Wall Street Breakfast
Today - Monday, March 10, 2014
Wall Street Breakfast - daily dose of stock market news
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Plunging Chinese exports hit Asian stocks. Chinese exports dropped 18.1% on year in February after expanding 10.6% in January and badly missed consensus of +6.8%. However, the trend may have been distorted by the Lunar New Year holiday and fake invoicing that boosted the data a year earlier, while the severe winter weather in the U.S. may also have had an effect. Still, the reading sent the Shanghai Composite tumbling 2.9% and helped drag other Asian indices lower.
WSJ: ONO owners continue prepping for IPO as Vodafone seeks deal. Grupo Corporativo ONO's shareholders are moving forward with plans for an IPO, the WSJ reports. The investors are due to hold an annual meeting on Thursday, when they could approve the IPO, which would effectively end any takeover talks with Vodafone (VOD) or Liberty Global (LBTYA). The WSJ's article contrasts with a Reuters report on Friday which said that Vodafone has agreed to acquire ONO. An M&A deal for the company could be worth €7B or more.
Chiquita to buy Fyffes to create world's biggest banana firm. Fruit distributor Chiquita Brands (CQB) has agreed to acquire Irish peer Fyffes (OTC:FYFFF) for $526M in an all-stock deal that will create the world's largest banana supplier. The merged company's annual revenues would be $4.6B. The transaction will help Chiquita lower its tax revenue, as the combined firm will be domiciled in Ireland. However, the deal could spark antitrust fears, as four multinationals - including Chiquita and Fyffes - control 80% of the world's banana market.
Top Stock News
Hunt goes on for missing Boeing 777. Search crews had failed - at the time of writing - to find any signs of the Malaysia Airlines 777 that disappeared over the weekend whilst flying over Vietnamese airspace. Officials are mystified as to what happened to the jet, although it seems that the identities of four passengers are under investigation, two of whom were traveling on stolen passports. That has sparked suggestions that terrorism might have been involved. Freescale Semiconductor (FSL) said 20 "very important" employees from its operations in Asia, including senior managers, were on the flight.
WSJ: Cars.com on the block for $3B. Newspaper consortium Classified Ventures, which includes Gannett (GCI), McClatchy (MNI) and Tribune (OTCPK:TRBAA), is looking to sell Cars.com for $3B, the WSJ reports. Gannett, whose holding in Classified is 27%, could be interested in increasing its stake in the auto-sales Web site. Any deal would come amid rising valuations for e-commerce sites and after Classified Ventures last week said it was selling apartments.com for $585M.
Bouygues moves to ease antitrust fears over Vivendi mobile deal. French conglomerate Bouygues (OTCPK:BOUYY) has agreed to sell part of its network and wireless spectrum to smaller French competitor Iliad for up to €1.8B ($2.5B) if Bouygues succeeds in its efforts to merge its mobile phone unit with Vivendi (OTCPK:VIVHY, OTCPK:VIVEF) subsidiary SFR. The asset sale would be part of Bouygues' attempts to assuage antitrust concerns in France about the cellular deal. Bouygues faces competition for SFR from Amsterdam-listed Altice.
NYT: Regulator didn't act on GM switches despite complaints. The National Highway Traffic Safety Administration received over 260 complaints about GM's (GM) faulty ignition switches during the past 11 years but declined to investigate, an NYT analysis shows. The agency has said that it didn't act because there wasn't enough evidence to show that the problem existed beyond isolated incidents. GM has said that the defect, which can shut down a car's engine and power system, is linked to 13 deaths. The company has recalled over 1.6M vehicles because of the problem.
Google looks to repeat Android success with wearable devices. Google (GOOG) plans to soon release a software developer kit for applications for wearable-computing devices as the company looks to repeat its Android success in a different area of gadgetry. Speaking at the South by Southwest Interactive conference in Austin, Texas, which runs from March 7-16, Google senior VP Sundar Pichai said the company hopes developers will build apps for more than just smartwatches, including even for a jacket with sensors.
Top Economic & Other News
Japan cuts GDP growth estimate. Japan has revised down its Q4 GDP growth calculation to 0.2% from an initial 0.3%, with the economy held back by weaker-than-estimated capex and consumer spending. The current-account deficit increased to a record ¥1.59T ($15.4B) in January from ¥638.6B in December. "Capital spending remains weak and exports are not coming back to strengthen the recovery," says economist Yoshimasa Maruyama. "Without support in these areas, Japan's economy is going to contract significantly in the second quarter."
Italian output tops consensus but France, Spain disappoint. Italian industrial production rose 1% on month in January after falling 0.8% in December and topped consensus of +0.4%. However, French output fell 0.2% despite expectations for growth, while Spanish production rose 1.1% on year, although that was down from 2.2% and below forecasts of 1.8%.
Top Ideas: Movers and Great Calls
1) While Air Canada's (OTCPK:AIDIF) stock price rose sharply in 2013, on February 18, Helix Investment Research said the stock had more room to fly, as currency headwinds and fleet expansion costs were abating. Shares are +14% since. Read article »
2) On November 25, Shaun Currie, CFA, saw an inflection point for CNG storage-tank producer Quantum Fuel Systems (QTWW), with at least 50% upside coming as the company reached profitability and expanded capacity. The stock is +58% to date. Read article »
Top Ideas To Watch
1) Nassarius Capital writes that metrology and optical maker Zygo Corporation (ZIGO) has tailwinds in key markets, a solid cash balance and new management, which should lead to considerable upside. Read article »
2) Emeco Holdings (OTC:EOHDF) owns the world's largest mining-equipment rental business, yet trades well below even a conservative estimate of liquidation value, writes Alpha Vulture. Read article »
Top Ideas are the best long and short ideas on Seeking Alpha. SA PRO subscribers receive early access to these Top Ideas, which often move markets. For more information about SA PRO and becoming a subscriber, click here.
In Asia, Japan -1% to 15120. Hong Kong -1.8% to 22265. China -2.9% to 1999. India +0.3% to 21983.
In Europe, at midday, London +0.3%. Paris +0.9%. Frankfurt -0.1%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq flat. Crude -1.2% to $101.33. Gold -0.2% to $1336.
Ten-year Treasury Yield flat at 2.79%.
Today's economic calendar:
No major events scheduled.
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