Today - Sunday, April 20, 2014
- Pfizer (PFE) has tentatively approached AstraZeneca (AZN) about acquiring the British-Swedish company in a deal worth over £60B ($100.7B), the U.K's Sunday Times reports. The figure is well above AstraZeneca's market cap of £47.7B.
- AstraZeneca has turned the offer down, although Pfizer could make a fresh proposal. A deal would be the largest ever foreign takeover of a British company.
- Pfizer is looking to do something with a $70B cash pile that it has accumulated overseas; repatriating the money to the U.S. so it could be distributed to shareholders would land the company with a massive tax bill.
- Airbnb has finalized a fundraising round of over $450M that values the company at $10B, the WSJ reports. The deal makes Aribnb, which enables people to rent their homes, sofas, rooms, castles and/or yachts to travelers, worth more than publicly traded hotel chains Wyndham Worldwide and Hyatt Hotels.
- Private-equity firm TPG, mutual fund T. Rowe Price Group (TROW), venture-capital firm Sequoia Capital and Dragoneer Investment Group participated in the round.
- The investment adds to the more than $300M that Airbnb has previously raised.
- Toyota (TM) aims to more than double it sales in China to 2M a year from 917,000 in 2013 and introduce 15 models in the country by the end of 2017. From 2015, the Japanese company intends to produce and sell hybrid versions of its Corolla and Levin cars in China. Toyota unveiled its plans at the Auto China show in Beijing, which has officially kicked off this weekend.
- Ford (F) is unveiling a prototype of the Ford Everest, a seven-seater off-road SUV that will be made by the company's JMC joint venture with Jiangling Motors. At the moment, Ford makes its SUVs with Chongqing Changan Automobile.
- Fiat Chrysler (FIATY) plans to start producing three new Jeeps in China with partner Guangzhou Automobile Group from late 2015 via the companies' GAC Fiat JV, which intends to invest 4.7B yuan ($755.8M) in a project in Guangzhou. The plans have received government approval. GAC Fiat could even make a vehicle customized for the Chinese market.
- GM is on course for "a good month" in the U.S., the head of its North American operations, Alan Batey, has said. GM increased sales in March despite the bad publicity the company suffered because of the ignition-switch defect. GM is launching a new Chevrolet Trax and a redesigned Chevrolet Cruze compact car at Auto China. Batey reckons GM isn't "too far away" from selling 1M Chevrolet vehicles in China after selling 650,000 in 2013.
- The city of Providence in Rhode Island has sued Bank of America (BAC), Virtu (VIRT), the New York Stock Exchange (NYX, ICE) and numerous other exchanges, brokerages and traders over high-frequency trading (HFT).
- Providence argues that the defendants have siphoned off billions of dollars by rigging the securities markets, as Michael Lewis has claimed in his new book, "Flash Boys."
- Providence is seeking unspecified damages from 42 defendants on behalf of all public investors that traded stocks in the last five years.
- A gun battle near the eastern Ukrainian town of Slavyansk has reportedly left five people dead, including three pro-Russian separatist militias. The two other dead were from a group that attacked in the militias, who were at a checkpoint.
- The incident has come as the separatists refuse to vacate government buildings and other positions they've taken up despite the signing of an international agreement last week to "de-escalate" the crisis.
- Under the deal, the buildings were to be vacated and armed militias disbanded. The Ukraine government has pledged not carry out military operations until after the Easter holiday ends on Monday.
- A mediator from Europe's OSCE security body, which has been tasked with trying to help implement the international accord, traveled to eastern Ukraine yesterday in order to try to persuade the militias to stand down. The OSCE also plans to increase the number of monitors in Ukraine to 500 from 100. However, protesters want Ukraine's interim government to step down first.
- More Ukraine
- ETFs: RSX, RUSL, ERUS, RUSS, RSXJ, RBL, GUR, ESR, RUDR
- Charter Communications (CHTR) is in negotiations to acquire 3M subscribers from Comcast (CMCSA) in a deal that could be worth $18-20B, Reuters reports.
- Charter could buy the subscribers through a straight purchase or Comcast could create a spin-off in which Charter would acquire a large minority holding.
- Other cable firms also are interested in obtaining the Comcast subscribers.
- Comcast has already committed to selling the subscribers in order to assuage antitrust concerns about its $45.3B takeover of Time Warner Cable (TWC).
Saturday, April 19, 2014
- Barrick Gold (ABX) and Newmont Mining (NEM) - the world's two largest gold producers - had hoped to have a merger deal announced as soon as Tuesday, reports the WSJ, but talks have broken down. The talks come after a particularly tough year for the gold miners has them shifting focus from empire-building to cutting costs, and analysts note the two have neighboring operations in Nevada, as well as operations in proximity to each other in Peru and Australia.
- The merger would have created a combined company with a market cap of more than $30B.
Friday, April 18, 2014
- Pro-Russian protesters, many of whom are armed, have refused to vacate administrative buildings they have occupied in eastern Ukraine despite an agreement between the government, Russia, the U.S. and EU to "de-escalate" the crisis.
- Under the deal, the buildings were to be vacated and armed militias disbanded.
- Despite the continued standoff, Russia's Micex index is +2.2% in response to the agreement. The USD-RUB is +0.1% at $35.568.
- More on Ukraine
- ETFs: RSX, RUSL, ERUS, RUSS, RSXJ, RBL, GUR, ESR, RUDR
- Japan's Nikkei ended up 0.7% and China's Shanghai Composite -0.05%, although with many bourses closed across the world for the Good Friday Holiday, volumes were low.
- Elsewhere in Asia, South Korea's KOSPI rose 0.6% and the Taiwan Weighted 0.25%.
- Car makers have been gearing up for two major shows this weekend: the New York International Auto Show, which starts today, and the Beijing International Automotive Exhibition, or Auto China 2014, which starts on Sunday.
- Ford's (F) Lincoln, which plans to formally enter China’s luxury market later this year, will unveil a new model in Beijing, the first time it has introduced a car outside of the U.S.
- New York show preview
- Tickers: F, GM, TM, HMC, CARZ, FIATY, PEUGF, BAMXF, DDAIF, HYMLF, NSANF, VLKAF, RNSDF, FIATY
- Globalfoundries has agreed to license Samsung's (SSNLF) most advanced chipmaking technology, 14-nanometer FinFET, in a co-operation deal that analyst Jim McGregor says poses "a huge competitive threat" to Taiwan Semiconductor Manufacturing Co. (TSM), which controls around half of the $38.9B chip-foundry sector.
- The collaboration could also make it more difficult for Intel (INTC) to gain a strong position in the foundry business, McGregor says.
- The tie-up "provides an alternative to those companies that are looking to use leading-edge production." That could affect chip designers such as Qualcomm (QCOM).
- Virtu Financial (VIRT) has suspended its IPO plans amid market volatility and controversy about high-speed trading (HFT) firms after Michael Lewis accused them of rigging the market in a new book, the WSJ reports.
- Virtu's move also comes as regulatory scrutiny on HFT increases, with the SEC, FBI, and the state of New York investigating the sector. Virtu has received a letter from the latter's Attorney General's office asking for information about its trading operations
- Virtu had intended to raise over $200M in its IPO at a market cap of about $3B and hoped its shares would debut by mid-April.
- ETF: IPO
- Microsoft (MSFT) has sold over 5M Xbox One computer gaming consoles to retail shops since launching the device in November, well below the more than 7M PlayStation 4 machines that Sony (SNE) has sold since its product was launched last year as well.
- Still, Xbox One sales have outpaced those of its predecessor, the XBox 360, by over 60% at the same point in time since launch.
- The introductions of the Xbox and PlayStation 4 helped boost U.S. sales of consoles in March by 78% on year to $395M.
- However, sales of videogames fell 28% to $432M, with revenue to multiplayer Internet games such as "World of Warcraft" dropping 19% to $84.8M.
- Tickers: EA, ATVI
- Eight million people have enrolled for health insurance under Obamacare, President Obama said yesterday, easily surpassing earlier projections by the Congressional Budget Office for 6-7M signups by the end of March.
- The high number of enrollments was achieved despite the technical problems that the online exchanges suffered, particularly when the Affordable Care Act was launched last year.
- Around 35% of those who purchased coverage were people under 35, who are thought to be less likely need to treatment and so can help balance the cost of claims for those who need care.
- However, Obama didn't provide details about the number of enrollees who already had insurance before Obamacare was introduced.
- More on Obamacare
- Health insurers: AET, HNT, HUM, UNH, WLP,
- ETFs: XLV, XHE, VHT, FXH, IHF, IHI, IYH, PTH, RYH, PSCH, RXL, RXD, XHS
- China's new-housing inflation weakened to an eight-month low in March, with the average price of new homes in 70 major cities moderating to +7.7% on year from +8.7% in February.
- On month, housing inflation slipped to 0.2% from 0.3%.
- Home prices rose on a year-on-year basis in 69 of 70 cities, as in February.
- The softening in prices reflects the government's attempts to cool the housing sector, although it also adds to concerns about the slowdown in the wider economy.
- "There are definitely risks in the property market of China's smaller cities," says Standard Chartered's Lan Shen. "The property market will be a big factor that presses the country's economic growth this year."
- The Shanghai Composite is -0.15%.
- ETFs: FXI, PGJ, GXC, FXP, YINN, KWEB, CYB, HAO, CNY, ASHR, CHIQ, DSUM, TAO, CHIX, YANG, CQQQ, MCHI, QQQC, PEK, XPP, YAO, CHXX, YXI, FXCH, CHXF, CHII, ECNS, CHIE, CHIM, FCA, KFYP, TCHI, CHLC, CHNA, KBA
- Russia, Ukraine, the U.S. and the EU have agreed to "de-escalate" the crisis in eastern Ukraine following talks in Geneva.
- Under the deal, non-government militias have to be dissolved and occupied government buildings vacated, while Ukraine will give amnesty to the protesters and it will start a public consultation to devolve constitutional powers to the provinces.
- The agreement also promised "additional support" for Ukraine's battered economy.
- However, the deal left various issues unaddressed such as who would disarm the militias. It also doesn't require Russia to scale back its massive buildup of troops on its border with Ukraine.
- More on Ukraine
- ETFs: RSX, RUSL, ERUS, RUSS, RSXJ, RBL, GUR, ESR, RUDR
Thursday, April 17, 2014
- Though pre-IPO demand was muted (leading to conservative pricing) and initial trading wasn't impressive, Weibo (WB +19.1%) and Leju (LEJU +18.6%) closed up strongly. The former is now worth $4.05B (21x sales), and the latter $1.57B (4.7x sales).
- Sina (SINA +6.7%) managed to follow Weibo higher, but E-House (EJ -5%) couldn't get a similar lift from Leju.
- Chinese Internet companies with upcoming IPOs - the list includes JD.com, Jumei.com (JMEI), and Cheetah Mobile - are likely breathing sighs of relief.
- Stocks closed mixed, as strong earnings from the likes of GE, Morgan Stanley and Goldman Sachs offset disappointing reports from technology blue chips IBM and Google.
- The S&P 500 and Nasdaq extended their winning streaks to four straight days, with the S&P capping its biggest weekly percentage gain since last July; the Dow was weighed by losses in several large components such as IBM, American Express and UnitedHealth.
- Trading volume was above average due to options expiration activity, but most of the action ahead of the holiday-shortened week centered on the companies that reported earnings.
- Treasurys retreated steadily through the session, causing the benchmark 10-year yield to add 9 bps to 2.72%.
- The major averages are managing to hang in there - S&P 500 (SPY +0.1%), Nasdaq 100 (QQQ) - despite sizable earnings-related declines in a number of high-profile names. IBM -3.4%, Google -4.5%, American Express -2%, and Chipotle Mexican Grill -1.9%. United Health -3.7%, and leading health insurer stocks lower amid dour comments on Medicare rate cuts and high Hepatitis C costs.
- Not all the big earnings names are lower though: Morgan Stanley +3.6%, GE +2.3%, and Goldman Sachs about flat.
- Also weighing is a big jump in Treasury yields after initial jobless claims remained right around 300K and the Phila Fed Index popped to a 7-month high. The 10-year Treasury is up 8 basis points to 2.71%.
- ETFs: SPY, QQQ, IVE, SH, SSO, SDS, PSQ, VOO, IVV, SPXU, UPRO, TQQQ, SPXL, QID, RSP, SQQQ, QLD, RWL, EPS, SPYG, IVW, RPG, RPV, SPYV, VOOG, BXUB, QQEW, VOOV, QQQE, TRND, SFLA, QQXT, BXUC, SPLX, BXDB, FTA, TNDQ
- Weibo (WB) opened at $16.27, below its $17 IPO price (at the low end of a $17-$19 range) . But shares have very quickly jumped to $18.18, giving them a 6.9% gain.
- The Chinese microblogging leader is worth $3.64B. Parent Sina (SINA +2.4%), which stands to own 58% of Weibo post-IPO after accounting for its downsized offering, has shot higher as well.
- Prospectus, IPO preview
- Update (12:20PM): Weibo is now up 10.1%.