Friday, September 4, 2015
- Freeport McMoRan (NYSE:FCX) reportedly has hired JPMorgan Chase to help it explore options such as asset sales and cost cuts, after Carl Icahn called the company undervalued and asked for corporate changes.
- Icahn disclosed an 8.5% stake in FCX last week, saying the miner needed to address several corporate governance and capital issues.
- Paragon (NASDAQ:PRGN) has struck a deal with Maxim Group for a $4M at-the-market stock offering. The company can offer/sell the shares at any time during the next 12 months.
- With Paragon having closed today sporting just a $15.5M market cap, dilution stands to be substantial. The company ended Q2 with $8.3M in cash, $156.8M in long-term debt, and $62.6M in assets held for sale.
- Shares fell 12.4% in regular trading ahead of the announcement, and are down 77% YTD amid a general rout in shipping stocks and commodities prices.
- Influential proxy adviser Institutional Shareholder Services has joined the choir urging shareholders at Bank of America (BAC -1.8%) to strip CEO Brian Moynihan of his chairman's title.
- With shareholders objecting since Moynihan got the additional title last year, the company promised a vote that was then moved sooner, to Sept. 22.
- On Tuesday, the country's two biggest pension funds urged separating the roles at BofA, due to "inherent conflicts." Mike Mayo noted that letting Moynihan serve in both roles could bring more regulatory scrutiny.
- Digitimes (citing Japanese media) reports Mitsubishi Chemical and Pioneer have begun sampling "the first blue light-less OLED lighting module made with a wet coating process for the light-emitting layer." The modules are expected to enter mass-production in early 2016, and help cut production costs by over 60%.
- OLEDs enable thinner lighting products than LEDs and other alternatives, and also provide energy efficiency and temperature benefits. However, high prices have limited adoption. Universal Display (NASDAQ:OLED) formed a partnership with Mitsubishi Chemical back in 2006, and struck a licensing deal with Pioneer in 2011.
- Separately, Panasonic exec Masahiro Shinada predicts OLED TVs will be cheap enough for average consumers in 2-3 years. "I'm very confident panel cost will go down ... Last year, the panel suppliers' yield was very, very low level. But currently this ratio is now growing." OLED TV prices currently start in the ~$2,000 range.
- DirecTV (T -1.4%) has settled on a year-old lawsuit against Al Jazeera America over distribution terms -- likely as part of a new carriage agreement with the news channel.
- The satellite company had charged Al Jazeera with violating a "most favored nation" clause by changing to more favorable terms with Time Warner Cable once it bought Current TV and struck a new carriage deal for its new channel.
- “We’re pleased to have settled the MFN violation lawsuit with Al Jazeera America and ensure that our customers receive a fair deal,” DirecTV said. “Al Jazeera America continues to be available on the DirecTV and U-verse platforms.”
- The Morgan Stanley commodity team lowers its crude oil price estimates, forecasting WTI at $51.07/bbl at the end of 2015, $56.45 at the end of 2016 and $60 at the end of 2017; the group had foreseen a 2017 price of $80.
- At the firm's recent Houston Energy Summit, EOG Resources (NYSE:EOG) was considered the most bullish in terms of expectations for oil prices, expecting "U.S. production to come off 100Mbld per month in year end" for a total decline from a peak of 700M bbl/day at year-end.
- Many other companies in attendance, including Anadarko Petroleum (NYSE:APC) and Apache (NYSE:APA), expect a more modest pickup in crude prices.
- Of all the companies in its coverage universe, Stanley sees InterOil (NYSE:IOC), Marathon Oil (NYSE:MRO) and Devon Energy (NYSE:DVN) as offering the highest upside to its price target.
- Barron's is out positive on Caterpillar (NYSE:CAT), with the company in strong position to right itself when commodities and heavy equipment sales rebound.
- With so much bad news reflected in its stock price now trading for less than 16x expected 2016 earnings, CAT can reward patient investors, Johanna Bennett writes; cost cuts have allowed CAT to keep its balance sheet strong enough to buy stock and raise dividends, and shares yield an enticing 4.1%.
- Earlier, RW Baird downgraded CAT to Neutral, saying commodity prices have failed to stabilize as the firm had predicted in May when it upgraded shares to Outperform.
- Biotech firm Xoma (XOMA +1.3%) says it's been notified by Nasdaq of a delisting risk after 30 business days of a low bid price.
- The firm has until March 2 (180 calendar days) to reconfirm compliance by lifting its closing price above $1.00 for 10 consecutive business days.
- Failing that, the company could earn another 180 days to comply by switching to Nasdaq Capital Market.
- At $0.794, shares are down 82% from their July 21 close, just before the failure of the company's gevokizumab in a late-stage study of a rare form of uveitis.
- The Boston Globe reports an assistant U.S. attorney and an FBI cybercrimes agent are investigating alleged attempts by former HubSpot (NYSE:HUBS) execs to obtain a draft copy of a book about the company prior to its publication. Sources state it isn't yet clear whether charges will result.
- In late July, HubSpot announced it had fired CMO Mike Volpe for attempting to procure a draft of the book, written by tech writer/former HubSpot marketing employee Dan Lyons, and that content VP Joe Chernov had resigned before HubSpot could decide whether to fire him as well. Chairman/CEO Brian Halligan was fined for failing to report Volpe/Chernov's actions quickly enough, but allowed to keep his job.
- Lyons' book, Disrupted: My Misadventure in the Start-Up Bubble, is set to go on sale on Feb. 2, 2016. A description from publisher Hachette suggests the memoir is less than flattering towards HubSpot. "[Lyons'] new employer made the world a better place...by selling email spam. The office vibe was frat house meets cult compound: Shower pods became hook-up dens; Nerf gun fights broke out at lunch; and absent bosses specialized in cryptic, jargon-filled emails."
- Lockheed Martin (NYSE:LMT) has won a 10-year contract, worth up to $428M, for the next phase of the Navy's Aegis Combat System.
- The program, Ship Integration & Test, will modernize the fleet with the latest Aegis systems (Baseline 9), designed for simultaneous defense against airborne threats and ballistic missiles.
- Along with the SI&T program, Lockheed Martin provides engineering services for the Aegis-equipped ships through a separate 2013 contract.
- S&P -1.34%.
- 10-yr +0.25%.
- Euro +0.25% vs. dollar.
- Crude -2.28% to $45.69.
- Gold -0.32% to $1,120.90.
- "With the majority of Good’s customers using iOS or Apple devices, we view this acquisition as positive for BlackBerry’s (NASDAQ:BBRY) ability to broaden its customer reach, especially with our survey work indicating ongoing share gains for Apple in the enterprise market," writes Canaccord's Mike Walkley about BlackBerry's $425M deal to buy enterprise mobility management (EMM) software rival Good Technology. "[Good] should also help BlackBerry build on its two new technology licensing deals announced last quarter."
- At the same time, Walkley notes some of Good's revenue comes from BlackBerry licensing payments, and argues BlackBerry still "faces the challenging task of selling not just EMM subscriptions but must also upsell increasing amounts of [value-added services] and close additional technology licensing deals to meet its [FY16] software-related sales target."
- Morningstar's Brian Colello: "Good ... has been a leader in EMM for quite some time, as evidenced by Gartner’s rating of Good as a 'Leader' in its magic quadrant for EMM in June 2015 (versus a 'Niche Player' rating for BlackBerry). We anticipate that the combination will lead to more advanced products and a growing customer base over time." In addition to Good, IBM, Citrix, VMware (AirWatch), and MobileIron are in Gartner's Leaders quadrant.
- UBS' Amitabh Passi: "Good serves more than 6,200 organizations, with particular strength in Government, [aerospace & defense], healthcare, and commercial banks. Good with its Good Dynamics platform will also bring access to over 2000 independent software vendor (ISV) apps."
- VentureBeat's Jack Gold notes questions remain about integrating Good's platform with BES. "BlackBerry does have experience here with its many recent acquisitions, but Good has much more technology to integrate than the previous acquisitions did, and far more overlap in capabilities. And the cultures of the two companies are different ... I expect [integration] will be successful given [John Chen's] track record, but it may not be without some 'potholes' along the way."
- After opening higher in response to the deal, BlackBerry closed down 2.4% amid a 1.1% Nasdaq drop. M&A hopes helped BlackBerry/Good rival MobileIron (NASDAQ:MOBL) rise 3.9%.
- Boeing (NYSE:BA) unveiled its new spaceship assembly plant today at Cape Canaveral, Fla., which NASA plans to use to fly crews to the International Space Station.
- Boeing's newly named CST-100 Starliner spaceships will be prepared for flight in a processing hangar once used by NASA's space shuttles.
- The Starliner can carry up to seven astronauts, or astronauts and cargo, and will be capable of deep space missions; It will compete against the Dragon capsule made by Elon Musk’s SpaceX, with similar capabilities.
- CEO Dennis Muilenburg, at the grand opening ceremony, does not specify how much money Boeing is contributing to the project, but NASA is paying up to $4.2B for a Starliner test flight and up to six missions to the space station.
5:27 PM| 5:27 PM | 5 Comments
- A month after warning FQ2 (August quarter) revenue would be at the low end of a prior forecast for 30%-60% Q/Q growth, DragonWave (NASDAQ:DRWI) says it now expects revenue to be up just 4% Q/Q to ~$27.5M. Consensus is at $37.3M.
- The RF backhaul hardware vendor states equipment/service orders were $3.4M lower than expected - about half of the orders are now expected in FQ3 - and that $2.8M worth of shipments didn't make the FQ2 cutoff date and slipped into FQ3. Shipments to a major Indian customer remain suspended on account of a (previously-disclosed) product issue that's said to be resolved.
- CEO Peter Allen: "Q2 has obviously been a very challenging quarter for DragonWave. We are developing the plan for moving forward and anticipate sharing that plan on our next regularly scheduled investors' call."
- Ahead of the announcement, shares fell 5% in regular trading to $0.20. They haven't yet moved after hours.
- TECO Energy (NYSE:TE) +24.1% AH after agreeing to be acquired by Canada-based energy company Emera (OTCPK:EMRAF) in a $10.4B deal, including $3.9B of debt.
- The $27.55/share price is a 30% premium over today's closing price and a 48% premium based on TE's unaffected closing stock price on July 15, the last trading day prior to news reports regarding the company's strategic review.
- The companies say the merger creates a North American energy leader with more than $20B of assets and more than 2.4M electric and gas customers.
- Viggle (VGGL -0.8%) notes in an 8-K filing that it's borrowed another $2M under a line of credit extended by its CEO.
- Robert F.X. Sillerman -- also CEO of SFX Entertainment -- had extended a 12% interest credit line in June of up to $10M to Viggle through his investment vehicle, Sillerman Investment Co.
- The latest draw brings the balance owed on the credit line to about $6M. The company's in a forbearance agreement and payment plan with AmossyKlein Family Holdings after missing a $4.8M merger payment tied to its June 2014 deal to acquire Choose Digital.
5:06 PM| 5:06 PM | Comment!
- S&P -1.34%.
- 10-yr +0.25%.
- Euro +0.25% vs. dollar.
- Crude -2.28% to $45.69.
- Gold -0.32% to $1,120.90.
- Boeing (NYSE:BA) says the recent canceled orders for four 747 freighters, leaving no net new orders from this year or last, will have "no impact on production rates."
- If the sales slump continues, Boeing could face the prospect of taking an accounting charge of $1B or more on the 747-8 program, says Deutsche Bank analyst Myles Walton, although it is unclear how long the company could continue without an order before triggering such an action.
- Boeing has flagged the charge risk in its quarterly filings, and says today there is no change in the status due to the order cancellation.
- Earlier: Boeing is beating Airbus where it counts: deliveries
- As expected, XOOM shareholders have signed off on PayPal's (NASDAQ:PYPL) $890M ($25/share) acquisition of the company. 95.17% of the votes represented at a special meeting were cast in favor.
- PayPal/Xoom previously stated the deal is expected to close in Q4. Xoom notes it still needs to receive "certain regulatory consents."
- Leidos (NYSE:LDOS) is selling 18 acres of Fairfax County, VA land featuring "four office buildings, a multi-level parking garage, surface parking lots, and other related improvements and structures, as well as related tangible personal property and third-party leases." (8-K filing)
- The company will be paid $75M up-front, and receive a $25M promissory note maturing in Dec. 2019.
- ZaZa Energy (NASDAQ:ZAZA) discloses that it still has not made the required interest payment on its 9% convertible senior notes due 2017; as of Aug. 31, there was $42.1M, including accrued and unpaid interest, outstanding under the convertible senior notes.
- Earlier today, ZAZA disclosed that it has appealed Nasdaq's recent delisting determination, delaying a suspension of its shares that would have taken effect Sept. 4; a hearing is scheduled for Oct. 1.
- After more than a year of experimenting with courier services, UBER plans to launch an express delivery service for online orders that will be supported by major retailers and fashion brands, Re/code reports. An announcement could come by late September or early October.
- To make the service easily available to smaller retailers, Uber has reportedly held partnership talks with e-commerce software/services provider Shopify (NYSE:SHOP), as well as with Shopify rival Bigcommerce. Shopify claimed 175K merchant clients as of Q2.
- Sources state Uber's service will initially launch in NYC, and be supported by "some flashy, luxury brands whose flagship stores are usually found on or around Fifth Avenue." A San Francisco launch will follow. The report comes as Amazon continues expanding its same-day delivery footprint, and gradually rolls out its Prime Now 1-hour delivery service.
- Last month, Cowen reported Uber is looking to expand its UberEATS meal delivery service (competes with GrubHub) to as many as 15 more cities. UberEATS is currently available in NYC, L.A., Chicago, Toronto, and 5 other locales.
- Stocks closed sharply lower ahead of the long holiday weekend, weighed by continued uncertainty about the timing of a Fed interest rate hike and the slowing Chinese economy.
- "You've got a buyers' strike and a lot of buyers anxious to get out ahead of a long weekend, ahead of pent-up news out of China," Wunderlich's Art Hogan says.
- Also, this morning's jobs report was considered solid enough for the Fed to consider a rate hike during the Sept. 16-17 meeting.
- All 10 sectors finished the day in negative territory, with materials (-2%) and financials (-1.9%) at the bottom of the leaderboard; energy (-1.7%) fell as Nymex crude oil slid 0.7% to $45.97/bbl.
- Today's action was a bit below levels from earlier in the week, as 828M shares changed hands at the NYSE.
- For the week, the S&P tumbled 3.4%, the Dow slid 3.3%, and the Nasdaq was off 3%.
- Treasurys gained strength through the day as equities retreated; the yield on the benchmark 10-year note fell 4 bps to 2.12%.
- Dow -1.67% to 16,100.50. S&P -1.53% to 1,921.15. Nasdaq -1.05% to 4,683.40.
- Treasurys: 30-year +0.77%. 10-yr +0.22%. 5-yr +0.08%.
- Commodities: Crude -1.55% to $46.03. Gold -0.27% to $1,121.50.
- Currencies: Euro +0.15% vs. dollar. Yen -0.84%. Pound +0.5%.
- Today's plunge in Arch Coal (ACI -15.6%) perhaps is attributable to a new Bloomberg article that indicates distressed debt swaps may be a thing of the past.
- ACI shares surged Monday after announcing that it had extended its debt exchange offer until Sept. 23, but apparently the company is having trouble completing the swap and cannot find enough shareholders who want to make the exchange.
- Today's article says ACI's proposed deal with bondholders to swap some of their securities into higher-ranking and longer-dated debt is stuck in limbo after another group of lenders - concerned that the exchange would not save ACI and thinking they might be better off if the company filed for bankruptcy - moved to block it.
- Some profit taking also may be at work, as the stock price has more than quadrupled in the past three weeks; also, J.P. Morgan came out with a negative outlook for coal prices (NYSEARCA:KOL), saying the U.S. thermal coal sector remains "subdued" because the oversupply of shale gas is putting severe pressure on U.S. natural gas prices.
- Eni (E -2.1%) is in touch with cash-rich state holding Cassa Depositi e Prestiti as it looks for ways to take the debt of its Saipem (OTCPK:SAPMY) unit off its balance sheet, Eni's chairwoman says.
- One of the solutions reportedly under consideration if for CDP, already the key shareholder in Eni, to take a direct stake in Saipem.
- "Our aim is to de-consolidate Saipem's debt... we're studying several options," Emma Marcegaglia says.
3:21 PM| 3:21 PM | Comment!
- Ambac (AMBC -2%) and MBIA's (MBI -6.5%) National Guaranty could each be on the hook for more than $10B for Puerto Rico's capital-appreciation bonds.
- The paper was originally sold for pennies on the dollar, because of their balloon payments at maturity, and the companies used the price at issuance for disclosing potential payouts. The big jump to more than $10B occurs once those balloon interest payments are included.
- “The difference between principal at issuance and the amount due at maturity is enormous” on capital-appreciation bonds, says Tamara Lowin, director of research at Belle Haven Investments. “Ignoring the accreted value is irresponsible.”
- Both National and Ambac are confident they can weather the Commonwealth's restructuring and note the biggest balloon payments aren't due for decades. Assured Guaranty (AGO -1.5%) says its exposure to the capital-appreciation bonds is minimal.
- Source: Bloomberg
- Previously: Puerto Rico banks, monolines surge as PREPA and creditors cut deal (Sept. 2)
- Teekay Tankers (TNK +4.2%) enjoys strong gains after UBS upgrades shares to Buy from Sell with a $7.25 price target, raised from $6.75, saying the stock has more upside risk than downside risk; UBS says its estimates show the stock trading at 1.0x price/NAV, while a more appropriate valuation metric would be 1.2x price/NAV.
- However, the firm downgrades Diana Shipping (DSX -2.4%) to Sell from Neutral with a $6.25 price target, cut from $7.50, saying the stock carries more risk than reward after falling 37% in the past year vs. 70% drops for most bulkers in the "worst bulker market in the past 30 years."
- With demand from Apple and Chinese mobile OEMs remaining strong, CEO Kaz Hirai Sony (SNE -3.1%) plans to invest €1.5B ($1.7B) in its image sensor ops in FY16 (ends March '16) - 5x what it invested in FY15.
- The remarks come as Apple (NASDAQ:AAPL) gets set to launch the iPhone 6S/6S+, which are expected to feature much-improved cameras. The rear camera is rumored to support 12MP still photos, 4K video recording, and a faster burst mode; the front camera is reportedly being upgraded to 5MP.
- Image sensors have been a strong point for Sony as it deals with weak smartphone and (PS4 excluded) home electronics sales. The company is believed to be taking share from OmniVision (OVTI +0.7%), which is expected by the Street to see its FY16 (ends April '16) sales drop 8.8% Y/Y.
- Dow -1.83%.
- 10-yr +0.25%.
- Euro +0.22% vs. dollar.
- Crude -1.96% to $45.84.
- Gold -0.36% to $1,120.50.
- Boeing (BA -1.2%) may trail rival Airbus (OTCPK:EADSF, OTCPK:EADSY) in the number of YTD orders, but it is winning in deliveries, where it totaled 503 deliveries through the end of August, topping Airbus’ delivery tally of 397 aircraft.
- Airbus said it had 708 net orders after cancellations through the end of August, compared to Boeing's 447 for the same period, but "it’s deliveries that put cash in the bank."
- Deutsche Bank analysts do not share the concerns of analysts who worry about dire consequences for Boeing from China's slowdown, remaining positive on the long-term demand potential from the market as air traffic has remained strong and the improving middle class enjoys increased availability and affordability of air travel.
- Although Boeing has delivered 98 aircraft to Chinese carriers in 2015, the current backlog shows a "trivial" 157 planes, or 2.7% of total backlog vs. the 10%-11% seen in 2010-11, Deutsche Bank notes.
- The FDA will assess Janssen Biotech's (JNJ -2%) Biologics License Application (BLA) for daratumumab for the fourth line treatment of multiple myeloma under Priority Review. The accelerated process shortens the review clock to six months from ten. The PDUFA date is March 9, 2016.
- Daratumumab, licensed from Danish biotech Genmab A/S (OTCPK:GMXAY), is a human IgG1k monoclonal antibody that binds to CD38, a protein expressed on the surface of multiple myeloma cells. Once bound, it induces rapid tumor cell death through multiple mechanisms.
- Previously: Janssen Biotech completes rolling BLA submission for daratumumab (July 9)
- A slew of Chinese firms are among the biggest tech decliners as U.S. markets once more go into risk-aversion mode following a weaker-than-expected jobs report. The Guggenheim China Tech ETF (CQQQ -3.3%) is now down 19% YTD.
- Big decliners include Alibaba (BABA -4.7%), as well as e-commerce peers JD.com (JD -6.6%), Vipshop (VIPS -7.9%), and LightInTheBox (LITB -3.8%). Others include Qihoo (QIHU -4.4%), Autohome (ATHM -5.3%), Sina (SINA -4.7%), YY (YY -4.3%), Ctrip (CTRP -4.3%), Qunar (QUNR -4.4%), Wowo (WOWO -5.8%), and iDreamSky (DSKY -5.6%).
- Yesterday, Bloomberg reported Alibaba founder/chairman Jack Ma and vice chairman Joseph Tsai plan to take out a $2B+ margin loan pledged against their Alibaba stock holdings, rather than sell shares to raise funds. The money reportedly could go towards Tsai's Blue Pool Capital family office.
- After initially moving higher, Qihoo is now below where it traded before posting a Q2 EPS beat (and not providing any guidance) on Tuesday afternoon.
- ETFs: KWEB, QQQC, EMQQ
- BioPharmX (BPMX -0.7%) initiated with a Buy rating and $3.50 (133% upside) price target by Sterne Agee CRT.
- Recro Pharma (REPH +5.3%) initiated with a Buy rating and $19 (30% upside) price target by H.C. Wainwright.
- AcelRx Pharmaceuticals (ACRX +4.1%) initiated with a Buy rating and $8.50 (101% upside) price target by H.C. Wainwright.
- NephroGenex (NRX -0.8%) initiated with a Buy rating and $9 (127% upside) price target by H.C. Wainwright.
- Puma Biotechnology (PBYI -2%) initiated with an Overweight rating and $122 (36% upside) price target by JP Morgan.
- Teledoc (TDOC -7.4%) initiated with an Outperform rating and $35 (68% upside) price target by Leerink Partners.
- Aimmune Therapeutics (AIMT -4.1%) initiated with an Outperform rating and $44 (96% upside) price target by Credit Suisse.
- Endo International (ENDP -2.9%) downgraded to Equal Weight from Overweight by Morgan Stanley. Price target lowered to $85 (18% upside) from $101.
- Abraxas Petroleum (AXAS +1.8%) is higher after announcing that its bank syndicate reaffirmed its borrowing base at $165M through April 1, 2016.
- AXAS also says it continues working on steps to improve profitability amid low commodity prices, including shutting in or divesting any marginal wells and making additional investments in its production facilities and ancillary equipment; it expecting the moves will lead to more predictable production in the future.
- AXAS lowers its FY 2015 production guidance to 5,800-6,500 boe/day, and sees full-year capex of $55M-$65M.
- The University of Chicago-trained Joaquim Levy - nicknamed "Scissorhands" for his budget-cutting abilities - caused a stir yesterday afternoon on word he would skip this weekend's G-20 meeting of finance ministers in Turkey. Though that decision was reversed later, speculation is growing he could resign just eight months after taking the helm at Brazil's finance ministry.
- It would be another blow to the Rousseff administration, where Levy is about the only one in government with the support of investors. His exit would likely mean the country's credit rating being cut to the junk level at some point.
- “Levy is persistent, so if he fails to drive through the adjustments needed, it’s a very bad sign," says Goldman's chief LatAm economist Alberto Ramos. "If he can’t do it, then who can?”
- The Bovespa is lower by 2.1% today, EWZ -4.5%. Among bank ADRs: Banco Bradesco (BBD -5.6%), Itau Unibanco (ITUB -6.3%), Banco Santander Brasil (BSBR -7.2%).
- ETFs: EWZ, BRZU, BRXX, BRAQ, BZQ, BRAF, UBR, DBBR, FBZ
- Toyota (NYSE:TM) sets out $50M to help develop research centers at MIT and Stanford focused on how artificial intelligence can be used to improve traffic casualty rates.
- The automobile industry expects to face some resistance to the autonomous cars concept on safety concerns, despite early success by several companies in testing.
- The use of A.I is considered critical in the development of self-driving cars because in theory it could reduce the inherent risk of relying solely on mapping and sensors.
- Amid an ongoing secular slowdown in ad sales, five of the biggest U.S. newspaper chains are in quiet talks to form an ad-sales collective for the 30 big metro markets, The New York Post is reporting.
- Tribune Publishing (TPUB -3.5%) -- owner of the Los Angeles Times, Chicago Tribune and The Baltimore Sun -- is said to be driving talks among it and Gannett (GCI +0.2%), Newhouse-owned Advance Publications, Hearst, and McClatchy (MNI -0.8%).
- Such a move would be different from the previously formed MediaWorks Publisher Consortium, and would surely mean a few hundred layoffs total as redundancies were ironed out.
- From 2000 to 2013, some $40B in ad revenue has drained from the U.S. newspaper market, previously bigger than $60B.
- The "Next Gen" venture would be a new for-profit company handling digital and print ads; Hearst is more interested in a digital combination, while Gannett (the chain with a top national paper in USA Today and many small markets) may be most conflicted about joining forces.
- U.S. oil producers idled 13 rigs this week, breaking six straight weeks of increases and marking the steepest drop in the Baker Hughes rig count in more than three months.
- The oil rig count fell to 662, the sharpest drop since May 29 and 60% decrease from the peak of 1,609 in October 2014.
- For all rigs, including natural gas, the week’s total also was down 13, to 864.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
- Lindt & Sprungli (OTC:COCXF, OTCPK:LDSVF) is looking to make more acquisitions in the candy space, according to Bloomberg.
- The multinational purchased chocolates maker Russell Stover earlier this year and is in the process of integrating the business.
- Weak local currencies in Brazil and Russia have L&S considering a strategic investments in those markets.
- Lindt rose today in Zurich trading.
- Microsoft (MSFT -2.8%) is "considering a multi-billion dollar revamp" of its Redmond HQ meant to "foster more collaboration among employees and attract young engineers," Bloomberg reports. High-profile architecture firm Skidmore Owings has reportedly been hired.
- Microsoft currently has ~80 buildings in Redmond covering about 500 acres. Bloomberg's report follows multiple reorgs meant to break down barriers between different product teams and make a certain org chart cartoon an anachronism. Apple and Google are both in the midst of creating new HQs.
- Separately, Microsoft has bought VoloMetrix, a provider of analytics software for gauging the performance of a company's workers and sales teams. Microsoft plans to integrate VoloMetrix with Office 365's Delve organizational analytics and content discovery service.
- Dow -1.89%.
- 10-yr +0.32%.
- Euro +0.39% vs. dollar.
- Crude -0.83% to $46.36.
- Gold -0.31% to $1,121.00.
- A merger between Liberty Global (LBTYA -1%) and Vodafone (VOD -1.6%) would draw an objection from Deutsche Telekom (OTCQX:DTEGY -0.5%) over concerns about the TV market, according to the head of DT's German business.
- “We would definitely have some remedies and protests against a merger, but we also expect the authorities to have a view on that,” said Niek Jan van Damme.
- Amid rumors of a bigger tie-up, Liberty Global and Vodafone have said they're discussing asset swaps in Europe, though operations in some countries are better fits than others. The two companies' broadband businesses don't overlap and don't present a competitive problem, van Damme says.
- Deutsche Telekom, meanwhile, is exploring more content partnerships and infrastructure sharing (such as networks).
- Previously: Summer's end may bring resolution for Vodafone, Liberty (Aug. 17 2015)
- Previously: Liberty Global, Vodafone see better rules environment for swaps (Jun. 12 2015)
- Previously: Liberty Global CEO: Need mobile services to complete quad-play (Jun. 09 2015)
- Petco appears to be exploring a dual path with an IPO in the works and the company engaged in talks with potential P-E buyers.
- The company will reportedly meet with KKR and Carlyle Group even as a blue-chip group of investment bankers prep for an $800M IPO.
- Petco has a long history of bouncing back and forth between being a publicly-traded stock and a private equity bet.
- Previously: Petco files for IPO (Aug. 17 2015)
- The Information reports Google (GOOG -1.3%, GOOGL -1.4%) "hopes to get Chinese government approval to distribute a special China version" of Google Play as soon as this fall. The Chinese version of the App Store will comply with Beijing's censorship requirements, and store data locally.
- The site previously reported of plans for a Chinese Play launch last November. Google shut down its Chinese search engine (Google.cn) in 2010 rather than comply with censorship requirements. However, the company still does plenty of business with Chinese advertisers looking to reach overseas buyers, and hosts many apps developed by Chinese firms within international Play stores.
- While Android accounts for well over half of Chinese smartphone sales - Kantar Worldpanel estimates a 79.1% unit share in "Urban China" for the 3 months ending July - Chinese Android users generally rely on app stores from local tech giants Baidu (NASDAQ:BIDU), Qihoo (NYSE:QIHU), and Tencent (OTCPK:TCEHY). Meanwhile, the iPhone maintains a large share among higher-income Chinese users more likely to pay for apps and/or in-app purchases.
- In other Google news, Google is expanding its self-driving car tests from the company's home base of Mountain View to Austin, TX. The company has previously suggested it wants to bring a self-driving car to market by 2020, and that it wants to act as a hardware/software supplier for 3rd-party automakers.
- Google claims its cars have been involved in just 16 minor accidents in over 2M miles of driving, and that none of the accidents were its fault. However, researchers think some of the accidents are a product of Google's cars being too safe, perfectly following the letter of the law in a world where many drivers don't.
- Ad giant Interpublic Group (NYSE:IPG) has named Simon Bond as chief growth officer.
- The move's effective Sept. 9. Bond comes to the holding company from a 17-year stint at BBDO, most recently as its global chief marketing officer.
- At IPG, he'll be working on growth initiatives and building business companywide. "Simon will be an asset to our agencies' business development teams, focusing our new business activity around best practices, and ultimately driving growth across the group," says IPG's Philippe Krakowsky.
- Dow -1.83%.
- 10-yr +0.26%.
- Euro +0.19% vs. dollar.
- Crude -1.56% to $46.02.
- Gold -0.41% to $1,119.90.
- UTi Worldwide (UTIW -14.8%) slumps to 52-week lows after widely missing expectations for FQ2 earnings and revenues as a result of declining ocean and air freight forwarding business.
- Q2 net revenues for UTIW's freight forwarding segment plunged 22% to $141M, while revenues for its contract logistics and distribution segment slipped 7% to $198M.
- UTIW now projects EBITDA of $75M-$100M for the fiscal year ending in January 2016, down from its previous outlook of $125M-$150M.
- In today's earnings conference call, CEO Edward Feitzinger said currency shifts cut into the revenue but that "normal seasonal volume growth did not occur [in FQ2] due to the global macroeconomic slowdown."
- UTIW also appeared to lose market share in the global freight forwarding business, as rival Expeditors International (EXPD -2.6%) recently reported a record $118M profit on strong gains in air and ocean freight volume in Q2.
- Posting a total return of 2.38% as of August 18, the FTSE NAREIT All Equity REIT index ended up the month with a loss of 5.82%, a slim 18 basis points better than the S&P 500.
- The least-bad sectors were infrastructure REITs - American Tower (NYSE:AMT) and Crown Castle (NYSE:CCI) come to mind - down 1.4% in August and 1.5% YTD, and self-storage REITs - PSA, SSS, CUBE, EXR - down 1.9% in August, but up a big 13.4% YTD (best in sector).
- Hardest hit last month were office REITs - GOV, EQC, BXP, WRE are examples - falling 8.65%.
- Source: REIT Cafe
- ETFs: IYR, VNQ, DRN, URE, RQI, SCHH, ICF, SRS, RWR, RNP, JRS, KBWY, RFI, NRO, DRV, RIT, REK, RIF, FRI, FTY, PSR, DRA, FREL, WREI, IARAX
- BP (BP -5.3%) is downgraded to Underperform from Neutral at BofA/Merrill, which foresees a shortfall in free cash flow as the company faces a three-legged “trilemma” in accordance with the need to maintain dividend, credit rating and its reserve basis.
- BofA projects falling refining markets at European Integrated oil companies, with the decline in the midstream industry expected to be below “mid-cycle levels” by 2016, which will cause companies to cut capex in order to maintain and deliver dividends on time.
- The firm prefers exposure to Lundin Petroleum (OTCPK:LNDNF) and Genel (OTCPK:GEGYF) due to the high quality of their exploration and production sectors.
- Thinly traded nano cap KaloBios Pharmaceuticals (KBIO +43.9%) jumps again in early trading on robust volume. Shares have more than doubled over the past two trading sessions.
- A possible driver of the bullish action may be Geron's (GERN -3.5%) interest in acquiring an early-stage oncology asset via licensing or outright purchase of a company. In the company's Q4 earnings call in March, CEO Chip Scarlett said the due diligence process to assess potential candidates was underway.
- Kalabios' two lead product candidates are KB004, a monoclonal antibody currently in Stage 2 development for myelofibrosis or myelodysplastic syndrome and KB003, a monoclonal antibody in Phase 1 development for chronic myelomonocytic leukemia.
- WhatsApp (FB -1.1%) has surpassed 900M active users 5 months after topping 800M, and 8 months after surpassing 700M. Facebook Messenger passed 700M active users in June, and Facebook reported having 1.49B total MAUs at the end of Q2.
- WhatsApp remains very cautious about monetizing its platform, which has become a full-blown SMS replacement for many of its users. A $1/year subscription fee is charged in some markets, but WhatsApp remains free of the ads, games, and payment/e-commerce services provided by various mobile messaging peers. VoIP support was added earlier this year.
- Separately, Axiom's Victor Anthony reports Instagram (over 300M MAUs) has seen a "meaningful increase" in ad load in recent weeks, with large brands such as Wal-Mart, McDonald's, Whole Foods, and Capital One among the advertisers. He thinks Instagram's ad sales will grow to nearly $4B by 2020 from just $102M in 2015. In early June, Instagram rolled out several new tools and ad formats for marketers.
- Also: The WSJ notes Facebook is making it easier for its 850M+ Groups users to buy and sell goods with each other, thereby furthering its e-commerce ambitions and encroaching on eBay and Craigslist's turf. For now, Facebook isn't charging any listing or transaction fees.
- Yesterday: Facebook improves ad measurement, begins testing interactive mobile ads
- Sclumberger’s (NYSE:SLB) purchase of Cameron International (NYSE:CAM) should easily close, with optimism growing that Halliburton's (NYSE:HAL) bid for Baker Hughes (NYSE:BHI) also will close, and the deals mean more oil company M&A is on the way, FBR Capital analyst Thomas Curran believes.
- The wave of heavyweight deals likely is not over yet, Curran says, seeing Weatherford (NYSE:WFT) as the highest probability takeout with the broadest set of plausible strategic suitors; National Oilwell Varco (NYSE:NOV) is viewed as having a high likelihood of entering into a big deal, although probably as an acquirer, and FMC Tech (NYSE:FTI) could puruse a full combination with Technip, its 50/50% JV partner in Forsys Subsea.
12:21 PM| 12:21 PM | Comment!
- CVS Health (NYSE:CVS) might be reaching a bit when it implied earlier this week that the company's decision to stop selling tobacco products led to a drop in smoking in different states, according to analysts.
- The retail chain has sold more smoking cessation products over the last year since the tobacco exit, but its impact on the national smoking rate is hard to quantify.
- The percentage rate of smokers in the U.S. has been steady decline over a longer period of time than the CVS action.
- CVS lost 780 bps off its front-end comp in Q2 due to the tobacco decision, but results have held up better than some forecasts.
- Dow -1.54%.
- 10-yr +0.17%.
- Euro -0.06% vs. dollar.
- Crude -1.3% to $46.14.
- Gold -0.33% to $1,120.80.
- Rio Tinto's (RIO -4.6%) outlook is cut to negative from stable at Standard & Poor's, as the ratings agency lowers its price assumptions for aluminum, copper and iron ore, reflecting lackluster market conditions and the uncertainty over China's economic slowdown; RIO's A- corporate credit rating is maintained.
- Despite a robust balance sheet, S&P expects that its lower price assumptions will likely weaken Rio's credit metrics from recent levels.
- Any weakness in this morning's establishment survey - 173K jobs created - was offset by other details like positive revisions to past months, average weekly hours now up 3.1% over the last quarter, and average hourly earnings slightly stronger than expected.
- The household survey was also strong, with headline UE falling to 5.1% and an unchanged labor force participation rate.
- Goldman's August Current Activity Indicator is up 2.8% so far, in line with July. Jan Hatzius and team continue to expect the FOMC to hold steady at its meeting on Sept. 16-17.
- ETFs: SHY, BIL, PLW, VGSH, SHV, GOVT, SCHO, FTT, EGF, DTUS, DTUL, SST, TUZ, TAPR
- Previously: In total, jobs report probably a sight beat (Sept. 4)
- Previously: Jobs up 173K in August; UE rate drops to 5.1% (Sept. 4)
- Known to commodity markets for decades, Andy Hall became known to the world after raking in about $100M while at Citigroup when the bank was being bailed out during the financial crisis.
- Still in the game at his Astenback Capital Management ($2.8B in AUM), and a bull on oil prices, Hall was flattish in August after falling 16.6% in July. Year-to-date, the fund is lower by 14.4%.
- The absence of "extreme contango" - in which near-term oil contracts trade at sizable discount to more future ones - suggests "the world, whilst moderately oversupplied, is not awash in oil," writes Hall to his investors, noting more than 200M barrels of crude storage capacity remain available. He expects U.S. crude output to continue to decline in H2, and for the IEA to have to cut its production forecasts.
- Oil is lower by 1.1% today to $46.23 per barrel.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, UGA, USL, DNO, UHN, OLO, SZO, OLEM
- Hall is also bullish on platinum-group metals, saying current pricing discounts a worst-case scenario for Chinese demand. "Extreme positioning creates the potential for a rapid recovery in prices.”
- Platinum-group ETFs: PALL, PPLT, PTM, PGM
- Source: Bloomberg
- The program gives Sam's Club members guaranteed discounts for cars sold by 10K+ dealers. TrueCar (TRUE -0.7%) claims average savings of $3,221 relative to MSRP are provided for new cars.
- A Sam's exec says the bulk goods seller doesn't expect to make money from the program, but is simply looking to create another incentive for obtaining or renewing a membership. Rival Costco sold nearly 400K cars last year through a program that works with 3K dealers.
- Gazprom (OTCPK:OGZPY) signs a shareholder agreement with its European partners on the development of the second phase of the Nord Stream gas pipeline system in the Baltic Sea to increase gas supplies to the European Union, moving forward on an expansion previously opposed by EU authorities.
- The project would be developed by a new company in which Gazprom holds a 51% stake; Royal Dutch Shell (RDS.A, RDS.B), E.ON (OTCQX:EONGY), OMV (OTC:OMVJF) and BASF (OTCQX:BASFY) each would get a 10% stake and ENGIE (OTCPK:ENGIY) the remaining 9%.
- Under the proposed expansion, two more lines would be added to the existing network running to the German coast, bringing annual net aggregate capacity to 1.9T cf of natural gas.
- Earlier: BASF, Gazprom to complete asset swap deal
- Earlier: YPF, Gazprom sign deal to develop gas projects in Argentina
- Freeport McMoRan's (FCX -4.9%) outlook is reduced to negative from stable at Standard & Poor's as the ratings agency lowers its copper price assumptions through 2017 by 11% to $2.40/lb.; FCX's BBB- corporate credit rating is maintained.
- As a result, S&P expects FCX'ss 2015 adjusted debt leverage will exceed the 4.5x downside rating trigger previously established for the rating.
- The negative outlook reflects ongoing uncertainty with regard to copper prices and the possibility that FCX might not be able to meet its cost-cutting and copper production expansion targets by the end of 2016.
- Also: Copper hit hardest by jobs report
- ComScore (NASDAQ:SCOR) is up again today, +0.9% against a market downdraft, as Cantor Fitzgerald chimes in with more positive analyst outlooks.
- After meeting with management, Cantor Fitzgerald reiterated its Buy rating and $64 price target. Shares closed yesterday at $46.87 and are currently at $47.30, implying 35% upside. Yesterday, Needham and Brean set $66 and $67 price targets respectively.
- "While we're not big fans of barter transactions, we believe management has adequately addressed the logic behind pursuing them and their benefits to the business," says Cantor's Youssef Squali, even as management moves toward cash-for-cash deals for new data pacts. "Importantly, management has not changed its 2015 guidance even as it looks to minimize this revenue stream going forward."
- Previously: ComScore up 5.7% as analysts respond to accounting questions (Sep. 03 2015)
- Previously: ComScore rebounding after two days of decline (Sep. 02 2015)
- Previously: ComScore top-line growth: Benefiting from barter? (Aug. 31 2015)
- Up strong in after hours trading yesterday after delivering an FQ4 beat and issuing mixed FQ1 guidance, Infoblox (NYSE:BLOX) has reversed course today. Shares have made new 2015 lows.
- The company disclosed on its earnings call (transcript) CFO Remo Canessa will be leaving to "pursue other opportunities." Canessa, who has been CFO since 2004, will remain in place until a successor is found.
- Meanwhile, management was peppered with questions about the extent to which recent sales growth - product/license revenue was up 45% Y/Y in FQ4 to $46.3M - was fueled by a product refresh cycle that will gradually taper out. CEO Jesper Anderson tried to downplay those concerns. "Look, refresh is a great tailwind to have for us and as we've said on earlier calls, we're very focused on making the most of it ... We see that we can upsell these opportunities, we can add security to them ... we are closing a lot of business that's not refresh as well."
- He added 4 of Infoblox's 10 biggest FQ4 deals didn't involve a refresh component, and that 3 major refresh deals also "included a significant amount of cloud and security discussion." However, Andersen admitted new account adds (averaging ~200 in recent quarters) were down slightly Q/Q and "probably one of areas where I feel we could have done a little better." He suggests sales incentive structures played a role.
- Though admitting there's limited visibility into the size of the refresh cycle, JMP's Erik Suppiger (Outperform) thinks "non-refresh business is robust and will sustain healthy growth." Morgan Stanley's James Faucette (Equal-Weight) is more cautious. "We believe the biggest chunk of the refresh is likely complete and while we expect strong Y/Y product growth, we are now modeling for a Q/Q drop in product revenue ... Continued acceleration in sales utilization beyond the refresh opportunity, increased op leverage and more traction with security products beyond the DNS Firewall could turn us more positive on the name."
- FQ4 results, guidance/details
- Dow -1.51%.
- 10-yr +0.13%.
- Euro -0.02% vs. dollar.
- Crude -1.07% to $46.25.
- Gold -0.53% to $1,118.50.
- Canada's Supreme Court rules that Chevron (CVX -1.7%) can be pursued in the country in a $9.5B class action lawsuit brought by Ecuadoran villagers over the company's alleged environmental actions in the country's rain forest, in a case that has spanned for more than two decades.
- The court rejected CVX’s arguments that it would be improper to hear the case in Ontario because the company has few assets there.
- The ruling on jurisdiction does not mean the villagers will be awarded any Canadian assets, only that the case can proceed and be argued by both sides.
- Airbus (OTCPK:EADSF, OTCPK:EADSY) says it has won 754 gross orders in the first eight months of the year, boosted by an order surge last month that included one worth $26.5B at list prices from Indian carrier IndiGo.
- The order for 250 A320neo jetliners brings total A320 aircraft being acquired by the Indian domestic airline to 530, comprising both neo and ceo versions.
- Airbus says total orders for the A320neo product line have reached 4,193, and that it marked a new industry record with a backlog of nearly 6,700 aircraft to be delivered.
- WhiteWave Foods (WWAV +0.5%) is beating market averages after William Blair initiates coverage on the food stock with an Outperform rating.
- The company is consider well-positioned to take advantage of the ongoing consumer shift to natural/organic foods, but valuation concerns and some exposure in China have held shares back from cresting $53.
- FMC Technologies (FTI -1.3%) is upgraded to Neutral from Underperform with a $29 price target at Credit Suisse, which believes the shares should outperform on a relative basis relative to newsflow, income revisions and the duration of the U.S. onshore activity cycle.
- Credit Suisse says it is still concerned about the 2-3 year order trend and the impact through the income statement, with a $500M-$600M drop in subsea revenues expected in 2016 and another decline in 2017, driving segment margins down 200-300 bps over the period.
- Navistar (NAV -5%) continues its pattern of bouncy trading today on strong volume.
- The company's future is somewhat cloudy as restructuring and a SEC investigation linger in the background.
- A majority of investment firms are on the sidelines due to the uncertainty with Neutral the most common rating.
- Previously: More on Navistar's FQ3 (Sep. 02 2015)
- Previously: Navistar could face SEC lawsuit (Sep. 02 2015)
- The Jewish Board of Family and Children's Services has hired InterCloud (ICLD +13.4%) to provide cloud disaster recovery/data redundancy services. The deal size is undisclosed.
- The microcap's shares have jumped on volume of 673K shares (compares with a 3-month daily average of 745K). They remain down 26% YTD.
- Previously: InterCloud lands $9M-$15M contract from U.S. carrier
- L Brands (LB +0.1%) rode a strong month for Victoria's Secret to a rousing 6% comp in August which easily topped the 2% decline at Gap (GPS -2.2%). Gap execs pointed to the late Labor Day weekend as a factor in the tail-off, although L Brands said the magnitude of the calendar effect was only one or two percentage points.
- On a pre-recorded sales call, L Brands CIO Amy Preston noted sales gains were paced by bras and the Pink brand. She said the company expects another positive comp for September.
- Retail analysts have noted that L Brands has put out a strong back-to-school assortment.
- Stocks are down 1%, but futures were off by that much ahead of the jobs number, and Treasurys, oil, gold, and the dollar haven't moved a whole lot since the mixed report.
- Copper however has quickly tumbled since 8:30 ET, now down 3% to $2.31 per pound - within a few cents of its lowest levels since 2009.
- JJC -2.9%
- Previously: Jobs up 173K in August; UE rate drops to 5.1% (Sept. 4)
- Previously: In total, jobs report probably a sight beat (Sept. 4)
- ETFs: JJC, CPER, CUPM
- Thoratec (THOR +0.1%) commences enrollment in its SHIELD II study comparing the safety and efficacy of its temporary ventricular assist device, HeartMate PHP, to Abiomed's (ABMD) Impella Recover LP 2.5. The trial will enroll up to 425 patients undergoing high risk percutaneous coronary intervention (PCI) across 60 sites. Subjects will be randomized to receive the HeartMate versus Impella at a 2:1 ratio. The primary endpoint is non-inferiority (no worse than) based on a composite of adverse events at 90 days of follow-up. The estimated study completion date is December 2016.
- HeartMate PHP is an acute cardiac assist device that has expandable catheter technology capable of generating average blood flow of up to five liters per minute through a true percutaneous insertion, which is the normal amount of blood pumped out by the left ventricle based on a heart rate of 72 beats/minute.
- The maximum flow rate of the Impella 2.5 is 2.5 liters/minute.
- Dow -1.59%.
- 10-yr +0.04%.
- Euro -0.06% vs. dollar.
- Crude -1.45% to $46.07.
- Gold -0.6% to $1,117.80.
- Notably higher as the averages tank today is BofI Holdings (BOFI +3.5%) after Raymond James upgrades the stock to a Strong Buy. The $145 price target is more than 30% above the current level.
- The decline from nearly $135 over the past month puts the stock in significantly oversold territory, says analyst Donald Worthington, who notes the company just closed its purchase of H&R Block Bank and entered into a Program Management Agreement with H&R Block to offer the company's products.
- BofI expects the PMA to lead net income growth of $13M-$16M annually, and that doesn't include the benefits of $419M in low-cost deposits, and cross-selling of things like mortgages and IRAs.
- Abengoa (ABGB +5.1%) is working with financial advisory firm Lazard to find investors for its planned capital increase, and may also consider debt restructuring in the future, according to a Bloomberg report.
- The company said last month that it is seeking to raise €650M ($724M) of capital and dispose of €500M of assets.
- ABGB also is said to be considering selling part of its stake in Abengoa Yield (ABY -2.7%), in which it holds a 49% stake worth more than $1B.
- Public Storage's (PSA -0.6%) "unmatched" capital structure - 11% senior cap ratio, 6.7x fixed charge coverage - will attract investors looking for safe stocks, says analyst Jonathan Hughes, boosting the name to Outperform. The $220 price target is about 8.5% above the current level.
- Downgraded to Market Perform from Outperform is Sovran Self Storage (SSS -1.3%), with Hughes saying the company's exposure to the Houston market is weighing heavily on the name.
- CubeSmart (CUBE -1.2%) remains Hughes' top pick in the sector, notably trading at 20x 2016 AFFO/share estimates vs. peers as high as 22.9x.
- Source: Benzinga
- With the 2015 fund family closed, iShares rolls out ones for 2021 and 2022, with the iShares iBonds Dec 2021 AMT-Free Muni Bond ETF (IBMJ) and the iShares iBonds Dec 2022 AMT-Free Muni Bond ETF (IBMK).
- Both funds have an expense ratio of 0.18%.
- Target-date muni ETFs: BTT, MMD, BKK, BPK, ETX, MTT, IBMF, IBMG, IBME, IBMD, IBMH, IBMI
- Dow -1.24% to 16,171.00. S&P -1.25% to 1,926.65. Nasdaq -1.17% to 4,678.00.
- Treasurys: 30-year +0.52%. 10-yr +0.1%. 5-yr -0.04%.
- Commodities: Crude -0.56% to $46.49. Gold -0.61% to $1,117.60.
- Currencies: Euro -0.11% vs. dollar. Yen -0.68%. Pound +0.35%.
- Deutsche has downgraded Ciena (NYSE:CIEN) to Hold after the company posted mixed FQ3 results. Shares have dropped to $22.46 premarket. Nasdaq futures are off 1.4%.
- Several firms provided positive reactions yesterday. Wells Fargo's Jess Lubert (Outperform rating): "With Ciena having secured 100G metro deployments with many of the world’s largest carriers and likely to see improved mix further benefit margins, we remain confident in the company’s ability to deliver C2016 EPS of at least $1.70 following FQ3 results. As such, we would recommend investors take advantage of any weakness on Ciena’s softer than expected FQ3 sales results to buy the stock, which we believe remains attractively valued at less than 14X our C2016 EPS estimate."
- Prior Ciena coverage
- Update: Deutsche's Brian Modoff states checks point to weak U.S. telco and cable demand. "Our latest round of channel checks correlate well with color we gathered from our post call with CIEN on the potential for modest headwinds to carrier network upgrade activity at the US telcos and cablecos (outside of T; where CIEN is seeing strength in 100G metro and in broadband fiber access). Infinera (NASDAQ:INFN), we note, has revenue exposure at the major Web 2.0 and Cloud portals, ISPs, Telcos such as CenturyLink and a handful of cablecos, and “zero” exposure currently at T, Verizon Communications, etc. We therefore prefer INFN to play the double-digit intensity in 100G Datacenter Optical rollouts and 100G in the Metro and Long Haul during 2H15 and into FY16/17
- "It is ridiculous empirically, but psychologically, people want to believe that it might never happen again," Stephen Schwarzman told an investment conference earlier this year before kind of calling himself the LeBron James of the investment world.
- The Blackstone (NYSE:BX) boss has been making the rounds over the last year trying to convince investors his company's remarkable run is no fluke and its stock price thus deserves a far higher valuation. BX is priced lower now than at its 2007 IPO (that was a market top-ticker), though AUM has more than tripled to $330B and profits to $4.3B from $348M. Its P/E ratio of 8.6x stands against BlackRock at 15.2x, Franklin Templeton at 10.4x, KKR at 10x, and T. Rowe Price at 15.5x.
- The secret to Blackstone profits are performance fees: Of the $4.3B earned last year, 71% came from performance fees - equaling the combined net income of BlackRock and T. Rowe Price, though they have AUM 15x the size of Blackstone. Schwarzman's task is convincing investors that - like LeBron - this sort of performance is sustainable.
- While Blackstone likes to compare its brand to that of Goldman Sachs, Schwarzman - pushing 70 - must also convince investors the next generation of leadership can continue his hard-charging, ultra-competitive style.
- Source: Landon Thomas in the NYT
- Fiat Chrysler Automobiles (NYSE:FCAU) has a market capitalization of roughly $18B in front of the the spin-off of Ferrari, a mark that will end up being considerably less than half of the cap of General Motors (NYSE:GM) after the deal is completed, according to analysis from Bloomberg.
- The comparison makes it clear GM shareholders would have a controlling interest in a combined entity.
- Fiat boss Sergio Marchionne, who has made some bold projections on consolidation synergies, is expected to take a break from pushing loudly for a Fiat-GM combination until the Ferrari separation is completed.
- Previously: Sergio Marchionne fires up Fiat-GM merger talk again (Aug. 31 2015)
- Stock futures indicate a sharply lower open, adding to earlier lows after the latest nonfarm payrolls report appeared strong enough for the Fed to raise interest rates later this month; S&P and Nasdaq -1.4%, Dow -1.5%.
- European bourses have extended early losses on news of the U.S. jobs data, with France's CAC -2.8%, Germany's DAX -2.7% and U.K.'s FTSE -1.9%; in Asia, Japan's Nikkei ended -2.2%, while the Shanghai Composite was closed on holiday.
- The U.S. economy added fewer than expected jobs, but the details revealed some underlying strength as hourly wages grew faster than expected and the unemployment rate fell; as a result, the market has interpreted the report as good enough for the Fed to move ahead with a rate hike as early as the upcoming September meeting.
- U.S. Treasury prices remain near their overnight levels after seeing a brief drop following the jobs data; the 10-year note is modestly higher with its yield down 2 bps at 2.14%.
- Oil prices are lower, with WTI -0.3% at $46.60 and Brent -0.2% at $50.58.
- Telecom Italia (NYSE:TI) is looking at a plan to convert €5.5B (about $6.1B) in savings stock -- a non-voting class that still earns dividends -- into common shares in an effort to raise cash to pay debt, Bloomberg reports.
- Such a move would dilute the holdings of Vivendi (OTCPK:VIVHY), its largest shareholder at a 14.9% stake. It could generate about €500M for the company in a typical exchange scenario, as holders of the savings stock would need to pay a conversion fee coming to about half the difference in price.
- While savings shares earn dividends in Italy, TI hasn't paid a common dividend in two years. The share class accounts for almost a third of TI's share capital.
- In U.S. trading, TI ADRs are off 1.5% premarket. In Milan, TI regular shares are down 1%; savings shares are up 2.7%.
- IATA reports total revenue passenger kilometers increased 8.2% Y/Y in July.
- The mark is an acceleration from the 5.5% growth seen in June. The timing of Ramadan impacted results.
- International traffic was up 8.6% with broad gains across geographic divisions. Asia-Pacific RPKs were up 8.5% to top the capacity growth in the region. Load factors also increased in Europe and North America during the month.
- Despite the strong read from IATA for July, the forecast for the fall is shakier. "Following a strong summer the outlook heading into autumn is unsettled to say the least," warns the industry watcher.
- Global airline stocks: AAL, UAL, DAL, RYAAY, OTCPK:CPCAY, OTCPK:SINGY, CEA, ZNH, CPA, GOL, LFL, OTCPK:DLAKF, OTCPK:QUBSF, ALK, HA, OTCPK:AIRYY, OTCPK:MLYAF, OTCPK:AFLYY, VLRS, LUV, AVH, OTCPK:JAPSY, OTC:AFRAF, OTC:EJTTF, OTC:WJAFF, OTC:WJAVF, OTCQX:ESYJY, OTCPK:ICAGY, VLRS, OTCPK:GRPAF.
- Related ETFs: JETS
- YPF and Gazprom (OTCPK:OGZPY) sign a framework agreement that could lead to joint development of unconventional gas projects in Argentina.
- YPF is seeking partners to finance development of the huge but barely tapped Vaca Muerta shale formation that contains at least 23B barrels of oil, while Russia's Gazprom looks to expand oil and gas projects around the world.
- Although the companies did not discuss numbers, YPF hopes that a deal with Gazprom could eventually become similar in scale to multi-billion dollar joint ventures already in place with Chevron and Petronas.
- The final surgeries in Presbia's (NASDAQ:LENS) pivotal Phase 3 clinical trial of its Flexivue Micolens are scheduled for next week, meeting the company's plan to complete the required enrollment in Q3. The product is designed to treat presbyopia or age-related loss of near vision.
- The estimated primary completion date (final data collection for the primary outcome measure) of the trial is December 2018. The estimated study completion date is February 2019. The primary endpoint is uncorrected near vision acuity of at least 20/40 at a distance of 40 cm.
- Flexivue is commercially available in the European Union and other countries around the world.
- S&P -1.49%.
- 10-yr +0.13%.
- Euro +0.06% vs. dollar.
- Crude -1.27% to $46.16.
- Gold -0.24% to $1,121.80.
- Key Energy Services (NYSE:KEG) says it received a non-compliance notice from the NYSE relating to the minimum $1/share requirement, and has until March 2 to regain compliance.
- KEG says it intends to maintain its NYSE listing and will consider available alternatives, potentially including a reverse stock split, to cure the stock price deficiency.
- This morning's jobs reports - 173K jobs added disappointed, but revisions to June and July made up for the miss, and the UE rate fell more than expected - likely won't change anyone's mind (either the hawks or the doves) at the Fed.
- Futures are volatile, but at the moment holding the roughly 1% losses from before the print.
- The 10-year Treasury yield is down one basis point to 2.15%, but was as low as 2.12% earlier this morning. TLT +0.6%, TBT -1.2%
- The dollar (NYSEARCA:UUP) is modestly higher, and gold and oil are little-changed, but stronger than before the report.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, IVV, UPRO, PSQ, SPXU, TQQQ, SPXL, RSP, QID, SQQQ, QLD, DOG, DXD, RWL, UDOW, EPS, SDOW, DDM, VFINX, BXUB, QQEW, QQQE, SPLX, SFLA, BXUC, QQXT, SPUU, UDPIX, OTPIX, RYARX
- Previously: In total, jobs report probably a sight beat (Sept. 4)
- Previously: Jobs up 173K in August; UE rate drops to 5.1% (Sept. 4)
- Previously: Fed's Lacker makes case for rate hike this month (Sept. 4)
- Joy Global (NYSE:JOY) -2.1% premarket as UBS cuts its stock target price to $20 from $40 and reiterates its Neutral rating, as the company takes initiatives to catch up with deteriorating demand.
- North American coal was the biggest driver behind JOY's surprisingly low service bookings, in both underground and surface segments, and management noted a goodwill impairment in underground may be imminent
- JOY plans to take additional measures to improve efficiency and streamline its footprint, including $60M-plus in cost reductions, and believes its actions can lift its capacity utilization to ~75% from 50%.
- JOY fell 14.6% yesterday after the company's guidance cut and warning of continued pressure on demand for mining equipment.
- Who is behind Chubby Chipotle?
- That's the question on the mind of management at Chiptole (NYSE:CMG) after a full-page ad in The New York Post took the restaurant chain to task for the amount of calories in its burritos and its claims of selling "sustainable" food.
- The ad leads to a website run by the Center for Consumer Freedom which seems to be an organization fixated on taking on the "food police" meddling in the choices of U.S. consumers.
- Some digging by The Washington Post reveals that big food interests could be partially behind the testy CCF.
- The FDA extends its action (PDUFA) date from September 8 to December 8 for its Priority Review of Alexion Pharmaceuticals' (NASDAQ:ALXN) BLA for Breakthrough Therapy-tagged Kanuma (sebelipase alfa), an investigational enzyme replacement therapy for the treatment of lysosomal acid lipase deficiency (LAL-D). The extension will allow the agency to review additional Chemistry, Manufacturing and Controls (CMC) information that the company submitted at the request of the regulator. No new clinical data were requested.
- LAL-D is an ultra-rare inherited disorder in which the body fails to produce enough active lysosomal acid lipase, an enzyme that plays a key role in breaking down fatty material in the body. The buildup of fatty material leads to progressive and multi-organ damage including fibrosis, cirrhosis, liver failure and cardiovascular disease. It affects 1 - 3 newborns per 1M.
- Kanuma is designed to address the underlying cause of LAL-D by reducing substrate accumulation in the lysosomal cells throughout the body.
- Alexion obtained the rights to Kanuma via its acquisition of Synageva in May.
- August job gains of 173K were shy of consensus by 47K, but the revisions to June and July added 44K to those prints. We'll call it a wash. The unemployment rate, however, fell to 5.1% from 5.3%, and estimates for 5.2% - declines in the headline UE number have typically been associated with drops in the labor force participation rate, but that number was flat in August at 62.6%. One year ago, it was 62.9%.
- The average workweek edged up 0.1 hour to 34.6 hours. Average hourly earnings of $25.09 gained $0.08. They're higher by 2.2% Y/Y.
- The boarder U-6 unemployment rate fell to 10.3% from 10.4%. One year ago it was 12%.
8:30 AM| 8:30 AM | Comment!
- Caterpillar (NYSE:CAT) -1.5% premarket after Robert W. Baird downgrades shares to Neutral from Outperform and lowers its price target to $77 from $89, as the firm's May upgrade thesis that commodities would find a bottom after years of decline fails to gain traction amid rising China-driven macro volatility.
- "Against this backdrop, upside from [CAT's] resources business appears increasingly unlikely, while peer OEM commentary and results are suggesting that fundamentals can actually get worse rather than better in the near term (a combination of volume declines and price compression)," writes analyst Micera Dobre.
- Shares fell 2.2% yesterday following Joy Global's guidance cut and gloomy macro outlook.
- Ryanair (NASDAQ:RYAAY) CEO Michael O'Leary fired a warning shot at other European airlines by predicting "the mother and father of all fare wars" is on the way.
- The budget carrier has plenty of room to drop fares again after locking in more of its fuel costs with hedges.
- Related stocks: OTCPK:DLAKF, OTCQX:DLAKY, OTCPK:AFLYY, OTCPK:ICAGY
- In an interestingly timed speech (with the jobs number coming in a few minutes) titled The Case Against Further Delay, Richmond Fed hawk Jeff Lacker says accelerating consumer spending, tightening labor markets, and what should be a return of inflation back toward 2% add up to a rate hike this month.
- What about the recent tumult in markets? History says the Fed has a history of overreacting to market movements that seem unrelated to economic fundamentals, says Lacker.
- "By acquiring Good, BlackBerry (NASDAQ:BBRY) will better solve one of the biggest struggles for CIOs today, especially those in regulated industries: securely managing devices across any platform," says CEO John Chen.
- The $425M cash deal is expected to close near the end of 2016 FQ3, and should be accretive to earnings and cash flow within the first year after closing. BlackBerry expects to realize about $160M in GAAP revenue in year one from Good.
- A conference call is set for 8:30 ET.
- Source: Press Release
- Shares +4.2% premarket
8:04 AM| 8:04 AM | Comment!
- S&P -0.96%.
- 10-yr +0.25%.
- Euro +0.21% vs. dollar.
- Crude -0.16% to $46.68.
- Gold -0.07% to $1,123.70.
- Stereotaxis (NASDAQ:STXS) will conduct an offering of subscription warrants to stockholders of record as of September 9 whereby each holder will receive one warrant for every four common shares held that will entitle them to purchase one share of common stock at $1.10 per share.
- The warrants will be exercisable until 5:00 pm ET on September 30. The warrants will trade on the Nasdaq Capital Market under the symbol "STXSW" starting on or about September 14 and continuing until the expiration date.
- STXS closed yesterday at $1.37.
- Rosneft (OTC:RNFTF) agrees to sell a 15% stake in one of its largest oil-producing projects to India's ONGC Videsh, a move that highlights India's drive to compete for foreign energy assets as the country’s demand for oil surges alongside its fast growing economy.
- The price paid for the stake is not disclosed, but Financial Times reports the deal totaled ~$1.25B.
- The unit of India's state-owned oil and gas company will take the stake in Vankor, which produced 22M metric tons of oil last year to make it Rosneft's third-largest production subsidiary.
- Rosneft, hurt by Western sanctions on Russia, is looking for investments from its Asian neighbors to cut mounting debt and fund expansion, while ONGC seeks to tie up new sources of crude oil from Latin America to Russia to ensure steady supplies for India.
- The FDA approves the use of AstraZeneca's (NYSE:AZN) BRILINTA (ticagrelor) at a new 60 mg dose for patients with a history of heart attack beyond the first year. The expanded indication means that BRILINTA is now cleared to reduce the rate of cardiovascular death, myocardial infarction (MI) (heart attack) and stroke in patients with acute coronary syndrome (ACS) or a history of MI.
- BRILINTA, an oral antiplatelet treatment for ACS, was previously approved for the treatment of patients who have had a recent heart attack or severe chest pain from insufficient oxygen flow to the heart or patients who have had a heart attack or chest pain who are being treated with medicines or procedures to open blocked arteries in the heart.
- The new $400M term loan facility includes a $270M term loan maturing in five year with an initial interest rate of Libor + 115 basis points, and a $130M term loan maturing in seven years with an initial interest rate of Libor + 160 basis points.
- This follows a sale of $600M of senior notes last month. The two combined to finance CBG's purchase of Global Workplace Solutions, which closed this week.
- Source: Press Release
- As expected, the European Commission approves Novartis' (NYSE:NVS) Farydak (panobinostat), in combination with bortezomib [Takeda's (OTCPK:TKPYY) Velcade] and dexamethasone, for the treatment of adult patients with relapsed/refractory multiple myeloma who have received at least two prior lines of therapy including bortezomib and an immunomodulatory agent. Farydak is the first histone deacetylase (HDAC) inhibitor cleared in the EU. The EMA's CHMP adopted a positive opinion supporting approval in late June.
- HDAC inhibitors control cancer by inducing cell cycle arrest, differentiation and/or apoptosis (cell death).
- The FDA cleared Farydak in late February despite a negative Ad Comm vote.
- Previously: Novartis works around negative Ad Comm vote for panobinostat approval (Feb. 23)
- The restaurant industry posted same-store sales growth of 1.7% in August, according to data from Black Box Intelligence.
- Average traffic fell 1.1% during the month, while the per person average check amount rose 2.7%.
- YTD restaurant same-store sales are up 2.2%.
- Restaurant stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, BDL, NATH LUB, QSR, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN, SHAK, HABT, NDLS, BOJA, PBPB, PLKI, FRSH, RAVE, LOCO, TACO, PZZA, KONA, BGR, BJRI, CHUY, FRS, CBRL, GTIM, TAST, ARKR
- PTT Global Chemical has selected Fluor (NYSE:FLR) to perform front-end engineering and design work for its proposed petrochemical complex in Ohio.
- The project will encompass an ethane cracker and derivatives units by leveraging the availability of feedstock from gas taken from shale formations in the region to create chemical products.
- U.S. stock index futures are lower by 1%, but the jobs report at 8:30 ET could change things. Estimates say the economy added 220K jobs in August with the unemployment rate ticking down to 5.2%.
- Shanghai remained closed for business last night, but the Nikkei slid 2.2%. One day after partying behind hopes for boosted QE, Europe is giving back those gains and more, off more than 2% at midday.
- The 10-year Treasury yield is down three basis points to 2.13%, and gold and oil are modestly lower.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, IVV, UPRO, PSQ, SPXU, TQQQ, SPXL, RSP, QID, SQQQ, QLD, DOG, DXD, RWL, UDOW, EPS, SDOW, DDM, VFINX, BXUB, QQEW, QQQE, SPLX, SFLA, BXUC, QQXT, SPUU, UDPIX, OTPIX, RYARX
- Star Wars fans showed up with energy at Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) stores in the early morning hours for Force Friday, according to local media reports.
- The retail event wrapped around the new and old characters set to be introduced in the new Star Wars slated for December also inspired promotions from Toys 'R' Us, Amazon (NASDAQ:AMZN), and Kay Jewelers (NYSE:SIG).
- Toy makers Hasbro (NASDAQ:HAS) and Lego are expected to be big beneficiaries of the Star Wars event, while Mattel (NASDAQ:MAT) and Jakks Pacific (NASDAQ:JAKK) are also selling Star Wars 7 merchandise.
- The FDA designates Roche's (OTCQX:RHHBY) investigational factor VIIIa-mimetic bispecific antibody, ACE910, a Breakthrough Therapy for the treatment of hemophilia A, a rare inherited blood disorder caused by a deficiency in an essential clotting protein called factor VIII. People with severe hemophilia A are susceptible to uncontrolled or difficult-to-control bleeding, including internally and frequently in the joints, which can eventually lead to the need for joint replacements.
- ACE910 is a humanized bispecific monoclonal antibody designed to simultaneously bind to factors IXa and X, thereby mimicking the cofactor function of factor VIII. It promotes blood coagulation in patients with hemophilia A regardless of whether they have developed inhibitors to factor VIII.
- Roche has development and commercial rights to ACE910 worldwide with the exception of Japan, Taiwan and Korea via an agreement with Chugai Pharmaceutical (OTCPK:CHGCY). A Phase 3 study in patients with inhibitors will commence by the end of the year followed by a Phase 3 trial in patients without inhibitors in 2016. A pediatric study will commence in 2016 as well.
- Breakthrough Therapy provides for more intensive guidance from the FDA, the involvement of more senior agency personnel and a rolling review of the NDA.
- Japanese megabanks were among those to make offers for General Electric's (NYSE:GE) Japanese commercial finance operations today.
- Bidders included Orix (OTC:ORXCF) and the leasing units of Sumitomo Mitsui Financial Group (NYSE:SMFG), Mitsubishi UFJ Financial Group (NYSE:MTU) and Sumitomo Mitsui Trust Holdings (OTCPK:SUTNY).
- The banks will conduct due diligence over the next several weeks and determine the value of the operations, with the price likely to be several billion dollars.
- Bank of America Merrill Lynch upgrades Dollar Tree (NASDAQ:DLTR) to a Buy rating from Neutral on a valuation call.
- Shares of Dollar Tree are down over 10% this week after Q2 earnings disappointed investors.
- Previously: Dollar Tree misses by $0.01, misses on revenue (Sep. 01 2015)
- Previously: More on Dollar Tree's Q2 (Sep. 01 2015)
- DLTR +0.43% premarket to $67.29.
- Sears Hometown and Outlet (NASDAQ:SHOS) reports comparable-store sales decreased 1.4% in Q2.
- Adjusted comp declined 2.6% for the quarter.
- Comp for Hometown dropped 1.1% (-2.5% adjusted) and for Outlet slipped 2.2% (-2.7% adjusted).
- Hometown sales -4.06% to $460.75M; Outlet sales +0.27% to $158.86M.
- Gross margin rate fell 20 bps to 22.8%.
- Adjusted gross margin improved 70 bps to 22.4%.
- SG&A expense rate +20 bps to 22%.
- Inventory -8.14% to $431.38M.
- Store count -36 Y/Y to 1,215.
- BASF (OTCQX:BASFY) Gazprom (OTCPK:OGZPY) have agreed to complete an asset-swap deal signed in December 2013 but called off late last year following Russia's annexation of the Crimea region.
- As previously planned, BASF will exit the gas-trading and -storage business of its subsidiary Wintershall and will further expand its production of oil and gas.
- Gazprom will acquire BASF's natural-gas trading business and will also get a 50% share in BASF’s North Sea oil exploration and production unit.
- The swap was already approved by the European Commission at the beginning of December 2013.
- S&P -1%.
- 10-yr +0.25%.
- Euro +0.13% vs. dollar.
- Crude -0.5% to $46.52.
- Gold -0.17% to $1,122.60.
6:59 AM| 6:59 AM | Comment!
- The Cooper Companies (COO -0.7%) FQ3 results: Revenues: $461.7M (+6.8%); COGS: $188.8M (+24.3%); R&D Expense: $18.3M (+13.7%); SG&A: $191.8M (+19.0%); Operating Income: $50.3M (-47.9%); Net Income: $45M (-48.9%); EPS: $0.91 (-49.4%); Quick Assets: $17M (-32.5%).
- FQ4 Guidance: Total Revenues: $467M - 484B, CVI revenue: $385M - 400M, CSI revenue: $82M - 84M; Non-GAAP EPS: $2.07 - 2.17.
- 2015 Guidance: Total Revenues: $1.808B - 1.825B, CVI revenue: $1.499B - 1.514B, CSI revenue: $309M - 311M; Non-GAAP EPS: $7.51 - 7.61.
6:53 AM| 6:53 AM | Comment!
- Japan -2.15%.
- Hong Kong -0.45%.
- China Closed.
- India -2.18%.
- London -1.60%.
- Paris -1.64%.
- Frankfurt -1.65%.
- Narrowing its focus to healthcare and crop science, Bayer (OTCPK:BAYRY) is proceeding with the multibillion-euro flotation of its plastics unit.
- "It will give us the opportunity to build our position as a pure-play polymers producer with strong competitive advantages," said Patrick Thomas, Covestro's chief executive.
- The business, which makes products ranging from foam for mattresses to high-tech plastics for cars, had revenues of €11.8B in 2014 and EBITDA of €1.2B.
- Finance ministers and central bankers of G20 member states have gathered in Turkey’s Ankara city to discuss the situation of the world economy, the slowdown in the emerging markets, as well as structural reforms and stabilization policies.
- Meeting participants will also talk over investment and infrastructure ideas, international financial architecture, regulation concerns and tax/currency issues.
- German factory orders fell more than expected in July, indicating that growth in the eurozone's economic engine may still be bumpy.
- Orders, adjusted for seasonal swings and inflation, dropped 1.4% vs. forecasts for a fall of just 0.6%. Moreover, the 2% climb in June was revised down to 1.8%.
- The report comes after the ECB lowered its growth forecasts for the eurozone on Thursday, with President Mario Draghi citing a slowdown in emerging-market economies.
- ETFs: EWG, GF, DAX, DXGE, HEWG, DBGR, EWGS, FGM, QDEU
- World shares are heading south as worries about an imminent rate increase by the Federal Reserve overshadow the potential for stimulus by the European Central Bank.
- Other reports on Thursday, including low jobless claims levels and a narrowing of the trade deficit, continue to indicate a strengthening U.S. economy that can support a rate liftoff as early as September.
- A robust U.S. jobs report today may give a final push to the Fed, but global market volatility has prompted some analysts to predict a December rate increase.
- U.S. Futures: Dow -0.7%. S&P -0.6%. Nasdaq -0.7%.
- Europe: London -1%. Paris -1.2%. Frankfurt -1.2%.
- Asia: Nikkei -2.2%; Shanghai closed; Hang Seng -0.8%; Sensex -2.2%.
- Investors are ready to digest one of the most significant data releases of the summer this morning for its implications on the timing of the first rate hike since 2006.
- Due at 8:30 a.m. ET, the August non-farm payrolls report is the final read on monthly labor conditions before the Federal Reserve makes a decision on interest rates at its September 16-17 meeting.
- Economists expect employers to have added more than 220,000 workers in August, with unemployment ticking down a tenth of a percentage point to 5.2%.
- The United States is preparing to sanction Chinese companies connected to the theft of U.S. intellectual property as early as next week, FT reports.
- The timing would give China some time to cool down before President Xi Jinping meets President Obama later in September.
- White House officials are also considering sanctions against Russian individuals and companies guilty of economic espionage and theft of trade secrets.
- Previously: More sanctions on Russia? China? (Sep. 01 2015)
- GVC Holdings (OTC:GMVHF) has agreed to buy Bwin.Party Digital Entertainment (OTCPK:PYGMF) for about £1.1B ($1.7B), winning a fight with 888 Holdings (OTCPK:EIHDF) to acquire the online gambling company.
- GVC's battle was the latest in a series of combinations in the gaming industry driven both by the growth of the sector and protection from increasing tax and regulatory pressures.
- Previously: GVC pushes for Bwin.Party deal (Aug. 07 2015)
- Samsung Electronics (OTC:SSNLF) is making the technology of its upcoming Gear S2 smartwatch available to competitors who use Android, hoping to increase its share of the market, which is now dominated by Apple.
- According to Strategy Analytics, worldwide smartwatch shipments grew to 5M in the second quarter of this year from 1M in the same period of 2014.
- While Apple Watch captured 75% of global smartwatch market, Samsung only took an 8% share.
- Previously: Samsung unveils new smartwatch (Sep. 01 2015)
- China has sent the largest delegation ever to a major new conference being held in Russia's far east with trade deals worth tens of billions of dollars on the table.
- Due to U.S. and EU sanctions over Ukraine, Russia and China's economic ties have strengthened over the past year, increasing yuan-ruble trade and investment.
- Some 1500 foreign delegates from 24 countries are also attending the first Eastern Economic forum, which runs through September 5.
- ETFs: RSX, RUSL, RUSS, ERUS, RSXJ, RBL
- The drama at Volkswagen (OTCQX:VLKAY) is leading to more unexpected turns after the Porsche and Piech clans named CFO Hans Dieter Potsch as their candidate for chairman.
- Poetsch's gentle demeanor should help him mend fences at VW, which was rocked by a power struggle between CEO Martin Winterkorn and former chairman Ferdinand Piech in April.
- Although Volkswagen has grown to become the world's largest carmaker, it has proven to be one of the most difficult companies to manage due to labor representatives.
- Previously: Reuters: Volkswagen CFO to be proposed for chairman position (Sep. 03 2015)
Visit Seeking Alpha’s new Earnings Center
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs