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Today - Monday, May 20, 2013
Wall Street Breakfast - daily dose of stock market news
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<p><b>Top Stories</b><br> <b><a href="http://allthingsd.com/20130519/yahoo-tumblrs-for-cool-board-approves-1-1-billion-deal/" rel="nofollow">In its quest for cool, Yahoo nabs Tumblr.</a></b> Yahoo's (<a href='http://seekingalpha.com/symbol/yhoo' title='Yahoo! Inc.'>YHOO</a>) board approved the $1.1B acquisition of popular blogging service Tumblr Sunday, the latest step in Marissa Mayer's quest to give the internet heavyweight a much-needed makeover. AllThingsD notes the deal is indicative of Mayer's strategy to increase YHOO's "cool factor" and relevancy with younger audiences. Tumblr, whose founder/CEO David Karp will reportedly stay at YHOO for the foreseeable future, also comes with a treasure trove of user-generated content, something YHOO covets. As for comparisons between Tumblr and YHOO's ill-fated 1999 acquisition of Geocities, <a href="http://www.forbes.com/sites/tristanlouis/2013/05/18/is-tumblr-the-new-geocities/" rel="nofollow">Forbes notes</a> Geocities faltered in part because a flood of ads drove users away; Tumblr seems to be avoiding that pitfall.</p> <p><b><a href="http://seekingalpha.com/news-article/6592601-actavis-to-acquire-warner-chilcott-to-create-premier-11-billion-revenue-global-specialty-pharmaceutical-company">Actavis in $8.5B deal for Warner Chilcott.</a></b> Actavis (<a href='http://seekingalpha.com/symbol/act' title='Actavis, Inc.'>ACT</a>) confirmed it will buy Warner Chilcott (<a href='http://seekingalpha.com/symbol/wcrx' title='Warner Chilcott Limited'>WCRX</a>) for $8.5B in a stock for stock transaction Monday morning. The deal will see WCRX shareholders receive 0.160 shares of the "new" ACT for each WCRX share they own. The combined company will become the third-largest specialty pharmaceutical player in the U.S.</p> <p><b><a href="http://uk.reuters.com/article/2013/05/20/uk-japan-economy-tankan-idUKBRE94J04N20130520" rel="nofollow">Sun rises on Japanese economy.</a></b> The Japanese economy is slowly improving, the government said Monday, pointing to evidence that exports and factory output are beginning to show signs of life. The upgraded economic assessment is the first upbeat report in two months. Additionally, Reuters Tankan survey showed a sixth consecutive month of improving manufacturer sentiment in Japan, as exporters cheered the weak yen. The index printed at 7, the first positive read in more than a year. The country's Economics Minister said the stage is set for a "V-shaped recovery." The rosy outlook was enough to boost the Nikkei <font color="green">1.47%</font> on the session to a fresh five-and-a-half year high.</p> <p><b>Top Stock News</b><br> <b><a href="http://online.wsj.com/article/SB10001424127887323463704578493590027758394.html" rel="nofollow">Chesapeake recruits new CEO.</a></b> Directors at Chesapeake Energy (<a href='http://seekingalpha.com/symbol/chk' title='Chesapeake Energy Corporation'>CHK</a>) have recruited Anadarko (<a href='http://seekingalpha.com/symbol/apc' title='Anadarko Petroleum Corporation'>APC</a>) senior VP of international and deep-water operations Robert Douglas Lawler to succeed Aubrey McClendon as CEO, <em>WSJ </em>said. Lawler, a seasoned industry veteran, will join CHK on June 17 and says he "looks forward to generating value for shareholders in the years ahead." Besides plugging a multi-billion dollar gap between the company's spending and cash flow, Lawler's greatest challenge might be dealing with McClendon, whose contractual well investment rights mean he will likely be a part of the picture at CHK even if he isn't at the helm.</p> <p><b><a href="http://seekingalpha.com/news-article/6592051-ge-capital-board-plans-to-pay-6-5-billion-of-dividends-to-its-parent-ge-in-2013">GE Capital to return $11B to parent.</a></b> GE Capital will pay $6.5B in dividends to parent company <a href='http://seekingalpha.com/symbol/ge' title='General Electric Company'>GE</a> in 2013, consistent with previously stated goals on capital allocation. The finance arm also plans to pay a special dividend of $4.5B. Overall, GE intends to return $18B in cash to its shareholders in 2013.</p> <p><b><a href="http://www.bloomberg.com/news/2013-05-20/vodafone-100-billion-stirs-payout-deal-dreams-real-m-a.html" rel="nofollow">Analysts speculate on Vodafone's next move.</a></b> The deal may be far from done, but that hasn't stopped analysts from spending (in their heads anyway) the $100B+ cash hoard Vodafone (<a href='http://seekingalpha.com/symbol/vod' title='Vodafone Group plc'>VOD</a>) would be sitting on in the event Verizon (<a href='http://seekingalpha.com/symbol/vz' title='Verizon Communications'>VZ</a>) buys out VOD's 45% Verizon Wireless stake. "What they should do is a dramatic rethink of the business," a Bernstein analyst tells Bloomberg. One possibility: acquisitions, such as Kabel Deutschland Holding and/or Liberty Global, KBC asset management says. Even if the company returned half of the cash from a potential deal to shareholders, it would still be left with $62M, including what it currently has on its books.</p> <p><b><a href="http://finance.yahoo.com/news/goldman-sachs-exit-icbc-1-095343964.html" rel="nofollow">Goldman to sell off remaining ICBC stake.</a></b> Goldman Sachs (<a href='http://seekingalpha.com/symbol/gs' title='Goldman Sachs Group Inc.'>GS</a>) plans to sell the remainder of its stake in Industrial and Commercial Bank of China at between HK$5.47-5.50 per Hong Kong-listed share (~3% below Monday's closing price) for proceeds of around $1.1B. GS has divested its stake over three separate sales (counting the current offering), with the first coming in April of 2012 and the second earlier this year. GS has held a stake in the bank since 2006.</p> <p><b><a href="http://online.wsj.com/article/SB10001424127887324787004578494452272921008.html" rel="nofollow">Morgan Stanley sells wealth-management unit.</a></b> Morgan Stanley (<a href='http://seekingalpha.com/symbol/ms' title='Morgan Stanley'>MS</a>) has finally unloaded its Indian wealth-management unit, inking a deal to sell the business to Standard Chartered (<a href='http://seekingalpha.com/symbol/scbff.pk' title='Standard Chartered.5'>SCBFF.PK</a>) for an undisclosed amount. Morgan started the unit amid an economic and stock market boom in India in 2008, but things haven't panned out as hoped.</p> <p><b><a href="http://blogs.marketwatch.com/thetell/2013/05/17/hedge-funds-bet-1-6-billion-on-boeing-in-first-quarter-google-replaces-apple-as-tech-favorite/" rel="nofollow">Hedge funds bet big on Boeing.</a></b> Among those apparently <em>not</em> worried about the fate of the 787 Dreamliner during the first quarter were hedge funds. All told, hedgies spent $1.6B during Q1 buying shares of Boeing (<a href='http://seekingalpha.com/symbol/ba' title='The Boeing Company'>BA</a>), FactSet says. Among the buyers were Viking Global Investors and Jana Partners who bought 12.3375M and 1.55M shares respectively.</p> <p><b><a href="http://www.wired.com/design/2013/05/autodesk-purchases-tinkercad/" rel="nofollow">Autodesk buys Tinkercad.</a></b> Autodesk (<a href='http://seekingalpha.com/symbol/adsk' title='Autodesk, Inc.'>ADSK</a>) said Saturday it will acquire Tinkercad, a developer of low-cost, web-based, 3D modeling and simulation tools. In tandem with the deal, Autodesk will revive Tinkercad's modeling service, which the startup recently said it would discontinue to focus on its supercomputer-powered Airstone simulation environment. Tinkercad's offerings will be added to Autodesk's 123D family of hobbyist-focused 3D design products, which now includes iPad apps. Terms were undisclosed.</p> <p><b>Top Economic & Other News</b><br> <b><a href="http://www.cnbc.com/id/100748009" rel="nofollow">Curtailing rising property values proves difficult in China.</a></b> New home prices in China rose 4.9% from a year ago in April, a faster Y/Y pace than the 3.6% growth witnessed in March. In Beijing and Shanghai, prices rose 10.3% and 8.6% respectively. The data underscore government concerns regarding property inflation and suggest that last month's 13% decline in home sales transaction value was an anomaly tied to developers' rush to supply homes in March ahead of property curbs rather than an indicator that the sector is cooling. On a M/M basis, home prices rose 1% in April. The Chinese Real Estate ETF (<a href='http://seekingalpha.com/symbol/tao' title='Guggenheim China Real Estate ETF '>TAO</a>) is essentially flat YTD, but <font color="green">up ~43%</font> over 12 months.</p> <p><b><a href="http://www.cnbc.com/id/100749695" rel="nofollow">Report questions financial stability of independent Scotland.</a></b> If Scotland were an independent state, its banking sector would have assets totaling 1250% of GDP, a U.K. government report said, throwing the financial risks inherent in a 2014 referendum on Scottish independence into stark relief. By contrast, Cyprus' banks had assets equivalent to 700% of economic output before the country's financial sector was hit by a devastating crisis. Such an "exceptionally large banking sector" would be vulnerable to financial shocks, and taxpayers may be at great risk if the central government didn't have the capacity to deal with the fall out, the U.K. says. Scotland's Finance Secretary called the report "a feeble attempt to undermine confidence" in an independent Scotland.</p> <p><b><a href="http://www.bloomberg.com/news/2013-05-19/gold-bear-bets-reach-record-as-soros-cuts-holdings-commodities.html" rel="nofollow">Gold bears abound as short positions hit record.</a></b> "I think that any last vestige of an investment thesis for gold has been stripped," a senior VP and fund manager tells Bloomberg. Downbeat rhetoric from the likes of Goldman Sachs and Credit Suisse, combined with news George Soros and BlackRock (among other large investors) pared holdings of gold ETPs (<a href='http://seekingalpha.com/symbol/gld' title='SPDR Gold Trust ETF'>GLD</a>) during the first quarter have brought out the bears in force: CFTC data shows that as of May 14, hedge funds and other speculators held 74,432 short contracts, the most on record.</p> <p><b><a href="http://www.ft.com/intl/cms/s/0/595a0abe-c01b-11e2-b19c-00144feab7de.html" rel="nofollow">Relaxed lending standards spark concern.</a></b> The latest installment of the Senior Loan Officer Opinion Survey, has some observers worried. Citing "increased competition," banks generally reported easing their lending standards on business loans over the last three months as razor thin margins have created a scramble for C&I business. Concurrently, the amount of business loans extended rose 10% Y/Y to $1.55T, leading some to question whether the combination of more lending and lax underwriting standards might prove hazardous to the system. Competition "creates the temptation to do silly things," M&T vice-chairman Mike Pinto told <i>FT</i>.</p> <p><b><a href="http://www.bloomberg.com/news/2013-05-20/german-government-bonds-decline-before-italian-industrial-report.html" rel="nofollow">What risk? Yields fall for Italy, Slovenia.</a></b> Is risk aversion yesterday's news in the eurozone? A report out of Italy showing industrial orders rose 1.6% in March (handily beating estimates and reversing a 2.5% decline in February) helped push the spread between 10-year German bunds (<a href='http://seekingalpha.com/symbol/bund' title='PIMCO Germany Bond Index ETF'>BUND</a>) and comparable Italian government debt (<a href='http://seekingalpha.com/symbol/itly' title='PowerShares DB Italian Treasury Bond Futures ETN'>ITLY</a>) to its narrowest level since January at one point on Monday, as investors pared safe haven bets. Meanwhile, yields on Slovenian 10-year bonds fell slightly early on, defying Fitch's downgrade. Of course, the ratings agency is still "<a href="http://www.bloomberg.com/news/2013-05-20/slovenian-bonds-extend-rally-as-investors-shrug-off-fitch-cut.html" rel="nofollow">far behind the market's assessment</a> of Slovenia's creditworthiness," one economist said, adding that as long as S&P maintains its A- rating, Slovenian banks can still pledge their government bonds as collateral in ECB liquidity ops.</p> <p><b>Editors' Picks</b><br> <b><a href="http://seekingalpha.com/article/1432541-the-hard-money-has-been-made-in-imperial-holdings"> SA Pro: The Hard Money Has Been Made In Imperial Holdings </a></b> <br> <b><a href="http://seekingalpha.com/article/1446071-i-m-not-gonna-brag-but-i-did-recommend-stag"> I'm Not Gonna Brag, But I Did Recommend Stag </a></b> <br> <b><a href="http://seekingalpha.com/article/1445611-are-streaks-and-current-yields-the-best-metrics-for-dividend-growth-investors"> Are Streaks And Current Yields The Best Metrics For Dividend Growth Investors? </a></b></p> <p><b>Today's Markets:</b> <br> <b>In Asia</b>, Japan <font color="green">+1.47%</font> to 15360. Hong Kong <font color="green">+1.78%</font> to 23493. China <font color="green">+0.75%</font> to 2299. India <font color="red">-0.31%</font> to 20223. <br> <b>In Europe</b>, at midday, London <font color="red">-0.06%</font>. Paris <font color="green">+0.24%</font>. Frankfurt <font color="green">+0.42%</font>. <br> <b>Futures at 7:00:</b> Dow <font color="red">-0.02%</font>. S&P <font color="red">-0.02%</font>. Nasdaq <font color="red">-0.03%</font>. Crude <font color="red">-0.5%</font> to $95.54. Gold <font color="red">-1.09%</font> to $1349.00.</p> <p><b>Today's economic calendar:</b><br> <b><font color="maroon">8:30</font></b> <a href="http://www.chicagofed.org/webpages/publications/cfnai/index.cfm" rel="nofollow">Chicago Fed National Activity Index</a></p> <p><b>Notable earnings before today's open:</b> <a href='http://seekingalpha.com/symbol/cpb' title='Campbell Soup Company'>CPB</a>, <a href='http://seekingalpha.com/symbol/hgg' title='hhgregg, Inc.'>HGG</a>, <a href='http://seekingalpha.com/symbol/jaso' title='JA Solar Holdings, Co., Ltd.'>JASO</a>, <a href='http://seekingalpha.com/symbol/qihu' title='QIHOO 360 Technology Co. Ltd.'>QIHU</a></p> <p><b>Notable earnings after today's close:</b> <a href='http://seekingalpha.com/symbol/tivo' title='TiVo Inc.'>TIVO</a></p> <p>See full <a href="http://seekingalpha.com/currents/earnings">real-time earnings coverage »</a></p> <p>Wall Street Breakfast is sent out by email for free -- <a href="http://seekingalpha.com/page/email-preferences/?source=newsbriefbody">Get it now »</a> </p>
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We are now at ludicrously low interest rates and of course an inflating stock market. Continuing to inflate those bubbles seems to me to be very dangerous. The biggest danger being the complacency we have seen in Europe. Higher interest rates are no longer pressuring the need for change and thus they don't. The next EU round of inflating interest rates will thus come with much higher debt/GDP ratios, even for the bullwarks like France and Germany.
Ludicrous or not, I'm on record as believing that interest rates will stay low much longer than most believe.
But please don't tease me
C'mon and squeeze me
But please don't tease me
(Duke Ellington, lyrics by Lee Gaines - 1941)
So what are the chances for a squeeze on Gold underwear?
An interesting market current on the growing percentage of cell phone users who are entering the pre-paid market. If Verizon and AT&T have not seen this coming and do not have a plan in place, they deserve what they get.
It seems that (CHK) can not free itself from the clutches of Aubrey McClendon.
Where is the Jamie Dimon update? It has been a few days with no "breaking news" on voting predictions. (I thought politcal elections were over-done!)
Where is Jon Corzine and did he really throw out the first pitch in Toledo at the Mudhens game on Saturday?
Have a great day everyone.
Thank you and your day as well.
Yahoo Finance seems like a decent site.
I was commenting on Yahoo's home page and their "news." Yahoo! Sports is pretty poor also. When there is incorrect information and grammatical errors, you have to wonder if they are just cranking out stories without any quality control in place.
Check the headlines from Yahoo sometime and think tabloid.
I just happen to be a fan of Yahoo! Sports but then I'm not an "insider" to the four-letter site. They're affiliation with SB Nation is something I also enjoy. Sports fans' bloggers a fun lot to mix with. Lots of gif's and such.
Verizon does offer prepaid plans: http://vz.to/10IxqnS
They back that up with writing that has you scratching your head figuring out what they are saying many times.
Just not worth the effort and time to look through all the gwop for a story I may have interest in.
So. I now use iCal on iCloud (though I could have used Google, I decided to stay with the one company so as not to risk future compatibility issues).
That's a big problem with computing: proprietary issues mean that often one has to choose one vendor or risk problems later. It's a pity that a single universal standard cannot be agreed. Instead companies deliberately keep their products incompatible to protect their own product sales. Understandable but problematic for users and consumers.
Those who don't save - or can't afford to - will not lose so much, but those who did and do, will be left poorer by the actions of politicians and business people (and not just bankers, but those too who award themselves over-generous remuneration packages at the expense of shareholders).
And governments don't care too much about inflation either, because it reduces their debts on the one hand, but doesn't reduce their income, because tax is always paid in today's money, therefore inflation proofed.
The EPA also forced Primatene Mist off of the market for the same issue, removing access of an economically inexpensive, yet effective emergency OTC medication.
" Is breathing clean air of value to Americans?"
Define "clean", and then show me where to find this air.
Caveat - I am an asthma sufferer, and it's triggered by pollens.
GE Capital... from the edge of the abyss, it now looks like GE Capital has become a cash cow. Does that make Jeffrey Immelt 'Executive of the Year"? I assume we have lots of Immelt fans right here at SA.
-- (YHOO) is still a buy. As for flood of ads driving away users, reminds me of (FB).
"Actavis in $8.5B deal for Warner Chilcott. Actavis (ACT) confirmed it will buy Warner Chilcott (WCRX) for $8.5B in a stock for stock transaction Monday morning. The deal will see WCRX shareholders receive 0.160 shares of the "new" ACT for each WCRX share they own. The combined company will become the third-largest specialty pharmaceutical player in the U.S."
-- So that is why (ACT) rose on unusual volume all last week. I think the stock is a buy.
"Morgan Stanley sells wealth-management unit. Morgan Stanley (MS) has finally unloaded its Indian wealth-management unit, inking a deal to sell the business to Standard Chartered (SCBFF.PK) for an undisclosed amount. Morgan started the unit amid an economic and stock market boom in India in 2008, but things haven't panned out as hoped."
-- Wealth-management stocks are on fire. Just look at (APO), (BX), and (FIG).
"Hedge funds bet big on Boeing. Among those apparently not worried about the fate of the 787 Dreamliner during the first quarter were hedge funds. All told, hedgies spent $1.6B during Q1 buying shares of Boeing (BA), FactSet says. Among the buyers were Viking Global Investors and Jana Partners who bought 12.3375M and 1.55M shares respectively."
-- Cramer says to ignore this news. I choose the opposite.
"Autodesk buys Tinkercad. Autodesk (ADSK) said Saturday it will acquire Tinkercad, a developer of low-cost, web-based, 3D modeling and simulation tools. In tandem with the deal, Autodesk will revive Tinkercad's modeling service, which the startup recently said it would discontinue to focus on its supercomputer-powered Airstone simulation environment. Tinkercad's offerings will be added to Autodesk's 123D family of hobbyist-focused 3D design products, which now includes iPad apps. Terms were undisclosed."
-- (DDD) is just a start. You need the 3D graphics programs for the 3D printers. In Japan, they have 3D scanners, so one can make a mini me.
"What risk? Yields fall for Italy, Slovenia. Is risk aversion yesterday's news in the eurozone? A report out of Italy showing industrial orders rose 1.6% in March (handily beating estimates and reversing a 2.5% decline in February) helped push the spread between 10-year German bunds (BUND) and comparable Italian government debt (ITLY) to its narrowest level since January at one point on Monday, as investors pared safe haven bets. Meanwhile, yields on Slovenian 10-year bonds fell slightly early on, defying Fitch's downgrade. Of course, the ratings agency is still "far behind the market's assessment of Slovenia's creditworthiness," one economist said, adding that as long as S&P maintains its A- rating, Slovenian banks can still pledge their government bonds as collateral in ECB liquidity ops."
-- Good news. But A- rating? And you give the U.S. an AA rating? Wow, someone at S&P needs to go.
The chart says nothing but down big time from '08 to '11 and then flat for the past two years. Why should it "recover"?