Chinese Q2 GDP grows in line with expectations. China's economy matched forecasts and expanded 7.5% on year in Q2, although that was down from 7.7% in Q1. China won't have a problem achieving its official annual growth target of 7.5%, the statistics bureau said, with the economy "generally stable" in H1 and major indicators in a "reasonable range." However, economists are less confident, while a major question is how far China's leaders are prepared to let growth slow as they reform the economy.
No direct evidence battery caused 787 fire. Boeing's (NYSE:BA) shares were +1.7% premarket after investigators said over the weekend that there is "no evidence of a direct causal relationship" between Friday's fire aboard an Ethiopian Airlines 787 and the plane's batteries. The preliminary investigation into the blaze is reportedly expected to take several days. Carriers continued to fly their Dreamliners over the weekend, with passengers in Japan, the 787's major market, not canceling their tickets.
China holding four GSK executives. GlaxoSmithKline (NYSE:GSK) has transferred up to 3B yuan ($489M) to over 700 travel agencies and consultancies in China over the past six years as part of a scheme to bribe officials and doctors to illegally increase the sales of the company's drugs, the country's Ministry of Public Security said today. The Ministry didn't say how much of the money was spent on the bribes, but did say that four GSK officials have been detained.
Top Stock News
Shares stage relief rally over Chinese GDP. U.S. equity futures, as well as Asian and European shares, have risen as markets show relief that China's Q2 GDP met expectations, especially as the country's leaders have been saying they're willing to tolerate lower growth as they reform the economy.
Vivus delays annual meeting for three days. Vivus (NASDAQ:VVUS) has postponed its annual meeting until Thursday from today after accusing a paid adviser to activist investor First Manhattan (FMC) of making "false and misleading statements" about the recommendation of proxy advisory firm Institutional Shareholder Services (ISS). The latter has backed three board candidates put up by FMC, which wants to replace all of Vivus' directors. On Saturday, Vivus said it had invited onto its board the three ISS-recommended FMC nominees.
ISS comes out against four McKesson directors. Institutional Shareholder Services (ISS) has recommended that shareholders vote against the re-election of four McKesson (NYSE:MCK) directors at the drug distributor's annual meeting on July 31. The directors, who are members of the company's compensation committee, have failed to adequately address shareholder concerns regarding compensation, the proxy advisory firm said. Unlike CtW Investment Group, however, ISS didn't recommend a vote against Chairman and CEO John Hammergren.
Volumes in Leap options soared prior to AT&T deal. Trading volume in Leap Wireless (LEAP) options leapt to 7,139 contracts on Friday - vs an average of 1,320 contracts - prior to the announcement that AT&T (NYSE:T) has agreed to acquire the smaller carrier for $1.18B. The call-to-put ratio was 20-1. "It appears that prior knowledge of this takeover may have been leaked and traded on," says options analyst Ophir Gottlieb.
Telecom-equipment firms eye massive Russian opportunity. There's a $6.5B opportunity - give or take - in Russia over the next six years for telecom-equipment makers as the country's cellular carriers build 4G networks. "The geographic scope, population size, economic demand and growth all indicate the size of the contracts coming out of Russia could be outstanding," says Ovum analyst Daryl Schoolar. Those vying for a piece of the pie include Nokia Siemens Network (NYSE:NOK), Ericsson (NASDAQ:ERIC), Alcatel-Lucent (ALU) and Huawei Technologies.
TWC in talks to invest in Hulu. Time Warner Cable (TWC) was still in negotiations to acquire a holding in Hulu even after an auction for the video-streaming service was abandoned, Bloomberg reported over the weekend. The speculation appears to contradict a statement on Friday from Hulu's owners - Fox (NASDAQ:FOXA), Disney (NYSE:DIS) and Comcast (NASDAQ:CMCSA) - that they "will maintain their respective ownership positions" in the video-streaming service. In the auction, TWC had bid for a 25% stake.
Top Economic & Other News
Australia to scrap costly carbon tax. New Australian Prime Minister Kevin Rudd plans to discard the country's carbon tax and introduce a less costly floating price emissions-trading system by July 1, 2014, a year earlier than planned. The scrapping of the tax is expected to lower government revenues by several billion dollars, so it will have to cut spending to compensate. Companies that could be affected include Peabody Energy (NYSE:BTU), BHP (NYSE:BHP), Rio Tinto (NYSE:RIO) and Glencore (OTCPK:GLCNF).
Global business confidence falls to crisis lows. World business confidence has dropped to levels seen during the financial crisis, says Markit, with the net balance of companies expecting a rise in activity over the next year falling to 30 percentage points from 39 percentage points in February. The fall in confidence was most notable in the U.S. and China, with optimism low in Germany and France as well, although the U.K. was pretty bullish.
Restaurants, bars act to avoid cost of Obamacare. The WSJ has found anecdotal evidence that restaurants and bars have been converting much of their staff to part-time from full time so that they don't have to provide health insurance as mandated by the Affordable Care Act. Companies in the sector have been adding 50,000 jobs a month since April, although the average work week for staff has risen slightly to 25.6 hours this year from 25.5 hours in 2012.
Alpha-Rich Stock Movers and Great Calls
1) Tokyo Electric Power Company (OTCPK:TKECF) is +6.2% since Thursday, when Marc Peckner showed how stars are aligning for TEPCO's share price to triple. Read article »
2) Brazil Fast Food Corp. (OTCPK:BOBS) is +23% since June 4, when Nick Ghattas highlighted the company as an under-the-equator play on the verge of increasing profits, debt paydown, and capital returns. Read article »
Alpha-Rich Stocks To Watch
1) Symantec (NASDAQ:SYMC). The company has 30% upside as it continues to work through a turnaround, and conservative estimates give it room to outperform. Read article »
2) Shutterstock (NYSE:SSTK). The firm's success has earned it a nosebleed valuation and will attract competitors in a low-moat industry. Slowing growth means 30% downside. Read article »
Alpha-Rich articles are the best long and short ideas on Seeking Alpha. SA Pro subscribers receive early access to these Alpha-Rich articles, which often move markets. For more information about SA Pro and becoming a subscriber, click here.
In Asia, Japan closed. Hong Kong +0.1% to 21303. China +1% to 2059. India +0.4% to 20,040.
In Europe, at midday, London +0.3%. Paris +0.4%. Frankfurt +0.1%.
Futures at 6:15: Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude -0.5% to $105.45. Gold +0.3% to $1281.50.
Notable earnings before today's open: C
Notable earnings after today's close: CTAS
See full real-time earnings coverage »
Wall Street Breakfast is sent out by email for free -- Get it now »