Wednesday, November 18, 2015

Wall Street Breakfast: World Equities Lower As French Police Raid Terrorist Hideout

  |  141 comments  |  Includes: AIQUF, AIRB, ARG, BAMXF, CAM, CP, DDAIF, F, GM, HL
Major global stock indices were flat-to-lower at the time of writing as investors stayed cautious amid news of a police raid in Paris on suspected terrorists (see below) and ahead of the release later today of the FOMC minutes from its meeting in late October. It's safe to assume that the document will be scrutinized for indications as to whether the Fed will raise interest rates in December.
Economy
Two suspected terrorists have been killed in a raid in the Parisian suburb of Saint Denis as police continued their search for those responsible for the attacks on Friday, with one of the suspects, a woman, detonating a suicide bomb. Security forces have also arrested seven people in the raid. Reuters reported that the suspects had planned an attack on the city's business district.
Argentine police have raided the country's central bank ahead of a presidential election on Sunday and amid a bitter dispute between bank President Alejandro Vanoli and opposition leader Mauricio Macri, who is leading in the polls. The raid was in response to Macri filing a criminal complaint against Vanoli and the bank's directors for allegedly breaching its charter by selling dollar futures contracts at below-market rates. Critics say the policy has put Argentina's dwindling foreign-currency reserves at risk, and could cause Macri major budgetary problems if he wins the election and fulfills his pledge to remove some forex controls and devalue the peso.
Stocks
Norfolk Southern will "carefully evaluate" Canadian Pacific Railway's (NYSE:CP) $28.4B acquisition offer, but has described the bid as "low-premium" and warned that it would face significant regulatory obstacles. Canadian Pacific is offering around $94.94 in cash and stock, or a 9% premium to Norfolk Southern's (NYSE:NSC) closing price of $87 yesterday.
Square is due to price its NYSE IPO later today in an offering that's being closely watched for what it means for the potential listings of other "unicorn" tech companies - those worth over $1B - such as Airbnb (Pending:AIRB) and Dropbox. Amid a difficult market for tech IPOs, Square (NYSE:SQ) set its price range at $11-13 a share, valuing the company at up to $4.2B, or 30% below its worth in a private fundraising round a year ago. Trading in the firm's stock is scheduled to start on Thursday.
Federal prosecutors are investigating executives at RBS (NYSE:RBS) and JPMorgan (NYSE:JPM) for their roles in the sales of allegedly flawed mortgage securities prior to the financial crisis, the WSJ reports. Investigators are attempting to establish if they can prove that the executives committed fraud by ignoring warnings from associates that they were filling their bond deals with too many dodgy mortgages. While major banks have had to pay billions of dollars in settlements over the financial crisis, there has been a notable lack of criminal convictions.
The Department of Justice has indicted executives of privately held USP Labs for criminal conspiracy to distribute toxic substances contained in their Jack3D dietary supplements and other products. The DOJ has also accused the company of altering its labeling and packaging regarding ingredients, and making false claims about the effectiveness of the products. Investors in rival Herbalife (NYSE:HLF) seem to be sanguine, with shares up 0.1% after-hours.
Air Liquide has agreed to acquire Airgas (NYSE:ARG) in the largest takeover in the industrial-gases sector in nine years. Air Liquide (OTCPK:AIQUF) is offering $143 a share for an enterprise value of ~$13.4B. The deal will make Air Liquide the world's biggest supplier of industrial gases and give it a dominant position in the U.S.
Wells Fargo has named Timothy Sloan as President and COO, setting him up as a potential successor to CEO John Stumpf. In addition to his new role, Sloan will continue to lead Wells Fargo's (NYSE:WFC) wholesale banking business. Stumpf will turn 65 in 2018, and under company rules, all senior executives must retire by Dec. 31 of the year in which they reach that age.
Ford is set to unveil the latest version of its luxury car the Lincoln MKZ at the Los Angeles Auto Show later today. The 2017 MKZ features a new grille design, a three-liter turbo-charged engine, 400 horsepower vs 300 HP on the current model, and an all-wheel drive system. With the MKZ, Ford (NYSE:F) competes with GM's (NYSE:GM) Cadillac ATS, BMW's (OTCPK:BAMXF) 3-series, Daimler's (OTCPK:DDAIF) Mercedes-Benz C-Class and Audi's (OTCQX:VLKAF) A4 in the $36,000-$50,000 price category.
New York Attorney General Eric Schneiderman has included Yahoo (NASDAQ:YHOO) in his investigation into the multibillion-dollar daily fantasy sports industry, Reuters and the NYT report, and has issued the company with a subpoena. Yesterday, Schneiderman filed for a temporary injunction to shut down industry leaders DraftKings and FanDuel, arguing that they facilitate illegal gambling.
The Justice Department has unconditionally approved Schlumberger's (NYSE:SLB) $12.7B proposed purchase of Cameron International (NYSE:CAM), putting the companies on track to close the deal early next year. Cameron shareholders are expected to vote on the transaction on December 17; approval is not needed from Schlumberger's shareholders.
Today's Markets 
In Asia, Japan +0.1% to 19649. Hong Kong -0.3% to 22188. China -0.4% to 10609. India -1.5% to 25483.
In Europe, at midday, London -0.3%. Paris -0.9%. Frankfurt -0.7%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq flat. Crude +1.8% to $41.40. Gold flat at $1068.40.
Ten-year Treasury Yield flat at 2.27%.
Today's Economic Calendar
Companies reporting earnings today
Source: http://seekingalpha.com/article/3694586-wall-street-breakfast-world-equities-lower-as-french-police-raid-terrorist-hideout
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