Outstanding Performance Article RewardsWe're excited to announce our latest two Outstanding Performance award winners. Each author receives $2,500. Read more about our Outstanding Performance award winners here.
Winner #1: Long idea on SKX (Skechers) by Tansy Trading, published January 19, 2014. Return to date: +151.5%
Winner #2: Top short idea on CRRS (Corporate Resource Services) by ROIC1, published September 24, 2013. Return to date: +95.5%
Note: Both articles are part of the SA PRO equity research archive available exclusively to SA PRO subscribers. In honor of the awards, both articles will be available to all readers for 48 hours before returning into the archive.
Seeking Alpha is running its first-ever investment contest, rewarding the best ideas on large-cap stocks with $5,000 in prizes. We're accepting entries through March 15. Click here for more information.
Economy
Asian stocks rose on Monday after China cut interest rates by a quarter percentage point over the weekend, while a survey showed HSBC's PMI climbing from 49.7 to 50.7 in February, the strongest level since July. "Deflationary risk and the property market slowdown are two main reasons for the rate cut this time," said a central bank official. In the last few months, China has been showing further signs of flagging economic growth, with GDP dipping to 7.3% in Q4 - its slowest rate in over two decades, and CPI sliding to 0.8% in January - its weakest showing since late 2009.
In the biggest change to its monetary policy since opening up its economy more than two decades ago, India's central bank and finance ministry have agreed to introduce inflation targeting to rein in a long history of volatile price rises. The 4% inflation target for the 2016/17 fiscal year will be symmetrical, seeking to keep consumer price growth within two percentage points on either side of the central target.
Eurozone consumer prices fell for the third straight month in February, giving some encouragement to ECB policy makers as they prepare to meet in Cyprus on Wednesday and Thursday to set the stage for their new stimulus program. Eurostat said prices were 0.3% lower than in February 2014, having fallen 0.6% in January, while the unemployment rate across the eurozone fell to 11.2% in January, its lowest since April 2012.
U.K. manufacturing growth hit a seven-month high in February as domestic strength offset weakness in Britain’s main export markets. "This reinforces the picture of a broader growth revival in the U.K. so far in the opening quarter," said Markit's Rob Dobson, but warned that the upturn relied on the manufacture of consumer goods, rather than plant and machinery which would reflect improving business investment. Markit's PMI rose a full point to 54.1 from a revised 53.1 last month, beating all economists' forecasts.
Stocks
Citigroup executives are facing a critical hurdle this month, as they prepare for the institution's "stress test" results, FT reports. A year ago Citi (NYSE:C) became one of a handful of banks to have its capital plan rejected by the Fed, on the grounds that it had inadequate processes in place for assessing its capital needs in the event of a severe recession. If the bank were to fail again, CEO Mike Corbat, CFO John Gerspach and Brian Leach, head of risk, would be under strong pressure from investors to step down.
Citigroup executives are facing a critical hurdle this month, as they prepare for the institution's "stress test" results, FT reports. A year ago Citi (NYSE:C) became one of a handful of banks to have its capital plan rejected by the Fed, on the grounds that it had inadequate processes in place for assessing its capital needs in the event of a severe recession. If the bank were to fail again, CEO Mike Corbat, CFO John Gerspach and Brian Leach, head of risk, would be under strong pressure from investors to step down.
"Both the board and I believe we now have the right person to succeed me as CEO," writes Warren Buffett in his sizable annual letter to shareholders. In a separate letter from Charlie Munger, Berkshire’s (BRK.A, BRK.B) vice chairman suggests reinsurance head Ajit Jain or energy boss Greg Abel as worthy replacements. Dipping to $4.16B from $4.99B a year earlier, Berkshire posted a 16.7% decline in Q4 net profit over the weekend.
Putting pressure on U.S. rival Apple (NASDAQ:AAPL), Samsung Electronics (OTC:SSNLF) has unveiled the Galaxy S6 in a bid to reclaim its throne as the global smartphone leader. The S6's frame is made completely out of aluminum and uses Corning's (NYSE:GLW) Gorilla Glass 4 for front and back glass panels. Other features: Wireless charging support, a 16MP rear camera, and a mobile payment system which will use the technology of recently acquired startup LoopPay.
HTC is planning its first move into the crowded virtual reality market with a new headset called Vive, competing against Facebook's (NASDAQ:FB) Oculus Rift, Samsung's (OTC:SSNLF) Gear VR and Sony's (NYSE:SNE) Project Morpheus. The device will track head movements as precisely as one-tenth of a degree, and will include a Steam VR base station, which will let users walk around the virtual space instead of using a controller. HTC (OTC:HTCXF) has partnered with Valve Software on the platform, which will be made available to the public by the end of the year.
NXP Semiconductors has agreed to buy Freescale Semiconductor (NYSE:FSL), in an $11.8B deal that would create a large maker of chips for industries as varied as automobiles and mobile payments. Under the deal’s terms, NXP (NASDAQ:NXPI) will pay $6.25 per share in cash and 0.3521 of one of its shares for each Freescale share owned. The companies expect the deal to close in the second half this year. NXPI +8.4% premarket.
Nearly four years after Rebekah Brooks left News Corporation (NASDAQ:NWS) amid the phone-hacking scandal at the now-defunct U.K. tabloid the News of the World, the former executive is close to finalizing a deal to return to the company. The details of her exact role are still being discussed, but Brooks could end up in an executive position overseeing digital initiatives, WSJ reports.
Orange has been discussing a possible alliance with Telecom Italia (NYSE:TI), Orange's chief executive told the Journal de Dimanche. "There are no negotiations ongoing just exchanges of points of view between the two management teams," said CEO Stephane Richard. "It would be an attractive European consolidation opportunity." The news comes after a recent spate of deals in the European telecoms sector, with BT (NYSE:BT) buying EE from Orange/Deutche Telekom (OTCQX:DTEGY) and Hutchison Whampoa (OTCPK:HUWHY) purchasing O2 from Telefonica (NYSE:TEF).
British Airways owner IAG will make "concrete proposals" to the Irish government next week to try and convince it to sell its 25% stake in Aer Lingus (OTC:AIRXY), sources told the Sunday Business Post. The Irish government rebuffed IAG's (OTCPK:ICAGY) latest €1.36B bid last Tuesday, saying it needed more assurances on jobs and growth prospects before it would consider selling the stake.
Herbalife cut the pay of CEO Michael Johnson 36% for 2014 after he failed to meet performance goals, such as levels the company set for earnings per share and sales growth in 2014. Missing out on the $3.7M incentive plan compensation he received two years ago, Johnson received total compensation of $6.73M in 2014, down from $10.5M the prior year. HLF -1.2% premarket.
GlaxoSmithKline and Novartis have completed a series of asset swaps worth more than $20B that will reshape both drugmakers. Glaxo (NYSE:GSK) is forming a consumer health joint venture with Novartis (NYSE:NVS), while at the same time buying the Swiss company's vaccines business and selling Novartis its cancer drugs portfolio. Following completion of the transactions, Glaxo plans to return £4B ($6.16B) to shareholders.
Today's Markets:
In Asia, Japan +0.2% to 18827. Hong Kong +0.3% to 24887. China +0.8%to 3336. India +0.3% to 29459.
In Europe, at midday, London +0.2%. Paris -0.4%. Frankfurt +0.2%.
Futures at 6:20: Dow +0.2%. S&P +0.1%. Nasdaq +0.2%. Crude -1.1% to $49.21. Gold +0.3% to $1216.90.
Ten-year Treasury Yield -1 bps to 2%
Today's economic calendar:
8:30 Gallup US Consumer Spending Measure
8:30 Personal Income and Outlays
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
8:30 Gallup US Consumer Spending Measure
8:30 Personal Income and Outlays
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
Notable earnings before today's open: AMBC, ANFI, BID, ECYT, EMES,ENDP, EVEP, FSS, GTI, ICPT, JKS, LXU, MHR, NCT, OMG, PMC, SSE, SSYS,STNG, VGR
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