Friday, March 7, 2014
- Stocks finished mostly lower in choppy trading, as investors pulled back to take profits after early gains sparked by the better than expected nonfarm payrolls report.
- The situation in Ukraine kept investors on edge, after Crimea's legislators voted Thursday to secede from Ukraine and join Russia, and reports today of a Ukranian military base in Crimea under siege by Russians.
- Some traders said the intraday pullback appeared to be more the result of a lack of buying than any meaningful selling on a relatively low-volume day.
- The S&P 500 held up relatively well thanks to the relative strength of the financial sector, which continued its recent outperformance; biotechs lagged for the second day in a row, which fueled much of the Nasdaq weakness.
- Treasury bond prices fell, capping the biggest weekly selloff in three months; the 10-year yield finished ~2.79% after reaching a six-week high of 2.821%.
- Sources tell Reuters (translation) Vodafone (VOD -2.8%) has raised its bid for Spanish cable giant ONO, and has reached a preliminary deal with ONO shareholders collectively possessing a controlling stake.
- No word on the specific offer price. Vodafone was previously reported to have made a rejected €7B ($9.6B) bid for ONO.
- One source states Vodafone plans to formally present its offer before ONO's board meets on March 13 to approve recently-announced plans to pursue an IPO.
- Vodafone is selling off on the report. A successful Vodafone bid for ONO, coming on the heels of its $14.2B Kabel Deutschland acquisition, could lower the odds AT&T (T +0.3%) will make an offer for the company once its 6-month waiting period ends. AT&T CEO Randall Stephenson has reportedly told investors further cable acquisitions by Vodafone would complicate a deal.
- A check of asset markets following what's currently being interpreted as a strong nonfarm payroll report (175K jobs added vs. 154K expected; UE rate up to 6.7%): Flat ahead of the number, stock index futures are up by 0.5%; gold is down 1.1%, silver down 3.2%, copper off 2.9%; the dollar is up a bit, but mostly against the loonie after a weak jobs number in Canada.
- DIA +0.5%, GLD -1%, SLV -2.9%, JJC -3%, UUP +0.15%
- Previously: Treasury yields fly higher after payroll report.
- Related ETFs: GLD, SLV, DIA, AGQ, IAU, PHYS, UUP, SIVR, USLV, ZSL, SGOL, UDN, UGL, DGP, DOG, GLL, DXD, JJC, DZZ, UDOW, UGLD, SDOW, DSLV, DDM, DGL, DBS, GLDI, DGZ, DBV, AGOL, DGLD, SLVO, FORX, TBAR, UDNT, UUPT, USV, UBG, CPER, GLDE, GYEN, CUPM, GEUR, USDU, GGBP
- The BLS notes severe winter weather occurring in much of the country during the February survey period. Bad weather - says the agency - is more likely to show up in average weekly hours than in the headline payroll number, and this month's report has the average workweek declining by 0.1 hours to 34.2 hours.
- Previous: Jobs +175K vs. +154K expected
- Maybe most surprising in today's report is the 0.4% increase in average hourly earnings, the biggest gain in nearly a year.
- The labor force participation rate is flat at 63% - it was 63.5% a year ago. The employment-to-population ratio is flat at 58.8% - it was 58.6% a year ago.
- Expiring unemployment benefits didn't put a dent in long-term unemployed which rose 203K.
- The broader U-6 unemployment rate slips to 12.6% from 12.7% - it was 14.9% a year ago.
- Bond traders are seeing a strong report, with the 10-year Treasury yield shooting up to 2.81% from 2.72% before the release. TLT -0.8%, TBT +1.7%.
- Treasury ETFs: TBT, TLT, TMV, SHY, IEF, TBF, PST, EDV, TTT, TMF, SBND, ZROZ, TLH, IEI, DLBS, TYO, DTYS, VGLT, UST, BIL, SHV, UBT, VGIT, VGSH, TBX, TLO, SCHO, GSY, DTYL, SCHR, LBND, ITE, TENZ, TYD, TYBS, DTUL, SST, DTUS, TUZ, FIVZ, DFVL, TBZ, DLBL, DFVS, TYNS
- February Nonfarm Payrolls: +175K vs. consensus +154K, +129K previous (revised from 113K).
- Unemployment rate: 6.7% vs. 6.6% consensus, 6.6% previous.
- Novartis' (NVS) Jakavi treatment has achieved the main goal in a Phase III trial of maintaining red-blood cell volume in certain patients with polycythemia vera, an incurable cancer associated with the overproduction of such cells. The patients didn't need phlebotomy (a procedure to remove blood from the body to reduce the concentration of red blood cells) or a reduction in spleen size.
- Jakavi was tested against the best available therapy.
- Jakavi is already approved for myelofibrosis, another form of blood cancer. Expanding the drug's use could turn it into a blockbuster with sales of $1B+.
- Shares are -0.6% in Zurich. (PR)
- Stock index futures are marginally higher ahead of this morning's non-farm payroll report. Consensus estimates are for a gain of 154K jobs and no change to the unemployment rate at 6.6%.
- Europe is off moderately and Asia was mixed overnight - though the Nikkei continued a big rally, up 0.9% and bringing its gain over the last 5 sessions to about 5%.
- The 10-year Treasury yield is down one basis point to 2.73% and gold is off $3 to $1,349 per ounce.
- Index ETFs: SPY, QQQ, IVE, SH, DIA, SSO, SDS, PSQ, IVV, VOO, SPXU, UPRO, TQQQ, QID, RSP, DOG, SQQQ, QLD, DXD, RWL, EPS, UDOW, SDOW, IVW, SPYG, DDM, RPG, RPV, SPYV, BXUB, VOOG, QQEW, QQQE, VOOV, TRND, SFLA, BXUC, QQXT, BXDB, FTA, TNDQ
- Asian shares mainly rise, Europe is mostly down and American stock futures are flat-to-higher ahead of the U.S. jobs report, which is due out this morning.
- Non-farm payrolls are estimated to have risen by 149,000 in February vs 113,000 in January, although soft ADP private-sector jobs data this week may have dampened expectations. Fed policymaker Charles Plosser will take the non-farm reading "with a pinch of salt," because of the severe winter weather.
- The standoff over Crimea could be affecting sentiment in Europe, especially after what seems to have been a fairly fruitless hour-long conversation between Presidents Obama and Putin.
- Japan +0.9% to 15274. Hong Kong flat, China -0.1%, India +1.9%.
- Euro Stoxx 50 -0.5%, London -0.4%, Paris -0.4%, Frankfurt -0.9%, Milan -0.3%, Madrid -0.2%.
- U.S. stock futures: Dow +0.1%. S&P +0.1%. Nasdaq flat.
- Mexico's Federal Telecommunications Institute (IFT) is moving to boost competition in the telecom and broadcasting sectors and it is notifying companies that it considers to be dominant.
- In a statement, IFT didn't mention names but it was most likely referring to America Movil (AMOV) in the telecom market and Televisa (TV) in the broadcasting sector.
- The classification is important, as the IFT has new powers to break up dominant players, although the regulator has said in the past that such a move would be a last resort.
- Instead, the agency is implementing other measures such as holding a tender for two new national broadcasters.
- However, the IFT needs to wait for final legislation to be passed before it can fully move ahead with reform.
- Japan has decreed that Bitcoin is not a currency and the government has no laws to define it, although the government said in a statement it can tax transactions.
- The country's banks can't broker Bitcoin transactions or create customer accounts to hold digital assets, Japan said, although brokerages and asset managers can manage clients' Bitcoins.
- The comments come amid calls to regulate Bitcoin and a week after the collapse of Mt. Gox, a leading Tokyo based exchange, due to a massive theft.
- The government's statement also comes after Newsweek marked the return of its print version with a bang by "outing" 64-year-old Japanese-American physicist Dorian S. Nakamoto as the creator of Bitcoin, although he yesterday denied involvement in the digital currency.
- ETFs: BITCN, BTCS
- Amcol International (ACO) has told Paris-based Imerys (IMYSF) that it has four working days to match Minerals Technologies' (MTX) increased rival offer of $1.48B, which Amcol's board has said is superior to that of Imerys.
- Minerals' proposal is worth $45.75 a share, 50 cents above Imerys' latest bid on Tuesday, although Amcol didn't change its recommendation in favor of a deal with the French company.
- One of the attractions of Amcol is that it has large reserves of bentonite, an important material for the construction and energy sectors. (PR)
- Disney (DIS) has deepened its relationship with Shanghai Media Group Pictures, with the companies agreeing to collaborate on films that will incorporate Chinese themes. The U.S. company already has a partnership with Shanghai Media digital unit BesTV New Media.
- The expanded co-operation marks the latest attempt by a U.S. studio to increase its presence in a market that is forecast to grow to $148B by 2015 from $120B in 2013.
- It also comes after Disney's Iron Man 3 debuted in China, and included a leading Chinese actress and footage that was filmed in the country.
Thursday, March 6, 2014
- As rumored, Supermarket chain owner Albertsons, controlled by an investor group led by P-E firm Cerberus, is acquiring Safeway (SWY). Investors are unhappy with the specific deal terms. (PR)
- Albertson's will pay $32.50/share in cash, distribute proceeds from the sale of Safeway's real estate subsidiary assets and Casa Ley stake (estimated value of $3.65/share), and distribute Safeway's 37.8M Blackhawk Network (HAWK) shares (current value of $3.95/share).
- The deal is expected to close in Q4, has a $400M termination fee, and comes with a 21-day go-shop period. Albertsons plans to fund the deal with the help of $7.6B in debt financing.
- Stocks scratched out slight gains, lifting the S&P 500 to its 50th record close since last April, after jobless claims fell to a three-month low ahead of tomorrow's monthly non-farm payrolls report and the Bank of England and European Central Bank left interest rates unchanged.
- Blue chips advanced, led by the financial sector, which outperformed for the third straight session; however, weakness in high-flying biotech stocks pulled the Nasdaq lower, as momentum names Gilead Sciences and Vertex Pharma each fell nearly 4%.
- Retailers were on the defensive after Staples reported disappointing results and said it would close as many as 225 North American stores by the end of next year.
- Gold markets were paying more attention to escalating tension between Russia and the west, sending gold $11.50 higher to $1,351.80; palladium prices set an 11-month high.
- Treasury prices ended modestly lower, sending the 10-year yield up 3 bps at ~2.74%.
- The weather knocked about 0.5-1% off of growth in Q1, says FRBNY boss Bill Dudley - now being interviewed by Jon Hilsenrath. Dudley now expects GDP to print at under 2% in Q1, but to rebound in Q2 as things warm up.
- The 6.5% unemployment rate threshold is "already obsolete" as we're just about already there and nobody expects a rate hike anytime soon. Dudley prefers the BOE's more qualitative approach where a broad range of labor market indicators are looked at.
- Webcast and blog here
- ETFs: SHY, IEF, PST, IEI, TYO, DTYS, UST, BIL, SHV, VGIT, VGSH, TBX, SCHO, GSY, DTYL, SCHR, ITE, TYD, DTUL, SST, FIVZ, DTUS, TUZ, DFVL, TBZ, DFVS, TYNS