55 comments | Includes: BBRY, BP, DB, ENDP, GE, HCMLY, IBM, JPM, KKR, LFRG
Outstanding Performance Article Rewards
Seeking Alpha awards two authors $2,500 each in prizes every week to reward great calls that played out well. We're excited to announce this week's Outstanding Performance Award Winners here.Winner #1: Long idea on GFI Group (NYSE:GFIG) by Esekla, published in October 2013. Return to date: +67%
Winner #2: Top short idea on Clearfield (NASDAQ:CLFD) by Brendan Rose, published in February 2014. Return to date: +33.4%
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.
Economy
With the dollar hitting fresh 12-year highs and growing concerns that the U.S. might run out of oil storage, U.S. crude fell for a fifth day, dropping to its lowest intraday price since March 2009. As the dollar index stayed above the key 100 level, crude futures lost as much as 2.8% to $43.57 a barrel, closely following the IEA's prediction on Friday that tanks in the U.S. may become full this year as drilling-rig cuts fail to slow production.
With the dollar hitting fresh 12-year highs and growing concerns that the U.S. might run out of oil storage, U.S. crude fell for a fifth day, dropping to its lowest intraday price since March 2009. As the dollar index stayed above the key 100 level, crude futures lost as much as 2.8% to $43.57 a barrel, closely following the IEA's prediction on Friday that tanks in the U.S. may become full this year as drilling-rig cuts fail to slow production.
Chinese shares rose over 2% today, reaching five-year-highs, after Premier Li Keqiang announced that the country is prepared to take action to stimulate the economy if needed. The government has a "host of policy instruments" at its disposal and will not hesitate to use them if the slowdown causes widespread unemployment or a drop in incomes, said Li on Sunday. China's GDP dipped to 7.3% last quarter - its slowest rate in over two decades, while the country's central bank cut interest rates twice in the last four months.
The euro recouped its earlier losses after briefly touching a new 12-year low against the dollar in Asia trade, but further slides in the currency looked likely given the diverging monetary policies in the eurozone and U.S. Ahead of the FOMC scheduled to end Wednesday, the euro was up 0.4% at $1.0536 after hitting $1.0457, its lowest since January 2003, while European shares extended gains powering Germany's DAX past 12,000 for the first time. Nearly all now believe that Fed policy setters will remove the word "patient" from their statement, opening the door for a rate increase in June.
Brazil's government will present a package of anti-corruption measures after more than 1 million people, some of them calling for President Rousseff's impeachment, took to the nation's streets yesterday. Higher taxes and increased prices for government-regulated items are rankling Brazilians as the biggest corruption scandal in the country's history ensnares powerful figures in her governing coalition. Brazil’s currency tumbled to the weakest level in 12 years on Friday, while the benchmark Ibovespa stock index has declined 15%since Rousseff was re-elected last October.
Due to growing pressure from congressional Republicans, the FTC is revising procedures for challenging mergers it believes are anti-competitive. Under the new rules, if the FTC doesn’t win an injunction from a federal judge it will suspend the previously automatic in-house trial proceedings upon request of the merging entities. The shift doesn’t force the FTC to abandon its case, but it could make it harder for the agency to continue with its challenge if it loses in federal court.
Stocks
In one of the biggest deals in the Asia-Pacific region so far this year, a consortium of KKR (NYSE:KKR), Varde Partners and Deutsche Bank (NYSE:DB) has agreed to buy GE (NYSE:GE) Capital's Australian and New Zealand consumer lending arm for about $A8.2B ($6.26B). The move comes after General Electric disposed of its appliances unit, real estate holdings and a stake in NBCUniversal, and shed more of its banking businesses to return to its industrial focus.
In one of the biggest deals in the Asia-Pacific region so far this year, a consortium of KKR (NYSE:KKR), Varde Partners and Deutsche Bank (NYSE:DB) has agreed to buy GE (NYSE:GE) Capital's Australian and New Zealand consumer lending arm for about $A8.2B ($6.26B). The move comes after General Electric disposed of its appliances unit, real estate holdings and a stake in NBCUniversal, and shed more of its banking businesses to return to its industrial focus.
Federal authorities investigating last summer's data breach at JPMorgan (NYSE:JPM), which exposed the contact information of 83M customers, are increasingly confident that a criminal case will be filed against the hackers in the coming months, sources told the NYT. Officials believe that several of the suspects are "gettable," meaning that they live in a country with which the U.S. has an extradition treaty. That would exclude countries like Russia.
Tesla will present a software update to its Model S vehicle at a news conference on Thursday that is designed to allay fears that drivers will run out of power for their cars, Elon Musk declared on Sunday. "Tesla (NASDAQ:TSLA) press conf at 9am on Thurs. About to end range anxiety ... via OTA software update. Affects entire Model S fleet," Musk said in a tweet.
BlackBerry has announced that its SecuTablet, launched in partnership with Samsung (OTC:SSNLF) and IBM (NYSE:IBM), will be made available by this summer. The $2,380 high-security tablet is based on Samsung's Galaxy Tab S 10.5 Android tablet, and contains encryption and anti-eavesdropping technology developed by the company's German Secusmart unit. BlackBerry (NASDAQ:BBRY) is aiming the device at enterprise and government clients.
Looking to expand its television broadcasting businesses in Europe, Scripps Networks (NYSE:SNI) has agreed to buy a 52.7% stake in Polish broadcaster TVN for €584M ($613.8M). The company will also assume €840M of debt and start a mandatory tender offer to increase its stake as required under Polish law.
A new round of Egyptian investment is kicking off after Siemens (OTCPK:SIEGY) said it had signed deals and MOUs worth €10B with Egypt that would help expand its power generation capacity by as much as one-third by 2020. PepsiCo (NYSE:PEP) has earmarked $500M for planned investment in the country, while General Electric (GE) announced on Friday it would invest $200M in a manufacturing and training facility in Suez City.
Meanwhile, BP has signed an agreement to invest $12B in Egypt that will produce 3B barrels of oil equivalent. The deal, finalized at an international investment conference in the Sharm El-Sheikh resort, will help the country tackle its worst energy crisis in decades. Over the weekend, BP (NYSE:BP) was also hit with the news that the U.S. government appealed Judge Carl Barbier's January ruling on the size of its 2010 Gulf of Mexico oil spill, which reduced the potential penalty the company must pay by almost $4B.
Holcim has proposed changes to its planned merger with Lafarge that include a modification of their proposed share-exchange ratio and management structure, Bloomberg reports. While the original ratio was 1:1, Holcim (OTCPK:HCMLY) is now proposing that Lafarge (OTCPK:LFRGY) adopt a 0.875 weighting and Lafarge has signaled it will counter with a weighting of 0.93. Lafarge CEO Bruno Lafont had been picked to lead the combined company, which will be the world’s largest cement maker with $44B in annual sales.
Endo International, which is in a bidding war with Valeant Pharmaceuticals (NYSE:VRX) for Salix Pharmaceuticals (NASDAQ:SLXP), believes it could close a takeover within as little as five weeks of a negotiated deal. The timing is possible because under Irish law, there is only a minimum of 17 days required between mailing proxy materials and holding a shareholder meeting. Endo's (NASDAQ:ENDP) $11.2B proposal is also not subject to financing conditions.
Seeking to contain a virulent strain of avian flu, U.S. authorities are weighing tougher restrictions in Arkansas in a bid to minimize international trade disruptions and contain the virus in the heart of America's poultry region. The H5N2 flu discovered last week is the state's first case of a strain that causes massive internal hemorrhaging in poultry, can kill nearly every bird in an infected flock within 48 hours, and is likely to impact chicken stocks and prices.
Today's Markets:
In Asia, Japan flat at 19246. Hong Kong +0.5% to 23950. China +2.2% to 3449. India -0.2% to 28438.
In Europe, at midday, London +0.5%. Paris +0.8%. Frankfurt +1%.
Futures at 6:20: Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude -0.6% to $44.58. Gold +0.4% to $1157.10.
Ten-year Treasury Yield +2 bps to 2.11%
In Asia, Japan flat at 19246. Hong Kong +0.5% to 23950. China +2.2% to 3449. India -0.2% to 28438.
In Europe, at midday, London +0.5%. Paris +0.8%. Frankfurt +1%.
Futures at 6:20: Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude -0.6% to $44.58. Gold +0.4% to $1157.10.
Ten-year Treasury Yield +2 bps to 2.11%
Today's economic calendar:
8:30 Empire State Mfg Survey
9:15 Industrial Production
10:00 NAHB Housing Market Index
4:00 PM Treasury International Capital
8:30 Empire State Mfg Survey
9:15 Industrial Production
10:00 NAHB Housing Market Index
4:00 PM Treasury International Capital
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