Wall Street Breakfast: Must-Know News
Top Stories
WellPoint to buy Amerigroup for $4.9B. WellPoint (WLP) has agreed to acquire Amerigroup (AGP) for $92 a share in a cash deal worth almost $4.9B. The offer represents a 43% premium over Amerigroup's closing price on Friday, and its shares were +40% premarket.
WellPoint to buy Amerigroup for $4.9B. WellPoint (WLP) has agreed to acquire Amerigroup (AGP) for $92 a share in a cash deal worth almost $4.9B. The offer represents a 43% premium over Amerigroup's closing price on Friday, and its shares were +40% premarket.
Sikorsky signs $7.3B helicopter deal with U.S. United Technologies (UTX) unit Sikorsky Aircraft has signed a five-year $7.3B deal to supply the U.S. armed forces with H-60 Black Hawk helicopters and other versions of the workhorse aircraft, Reuters reports. The agreement is the eighth multi-year procurement of the choppers, and includes options that could add $1B-$2B to the value of the contract.
Chinese inflation falls to two-and-a-half year low. Chinese inflation slowed more than expected to a 29-month low of 2.2% on year in June from 3% in May, with CPI dropping 0.6% on month for the third consecutive negative print. Yesterday, Chinese Premier Wen Jiabao warned that the downward pressure on the economy is still "relatively great." Should it want to, Beijing has more room to ease policy further.
Top Stock News
Earnings set to add to investor nervousness. While the slowing world economy, especially in Europe, is worrying investors, it's also hurting company results, a trend that's reinforcing shareholder concern. With earnings season set to kick off today with Alcoa's (AA) results, over 40 companies have already issued profit warnings, including Ford (F) and Texas Instruments (TXN), and analysts say share prices haven't fully accounted for the darkening picture.
Earnings set to add to investor nervousness. While the slowing world economy, especially in Europe, is worrying investors, it's also hurting company results, a trend that's reinforcing shareholder concern. With earnings season set to kick off today with Alcoa's (AA) results, over 40 companies have already issued profit warnings, including Ford (F) and Texas Instruments (TXN), and analysts say share prices haven't fully accounted for the darkening picture.
Analysts slash forecasts for Alcoa. Ahead of Alcoa's (AA) results today, analysts have sharply cut their EPS estimates to just $0.05 vs. $0.32 a year ago. Revenues are expected to sink 11.8% to $5.81B. The business of producing aluminum isn't a great one, beset as it is by rising input costs and sinking finished-product prices. The stock is flat year to date.
Barclays mulls NY float for investment bank - or not. Barclays (BCS) is considering ways to spin off its investment-banking arm following the Libor scandal, Britain's Sunday Times reports. The division could float in New York while the U.K.-based retail and commercial bank would retain its London listing. However, a source tells MarketWatch that the report is inaccurate.
Farnborough dealmaking to fly lower this year. Dealmaking will probably be less frenetic at this week's Farnborough Airshow than in previous years and at Paris in 2011. The eurozone recession, the looming automatic defense cuts in the U.S., and falling airline profits are among the reasons, as is the recent airline buying spree. Still, Boeing (BA) could announce orders for the 737 Max from two leasing firms, the WSJ reports.
Lloyds close to offloading £1B in toxic assets. Lloyds (LYG) is reportedly near a deal to unload about £1B in toxic loans and equity stakes it inherited through its acquisition of HBOS in 2008, with various P-E and vulture firms in the running as buyers.
Russia helps make up for GM's slowing Chinese sales. General Motors (GM) believes that fast growth in Russia will help offset the company's slowing sales in China, senior executive Tim Lee has said. In the first half of 2012, the automaker increased sales 21% on year in Russia to 136,400 vehicles, led by a strong showing from the Chevrolet Niva.
Celgene eyes Human Genome. Celgene (CELG) is one of two firms other than GlaxoSmithKline (GSK) that are considering buying Human Genome Sciences (HGSI) and are holding talks with the company, Reuters reports. There's no word on who the second suitor is, although any deal would most likely be a merger of equals. With Human Genome holding an auction, the deadline for bids is July 16.
Panasonic overhaul could cost more than expected. Panasonic's (PC) restructuring costs for FY 2012/13 could exceed the ¥41B ($515.5M) the company has planned for, new President Kazuhiro Tsuga said today. Tsuga added that the electronics giant will formulate a new business plan by the autumn, and detailed plans for 90 units by February. The sheer number of units indicates what a sprawling mess Panasonic is.
Top Economic & Other News
Obama to push 1-year extension of tax cuts for middle class.President Obama will today reportedly propose a one-year extension of the Bush-era tax cuts for families earning below $250,000 a year, a move that might soften the impact of the "fiscal cliff" on January 1. That still leaves a gap with Republicans, who want to extend the cuts forever, and even with some senior Democrats, who want to include those earning under $1M.
Obama to push 1-year extension of tax cuts for middle class.President Obama will today reportedly propose a one-year extension of the Bush-era tax cuts for families earning below $250,000 a year, a move that might soften the impact of the "fiscal cliff" on January 1. That still leaves a gap with Republicans, who want to extend the cuts forever, and even with some senior Democrats, who want to include those earning under $1M.
Markets skeptical ahead of EU meeting. Yields on 10-year Spanish bonds were +11 bps at 7.07% midday in Europe and those of Italy +9 bps at 6.12%, while EU stocks were lower ahead of a meeting of eurozone finance ministers today. The participants will attempt to hash out the details of the Spanish bank rescue and EU banking supervision as they try to persuade skeptical markets that they can solve the debt crisis.
BOE's Tucker to face panel over Libor manipulation. It's the turn today of Paul Tucker, the Bank of England's deputy governor, to appear in front of a U.K. parliamentary panel, where he will be questioned about whether regulators turned a blind eye, and even gave "a nod and a wink," to Libor manipulation to ensure market confidence. Tucker was warned in 2007 that banks may be fixing the rate.
German resilience resurfaces. German exports unexpectedly rose 3.9% on month in May after falling 1.7% in April, while imports climbed a greater-than-forecast 6.3%. "The data suggests that resilient exports to emerging markets and strong domestic demand offset the weakness in demand from other European countries in the second quarter,” says Berenberg Bank's Holger Schmieding.
Japanese current account surplus, machinery orders plummet.Japan's May current-account surplus plunged 63% on year to ¥215.1B ($2.7B) - the 15th consecutive month of decline - falling well below the consensus of ¥511B. Meanwhile, machinery orders tumbled 14.8% for the biggest drop since April 2005. While the fall is large, "the results are unlikely to change the recovery momentum in capital investment plans led by large manufacturers, as shown in the June Tankan report" of business confidence, says economist Mari Iwashita.
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Today's Markets:
In Asia, Japan -1.4%. Hong Kong -1.9%. China -2.4%. India -0.7%.
In Europe, at midday, London -0.3%. Paris -0.4%. Frankfurt +0.1%.
Futures at 7:00: Dow -0.4%. S&P -0.4%. Nasdaq -0.2%. Crude +0.5%to $84.89. Gold +0.4% to $1585.70.
In Asia, Japan -1.4%. Hong Kong -1.9%. China -2.4%. India -0.7%.
In Europe, at midday, London -0.3%. Paris -0.4%. Frankfurt +0.1%.
Futures at 7:00: Dow -0.4%. S&P -0.4%. Nasdaq -0.2%. Crude +0.5%to $84.89. Gold +0.4% to $1585.70.
Today's economic calendar:
Fed's Rosengren: 'A Perspective on the Future of Monetary Policy and the Implications for Asia'
1:00 Fed's Evan: 'A Perspective on the Future of Monetary Policy and the Implications for Asia'
10:00 Employment Trends Index
11:55 Fed's Williams: Economic Outlook
3:00 PM Consumer Credit
Fed's Rosengren: 'A Perspective on the Future of Monetary Policy and the Implications for Asia'
1:00 Fed's Evan: 'A Perspective on the Future of Monetary Policy and the Implications for Asia'
10:00 Employment Trends Index
11:55 Fed's Williams: Economic Outlook
3:00 PM Consumer Credit
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