Chi Minh City flagship store. Of all the markets into which the Seattle coffee giant has ventured, Vietnam may prove the most challenging given the country's rich coffee culture which dates back at least a century. Predictably however, business is good, and Howard Schultz says sales are already exceeding expectations despite locals' penchant for what WSJ describes as a "thick, oily" domestic brew. (Also: SBUX goes to Myanmar) [Consumer] 3 Comments
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8:08 PM Yahoo (YHOO) update: The board will meet Sunday night to decide on a $1.1B all-cash deal for Tumblr, according to AllThingsD. (earlier) [Tech, Breaking News] Comment!
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7:18 PM Yahoo's (YHOO) NYC event will be focused on Flickr updates rather than Tumblr, Bloomberg reports. This, of course, doesn't preclude a Tumblr deal from being announced at some other time. Marissa Mayer reportedly doubled the size of long-neglected Flickr's engineering team last summer, and new Flickr apps have launched to positive reviews. However, Flickr's online photo market share is now well below that of Facebook/Instagram. [Tech] 1 Comment
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7:18 PM Shares of General Motors (GM +3.1%) eclipsed their $33 IPO price as investors speculate that the U.S. government may soon exit its ownership stake in the auto maker. The auto maker rose to $33.42 to close above its November 2010 IPO price for the first time since February 2011. U.S. taxpayers currently hold a 16.4% stake, or 241.7M shares worth about $8.08B. [Consumer, U.S. Economy] 3 Comments
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6:50 PM UniPixel (UNXL -26%) crashed today in the absence of major news. Williams Financial's Cody Acree, who rates shares a Buy: "There were a lot of speculative things today, a lot of which probably got blown out of proportion." Among other things, Acree notes a recent Apple patent application for a large-display touch sensor panel (not a competitive threat), and the fact a 13G filed by Goldberg Capital notes the firm's stake in UniPixel has fallen to 5.25% (Acree says this is only due to dilution from the stock offering). Shares still +99% YTD. [Tech, On the Move] 13 Comments
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6:44 PM If we keep moving up like this, stocks could go "parabolic," says Art Cashin. The stocks that have the heaviest short positions have already raced ahead of the indices, and they are going to crumble if we keep going. (Video). [U.S. Economy] 3 Comments
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6:35 PM SolarCity's (SCTY +25.7%) big rally is "bubble-like," cautions Raymond James' Pavel Molchanov, who tried to temper enthusiasm about First Solar last month. Molchanov warns a June 11 lockup expiration could "open the floodgates." Credit Suisse also cited the lockup when downgrading shares on Tuesday; the firm estimates the lockup will increase SolarCity's tradable float by 8x-10x. (earlier) [Tech, On the Move] Comment!
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6:28 PM AOL is reportedly laying off ~3% of Patch's 1,400-strong staff and (per a company memo) is giving the oft-criticized local news unit a new CEO. Patch COO Steve Kalin is the division's new chief; current CEO Jon Brod will return to AOL Ventures. AOL asserts the changes are aimed at improving content quality/engagement and allowing Patch to make good on promises it will be profitable by year's end. comScore estimates Patch, bogged by questions over how well a business focused on "hyper-local" content can scale, saw traffic rise 26% Y/Y in April to 13M monthly uniques. [Tech] 1 Comment
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6:15 PM Caterpillar's (CAT) deal to cut the purchase price of a Chinese mining equipment maker it bought last year ends an embarrassing episode, but now comes the hard part: penetrating China's huge underground mining market. The dispute overshadowed the real importance of giving CAT the product line and distribution it desperately wants in China, the world's top producer and consumer of coal. [Global & FX] Comment!
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6:08 PM Ubiquiti (UBNT) -5.9% AH after filing to sell 7.7M shares on behalf of existing shareholders through a public offering. CEO/NBA owner Robert Pera will be selling 1.7M shares, lowering his stake to 64.4% from 66.4%. Investment firm Summit Partners will be selling 6M, lowering its stake to 10.5% from 17.3%. The filing comes shortly after Ubiquiti closed near its 52-week high, and a week after shares took off in response to a Q1 beat and strong guidance. (S-1) [Tech, On the Move] 1 Comment
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6:08 PM All the chatter about cheap stocks is likely to fall on deaf ears if this "profitless rally" continues, observe analysts at Citigroup. Markets are expected to make further gains supported by moderate EPS growth and dividend increases, but "valuations imply less impressive gains from here," the bank says. In particular, a slowdown would affect two of the most impressive markets the most; the S&P 500 and the Nikkei, which have risen more than 16% and 46% this year, respectively. [Financials] Comment!
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6:00 PM On the hour: S&P +0.97%. 10-yr -0.38%. Euro -0.37% vs. dollar. Crude +0.78% to $95.91. Gold -2.1% to $1357.75. Comment!
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5:52 PM The permit approval for the Freeport gas export project opens up the dam for other pending applications, but the pace of coming decisions is still unknown, analysts say, adding that similar projects building from existing facilities are best placed to secure approval and financing. Meanwhile, Cheniere Energy (LNG) has reaffirmed its operating target date of late 2015 for the export terminal it is building at Sabine Pass, La. [Energy] 6 Comments
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5:46 PM QLogic (QLGC) CEO Simon Biddiscombe has resigned from his position, as well as from the company's board, to "pursue other opportunities." CFO Jean Hu has been named interim CEO while a search commences for a replacement. Biddiscombe became CEO in Nov. 2010, after serving as CFO for two years. QLogic has had a rough time during Biddiscombe's tenure, as both the company and archrival Emulex contended with soft storage adapter card demand and competitive pressures. Shares -2.2% AH. [Tech, On the Move] Comment!
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5:34 PM Though Google's rally and Apple's plunge have received more headlines, Microsoft (MSFT +2.3%) has rallied this month to levels last seen in '07, and in doing so has let Bill Gates pass Carlos Slim to become (once more) the world's richest man. Shares are up 32% YTD as value investors bet enterprise and cloud services strength will offset PC weakness and slow Windows 8 uptake. Microsoft currently trades at 8.6x FY14E EPS after backing out net cash/investments. [Tech] 2 Comments
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5:31 PM Venezuela reportedly will allow its state-owned energy company to form joint ventures with PetroChina (PTR) and Chevron (CVX) to manage $6B in loans designed to reverse declining oil output. Agreements have been reached on terms of a $2B credit from CVX for the Petroboscan venture and a $4B loan from China for Sinovensa. Similar deals may be in the works with Shell (RDS.A) and Repsol. [Energy, Global & FX] 3 Comments
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5:28 PM Accenture (ACN) is acquiring e-commerce/online ad consulting firm Acquity Group (AQ) for $316M, or $13/share, in cash. The price represents an 118% premium to Acquity's close today. Much like Accenture's recent purchases of Fjord and avVenta, the deal is about increasing Accenture's exposure to a burgeoning Web/digital marketing services space, and pitch more comprehensive solutions to CMOs and ad agencies. Accenture notes Acquity brings expertise in popular platforms such as Adobe and hybris. Acquity shares +111% AH to $12.56. [Tech, M&A, On the Move] Comment!
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5:14 PM The NYSE cancels rogue trades in Anadarko Petroleum (APC) from the final second of the trading day that took the stock from $90 to one cent in some trades. NYSE initiated a "clearly erroneous execution review,” resulting in cancellation of trades executed at or below $87.56/share in that last second. [Energy] 5 Comments
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5:13 PM After taking a hit earlier this month on a weak earnings report, Con-Way Trucking (CNW +3.4%) has steadily rebounded and posted another strong showing today. Optimistic investors turned towards the options pit on a buying spree in the name today. Total option volume was 100 times greater than average in the name yesterday, with calls accounting for 96% of the total. [Consumer, On the Move] Comment!
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5:04 PM GameStop (GME +4.5%) closed with a big gain after NPD reported U.S. physical retail video game sales fell 17% Y/Y in April, better than some feared; they fell 1% in March, and 27% in Feb. Hardware sales fell 42%, as gamers wait for this fall's launches. Total industry physical retail sales fell 25%; as Electronic Arts (EA +0.9%) and Activision's (ATVI +0.5%) latest results show, such sales make up a declining portion of industry revenue. Take-Two's (TTWO +1.9%) Bioshock: Infinite and NBA 2K13 were the month's 3rd and 7th-most popular titles, and Activision's Call of Duty: Black Ops 2 and Skylanders Giants were #4 and #8. [Tech, Consumer, On the Move] Comment!
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5:00 PM On the hour: S&P +0.97%. 10-yr -0.38%. Euro -0.37% vs. dollar. Crude +0.78% to $95.91. Gold -2.1% to $1357.75. Comment!
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4:49 PM The week's ETF movers - Gainers: TAN +9.6%. XLF +3.7%. UNG +3.4%. GAZ +3.2%. EWJ +3.0%.
ETF Losers: GDXJ -14.2%. GDX -11.5%. PSLV -7.3%. SLV -6.9%. SIVR -6.7%. [On the Move] 1 Comment -
4:44 PM It looks like investors will have to wait for any supersized dividend from Gazprom (OGZPY.PK). Citigroup analysts say the Russian gas giant will pay a dividend of 5.99 rubles/ADR, or ~25% of net income according to Russian accounting standards; investors had been hoping the company would pay 25% of net income based on international financial reporting standards. (earlier) [Energy, Global & FX] 3 Comments
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4:40 PM Maxwell Technologies (MXWL) says on May 14 it received an additional notification letter from the Listing Qualifications Department of the NASDAQ advising it that, due to its inability to file a 10-Q on a timely basis, and because the company remains delinquent in filing its Form 10-K for the fiscal year ended December 31, 2012, the company is not in compliance with NASDAQ Listing Rules. The company has until May 20, 2013 to submit a plan explaining how it expects to regain compliance. [Tech] Comment!
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4:34 PM iRadio (AAPL) is "still bogged down in licensing talks," music industry sources tell The Verge's Greg Sandoval. In addition to Sony (already reported to have rejected Apple's licensing terms), BMG is said to be holding out for a better deal; one has reportedly been signed with Universal. Apple's interest in offering on-demand options not found on Pandora (P) and other Web radio services has reportedly complicated talks. Past reports stated Apple is aiming for a summer launch. [Tech] 8 Comments
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4:33 PM Dow Chemical (DOW) issued a somewhat surprising statement after the approval of the Freeport liquefied natural gas export project, saying it "provides the greater clarity and certainty that businesses need to make investment decisions... Dow will adopt a wait and see approach regarding further approvals." Dow has argued against unfettered exports, saying they could lead to price spikes that could harm the economy. [Energy] 1 Comment
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4:23 PM Gilead Sciences (GILD +2.4%) finishes higher today after UBS raised its price target to $67 from $63 and reiterated its Buy rating. Analyst Matthew Roden sees ongoing strength for its HIV franchise, saying the firm conducted a survey of top-volume prescribers to gauge initial receptiveness and expected utilization once available,and results were highly supportive of TAF, its HIV treatment, as a next-gen replacement for Viread. [Healthcare, On the Move] 1 Comment
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4:17 PM More on Yahoo/Tumblr: Forbes' Jeff Bercovici reports talks are "proceeding rapidly and likely to result in an offer" as soon as Marissa Mayer can get board approval. He adds Mayer would prefer an acquisition over some other kind of deal, and is trying to allay Tumblr CEO David Karp's fears of being "absorbed into a behemoth." Tumblr is also said to have held talks with Facebook and Microsoft, but a lockup agreement with Yahoo makes them irrelevant. BI's Nicholas Carlson observes Tumblr sources who were happy to talk with him 3 weeks ago have gone silent. [Tech, M&A] 1 Comment
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4:11 PM DirecTV (DTV) has joined the ranks of companies weighing a bid for Hulu (DIS, NWS, CMCSA), with an eye towards expanding its arsenal of TV Everywhere content, the WSJ reports. The scoop shortly follows a report Time Warner Cable and other MSOs are talking about a possible bid. [Tech, Consumer, M&A] Comment!
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4:10 PM Market recap: The familiar buy-the-dip trade was back in action, and a bigger than expected rise in consumer sentiment plus a gain in leading economic indicators bolstered the view that maybe the economy isn't so bad. All key S&P sectors were in the green, led by energy and industrials. The dollar index jumped to its highest since July 2010, one of the factors behind gold's seventh straight losing session. [Top Stories] 5 Comments
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4:09 PM Net Element (NETE): FQ3 EPS of -$0.11. Revenue of $874.5K. (PR) [Earnings, Breaking News] Comment!
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4:02 PM With Tumblr speculation swirling, Yahoo (YHOO -0.3%) has scheduled a Monday evening NYC press event; CNBC reports Marissa Mayer will speak. Wells Fargo gives an overview of Tumblr's opportunities/risks. The firm notes comScore estimates Tumblr had 115M PC unique visitors in April (+85% Y/Y) and 14.5M mobile visitors (+227%), that engagement is strong, and that Tumblr is targeting $100M+ in 2013 revenue following just $13M in 2012 (ad sales are only starting to ramp). Wells thinks Yahoo could monetize Tumblr the way it did Flickr, but also points out the site has a ton of "provocative and even salacious material" that could deter brands. [Tech] 1 Comment
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4:00 PM At the close: Dow +0.77% to 15351. S&P +0.95% to 1666. Nasdaq +0.87% to 3495.
Treasurys: 30-year -0.85%. 10-yr -0.36%. 5-yr -0.14%.
Commodities: Crude +0.87% to $95.98. Gold -2.29% to $1355.15.
Currencies: Euro -0.42% vs. dollar. Yen +0.95%. Pound +0.67%. 1 Comment -
3:58 PM TC Pipelines (TCP +2.6%) is upgraded to Buy from Neutral with a $51 price target at BAML on plans to acquire additional equity interests in Gas Transmission Northwest and Bison. The firm views TCP's recently announced drop-down as alleviating most concerns about uncertainty around the ability to re-contract pipeline capacity on attractive terms and below peer-average distribution growth. [Energy, Quick Ideas, On the Move] Comment!
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3:56 PM Oncothyreon (ONTY +0.9%) gets a boost from Wedbush today, as the firm upgrades he stock to Outperform and raises the price target from $2 to $5. Wedbush says that its partner Merck KgA may be successful in negotiating a path to approval for Stimuvax with the existing and anticipated new data from ongoing clinical trials. Merck expects to provide an update on their discussion with regulators in 2013. [Healthcare, On the Move] 1 Comment
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3:55 PM The bear market in gold (GLD, IAU) has left three closed-end funds trading at abnormally large discounts to NAV, says Morningstar's Cara Esser: GTU, CEF, and PHYS. Likewise, a small selloff in municipal (MUB) paper has left these muni CEFs at attractive values: NXR, MYD, NXP. [Quick Ideas] 1 Comment
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3:46 PM The yen (FXY -0.9%) legs down to a new multi-year low - the dollar now buying ¥103.24 - continuing a truly remarkable move since late last year. It's an instance where politicians told you they were going to devalue, every trader and strategist around told you they were shorting the yen, and sure enough the yen went down ... hard, and in as straight of a line as markets ever allow. Ah, if it were always that easy. Other ETFs: JYN, YCL, YCN. [Global & FX, On the Move] 3 Comments
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3:43 PM Shares of Amarin (AMRN -1.1%) rebound somewhat from an earlier dip on news that its Vascepa wasn't in the FDA's Orange Book for April. [Healthcare, On the Move] 4 Comments
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3:41 PM Deutsche Bank raises its price target on Buy-rated Access Midstream Partners (ACMP +1.4%) to $57 from $46 after the MLP's analyst day introduced guidance for 20% EBITDA growth into 2015. A peak in organic capex this year, a 1.4x distribution coverage ratio, and no need for equity issuance for three years show a potential for distribution growth to top expectations. [Energy, Quick Ideas] Comment!
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3:37 PM SunTrust (STI +1.8%) notches a legal victory with a federal judge blocking a hedge fund from moving forward with a $13M arbitration over soured MBS. It's another in a series of suits by banks who would prefer the claims be heard in a court of law rather than by FINRA. [Financials] Comment!
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3:25 PM Famous Dave's of America (DAVE -0.4%) resumes trading after a brief halt for volatility. The shares initially spiked lower without any news to drive the shares. [On the Move] Comment!
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3:22 PM Gold miners (GDX -3.2%) take another beating as gold continues to lose its allure amid disclosures of reduced bets by hedge funds, a World Gold Council report showing gold demand at a three-year low, and a surging dollar. For the miners, it's an ugly world of lower production, higher costs and falling prices. At least nine miners hit 52-week lows: NEM -3%, GG -2.7%, AUY -4.8%, HMY -6.3%, AU -2.5%, BVN -1.1%, ANV -7.4%, NG -2.7%, GSS -5.8%. [Commodities, On the Move] 12 Comments
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3:03 PM Stocks move to new session highs an hour before the bell, perhaps soothed by the FOMC's Kocherlakota arguing the Fed isn't easy enough. It's the opposite of 24 hours ago when John Williams' hawkish words knocked the markets for a few points. (SPY +0.9%), (DIA +0.4%), (QQQ +0.8%). 10 Comments
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3:03 PM Keep an eye on Dean Foods (DF +1%). Though the food company could see some choppy trading next week after it was dumped from the S&P 500, dealReporter notes there's plenty of M&A speculation around the name to keep shares perky. A market cap below $4B raises the possibility that a larger company could see DF as a bolt-on acquisition. [Consumer, M&A] Comment!
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3:00 PM On the hour: Dow +0.65%. 10-yr -0.36%. Euro -0.41% vs. dollar. Crude +0.92% to $96.04. Gold -1.8% to $1361.95. Comment!
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2:59 PM Wells Fargo (WFC) and Citigroup (C) have halted the vast majority of foreclosure sales in numerous states following the release of new standards from the OCC, reports the American Banker. Harkening back to the days of the robo-signing scandal, Wells' foreclosure sales across 5 westerns states dropped to fewer than 10 per day in April from more than 300 previously. JPMorgan (JPM) also slowed sales, but has returned to normal activity. BofA (BAC) is proceeding as usual. [Financials, U.S. Economy] 1 Comment
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2:58 PM A bankruptcy judge approves $6.9M in bonuses for Patriot Coal (PCXCQ.OB) executives and workers, overruling the objection of union members who face wage and benefit cuts. Patriot and the United Mine Workers union still await a ruling from the judge over whether the company can impose wage and benefit cuts upon its union workers and retirees. [Energy] 1 Comment
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2:55 PM Volatile NII Holdings (NIHD +10%) is soaring after pricing a $700M debt refinancing deal. The Latin American carrier, which originally was looking to raise $500M, will be paying 7.875% on senior notes due Aug. 2019, and intends to use the proceeds to pay back Mexican and Brazilian loans. NII had $5.7B in debt on its balance sheet as of March 30, and $1.9B in cash/investments. 40.7% of the float was shorted as of April 30. (PR) [Tech, On the Move] Comment!
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2:40 PM Blackstone (BX) launches a curious new fund - a high-risk hedge fund whose positions will consist of the riskiest trades from 3rd-party hedge funds the P-E firm invests with. Managers can sell their ideas to the the new fund in exchange for a fee. If secrecy is a prime asset of hedge funds, one imagines managers will not be so quick to part with ideas. It should be interesting to watch. [Financials] 2 Comments
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2:38 PM Amazon (AMZN +1.5%) and eBay (EBAY +1.9%) are outperforming after mid-May U.S. consumer confidence numbers blow past expectations. Of course, it was European sales (I, II), rather than U.S. sales, that put investors in both companies on edge following their Q1 reports. [Tech, Consumer] 1 Comment
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2:34 PM McDonald's (MCD) will boost its workforce by 83% this year to take it to 165K as it picks up its pace of store growth in the nation. The restaurant operator has less than half of the fast-food market share that Yum Brands claims, but the gap is narrowing with KFC China suffering some turmoil. [Consumer] 10 Comments
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2:34 PM Actavis' (ACT +1.5%) pursuit of Warner Chilcott (WCRX +0.5%) may be a way to defend itself from a potential takeovers by Valeant Pharmaceuticals (VRX +2.5%) and Mylan (MYL +2.2%). VRX routinely looks at potential acquisitions, but to date has stayed away from WCRX because of its dwindling pipeline, so a combined ACT/WCRX deal would be out of the picture. And it would be virtually impossible for MYL, with a market value of $11.7B, to buy the combined firm. It already has about $6B in debt and Street estimates put a combined companies near $21B. [Healthcare, M&A] Comment!
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2:33 PM The Fed hasn't lowered "real" interest rates enough, says Minneapolis Fed chief Kocherlakota, not disappointing his new fans. Somewhat hawkish until a near-religious conversion last year, Kocherlakota is now the most dovish on the FOMC (though not a voter this year) and fond of making statements like that. [U.S. Economy] 10 Comments
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2:28 PM Google's (GOOG +0.1%) sell-side PTs have been surging as shares continue trading above $900 following a torrent of I/O news. The I/O news demonstrates "Google remains one of the most innovative and forward thinking companies of this generation," gushes Topeka, which has raised its PT to $999. Baird's PT is now at $1,025, and Argus' at $1,065. In some respects, the mood resembles that surrounding Apple not too long ago. [Tech] 12 Comments
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2:26 PM Invesco Mortgage (IVR) CEO Richard King added a bit more than 10% to his stake in the company yesterday, purchasing 5K shares at $19.92 each. The stock has dipped more than 5% since earnings on May 1 and at $19.92 trades below March 31 reported book value of $20.42. [Financials] Comment!
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2:21 PM Tesoro (TSO +5.3%) says the FTC approved its purchase of BP's 240K bbl/day Carson, Calif., refinery and other assets. The commission found the deal would not substantially lessen competition among seven refiners for gasoline in California, the largest U.S. gasoline market. Tesoro Logistics (TLLP +3.5%) will acquire the first portion of Carson logistics assets from TSO for $640M. [Energy, On the Move] Comment!
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2:19 PM Execs with Nordstrom (JWN -1.2%) highlighted the company's successful partnership with Topshop during the firm's earnings call. The British firm's clothing lines sold well online and in the 14 stores where Nordstrom carrier them. As a result, the retailer plans to add another 28 stores to the Topshop strategy later this year. (transcript) [Consumer] Comment!
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2:15 PM "Intel's culture is blessedly not the culture of a CEO," says the departed Paul Otellini in an in-depth Atlantic piece. Journalist Michael Malone likens Intel's (INTC) culture to that of a giant, regimented, research team (contrasting sharply with many tech firms). "Intel was in many ways a camp for bright young people with unlimited energy and limited perspective ... There was also the belief ... that the organization to which they've attached themselves is the greatest of its kind." It's now up to new CEO Brian Krzanich to leverage that culture to rapidly grow Intel's mobile processor sales in the face of major challenges. Krzanich is already promising a stronger mobile focus. [Tech] Comment!
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2:14 PM Donaldson (DCI -0.2%) bucks a weak FQ3 report late yesterday to trade slightly higher in today's session. Net profit fell 1.6% Y/Y on significantly lower revenue due to softer engine-product and industrial-product sales. The company again lowered its full-year guidance, now seeing FY13 EPS coming in between $1.57 - $1.65, below Street estimates of $1.70. It also lowers its FY13 sales outlook from $2.50B to $2.40B - 2.45B, also below consensus $2.51B estimates. [Earnings] Comment!
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2:07 PM Michael Talbert is voted out as board chairman at Transocean (RIG -1.7%) and will be replaced by Icahn-nominee Samuel Merksamer. But that was Icahn's only victory, as shareholders re-elected the other four company nominees. Earlier today, shareholders rejected Icahn's $4 annual dividend proposal, supporting the company's more modest $2.24. [Energy, On the Move] Comment!
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2:00 PM On the hour: Dow +0.38%. 10-yr -0.33%. Euro -0.37% vs. dollar. Crude +1.06% to $96.17. Gold -1.69% to $1363.45. Comment!
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1:48 PM Real Goods Solar (RSOL +105.9%) skyrockets after SA contributor Andy Zelenak makes a bull case, citing the potential of the company's partnership with homebuilder Lennar (LEN) and its PowerOn solar modules. Zelenak notes the Lennar deal allows home buyers to install panels "with no money down at a guaranteed 20% lower-than-grid cost," and that PowerOn modules sell for just $2.33/watt, well below the national average of $4/watt. He also considers its valuation reasonable relative to that of high-flyers such as SolarCity. [Tech, On the Move, Quick Ideas] 2 Comments
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1:40 PM Surprise! America will continue to pay its bills. The White House informs Congress of the Treasury's intention to use "extraordinary measures" once the debt ceiling is hit this weekend. (previous) [U.S. Economy] 7 Comments
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1:38 PM "There's no way" Sprint's (S) attempt to buy Clearwire (CLWR +0.6%) succeeds without a higher bid, says Taran Asset Management's Chris Gleason, one of many institutional Clearwire investors planning to vote against Sprint's $2.97/share offer at Tuesday's meeting. Reuters has uncovered investors holding 31% of Clearwire's public (non-Sprint-owned) shares who oppose the current deal; Sprint needs a majority of public shares to be voted in favor. Clearwire is trading 10% above Sprint's offer price, and 1% below Dish's $3.30/share offer price. (previous) [Tech, M&A] 16 Comments
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1:36 PM For-profit education stocks rally as some bubbling enthusiasm over financial aid legislation is just enough to pressure short sellers in the sector. Gainers: ITT Educational Services (ESI) +10.2%, Career Education (CECO) +11.5%, Corinithian Colleges (COCO) +15.3%, Lincoln Education (LINC) +5.2%, Education Management (EDMC) +5.5%, Bridgepoint Education (BPI)+4.4%, Devry (DV) +3.1%, Capella Education (CPLA) +5.5%, [Consumer, On the Move] 1 Comment
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1:31 PM Fitch downgrades Slovenia by one notch to BBB+, outlook Negative (the country is still worthy of an investment grade rating apparently) citing, among other factors, "a significant divergence between official and Fitch estimates of bank recapitalization costs." Recall that NPLs at state-controlled banks sum to nearly 30% of total loans (total NPLs at ~20% of GDP), and many of these will need to be transferred to a state-run "bad bank." (Previously: Moody's takes Slovenia into junk territory) [Global & FX] Comment!
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1:16 PM Disney's (DIS -0.7%) Iron Man 3 officially crossed the $1B mark in global box office sales including a smashing +$100M grab from China. A strong performance from Oz: The Great and Powerful helped the company beat estimates in FQ2 and it looks like Iron Man 3 will do some of the heavy lifting in FQ3. [Consumer] 3 Comments
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1:14 PM Corning (GLW) unveils its Lotus XT substrate glass, which is aimed at high-performance LCD and OLED displays. The successor to Lotus Glass (launched in 2011), Corning asserts Lotus XT offers unmatched pitch variation, which in turn leads to better display yields. The company also declares XT (like the original Lotus Glass) to be well-suited to enabling low-power displays with high resolutions and fast response times. Though not as durable/scratch-resistant as Corning's Gorilla Glass products, which are cover glasses, XT can be paired with them. [Tech] Comment!
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1:08 PM Goldman Sachs (GS) launches the Goldman Sachs Multi-Manager Alternatives Fund offering alternative and non-traditional investment strategies to investments as little as $1K. P-E firms from CG to KKR to BX have noted much of their future growth will not from the institutional side, but from individuals in search of yield. [Financials] Comment!
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1:07 PM BofA took a trip to Phoenix, paid Honeywell's (HON +2%) Aerospace facilities a visit, and came away impressed after management said it believes "air transport hours bottomed in Q1" meaning demand should accelerate going forward "driving mid single digit aftermarket growth" in H2. Aerospace sales fell 1% in Q1. HON price target raised to $88 from $79. [On the Move] Comment!
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1:05 PM The Obama administration approves ConocoPhillips-led (COP +0.3%) Freeport LNG as the second U.S. liquefaction project to gain federal approval to export chilled natural gas to countries without free trade agreements with the U.S. The decision is an important harbinger for the remaining 19 applications to export gas to non-FTA countries. [Energy] 13 Comments
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1:00 PM On the hour: Dow +0.35%. 10-yr -0.37%. Euro -0.42% vs. dollar. Crude +0.84% to $95.96. Gold -1.65% to $1364.05. Comment!
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12:57 PM Anheuser-Busch InBev (BUD -1%) says it will buy C&G Distributing Co. for an undisclosed amount with an eye on closing the deal within the next 90 days before a state law goes into effect in Ohio that prohibits brewers from owning distributors. Expect more cat and mouse from A-B as other states are reportedly considering the same type of legislation. [Consumer] Comment!
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12:53 PM The bull move in the greenback (UUP, UUPT) is just getting started, writes Vince Cignarella, believing the dollar's about to get another boost from safe-haven flows. The catalyst will be a selloff in fixed income taking yields on junk bonds (HYG, JNK) - now at all-time lows - to more realistic levels. The catalyst for the catalyst? It won't be 2007 all over again, he says, but instead maybe the dreaded "tapering" move from the Fed, or perhaps Syria flaming up higher. [Global & FX] Comment!
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12:51 PM After barely moving yesterday in response to nearly in-line Q1 results and strong Q2 revenue guidance, Youku (YOKU -9.6%) is falling hard today. The decline comes even though Youku has received two upgrades since the report (from HSBC and Maxim), as well as a bullish coverage launch from BofA. Concerns about mobile monetization could be a factor. On its earnings call, Youku stated mobile daily video views rose 50%+ Q/Q and are now above 170M, that mobile monthly users have topped 100M (PC users are around 400M), and that mobile now makes up ~30% of traffic. However, the company added "mobile monetization this year is relatively modest." [Tech, On the Move, Earnings] 2 Comments
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12:50 PM The USDA says the orange crop in Florida will be 10% smaller than an earlier forecast. Farmers in the state blame a bacterial disease for the reduced outlook for this year's harvest. The read-through: PepsiCo (PEP -0.6%) and Coca-Cola (KO -1%) have seen orange juice commodity prices rise 23% YTD in a market where hedges have gone awry in the past. [Consumer] Comment!
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12:49 PM Transocean (RIG -1.2%) shareholders reject Carl Icahn's proposal for a $4/share annual dividend and vote in favor of the company's proposed $2.24/share dividend. More than 75% of all voted shares reportedly were in favor of the company’s proposal. [Energy] Comment!
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12:48 PM Walgreen (WAG +1.3%) and Alliance Boots receive the regulatory clearances for their equity investment in AmerisourceBergen (ABC +0.4%). The clearances permit both to purchase up to 7% of ABC in the open market, and the exercise of two warrants for 16% in the aggregate in 2016 and 2017. [Healthcare, M&A, On the Move] Comment!
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12:43 PM JPMorgan lifts its price target ($70 from $68) on Northrop Grumman (NOC +3.6%) to reflect Thursday's announcement that the company plans to reduce the number of outstanding shares by 25% by 2015. More interesting is the color in the note regarding NOC's position relative to peers: the company "intends to return essentially all cash to shareholders. Besides LMT's nearly 50% payout ratio (which we believe is likely to rise still higher in September), this is the clearest multi-year strategic statement we have seen among large defense companies, and we think the market will reward this," notes analyst Joseph Nadol III. [On the Move] 1 Comment
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12:43 PM Tetra Technologies (TTI +4.6%) is upgraded to Outperform with a $12 target price, up from $10, at RBC Capital, which says TTI appears to be in the early phases of a transformation that will help boost free cash flow generation. The firm believes the current share price offers an attractive entry point to take advantage of TTI's repositioning strategy. [Energy, Quick Ideas, On the Move] Comment!
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12:42 PM Now longer an outlier on the low side, BAML ups its Q2 GDP growth estimate to a roughly inline with consensus 1.8% from 1.3% previously. "The economy has shown a lot more resilience than we had thought, but the full impact of the fiscal shock has not yet arrived," writes Ethan Harris. He continues to believe inflation stays low, the Fed stays easy, and growth of 3% or better through 2014. [U.S. Economy] Comment!
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12:41 PM Wal-Mart isn't the only retailer dealing with negative publicity on doing a poor job of keeping store shelves stocked after The Consumerist blog calls out Walgreen (WAG +0.7%) for the same issue. An advocacy group released a detailed study showing an excessively high percentage of out of stock and mislabeled items at the Walgreens chain of stores. What to watch: Walgreen has a lot riding on its well-publicized Balance Rewards program and needs to keep customer retention high to realize profit estimates off the program. Comment!
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12:36 PM BioLineRx (BLRX -0.6%) enters into an at-the-market sales agency agreement with Stifel Nicolaus. Under the terms of the agreement, BLRX may from time to time, in its discretion, sell up to a maximum of $20M ADSs. Each ADS represents ten ordinary shares. [Healthcare] Comment!
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12:30 PM Three lunchtime reads:
1) Spain posts first trade surplus on record
2) Day traders steer Tesla higher
3) Bill Gates retakes world's richest title from Carlos Slim Comment! -
12:26 PM Cosi (COSI -13.7%) takes a double-digit dive after its Q1 report misses by what might fairly be called a "wide margin". Revenues fall 13% Y/Y due to store closures and lower comps. Comps breakdown: -6.6% and -1.3% for company-owned restaurants and franchise-operated locations respectively. From the CC: "Dinner [is] where we took the greatest [comp percent] hit." Summing it up is CEO Carin Stutz: "Q1 results were unacceptable … [if] profitable sales [are] the measure of our success … we have not succeeded." Northland Capital rubs a little salt in the wound, downgrading the shares to Market Perform from Outperform (see analyst Chris Krueger's Q&A on the CC). [Consumer, On the Move] 2 Comments
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12:25 PM Bank of Montreal (BMO -0.5%) is hit with an "enforcement action" by the Fed for "deficiencies" in complying with money-laundering rules. Examiners at the Chicago Fed discovered the issues during an examination of BMO's branch in that city. "Our remediation activities are well under way," says a bank spokesman. [Financials] Comment!
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12:23 PM Cempra (CEMP -0.2%) fails to get any reaction out of Jefferies' initiating coverage today with a Buy rating and $10 price target. The firm cites optimism over its pipeline, saying that its lead drug solithromycin is the key value driver. However, the company has limited capital, which has impacted its ability to conduct Phase 3 trials in an expedited manner. It will likely need to secure additional financing to further advance its programs, leaving the the stock with a potential dilutive overhang. [Healthcare] Comment!
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12:20 PM Quicksilver Resources (KWK -4.4%) announces a multi-year profit improvement plan it says will focus on prioritizing its core brands, globalizing key functions and reducing its cost structure, Briefing.com reports. KWK expects the plan will improve EBITDA by $150M by 2016. Also, KWK will be replaced in the S&P 400 after the close of trading May 23. [Energy, On the Move] Comment!
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12:18 PM Marketo's (MKTO) IPO is nearly as good as Tableau's. Shares opened at $20 and are currently moving at $20.24, up 55.7% from an IPO price of $13. That gives the cloud marketing automation software vendor and occasional subject of Salesforce buyout speculation a valuation of $722M, or 12x 2012 sales. (S-1) [Tech, On the Move, Breaking News] Comment!
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12:14 PM A revenue miss and light guidance lead Brocade (BRCD -4.2%) to slump. On its earnings call, Brocade guided for FQ3 revenue of $510M-$530M and EPS of $0.11-$0.13, below a consensus of $556M and $0.15. The company partly blames soft storage array sales from OEM partners (IBM, H-P, and Dell appear to be culprits, NetApp could be another). Brocade's storage switch division sales (69% of total) fell 10% Q/Q and 6% Y/Y in FQ2, in spite of growing demand for 16G Fibre Channel switches (Brocade has had a big lead on Cisco (CSCO) here, but Cisco is finally catching up). Ethernet switch division sales -4% Q/Q and +15% Y/Y. [Tech, On the Move, Earnings] Comment!
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12:06 PM Thoratec Corporation (THOR -1.5%) says it's received FDA approval to market the HeartMate II Pocket Controller, the small face of the HeartMate II LVAD System. The device controls the left ventricular assist device or LVAD, which is a kind of mechanical heart which is put inside a person's chest, to help the heart pump oxygen-rich blood throughout the body. [Healthcare, On the Move] Comment!
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12:00 PM On the hour: Dow +0.4%. 10-yr -0.29%. Euro -0.5% vs. dollar. Crude +0.25% to $95.4. Gold -1.72% to $1363.05. 1 Comment
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11:58 AM Major oil producers launch a joint program to beef up their Arctic oil spill response plan in a bid to convince the Arctic Council they are ready for large-scale development in the region. There are plenty of doubters, of course, and incidents such as BP 2010 Gulf of Mexico spill and Shell's recent problems north of Alaska with two drill ships don't help. [Energy] 5 Comments
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11:57 AM "Do you really think risk-averse central bankers are going to try and catch the knife," asks Credit Suisse commodity research chief Ric Deverell about gold. "No" is his answer as this crowd only buys when the price is headed higher. Of reports of heavy physical buying, he's unimpressed, noting investment demand (ETFs) is the gorilla in the gold market. The metal's (GLD -1.6%) within a few dollars of taking out the 26-month low hit in April. [Commodities] 14 Comments
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11:47 AM MicroVision (MVIS +12.2%) jumps after announcing it has raised $5.85M by selling 2.6M shares and warrants to acquire another 2M shares to investment firm Crede and other buyers. The sale gives MicroVision, which had just $3.8M in cash/investments on its balance sheet as of March 31 (down from $7.3M on Dec. 31), a needed liquidity injection as it continues it efforts to commercialize its PicoP mobile projection tech. [Tech, On the Move] Comment!
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11:43 AM A broad rally in auto supplier stocks isn't a shocker after positive news piled in from across the globe. In Europe, a long slide in sales has finally reversed while China is opening up the western part of its territory for manufacturers. Just to top it off quite nicely, consumer sentiment rose briskly in the U.S. Advancers: American Axle (AXL) +4.5%, Dana Holding (DAN) +4.1%, TRW Automotive (TRW) +2.2%, Navistar (NAV) +4.4%, Federal-Mogul (FDML) +4.2%, Magna International +1.9%, Meritor (MTOR) +2%, Johnson Controls (JCI) +1.9%, Exide Technologies (XIDE) +5.5%. [Consumer, On the Move] Comment!
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11:38 AM Jim Cramer chooses MLPs Kinder Morgan Partners (KMP) and Enterprise Products Partners (EPD) as antidotes to potential froth in the broader stock market. Cramer likes KMP's strategic acquisitions during recent years and is bullish on its outlook. On EPD, Cramer praises the management team and likes its track record of executing growth projects and integrating acquisitions. [Energy, Quick Ideas] 15 Comments
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11:33 AM U.S. Cellular (USM +5.5%) spikes higher after announcing a $5.75/share special dividend that will be paid on June 25 to shareholders on record as of June 11. The announcement comes as USM states it has closed its $480M deal to transfer spectrum and 420K customers to Sprint. [Tech, On the Move, Breaking News] Comment!
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11:27 AM Galaxy S4 sales will top 10M next week (less than a month after launching), says Samsung (SSNLF.PK) co-CEO Shin Jong-kyun. The Galaxy S III took 50 days to crack 10M. Samsung thinks S4 sales could eventually reach 100M, or twice the 50M the S III has seen over its lifetime. Suppliers with decent exposure: RFMD, ANAD, PANL, QCOM, BRCM, SYNA. [Tech] 2 Comments
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11:23 AM While a razor-thin margin one way or the either is anticipated in next Monday's vote on Freeport McMoRan's (FCX) takeover bid for Plains Exploration (PXP), FCX shares could be poised to rise on either outcome. But all bets are off if FCX sees the bid on the verge of defeat and decides to sweeten the pot after saying it wouldn't do so. A higher offer could further pressure shares, already -16% since the deal was announced. [Commodities, Energy, M&A] Comment!
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11:23 AM United Airlines (UAL +0.1%) debuts a loyalty program aimed at business travelers, marking something of a first for the industry. More expansive than strictly a miles program, the MileagePlus Small Business Network will reward customers who buy goods and services from approved vendors and will include an auction program. [Consumer] Comment!
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11:23 AM Impax Laboratories (IPXL -1.2%) says its Generic Division, Global Pharmaceuticals, has begun shipping its generic drug Zomig, which is used for the treatment of migraines in adults, as part of a licensing and distribution agreement with AstraZeneca (AZN). [Healthcare, Global & FX] Comment!
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11:22 AM In a late bit of campaigning, JPMorgan's (JPM) board sends a letter to shareholders urging they vote against the proposal to split the Chairman and CEO roles. The directors also endorse the re-election of ... themselves. One large fence-sitter - T. Rowe Price - will vote against the split, with fund manager Brian Rogers suggesting a look at the scoreboard says Dimon and his team know what they're doing. The annual meeting is set for Tuesday. [Financials] Comment!
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11:14 AM Take this one with a grain of salt: an "industry source" claims Baidu (BIDU +1.6%) has reached a deal to buy Sohu's (SOHU +2.5%) Sogou search unit for $2B-$2.5B in cash and shares of Baidu's iQiyi online video unit. Though Sohu is rallying, the entire company still only has a market cap of $2.4B, indicating investors are as skeptical of this report as they were of Qihoo deal reports. Acquiring Sogou would pose integration challenges for Baidu, and (given Baidu's dominant Chinese search share) could also draw a regulatory response. (previous) [Tech, M&A, On the Move] Comment!
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11:05 AM A nice little jump in consumer sentiment bodes well for automobile companies, according to CNBC's Phil LeBeau. The outlook for the industry looks extremely good with fresh models from automakers (F, GM, TM, FIATY.PK, HMC, NSANY.OB, VLKAY.PK) coinciding with structural pent-up demand and the uptick in sentiment. [Consumer] 4 Comments
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11:05 AM Triple-S Management (GTS -4.8%) slides after pricing a secondary offering of 5.4M Class B shares at $18.25, a 4.5% discount to Thursday's close. As part of the Offering, 4,400,368 shares were sold to the public in a conversion from Class A shares, and 1M shares were purchased by the Company. Triple-S will not receive any proceeds from the Offering. [On the Move, Healthcare, Financials] Comment!
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11:04 AM SolarCity (SCTY +15.3%) won't take a breather. Shares are blasting off to new post-IPO highs a day after rallying on news of an expanded financing partnership with Goldman. "We hope [the deal] sends a signal that solar is a stable and reliable asset to invest in," CEO Lyndon Rive tells Bloomberg. Meanwhile, some Chinese solar names are up following a rally in Shanghai: YGE +4.1%. LDK +5.1%. SOL +6.1%. JASO +3.5%. CSIQ +2.5%. [Tech, On the Move] Comment!
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11:01 AM Goldman's Tuesday bear call on agricultural commodities has implications for Deere (DE -2.7%) which gets a downgrade to Sell from Neutral. Analyst Jerry Revich says "recovering commodity inventories point to lower U.S. farm income and capex." As recently bearish Barron's notes (channeling Wells Fargo's Andrew Casey) "as goes the North American corn crop, so goes DE's stock price." For their part, GS says only a "major weather shock" could keep corn crop (CORN +0.1%) prices "near their current levels." Price target: $85 from $98. [On the Move, Commodities] Comment!
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11:00 AM On the hour: Dow +0.36%. 10-yr -0.16%. Euro -0.42% vs. dollar. Crude +0.18% to $95.33. Gold -2.04% to $1358.55. Comment!
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10:58 AM Vertex Energy (VTNR +3.1%) is started with a Buy rating and $4 price target at Wunderlich, which cites flexibility in responding to price/supply fluctuations across the collection/resale markets for used oil. In addition to economies of scale and low capital requirement, the spread between VTNR's feedstock and its end products are more highly correlated than fully re-refined Group II base lube oils, the firm says. [Energy, Quick Ideas, On the Move] Comment!
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10:57 AM Kansas City Southern (KSU +1.2%) still has a "long runway" of growth opportunities and is a juicy takeover candidate, says Stephens analyst Justin Long. One thing that separates KSU from the pack of railroad tocks is that it's more of a pure play on growth in Mexico where the upside is higher than the U.S. or Canada. [Consumer] 2 Comments
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10:54 AM Capital One (COF +1.8%) is presumably about to save some money on loan servicing, commencing an exchange offer for all of its senior notes maturing in 2017 for a combination of new notes maturing in 2023 and cash. (PR) [Financials] Comment!
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10:51 AM Vanda Pharmaceuticals (VNDA +20%) pops after Lazard pounds the table on the stock and ups its price target by nearly 55% to a whopping $17 from $11. The firm cites positive checks from sleep specialists on tasimelteon for non-24 hour insomnia disorder. [Healthcare, On the Move] Comment!
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10:49 AM Transocean (RIG) CEO Steve Newman's people skills have been tested trying to convince shareholders to reject Carl Icahn's call to replace three board members at today's annual meeting, but he says it's nothing compared to visiting the homes of the nine RIG workers who died at the Deepwater Horizon explosion. While Icahn might appreciate the treatment of the families, he disagrees with just about everything else Newman and the board has done. [Energy] Comment!
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10:41 AM Tableau's (DATA) IPO is as good as advertised. Shares opened at $47 and are currently at $49.82, up 61% from a raised IPO price of $31. That gives the analytics/data visualization software vendor a valuation of $2.86B, or a whopping 22x 2012 revenue. Rival Qlik (QLIK +4.6%) is up in sympathy - a bullish BMO note might also be helping. (S-1) (Pac Crest) [Tech, On the Move, Breaking News, Top Stories] Comment!
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10:37 AM Halozyme Therapeutics (HALO +1%) continues its run again today, on the back of an 18% gain in yesterday's regular session. Late Wednesday, the company said that positive clinical data from a Phase 1b trial of PEGPH20 in combination with gemcitabine to treat patients with stage IV metastatic pancreatic cancer will be presented at the 2013 American Society of Clinical Oncology Annual Meeting. [Healthcare, On the Move] Comment!
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10:35 AM Stocks add to gains (SPY +0.6%) as the mid-May UMich Consumer Sentiment read rises to 83.7 vs. 76.4 at the end of April and against expectations for 78. The current conditions index jumped 7.6 points to 97.5 - a new high for the economic recovery. Treasurys (TLT -0.7%) slide further. [U.S. Economy] 3 Comments
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10:29 AM Demand is rising for "frackwear" that oil and gas workers can wear to protect themselves from wires and explosions, and retailers and clothes makers are trying to take advantage. VF Corp. (VFC) says it is pulling research teams from malls and placing them alongside workers in oil fields. Retailers including Cabela's (CAB) say they are seeing rising demand for sturdy shoes and fire-resistant clothing. [Energy, Consumer] Comment!
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10:27 AM The call option otherwise known as National Bank of Greece (NBG +19.2%) soars again, now closing in on being a 4-bagger in a month. The capital raise plan has been approved - though surely dilutive, it keeps the bank privately-owned - and an upgrade cycle has begun for the country and the banking system. The Greek ETF (GREK +3.1%). [Financials, On the Move, Global & FX] Comment!
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10:26 AM BofA delivers a stinging downgrade on Williams-Sonoma (WSM -0.8%) to Neutral from Buy, maintaining the retailer is out of near-term catalysts. A price objective of $60 reflects a 19X 2014 earnings multiple which stands well-above sector peers. Comment!
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10:25 AM While Aruba crashes thanks to soft July quarter guidance and worries about Cisco's efforts to bundle Wi-Fi hardware in enterprise deals, carrier Wi-Fi rival Ruckus (RKUS +2.6%) is adding to yesterday's Cisco-fueled gains thanks to an upgrade to Buy from Goldman's Simona Jankowski. She notes shares closed yesterday down 41% YTD and 11% from their $15 IPO price thanks to Ruckus' Q1 miss and Q2 guidance, and argues Ruckus' long-term story is intact. Deals with tier-1 carriers such as AT&T and Vodafone are expected, and Ruckus is seen as a "key beneficiary" of efforts to integrate small cell base stations with Wi-Fi access points. [Tech, On the Move] Comment!
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10:22 AM Jefferies starts Cempra Holdings (CEMP +2.5%) at Buy with a $10 price target. [Healthcare] Comment!
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10:16 AM Imperial Holdings (IFT +0.6%) has run more than 50% in a month, but that's just the "hard money," says SA Pro's Whopper Investments. The "easy money" is still out there as all substantial risk has been taken off the table, leaving a company trading below liquidation value. Chairman Phil Goldstein last year believed intrinsic value to be at least $8/share, but warned on risks of shareholder lawsuits, an SEC investigation, not-yet-filed audited statements, and the ability to hold onto its life insurance policies. "Those risks are now behind the company," says Whopper. [Quick Ideas, Financials] Comment!
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10:16 AM Aruba (ARUN -26.8%) is slammed with 9 downgrades after providing light guidance to go with its FQ3 results. Aruba is "likely dealing with a multi-quarter, if not structural, change in its competitive landscape and growth rate," writes Needham, cutting shares to Hold. Wells Fargo, downgrading to Market Perform, notes Cisco (CSCO - 27% Y/Y Wi-Fi growth in FQ3) is extending its efforts to bundle Wi-Fi hardware with other enterprise gear to Europe/Asia, and that Aruba plans to invest more to compete better. Along with the report, Aruba announced it's buying Meridian Apps, a developer of mapping/navigation software for hotels, subways, hospitals, etc. (transcript) [Tech, On the Move] Comment!
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10:13 AM Shares of Goodyear Tire & Rubber (GT +4%) and Cooper Tier & Rubber (CTB +2.9%) trade higher after European car sales turn around finally and with news that China will encourage manufacturing in the western part of the country. [Consumer] Comment!
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10:10 AM China says it will encourage investment in vehicle manufacturing in the western part of the nation to reverse a prior decision on the issue. General Motors (GM +2.5%) and Volkswagen (VLKAY.PK) could benefit from the development due to their aggressive expansion plans in the region. [Consumer, Global & FX] Comment!
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10:08 AM Stemline Therapeutics (STML +6.2%) ramps higher after it prices its 4.2M share public offering at $14.50 per share, just a 3.3% discount to yesterday's close. The pricing puts the tally on gross proceeds at around $60M. The company intends to use the proceeds to fund ongoing clinical trials of its potential leukemia and lymphoma treatments SL-401 and SL-701, as well as for other general corporate purposes. [Healthcare, On the Move] Comment!
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10:01 AM Pike Electric (PIKE +5.6%) rises after Stifel Nicolaus makes a valuation call, upgrading the shares to Buy and setting a $14.50 price target. Having sold-off ~24% since earnings, including ~9% since announcing its secondary, the stock represents a bargain given that "the fundamental story is sound." As was the case the last time Stifel made a call on PIKE, the stock is trading on heavy volume (30% of the average 10-day volume has already changed hands in the first ~30 minutes of trading). [Energy, On the Move] Comment!
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10:00 AM On the hour: Dow +0.4%. 10-yr -0.19%. Euro -0.5% vs. dollar. Crude +0.87% to $95.99. Gold -1.11% to $1371.45. Comment!
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10:00 AM Apr. Leading Indicators: Leading Index +0.6% to 95.0 vs. +0.3% expected, -0.1% prior. Coincident Index +0.1% vs. -0.1% prior. Lagging Index +0.1% vs. +0.3% prior . [U.S. Economy] 3 Comments
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9:56 AM The U.K.'s Serious Fraud Office says it is "urgently reviewing" whether it has the authority to investigate allegations of price fixing in the oil market, after unannounced inspections earlier this week by EU antitrust authorities of BP, Shell (RDS.A, RDS.B) and Statoil (STO). The SFO believes it could be the appropriate body to investigate such allegations. [Energy, Global & FX] 5 Comments
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9:53 AM Disney's (DIS -0.3%) ESPN snatched the rights to the U.S. Open tennis tournament for 2015-2025 away from CBS (CBS +2.5%) after the network aired the finals and semifinals for almost 50 straight years. It's another example of a content grab by the sports juggernaut which helps it land the highest carriage fees in the industry and adds just a bit more to the I-Would-Be-A-Cord-Cutter-If-Not-For-Sports mentality. [Consumer] 3 Comments
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9:48 AM Laredo Petroleum (LPI +4.2%) is started with a Buy rating and $23 target price at Topeka Capital, which thinks the market is undervaluing its Anadarko Basin assets: "The story may require patience to get the balance sheet in shape and asset value to be realized, but we believe this could evolve sooner rather than later." [Energy, Quick Ideas, On the Move] Comment!
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9:46 AM Alnylam Pharmaceuticals (ALNY -0.2%) pares the early gains it racked up after saying preclinical data demonstrate RNAi therapeutics targeting ALAS-1 can suppress the "toxic heme biosynthesis intermediaries that cause the symptoms and disease pathology of acute intermittent porphyria." The company says the findings support its ALN-AS1 program. (PR) [Healthcare] Comment!
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9:44 AM Hulu (NWS, DIS, CMCSA) could be even more valuable than people think due its rich user experience and advanced advertising system, reasons BTIG's Rich Greenfield. The analyst isn't convinced a cable industry joint venture would work well, but says he could make the case why almost any large media/tech company (Google?) could use Hulu to position itself in the "rapidly fragmenting" video world. [Consumer, Tech] Comment!
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9:38 AM Did the Fed tighten while we were getting a cup of coffee? The greenback is soaring against all other currencies, with the dollar bull ETF (UUP) gaining 0.6% - an unusually large move for that vehicle. Strength against the yen (FXY -0.3%) and the aussie (FXA -0.9%) are givens of late, but the greenback is up about 1% vs. both the loonie (FXC) and the swissie (FXF), and about 0.6% vs. the euro (FXE) and cable (FXB). Getting hit are Treasurys (TLT -0.5%), the dollar bear ETF (UDN -0.6%) and of course, gold (GLD -0.7%). [Global & FX] 5 Comments
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9:35 AM A downgrade to Hold from Maxim's John Tinker leads Pandora (P -0.2%) to open lower, but shares have quickly bounced. Tinker cites valuation, noting Pandora trades near the $17 PT Maxim set back in Aug. '11. He's otherwise positive, noting improved mobile monetization and the fact Pandora support is now built into 95 car models. Piper raised its estimates yesterday. [Tech, On the Move] 1 Comment
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9:31 AM At the open: Dow +0.26% to 15273. S&P +0.39% to 1657. Nasdaq +0.55% to 3484.
Treasurys: 30-year -0.3%. 10-yr -0.1%. 5-yr -0.04%.
Commodities: Crude +0.98% to $96.09. Gold -0.77% to $1376.25.
Currencies: Euro -0.6% vs. dollar. Yen +0.38%. Pound +0.55%. Comment! -
9:29 AM James River Coal (JRCC) +10.3% premarket after announcing separate exchange agreements in connection with its 4.50% and 3.125% convertible senior notes. JRCC will exchange $243M of existing senior convertible notes for $123M of new senior convertible notes due in 2018. [Energy, On the Move] Comment!
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9:26 AM Thai stocks (THD) rise 0.62%, helped by 7% gains for Shin Corp. (SHNZY.PK) and Minor International (MNILF.OB) which will both be added to the MSCI Emerging Markets (EEM) index. Elsewhere in the region, stocks in Indonesia (IDX) rise 1.32%, continuing to defy analysts' predictions (I, II) of a steep sell-off, and post-midterm election profit-taking continues in the Philippines (EPHE), where stocks fall 0.42%. [Global & FX] Comment!
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9:26 AM The Outdoor Channel Holdings (OUTD) bidding war is over, with Kroenke Sports & Entertainment closing its acquisition for $10.25/share in cash after Intermedia walked away. OUTD will presumably be delisted today. Congrats again to SA Pro's Whopper Investments and Chris DeMuth who spotted this "Heads You Win, Tails You Tie" proposition at $8.75/share. [M&A] 1 Comment
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9:22 AM Tableau Software (DATA) and Marketo (MKTO) are will begin trading today after pricing their IPOs at levels that indicate strong demand. Tableau, set to become the Street's latest big data/analytics darling, priced its offering at $31, above a prior range (also raised) of $28-$30. The company sold 8.2M shares, up from a prior 7.2M, as insiders used the demand to sell an extra 1M shares. Marketo priced its offering at $13, at the high end of an $11-$13 range. The IPO prices give Tableau a valuation of $1.78B, and Marketo a valuation of $464M. (S-1s: Tableau, Marketo) [Tech, On the Move] Comment!
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9:20 AM Market preview: The rally looks to be back on track after a one-day pause, with S&P futures +0.3%, but in an otherwise uneventful day the final outcome likely will be dictated by key data on consumer sentiment and leading economic indicators. The dollar is surging early. Gold is on track for a seventh straight loss, which would be the longest such streak in four years. Comment!
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9:15 AM Euroseas (ESEA): Q1 EPS of -$0.10 misses by $0.05. Revenue of $10.9M misses by $0.4M. (PR) [Earnings, Breaking News] 1 Comment
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9:13 AM Big beer companies including Anheuser-Busch InBev (BUD), Molson Coors (TAP), SABMiller (SBMRY.PK), Heineken (HINKY.PK), and Constellation Brands (STZ) support legislation that they say would take away some of the advantages craft brewers have on excise taxes. While separating the big boys like A-B from smaller local players is pretty easy, things get more confusing when trying to label brewers such as Boston Beer (SAM) and Craft Brew Alliance (BREW) with indy roots. What to watch: Though sluggish beer volume in the U.S. is a major concern, the battle over excise taxes could be just as big for bottom lines. [Consumer, Global & FX] Comment!
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9:10 AM Leap Wireless (LEAP) -2.5% after Barclays starts coverage with an Underweight and $4 PT as part of a broader coverage launch of U.S. telecom service providers. Tower owners SBA (SBAC) and American Tower (AMT) have been started at Overweight, and so has Verizon (VZ). AT&T (T) and T-Mobile USA (TMUS) have been started at Equal Weight. [Tech, On the Move] Comment!
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9:09 AM Charles Schwab (SCHW) reverses course, eliminating a requirement customers waive their right to participate in class-action lawsuits against the company. Schwab added the provision in September 2011, but Finra brought a complaint arguing the requirement violated its regulations. [Financials] Comment!
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9:08 AM Celsion (CLSN) jumps 14% premarket after the company says data from a Phase III HEAT study suggests ThermoDox combined with radio frequency ablation warrants "further investigation and development … as a first line treatment for hepatocellular carcinoma." (PR) [Healthcare, On the Move] 1 Comment
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9:00 AM On the hour: S&P +0.36%. 10-yr -0.02%. Euro -0.47% vs. dollar. Crude +0.85% to $95.97. Gold -0.91% to $1374.25. Comment!
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8:56 AM Workers in Angola are completing construction of the strongest crane in Africa, with a capacity to lift 2,500 metric tons, to be used at offshore projects for Chevron (CVX), Total (TOT) and SBM Offshore. The second phase of CVX’s $5.6 billion Mafumeira Sul project is expected to produce 110K bbl/day by 2015, and TOT’s Clov project may start pumping crude next year. [Energy, Global & FX] Comment!
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8:53 AM Metro Goldwyn Mayer reports revenue more than doubled in Q1 to $481.6M as the TV series Vikings and films Skyfall and The Hobbitt boosted results. There is a feeling in Hollywood (and Wall Street) that something is brewing with MGM as shares continue to rocket higher in private trading and with Daniel Loeb reportedly diving in. Does a major media company have the refreshed MGM with its impressive array of content in its sights? [Consumer] 1 Comment
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8:50 AM Russia's economy expanded by 1.6% in Q1 (consensus was for 1.2% growth), marking the fifth straight quarter of decelerating growth. As in Japan, business investment is weakening even as private consumption remains steady. The problem: demand for commodity exports from the world's largest energy exporter is flagging amid a seemingly intractable recession in the eurozone — the currency bloc accounts for ~50% of Russian trade. Russian stocks (RSX), which are the cheapest among 21 EMs according to Bloomberg, are trading 1.8% higher but are still off ~5% YTD. [Global & FX] 1 Comment
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8:45 AM Flagstar Bancorp (FBC) announces the appointment of Sandro DiNello as CEO to replace Michael Tierney who moves back to EVP of Personal Financial Services. Flagstar this month settled with MBIA, agreeing to pay $110M relating to the bank's issuance of $1.1B of MBS in 2006 and 2007. (PR) [Financials] Comment!
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8:40 AM Indonesia's Pertamina is rumored to have made a bid for InterOil’s (IOC) Elk-Antelope discoveries in Papua New Guinea. The Indonesian state-owned company reportedly needs to import LNG to meet existing export commitments because its production was falling. IOC +0.8% premarket. [Energy] Comment!
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8:40 AM Abercrombie & Fitch (ANF) CEO Michael Jeffries continues to try to defuse the backlash from rehashed comments a 2006 interview when he indicated the retailer went after the "cool" kids at the exclusion of plus-sized consumers. Though the exec went a bit too far in promoting the aspirational aspect of the Abercrombie brand, retail analysts thinks the effect from the resurfaced flap could be neutral on sales as the sound and fury recedes. [Consumer] Comment!
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8:37 AM First the move then the news? The euro takes a quick tumble, dropping about 50 pips to $1.2821. There's not much in the news other than the recycling of an old story Germany's Constitutional Court might reject the ECB's OMT plan, and chatter the central bank has been calling around to float the idea of negative deposit rates. FXE -0.5% premarket. [Global & FX] Comment!
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8:33 AM How things can change in a week. Tesla Motors (TSLA) CEO Elon Musk's response during a conference call (transcript) on a question over a capital increase was pretty definitive that the automaker had spent "no time" on the concept and a secondary offering would only be to ensure against an "unexpected supply interruption" or "risk event." To be fair, an exec being coy is nothing new and shares of Tesla were only in 3rd gear at the time - but the response is still intriguing. (h/t SA contributor George Kesarios) [Consumer] 11 Comments
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8:27 AM "The issue isn't if the Fed exits, it's a question of whether they exit way earlier than expected," American Capital (AGNC) CIO Gary Kain tells Bloomberg, feeling his portfolio is better positioned now than in Q1, when higher rates took a chunk out of book value. The Fed will be "extremely slow" in its withdrawal, says KBW's Mike Widner. "That spells an environment that actually gets better for the mREITs (MORT, REM) before it gets worse." [Financials] 9 Comments
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8:25 AM Total's (TOT) Christophe de Margerie confirms medium-term production targets of 3%/year average increases during 2011-15 and 3M boe/day by 2017, noting the acquisition of several deepwater blocks off Brazil as part of a new policy for riskier exploration locations. He also reassures shareholders that TOT won't explore for oil in Congo's Virunga National Park. Shares +1.3% premarket. [Energy] Comment!
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8:22 AM The FDA clears Oramed Pharmaceuticals' (ORMP) Investigational New Drug application for the oral insulin capsule ORMD-0801. Earlier this month, SA contributor Len Zehr flagged the IND application as a catalyst. Shares +14.84% premarket. (PR) [Healthcare, On the Move] Comment!
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8:19 AM More on Stage Stores (SSI): The retailer misses estimates by a decent margin as the quarter's stretch cool weather hurt traffic. Execs say they ended the period with a "clean" inventory position and think pent-up demand could help sales recover in Q2. Full-year guidance of 2% to 4% comparable store sales growth and EPS of $1.45-$1.55 is maintained. SSI -1.3% premarket. (PR) [Consumer, Earnings] Comment!
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8:13 AM Thomas Lee lifts his year-end S&P 500 (SPY) forecast to 1,715 from 1,580 as the bull has already outrun his expectations. His team sees clues economic performance is picking up, including the outperformance of semiconductors (XSD) vs. transports (IYT), and the steepening of the 10 year/30 year Treasury curve. Risk/reward is particularly appealing in tech (XLK), healthcare (XLV), and financials (XLF). Comment!
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8:13 AM The FDA approves Thoratec's (THOR) HeartMate II pocket controller, a lighter, more compact version of the previous controller which pairs with the company's LVAD system. (PR) [Healthcare] Comment!
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8:12 AM The deadline for claims against BP related to the 2010 Gulf of Mexico oil spill is 11 months away, but the overseer responsible for paying the claims says he is already bracing for a late surge in filings. Of more than 165K claims filed as of May 15, nearly 25% have been determined eligible for payments worth ~$3.2B, and 200K claims seems likely before all is said and done. (earlier) [Energy] 4 Comments
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8:05 AM EnteroMedics (ETRM) rises 15% before the bell after saying it has concluded a pre-Premarket Approval (so you're saying its preliminary?) application meeting at which the FDA said that once the company's application for the Maestro Rechargeable System's VBLOC vagal blocking therapy is accepted, and once a detailed review of the data is validated, the company can "anticipate presenting the PMA before a future FDA Advisory panel." Parsing that language: ETRM plans to submit a PMA in Q2. (PR) [Healthcare, On the Move] Comment!
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8:00 AM On the hour: S&P +0.33%. 10-yr +0.03%. Euro -0.09% vs. dollar. Crude +0.57% to $95.7. Gold -0.68% to $1377.45. Comment!
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7:58 AM The head of a major South African mining union threatens to bring the country's economy "to a standstill" and demands a meeting with President Zuma, ramping up the rhetoric in a long and heated conflict between labor and the government. But a strike seems averted for at least another day, as top platinum producer Amplats (AGPPY.PK) says employees reported for today's shifts as normal. [Commodities, Global & FX] Comment!
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7:53 AM China's top safety agency say Shanghai GM (GM) will recall 2.6K Cadillac SRX vehicles for a potential issue with wheel nuts. Shanghai GM is coming off a roaring April as sales rose 29% to 121,559 units - a faster pace than GM's other joint ventures in China. [Consumer] Comment!
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7:51 AM Caterpillar and Mining Machinery settle the dispute relating to the Siwei acquistion, with CAT cutting $135M from the $164.5M still owed to MML. It's a small salve to Caterpillar which had to take a $580M charge after discovering accounting issues. (PR) 2 Comments
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7:48 AM Corrections Corporation of America (CXW) declares $0.48/share quarterly dividend, 9.43% decrease from prior dividend of $0.53. Forward yield 4.94%. For shareholders of record July 3. Payable July 15. Ex-div date July 1. (PR) [Dividends] 3 Comments
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7:38 AM Ford (F) plans to shift some Fiesta production to Thailand to free up capacity in North America for other models. It's a move that makes sense to automobile analysts with the Fiesta selling well in Asia and Ford planning big things for new models in North America. [Consumer] 3 Comments
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7:36 AM Stocks at all-time highs aren't reeling in too many investors to the bullish side on the AAII Investor Sentiment Survey which shows a 2.3 point decline in bulls to 38.5% - just below the long-term average of 39%. Bears gained 1.9 points to 29.3%. also just under the long-term average. 8 Comments
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7:32 AM Turkish stocks (TUR) hit record highs after the country receives it first investment grade rating from Moody's in two decades (previous). The move comes 6-months after Fitch blessed Ankara with an investment grade nod for the first time since 1994. Yields on the country's two-year bonds hit a record low 4.63% Friday on the news. [Global & FX] Comment!
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7:29 AM Copy the Goldman aussie forecast to the yen - its quick tumble also forcing the team to revise lower its already bearish forecasts. The analysts now see the dollar buying ¥110 twelve months out vs. ¥105 previously. The yen's (FXY) marginally stronger this morning, the dollar buying ¥102.40. [Global & FX] Comment!
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7:26 AM The fast slide in the aussie catches even the bearish Goldman currency team off-guard, and it's forced to revise lower its 12-month forecast for the currency - now $0.90 vs. $0.98 previously. The reasons are well-known to anyone paying attention: A deteriorating Australian economy and lower commodity prices. FXA -0.4% premarket and the aussie is buying $0.9755. [Global & FX] Comment!
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7:18 AM Stryker (SYK) is downgraded to Reduce at SunTrust as a bank survey sows ACO's, CMS bundling, and readmission will negatively impact hips and knees pricing. [Healthcare] Comment!
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7:16 AM Shanghai (FXI, CAF) completes its biggest week in 4 months, up 1.4% overnight as the government slashes red tape for certain investment projects. A total of 117 "approval items" - including gas fields, airports, and paper pulp - can now move forward without getting an "Ok" from Beijing. [Global & FX] Comment!
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7:12 AM More on European car sales (previous): The 18-month losing streak for sales on the continent is over as Daimler (DDAIF.PK) and Volkswagen (VLKAY.PK) show double-digit growth with both putting in strong months in the U.K. and solid showings in Germany. Of the Japanese automakers, Nissan (NSANY.OB) made the most forward progress. [Consumer, Global & FX] 2 Comments
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7:11 AM BofA downgrades Williams Sonoma (WSM) to Neutral from Buy. Q1 results due next week. [Consumer] Comment!
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7:07 AM Stage Stores (SSI): Q1 EPS of -$0.02 misses by $0.11. Revenue of $379M (+3.5% Y/Y) misses by $9.43M. (PR) [Earnings, Breaking News] Comment!
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7:04 AM The House Agriculture Committee heard some spirited debate this week on if it should be easier for organic food companies to organize industry-wide promotional campaigns, a concept which didn't sit well with many farm-state Republicans. It's been a slow process, but more Republicans have been backing amendments and bills that support the organic food industry. Organic-minded: TFM, HAIN, NGVC, HAIN, BNNY, WFM, UNI, STKL, BDBD. [Consumer] 2 Comments
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7:03 AM Limited Brands (LTD) is downgraded by Jefferies to Underperform and assigned a lower price target of $40. [Consumer] Comment!
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7:03 AM Donaldson (DCI): FQ3 EPS of $0.46 misses by $0.03. Revenue of $619M (-4% Y/Y) misses by $40.41M. (PR) [Earnings, Breaking News] Comment!
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7:00 AM On the hour: S&P +0.3%. 10-yr +0.09%. Euro -0.16% vs. dollar. Crude +0.48% to $95.62. Gold -0.61% to $1378.45. Comment!
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6:56 AM S&P affirms India at BBB-, outlook Negative with a 1-in-3 chance of a downgrade within a year. There's also a chance for an upgrade provided public and private investments are made available to boost economic growth. [Global & FX] Comment!
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6:54 AM Retail watch: Chipotle (CMG), J.C. Penney (JCP), and Macy's (M) all hold their annual shareholder meeting today with each company expected to outline channels to find new growth. The trio could also use their meeting to back earnings guidance or tip off current sales trends. [Consumer] Comment!
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6:51 AM McDonald's (MCD) is considering removing more items from its menu to become streamlined, according to information tipped off by a franchisee. Fruit & Walnut salads, Chicken Selects and Angus burgers have already been selected for elimination while Caesar salads, the McSkillet Burrito, and steak bagels could also be on the copping block. The streamlining moves falls in line with a new focus from the company on costs and its value menu. [Consumer] 4 Comments
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6:43 AM Tesla Motors (TSLA) prices its offering of 3.393M shares of common stock at $92.24 per share. [Consumer] 9 Comments
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6:35 AM A worldwide poll of investors, analysts, and traders conducted by Bloomberg shows more than two thirds believe the U.S. economic recovery is "sustainable," while only a little over a quarter of those surveyed see a return to recession within the next two years. Key drivers of the upbeat forecast include increasing energy independence, rising home values, and "a pause in partisan budgetary battles in Washington" (there's agreement in Washington?). Housing, it seems, is the main talking point: "Anyone who isn't long real estate housing is a moron," Axiom Management's Stan Jonas is quoted as saying. [U.S. Economy] 3 Comments
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5:56 AM UBS upgrades global financials to Overweight from Underweight on a healing global economy, rebuilt capital, and the sector's shift "from being a net issuer to a net distributor of cash." Furthermore, the U.S. banking sector (XLF) is taken to Overweight as balance sheet strength and attractive valuations play well with the housing market recovery to create compelling opportunities. European banks (EUFN) are lifted to Neutral "with a preference towards Nordic and U.K. banks." Financials respond in London with LLoyds Banking Group (LYG) +2.3%, Royal Bank of Scotland (RBS) +3.3%, and Barclays (BCS) up 0.5%. [Financials, Global & FX] 5 Comments
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5:44 AM The British parliament will call Amazon (AMZN) back to testify before the Public Affairs Committee to explain how it justifies paying just $9M in income tax on some $23B in sales to British customers over the past six years, Reuters said Friday, citing lawmakers. The company claims it should only pay tax in Luxembourg as it operates a single business in Europe from there, rather than multiple independent subsidiaries across the region. Reuters suggests this is a mischaracterization. [Tech] 2 Comments
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5:25 AM New car registrations in Europe rise 1.8% in April, breaking a horrendous streak of monthly declines that dates back to September of 2011. However, even a cursory glance at the numbers reveals that the devil (as always) is in the details. U.K. auto sales jumped 15%, logging their best month since 2008. Stripping out that rather anomalous (at least in terms of the regional big picture) data point shows the European car market contracting again, albeit by a small margin. [Global & FX, Consumer] Comment!
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4:31 AM Real, inflation adjusted wages at nonprivate Chinese companies (state-owned and public enterprises) grew 9% in 2012, up from 8.5% in the previous year, while real wages in the private sector rose 14%. On a nominal basis, wages grew at a double-digit pace even as the pace of economic growth decelerated. While the data show the country is continuing to push towards establishing "a normal wage increase system," manufacturers could feel the heat should wage growth continue to outpace economic growth going forward. [Global & FX] Comment!
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12:00 AM Friday's economic calendar:
9:55 Reuters/UofM Consumer Sentiment
10:00 Leading Indicators
1:45 PM Fed's Kocherlakota: ‘The Future of Financial Regulation and Monetary Policy’ Comment!
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