MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Friday, May 24, 2013
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11:24 AM Brazil plans to auction off its largest-ever offshore oil discovery in October at the country's first presalt-bid round, selling exploration and production rights for the Libra prospect estimated to hold 8B-12B barrels of recoverable crude oil. Petrobras (PBR) will be required to take a minimum 30% stake in any winning bid group - unrealistic, critics say, since it lacks the necessary personnel and financial resources. Comment!
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11:22 AM China Biologic (CBPO -5.3%) slides on the news that on May 21 two of its shareholders sold its competitor, Shanghai RAAS, about 2.7M of its shares representing 9.9% of equity. CBPO says it had no knowledge of the deal, nor had there been any discussions with Shanghai RAAS. The sale looks to be questionable at best, considering that one of the shareholders' shareholding status was under dispute in a pending case in Hong Kong, and Shanghai RAAS was aware of that fact. Comment!
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10:46 AM Luxury retail companies seem to be seeing something more than economists do as they ramp up investments and marketing on expectations for increased high-end spending in the U.S. Even with all the focus on the growth potential for the luxury sector in China and Hong Kong, by sales the U.S. market is still twice as big and has plenty of upside, according to industry insiders. A wildcard in the mix is the impact from some relaxed rules on visa approvals for wealthier tourists from emerging markets. On watch: Hermes, LVMH Moet Hennessy (MAGOF.PK), Gucci (GUCG.PK), Louis Vuitton (LVMUY.PK), Coach (COH), Tiffany (TIF), Ralph Lauren (RL), Burberry (BURBY.PK), Saks (SKS), Hugo Boss, Christian Dior (CHDRF.PK). Comment!
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9:29 AM Beer market winners and losers: Tracking data from Citi Research showed Boston Beer was the big winner over the four-week period ending May 11, although Craft Brew Alliance (BREW) and Heineken (HINKY.PK) also made solid gains, sales up 10.7% and 7.1% respectively. The market share gains came at the expense of Anheuser-Busch InBev (BUD) and MillerCoors (SBMRY.PK, TAP) which saw sales slip during the same period. Comment!
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9:04 AM Stocks in the Philippines (EPHE) add 0.62% to yesterday's losses, bringing Thursday/Friday's decline to 1.6%, erasing Tuesday/Wednesday's combined gains entirely (I, II). Indonesian equities (IDX) rise 0.66% as the JCI closes the week at 5,155, down 1.1% from Monday's close (See: IDX rises on new Fin. Min.). Elsewhere in the region, Vietnamese stocks (VNM) rise 0.41% and Thailand, Malaysia, and Singapore are closed for a local holiday. Comment!
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7:58 AM Chrysler (FIATY.PK) says software issues held up production this year which led to a nasty cut of the automaker's profits, but a bigger issue could be lying under the surface. Sources tell the Detroit News that the large number of rookie workers on the assembly line were the real bug in the system. Comment!
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7:54 AM JPMorgan wins some work from the Russian government, beating out a number of banks for a contract to help boost the country's credit rating. The last agency move on Russia was Fitch cutting to BBB amid the February 2009 panic and Putin in the past has called his country's ratings an "outrage" boosting borrowing costs for the government and corporations. RSX -9.3% YTD. Comment!
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7:18 AM Goldman Sachs (GS) has gotten the nod from the Indian government to help it raise money by creating and launching ETFs of state-run companies, according to a senior official. The government initially aims to have 15-20 state-run firms in a basket of ETFs. Remember, this program was only made necessary by the government's inability to interest P-E and other investors in buying stakes. Price matters. Caveat emptor. Comment!
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6:57 AM Sony (SNE) plans to sell $1.5B in five-year bonds in June. Of the total $1.1B is slated to be used to pay existing debt and $400M is planned for capital investment. SNE -1.5% premarket. Comment!
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5:20 AM U.S. and Chinese regulators have signed a memorandum of understanding that gives U.S. authorities increased access to documents from Chinese audit firms. The agreement comes after scores of U.S.-listed Chinese companies faced questions over their accounting practices, with the SEC suing around a dozen for fraud and other charges. However, the new deal is limited and doesn't cover routine inspections of audit firms. 1 Comment
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4:11 AM German Ifo index of business confidence rises to 105.7 in May from 104.4 in April and tops estimates of 104.5. Current conditions 110 vs 107.3 and 107.2. Expectations static at 101.6, as forecast. The euro (FXE) spikes vs the dollar is now +0.1% after being lower, while the DAX is +0.1%. Comment!
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3:47 AM European shares enjoy a technical bounce and broadly follow Japanese stocks higher following yesterday's sharp sell-off in both regions. Things got a "bit scary," says technical analyst Valerie Gastaldy. "But my advice to clients is that we shouldn't panic and we should try to buy." EU Stoxx 50 flat, London +0.2%, Paris +0.2%, Frankfurt +0.3%, Italy +0.1%, Madrid -0.2%. Comment!
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3:41 AM The yen is higher vs the dollar as volatility in the currency markets somewhat echo the gyrations in Japanese stock markets. Bank of Japan Governor Haruhiko Kuroda says that the BOJ has no set target for the yen and that stability in Japanese debt market is "extremely desirable." His comments follow the extreme instability yesterday, when 10-year JGB yields rose as high as 1%, prompting the BOJ to step in with a fund-supplying operation. Dollar -0.5% at -¥101.54. Comment!
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3:17 AM German Q1 GDP (second reading) +0.1% Q/Q (flash +0.1%) vs -0.6% in Q4. On year, -1.4% (-1.4%) vs +0.1%. Private consumption adds 0.4 percentage point but gross capital investment cuts 0.3 point. (PR) Comment!
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3:08 AM Japanese shares end +0.6% following a volatile session in which stocks rose and fell by over 3% vs the close yesterday, when they slumped 7.3%. The plunge on Thursday was "just a speed bump" given this year's strong returns, says U.S. fund manager Audrey Kaplan. Improving economic conditions "will support the market going forward." Hong Kong flat, China +0.6%, India +0.3%. 2 Comments
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Thursday, May 23, 2013
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9:07 PM A rebound in Tokyo sees the Nikkei (EWJ) gaining 3% in early action following yesterday's 7% dive. A weaker yen (FXY) is helping, dollar/yen gaining 0.4% to ¥102.37. 6 Comments
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6:21 PM AVEO Pharmaceuticals (AVEO) has been informed by its partner, Astellas Pharma (ALPMY.PK), that it no longer intends to submit a Marketing Authorization Application to the European Medicines Agency for tivozanib, its treatment for advanced renal cell carcinoma, nor does not intend to fund any future trials under its strategic collaboration agreement. AVEO says it's evaluating the impact of the news and its options for the drug going forward. AVEO -14.7% AH. Comment!
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5:55 PM Serious overcapacity in China's steel industry is unlikely to ease in 2013, which could continue to hamper steel prices (SLX), analysts say at Platts Steel Market Europe conference. China is set to produce ~750M metric tons of crude steel in 2013 while capacity will rise to 950M, putting heavy pressure on steel prices in Europe and in the world steel industry as a whole. 5 Comments
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2:09 PM "We think the impact will be between €5B and €10B," the Bank of Spain tells FT, in the first official estimate of the additional provisions Spain's banks will need to take against bad loans as the government prepares to do away with "extend and pretend." Although the extra provisioning will no doubt weigh on results, expectations are that Banco Santander (SAN -0.2%) and BBVA +1.86% will have no trouble absorbing the hit, though it isn't clear that the same can be said of smaller banks. Comment!
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2:07 PM Boeing (BA +1.7%) updates its Orders and Deliveries page for the week, saying that since its last update it has received 107 new orders consisting of six 777s and 101 737s. In the Changes category, it reduced 737 net orders by 24. Additionally, the company says that Chinese regulators have cleared local airlines to fly the 787 Dreamliner, and are expected to allow them to launch overseas flights within a matter of months. Comment!
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