Top StoriesDetroit restructuring plan set to be unveiled. Detroit emergency manager Kevyn Orr is due to unveil his restructuring plan for the debt-laden city today to unions, bondholders and bond insurers, including MBIA (MBI) and Assured Guaranty (AGO). Orr will reportedly try to persuade creditors to accept as little as 10 cents on the dollar for the city's debt. He has indicated that creditors would be far better off compromising now than taking their chances with a bankruptcy filing.
Hilsenrath: Tapering doesn't mean end of QE. The WSJ's Jon Hilsenrath, who seems to have the inside track at the Fed, yesterday quoted officials as saying that a tapering of asset purchases doesn't mean an end to asset purchases, and a hike in short-term interest rates isn't anywhere close to being on the radar at this point. The report helped Wall Street to close higher, although stock futures were lower premarket.
Airbus A350 takes off on maiden flight. Airbus' (EADSF.PK) A350 wide-bodied jet has taken off from the company's Toulouse factory on its maiden flight after eight years of development that has cost an estimated $15B. Built with lightweight carbon composites and boasting increased fuel efficiency, the A350 is seen as a direct competitor to Boeing's (BA) troubled 787 and its 777. The A350 has so far attracted over 600 orders.
Top Stock News
Asian stocks rally as pattern repeats itself. Asian stocks fall sharply and then recover some but not all of their losses a day or so later. That seems to have been a recurring pattern over the past few weeks since the great global sell-off began, particularly with Japan, and the past couple of days have been no different. Today, stocks in Asia, as well as in Europe, were supported by Jon Hilsenrath's Fed report.
Asian stocks rally as pattern repeats itself. Asian stocks fall sharply and then recover some but not all of their losses a day or so later. That seems to have been a recurring pattern over the past few weeks since the great global sell-off began, particularly with Japan, and the past couple of days have been no different. Today, stocks in Asia, as well as in Europe, were supported by Jon Hilsenrath's Fed report.
U.K. seeks info from Citi, Deutsche Bank in forex probe. The U.K.'s Financial Conduct Authority (FCA) has reportedly sent requests for information to Deutsche Bank (DB), Citigroup (C) and two other banks as part of an investigation into the possible manipulation of the $4.7T-a-day forex market, which is the biggest and one of the least regulated in the financial system. The FCA and other regulators are also looking to increase oversight of the market.
HD Supply to raise up to $1.33B in IPO. Looking to benefit from the housing rebound, HD Supply plans to raise up to $1.33B in its IPO by selling 53.2M shares, or about 29% of the company, for $22-25 each. At the midpoint of the range, the building supplies firm would have an enterprise value of $8.67B, including a working-capital surplus of about $1.2B. HD Supply's owners include Carlyle Group (CG) and former parent company Home Depot (HD), which has a 12.5% stake.
Visa sues Wal-Mart in swipe-fee battle. Visa (V) is suing Wal-Mart (WMT) to stop the retail giant from seeking more damages over interchange fees as opposed to accepting a $7.25B settlement. Wal-Mart was one of 19 retailers that said last month it would opt out of the agreement, arguing that it would "allow credit card companies and big banks to perpetuate an unfair and broken system that costs all consumers."
Berkshire enters property & casualty market. Berkshire Hathaway's (BRK.A, BRK.B) new commercial property & casualty insurance unit has commenced operations, having poached four P&C executives from AIG (AIG) last month. Based out of Boston, Berkshire's new business is "focused primarily on U.S. excess and surplus lines insurance, due to the growing importance of this market segment."
T-Mobile, Verizon Wireless shielded from NSA program - sort of. T-Mobile USA (DTEGF.PK) and Verizon Wireless (VZ, VOD) are reportedly not part of the NSA's program to collect metadata about the phone calls on their networks, partly due to their ownership ties to foreign companies. However, it's likely that the NSA is still able to scoop up the metadata that the mobile carriers generate, as the calls eventually travel on infrastructure operated by U.S. companies that do work with the NSA.
Top Economic & Other News
BOE deputy governor quits after missing out on top job. Bank of England Deputy Governor Paul Tucker has resigned and will probably leave the BOE in the autumn. Tucker's departure comes after he lost out to Mark Carney for the top job at the bank, and after he faced questions about his role in the scandal over Libor manipulation. Given Tucker's involvement on international committees, his resignation could lead to a loss of influence for the BOE.
BOE deputy governor quits after missing out on top job. Bank of England Deputy Governor Paul Tucker has resigned and will probably leave the BOE in the autumn. Tucker's departure comes after he lost out to Mark Carney for the top job at the bank, and after he faced questions about his role in the scandal over Libor manipulation. Given Tucker's involvement on international committees, his resignation could lead to a loss of influence for the BOE.
Eurozone inflation continues to be tame. As expected, Eurozone inflation rose to 1.4% on year in May from 1.2% in April, while the core reading increased to 1.2% from 1%. Inflation is well below the ECB's target of just under 2% and even verges on deflation in Greece, where it was -0.3%. Meanwhile, eurozone employment fell 0.5% on quarter in Q1 to 145.1M vs -0.3% in Q4 2012. The inflation and jobs data could theoretically give the ECB good reasons to ease policy if it so wished.
Indian inflation continues to fall. India's wholesale price index (WPI), the country's main inflation gauge, slowed to a 3 1/2 year low of +4.7% on year in May from +4.9% in April. Inflation has been dropping over recent months, partly due to the Reserve Bank of India's tight monetary policy. The RBI is due to hold a policy meeting next week, when it will be under pressure to cut interest rates from 7.25% because of the falling WPI and stuttering economy, and despite the weak rupee.
OECD: G20 GDP rises 0.7% in Q1 but variations great. GDP in the G20 edged up 0.7% in Q1 vs +0.6% in Q4 2012, although the patterns across the world's 20 largest economies diverged significantly. India, China, South Africa and Mexico slowed, while GDP continued to contract in France and Italy, although at a reduced pace.
Stock Movers and Great Calls
1) Spreadtrum Communications (SPRD) soared 10.7% in yesterday's trading after the company hiked Q2 revenue guidance Wednesday. On Monday, Ashraf Eassa cited SPRD as a beneficiary of surging low-end smartphone demand.
2) On March 27, Investing 501 called Body Central (BODY) cheap for a reason, pointing out its cash-backed valuation and the potential for a turnaround or activist investor involvement. Since then, BODY is up 37%.
1) Spreadtrum Communications (SPRD) soared 10.7% in yesterday's trading after the company hiked Q2 revenue guidance Wednesday. On Monday, Ashraf Eassa cited SPRD as a beneficiary of surging low-end smartphone demand.
2) On March 27, Investing 501 called Body Central (BODY) cheap for a reason, pointing out its cash-backed valuation and the potential for a turnaround or activist investor involvement. Since then, BODY is up 37%.
Alpha-Rich Stocks to Watch
1) Ellie Mae (ELLI). Despite sector leadership, ELLI trades at a discount. As management exceeds conservative guidance, that should change.
2) Smith & Wesson (SWHC). As the recent surge in gun buying burns out, SWHC's valuation could be vulnerable to a big downside.
1) Ellie Mae (ELLI). Despite sector leadership, ELLI trades at a discount. As management exceeds conservative guidance, that should change.
2) Smith & Wesson (SWHC). As the recent surge in gun buying burns out, SWHC's valuation could be vulnerable to a big downside.
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Today's Markets:
In Asia, Japan +1.9% to 12687. Hong Kong +0.4% to 20969. China+0.6% to 2162. India +1.9% to 19178.
In Europe, at midday, London -0.2%. Paris +0.3%. Frankfurt +0.4%.
Futures at 7:00: Dow -0.1%. S&P -0.2%. Nasdaq -0.1%. Crude +0.4%to $97.06. Gold +0.1% to $1378.80.
In Asia, Japan +1.9% to 12687. Hong Kong +0.4% to 20969. China+0.6% to 2162. India +1.9% to 19178.
In Europe, at midday, London -0.2%. Paris +0.3%. Frankfurt +0.4%.
Futures at 7:00: Dow -0.1%. S&P -0.2%. Nasdaq -0.1%. Crude +0.4%to $97.06. Gold +0.1% to $1378.80.
Today's economic calendar:
8:30 Producer Price Index
8:30 Current Account
9:15 Industrial Production
9:55 Reuters/UofM Consumer Sentiment
8:30 Producer Price Index
8:30 Current Account
9:15 Industrial Production
9:55 Reuters/UofM Consumer Sentiment
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