Wall Street Breakfast: Must-Know News
Top Stories
Chinese shares soar the most since 2009. Chinese stocks surged 4.3% after the flash HSBC PMI rose to a 14-month peak of 50.9 in December from 50.5 in November, adding to recent other data showing that the economic turnaround is gaining momentum. However, markets don't usually rise by so much following middling flash PMI reports - the moonshot is more likely to do with institutional investors and state-owned firms (mostly one and the same in China) jumping all at once into a market trading at 2009 levels.
Alcatel-Lucent jumps after securing €1.6B credit facility. Alcatel-Lucent (ALU) has gained liquidity and breathing room to effect its turnaround by obtaining financing of €1.615B of senior secured credit facilities that are being underwritten by Credit Suisse (CS) and Goldman Sachs (GS). Alcatel-Lucent expects the facilities to be secured by its vast IP portfolio and other assets, while it's also looking to sell €1-1.5B of non-core operations. Shares surged 10.9% premarket, although not all analysts are convinced.
UBS to admit criminal guilt in $1B+ Libor settlement. UBS (UBS) will reportedly become the first major bank in over a decade to admit criminal wrongdoing as part of a deal with U.S., U.K. and Swiss regulators to settle allegations that it manipulated Libor and other inter-bank rates. UBS will also face fines of over $1B, which would be the largest amount levied so far in the Libor scandal and well above the $450M Barclays (BCS) agreed to pay.
Top Stock News
Softbank sets cap on Sprint's Clearwire bid. Softbank (SFTBF.PK) and Sprint (S) look set for a battle of wills with some of Clearwire's (CLWR) minority shareholders, who want $5-8 a share for the 48.3% of the company that Sprint doesn't own. That's well above the latter's offer of $2.90, which it made yesterday, and a cap of $2.97 that Softbank has reportedly set. In case Sprint's bid fails, Clearwire is in talks about other strategic alternatives.
Softbank sets cap on Sprint's Clearwire bid. Softbank (SFTBF.PK) and Sprint (S) look set for a battle of wills with some of Clearwire's (CLWR) minority shareholders, who want $5-8 a share for the 48.3% of the company that Sprint doesn't own. That's well above the latter's offer of $2.90, which it made yesterday, and a cap of $2.97 that Softbank has reportedly set. In case Sprint's bid fails, Clearwire is in talks about other strategic alternatives.
PPG boosts U.S. paint ops with $1.1B deal. PPG Industries (PPG) has agreed to acquire the North American decorative paints business of Akzo Nobel (AKZOF.PK) for $1.1B. The deal will increase PPG's U.S. market share to an estimated 28% from 15% and boost its challenge to Sherwin-Williams, which holds 36%. PPG may also be buying the unit, which sells the Glidden paint brand and recently became profitable, on the cheap: the price represent 0.7X of sales vs 1X for similar deals in the sector.
Adobe shares rise after earnings top the Street. Adobe (ADBE)climbed 6% in post-market trading after the company's FQ4 earnings beat analyst expectations and despite it providing FQ1 and FY 2013 guidance that's below forecasts. Net income jumped 28% to $222.3M, adjusted EPS came in at $0.61 and revenue was flat at $1.15B. Of particular note is the growth in Adobe's cloud-based subscription services, which rose to 17% of sales.
Pfizer mulls early 2013 IPO launch for animal-health ops. Pfizer (PFE) is reportedly thinking about launching the $4B IPO of its animal-health Zoetis unit in January or February, with a final decision to be based on market conditions. Pfizer is convinced that an IPO is the way to go, as the unit's hoped-for $20B valuation has priced it out of the range of potential strategic buyers.
Oregon set to debate Nike tax request. Nike (NKE) carries enough clout in Oregon that the state's legislature will go into a special session today to consider a strong request by the company to ensure that corporate taxes won't be raised in the future. Other states are reportedly trying to woo Nike with incentives as well.
iPhone 5 goes on sale in China. Only one person was standing outside the Apple (AAPL) store in Shanghai's financial district today, when the iPhone 5 went on sale for the first time in China. That's in contrast to the frenzy that accompanied the launch of the iPhone 4S. And although the new device will probably sell strongly, the lack of a deal with China Mobile (CHL), the country's largest operator, continues to hamper Apple.
Top Economic & Other News
Eurozone PMI still in contraction but hope springs eternal. While Chinese factory activity has started to expand again, eurozone PMI remains firmly in contraction, although manufacturing PMI did edge up to a nine-month high of 46.3 in December from 46.2 in November. The data is "consistent with euro area GDP falling for the third successive quarter," says Markit, but "growth is looking like an increasing possibility in the first half of next year, barring any surprises."
Eurozone PMI still in contraction but hope springs eternal. While Chinese factory activity has started to expand again, eurozone PMI remains firmly in contraction, although manufacturing PMI did edge up to a nine-month high of 46.3 in December from 46.2 in November. The data is "consistent with euro area GDP falling for the third successive quarter," says Markit, but "growth is looking like an increasing possibility in the first half of next year, barring any surprises."
CPI expected to have dropped 0.2% last month. Inflation data for November is due out this morning, with economists expecting that CPI fell 0.2%, well below October's gain of 0.1%. Lower pump prices and the reluctance of businesses to raise their prices amid the weak economy are thought to have offset increased food costs following the summer drought. Core CPI is seen up 0.2%.
Fitch affirms France's rating at AAA. Fitch has maintained France's rating at AAA, thereby remaining the only one of the Big Three agencies not to downgrade the country's debt. However, Fitch has kept France's outlook at negative and said the chance of a future cut is over 50%. The firm raised its forecast for France's 2014 debt-GDP ratio to 94% from 92% and warned that the new number is "at the limit" for a country with the highest rating.
Abe's LDP poised for victory in Japan. Japan is due to elect a new government on Sunday, with polls showing that the conservative Liberal Democratic Party (LDP) could win a big majority in the powerful, 480-seat lower house of parliament. LDP leader Shinzo Abe is in favor of more powerful monetary easing to pull Japan out of deflation and curb the strong yen. However, it's a policy that Yale economist Stephen Roachdoesn't think will work.
Japanese businesses get gloomier. Japan's business sentiment continued to worsen in Q4, the Tankan Index shows, with the large manufacturing index plunging to -12 from the -3 in Q3 and missing consensus of -10. Meanwhile, the large non-manufacturers diffusion index fell to four from eight.
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