MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Tuesday, June 18
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4:27 PM Hatteras Financial (HTS) receives board authorization for a stock repurchase program of up to 10M shares (about 10% of the float). Shares +0.8% AH. Previous: Hatteras maintains its $0.70 dividend. Comment!
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3:47 PM MBIA (MBI +2.6%) management needs to reconsider its aversion to separating its municipal finance business (National) and the securitization business (MBIA Insurance), writes Christian Herzeca. Investors in National have developed a "well-deserved antipathy to securitization guaranty insurance," he says, and for that have assigned about a $2 discount National which he believes is worth $16 as a separate entity. 1 Comment
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3:23 PM Moneygram (MGI +3.1%) pops higher on a Dealreporter story the company is in talks with potential suitors and has hired Bank of American to advise. Comment!
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3:04 PM Rising interest rates should be good for bank (XLF) income statements, but maybe bad for bank balance sheets, opines Fitch. Higher long rates mean wider margins which is good for earnings, but securities backing bank capital levels have large unrealized gains attached - gains which could disappear and turn into losses as rates rise. Basel III rules, of course, have yet to be finalized so the ultimate impact is not yet clear. Comment!
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1:32 PM Scotiabank (BNS) and TD Bank are each downgraded to Hold from Buy at Barclays which says earnings growth at the banks will be challenged and instead prefers insurers and asset managers (which ones are as yet unavailable). Comment!
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1:22 PM PowerShares' Global Short Term High Yield Bond Portfolio (PGHY) is set to launch on June 20 with an expense ratio of 0.35%. Like the name says, the fund will keep duration low and invest globally. iShares' GHYG also invests globally in high yield, but with no mandate to keep holdings short-term. Several high yield funds have built-in hedges against higher rates, including HYHG, THHY, HYLS. Comment!
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1:10 PM Colony American Home pulled its IPO this month because of a collapse in equity REIT prices, says Colony Financial (CLNY) Chairman Tom Barrack, appearing on CNBC. "We don't need the capital," he adds. An owner of mortgage insurers Radian (RDN) and MGIC (MTG), and Fannie Mae (FNMA.OB) preferred, Barrack calls them a great a way in H2 to play the housing comeback. Note: FNMA.OB is the symbol for the common. Comment!
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11:54 AM AIG slips 0.9% in an up market as Bernstein's Josh Stirling says investors may want to brace themselves for a headline announcing the termination of the deal to sell an 80% stake in ILFC. Would it be such a bad thing? At least one comparable - Aircastle Limited (AYR) - has rallied 40% since the deal to sell ILFC was inked. Perhaps ILFC would command more than a $5.2B valuation today. 3 Comments
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11:30 AM Hudson City Bancorp (HCBK +2%) pops as M&T Bank (MTB +0.6%) looks to soon be able to move forward with its purchase after agreeing with regulators to beef up its anti-money laundering policies. Comment!
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11:01 AM Sun Life Financial (SLF +0.9%) inks a "game-changing" deal with the Canadian Wheat Board, transferring (for a fee) all of the Board's pension plan risk to the insurer. It's the first of its kind in Canada, says Sun Life, which has been actively seeking such deals since General Motors and Verizon struck similar agreements with Prudential last year. Comment!
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10:42 AM Panicky fixed-income investors have sent implied volatility through the roof on normally quiet bond funds like the High Yield Corporate Fund (HYG) and the Investment Grade Corporate Bond Fund (LQD). It could spell opportunity as large price declines in many bond funds have overwhelmed the actual drop in NAV. 1 Comment
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10:23 AM Investment bank Jefferies - now fully owned by Leucadia (LUK) - reports FQ2 profit of $42M, off 34% Y/Y. The company saw a "significant slowdown" in fixed-income trading in March and April, says Leucadia CEO Richard Handler, blaming uncertainty over the Fed's QE program. Comment!
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10:15 AM PennyMac Mortgage Investment Trust (PMT -1.1%) is downgraded to Sell at Ladenburg Thalmann. The move stands in contrast with Compass Point's Buy recommendation from last week in which Kevin Barker argued the housing recovery should allow continued gains from PMT's distressed loan portfolio and the stock trades at a meaningful discount to its mREIT peers. 2 Comments
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9:18 AM In maybe more good news for CommonWealth REIT (CWH) shareholders, proxy advisory firm Glass Lewis - typically a supporter of managements - recommends clients vote to remove the entire board of the company. "(Management's) interests are significantly misaligned with those of CW's shareholders ... and the external management structure provides for value transfers to the Manager irrespective of the losses realized by investors in the Trust." Comment!
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8:05 AM Luxor Capital (about $5B in AUM) boosts its stake in American Realty Capital Properties (ARCP) to more than 17M shares (9.2% of the company) from about 4M previously. The stock is now Luxor's 3rd largest individual holding. Other REITs owned by Luxor include: CommonWealth (CWH), Realty Income (O), Equity Residential (EQR), and AvalonBay (AVB). Comment!
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7:45 AM American Capital Realty Properties (ARCP) will be added to the Nasdaq Financial-100, the Russell Global, and Russell 3000 indexes, effective June 24 for Nasdaq and July 1 for Russell. The company also expects to be added to the Russell 2000 - the small-cap subset of the Russell 3000. (PR) Comment!
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7:38 AM People's United Financial (PBCT) is upgraded to Buy with price target of $15.50 (from $13.50) at JPMorgan, which calls the current price just south of $14 an attractive entry point. 2 Comments
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7:28 AM Hong Kong extends it Hibor-rigging investigation (previously limited to UBS) to include HSBC (HBC) and a number of other banks, according to the central bank. In other rate-rigging news, it's bracelets for an ex-UBS trader as the U.K. launches criminal charges against him. Comment!
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6:53 AM Commerzbank (CRZBF.PK, CRZBY.PK) will slash more than 5K jobs as part of its cost-cutting program, reports Reuters, which adds the bank has reached preliminary agreement with labor unions over the implementation of said cuts. Shares +1.2% in Frankfurt. Comment!
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3:31 AM While the likes of Apple and Amazon go all out to keep their taxable income overseas, for the past few years Citigroup (C) has been trying to shift more of this type of profit back home. It's not because the bank wants to pay more tax, it's just that it has $55B of tax credits and deductions that it wants to use up. Hence the acquisition of $7B in credit-card loans to Best Buy customers. 1 Comment
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