Monday, March 30, 2015

Wall Street Breakfast: Greece Battles To Release Funds

52 comments  |  Includes: ABXBACBBYBCSCCTXAYCVXDDDUFRYGELY
Economy
After pulling away from a 12-year trough the last two weeks, the euro fell as low as $1.0830 (-0.6%) this morning hurt by the uncertainty of whether Greece would be able to strike a deal with its creditors before it runs out of cash. After sending a list of reforms to bailout monitors late last week, both sides held lengthy talks over the weekend, with Greece pledging to finalize the list by Monday. The proposals include measures to increase tax revenue and investment, and would raise some €3B, according to Greek officials. Athens' ATG stock index -1%.
Chinese stocks took off today after policy makers signaled the country had capacity to ease monetary policy and boost sluggish growth at the Boao Forum for Asia on Sunday. PBOC governor Zhou Xiaochuan outlined that China's policy makers had to be "vigilant" against the risk of disinflation and suggested that the nation had "room to act." China's central bank has already taken a series of easing steps since November, cutting interest rates twice and slashing banks' reserve requirements.
Russia, Australia, Denmark and the Netherlands have now become the latest countries to join the China-led Asian Infrastructure Investment Bank despite misgivings in Washington. China has set a March 31 deadline to become a founding member of the bank, which is seen as a significant setback to U.S. efforts to extend its influence in the region and balance China's growing financial clout and assertiveness. At least 35 countries will join the AIIB by the deadline, the bank's interim chief, Jin Liqun, said last Sunday.
Oil prices are heading south again as traders focus on whether Iran and six world powers will reach a deal that could add more crude to an already oversupplied market if sanctions against Tehran are lifted. Diplomats remain divided over the pace of easing sanctions on the Islamic Republic and the limits to be imposed on its nuclear program, but a deadline to find a preliminary agreement has been set for Tuesday, with a detailed accord coming by the end of June. Crude futures -2.3% to $47.76/bbl.
Stocks
Best Buy is planning to shutter its Canadian chain Future Shop in a move that will hurt its earnings by $0.10-$0.20 this year. Costing about $200M-$280M in restructuring charges, Best Buy (NYSE:BBY) said it will close 66 of its Future Shops and convert 65 of them into Best Buy outlets. The retailer also announced plans to spend $160M to improve its Canadian online operations, increase staffing at its remaining stores, and launch a range of home appliances.
Although it has not revealed what compromise it is seeking, Fidelity Investments, DuPont's (NYSE:DD) sixth largest shareholder, has put pressure on activist Trian Fund Management and the chemical conglomerate to reach a settlement over their "detrimental" proxy fight. Trian, which owns a 2.7% stake in DuPont, is pushing for the appointment of four of its own directors, including Nelson Peltz, at the company's annual shareholder meeting on May 13.
Argentina's securities regulator has suspended Citibank Argentina from conducting local market operations due to Citigroup's (NYSE:C) deal with holdout creditors who are embroiled in a legal battle with the South American nation. Economy Minister Axel Kicillof said on Wednesday the accord, in which Judge Thomas Griesa allowed the bank to process two debt payments in order to facilitate a smooth exit from its Argentine custodian business, violated local laws.
Top European and U.S. banks axed 59,000 jobs last year as they restructured, cut costs and moved further into digital banking, Reuters reports. The figure brings the total number of jobs lost across 24 banks in the last two years to 160,000. Notables: Barclays (NYSE:BCS) shed 7,300 jobs last year due to a three-year plan to cut 19,000 staff; RBS (NYSE:RBS) slashed 10,000 employees as it sold overseas businesses and trimmed its investment bank further; JPMorgan (NYSE:JPM) and BofA (NYSE:BAC) also made substantial job cuts as they worked through troubled mortgages and refinanced loans at lower rates.


In Asia's biggest block deal this year, Chevron (NYSE:CVX) has sold its entire stake in Caltex Australia (OTC:CTXAY), the country's biggest refiner, for A$4.7B ($3.7B). Offshore institutional investor demand for the 50% holding was strong, with bidding driving the final price to A$35 a share.
Eurocement, the second-largest shareholder in Holcim, plans to vote against the Swiss company's union with Lafarge (OTCPK:LFRGY) unless the financial terms of the deal are altered. Last week, the two cement companies salvaged their $44B merger with a revision to their agreement, saying Holcim (OTCPK:HCMLY) would offer 0.90 of one of its shares for each one of Lafarge, instead of a one-for-one swap. Eurocement alone can’t derail the deal, which requires the approval of two thirds of Holcim's shareholders at an extraordinary meeting (scheduled for May 8).
Volvo Cars is investing $500M in its first U.S. assembly plant, plugging a longstanding gap in the automaker's manufacturing base. While Volvo's (OTCPK:GELYF) global deliveries rose 9% last year, largely thanks to China, U.S. sales fell another 8% to 56,000 vehicles. The choice of the U.S. over Mexico - where several rivals have announced a series of plant investments - underlines Volvo's determination to "rebuild the brand" among American consumers, said Chief Executive Hakan Samuelsson.
Switzerland's Dufry has agreed to buy airport tax and duty free seller World Duty Free (OTC:WDFPF) in a deal that values the latter at about €3.6B ($3.9B), including debt. Dufry (OTCPK:DUFRY) will pay €1.3B, or €10.25 per share, for the Italian Benetton family's 50.1% stake in the airport retailer. The deal is the second high-profile foreign takeover of an Italian company in less than a week after ChemChina bought a majority stake in tire maker Pirelli (OTCPK:PPAMF) last Sunday.
Barrick Gold Chairman John Thornton received almost $13M in total compensation last year, up from $9.5M in 2013, raising more questions of executive pay at the world's largest gold miner. In yet another challenging year, Barrick's (NYSE:ABX) shares dropped around 35% in 2014, amid continued weakness in bullion prices and major write downs on the value of its assets. Thornton's compensation was also greater than the $7.3M and $4.5M awarded respectively to the company's joint chief executive officers, Jim Gowans and Kelvin Dushnisky.
Following months of regulatory examination, Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO) are expected to meet this week with members of the Federal Trade Commission ahead of a final decision by the agency on whether to allow the companies to merge. When the two U.S. cigarette makers announced their $25B deal last July, they sought to address potential regulatory concerns about competition by selling $7.1B in brands and other assets to Imperial Tobacco (OTCQX:ITYBY).
Horizon Pharma has agreed to acquire all of the issued and outstanding shares of Hyperion Therapeutics' (NASDAQ:HPTX) common stock for $46 per share in cash or approximately $1.1B on a fully diluted basis. "This transaction will be immediately accretive to adjusted EPS and we expect the contribution of orphan disease products, RAVICTI and BUPHENYL, to add approximately $100M to our adjusted EBITDA in 2016," announced Horizon Pharma (NASDAQ:HZNP) CEO Timothy Walbert. The proposed transaction has been unanimously approved by both companies' boards of directors.

Today's Markets:
In Asia, Japan +0.7% to 19411. Hong Kong +1.5% to 24855. China +2.6%to 3788. India +1.9% to 27976.
In Europe, at midday, London +0.5%. Paris +1.1%. Frankfurt +1.6%.
Futures at 6:20: Dow +0.7%. S&P +0.6%. Nasdaq +0.9%. Crude -2.3% to $47.76. Gold -1.1% to $1187.20.
Ten-year Treasury Yield -6 bps to 1.95%
Today's economic calendar:
8:30 Personal Income and Outlays
10:00 Pending Home Sales
10:30 Dallas Fed Manufacturing Outlook
3:00 PM Farm Prices
7:15 PM Stanley Fischer
Notable earnings before today's open: AIRCALM

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