symbol
stringlengths 1
9
| title
stringlengths 1
701
| text
stringlengths 1
140k
|
|---|---|---|
C | UPDATE 1 Citi hires RBS s Khoo as MD for Asia Pacific FIG | Citi s third key FIG hire in the past month
Khoo previously worked at RBS JP Morgan
Adds details background
HONG KONG April 20 Reuters Citigroup Inc hired
David Khoo as managing director Asia Pacific financial
institutions group FIG from Royal Bank of Scotland Group Plc
as the U S bank further boosts its investment banking
capabilities in the region
With this Citi has hired three managing directors to its
Asia Pacific FIG team over the past month
Last month Citi poached Jeff Emmanuel from UBS AG
and hired Brian McCullough from PacBridge Capital Partners as it
builds its team under FIG co heads Simon Yoo and Jong Zhao
Khoo comes to Citi after more than eight years with RBS
where he was most recently managing director and head of
Southeast Asia FIG the statement said Prior to that he worked
with J P Morgan
Capital raising by Asian banks and insurance companies is a
big fee earner for investment banks operating in the region
After a busy year financials had a slow start in 2011 and
was the fourth most active industry group in overall capital
raisings in Asia
Last year FIG accounted for more than a third of the total
capital raisings in Asia according to Thomson Reuters data
Khoo has previously worked on advising AMMB Holdings
on the stake sale to Australia and New Zealand Banking
Group Ltd and as a sell side adviser in Bank Permata s
sale to Stanchart and BII s sale to Temasek Holdings
Reporting by Denny Thomas Editing by Chris Lewis and Vinu
Pilakkott |
C | Asia stocks boosted by U S earnings Nikkei up 0 8 | Investing com Asian stock markets were broadly higher on Thursday as market sentiment was boosted by robust corporate earnings from U S companies including Apple while commodity linked shares gained after metal and oil prices advanced During late Asian trade Hong Kong s Hang Seng Index climbed 0 9 South Korea s Kospi Composite jumped 1 3 while Japan s Nikkei 225 Index gained 0 82 Consumer electronics giant Apple reported first quarter profit that almost doubled after U S markets closed on Wednesday thanks to surging sales of iPhones and iPads Apple linked shares performed strongly on the news Fanuc which supplies tools used to make the iPhone added 0 85 Toshiba jumped 1 9 while Hitachi rose 2 95 Also Wednesday the world s largest producer of mobile phone chips Qualcomm posted earnings that topped expectations citing booming demand for smartphones Elpida Memory Japan s leading manufacturer of phone chip memory cards surged 3 6 while rival Renesas Electronics advanced 2 45 Earlier in the day Citigroup said in a report that they remained bullish on the prospects for Japanese equities in the medium term We expect foreigner buying to continue based on low valuations and a recovery in the global economy and global stock prices the bank said in a report In Hong Kong commodity related shares led gains after gold prices rose to a new record high and oil prices re approached a two and a half year high The nation s largest oil and gas producer PetroChina saw shares jump 1 3 shares in rival China Shenhua Energy rose 1 6 while China s largest copper producer Jiangxi Copper soared 5 4 The outlook for European equity markets meanwhile was upbeat The EURO STOXX 50 futures pointed to a gain of 0 45 France s CAC 40 futures indicated an increase of 0 6 the FTSE 100 futures pointed to a rise of 0 4 while Germany s DAX futures advanced 0 45 Later in the day the U S was to publish official data on initial jobless claims and house prices Also Thursday the Federal Reserve Bank of Philadelphia was to publish an index of manufacturing activity |
C | UPDATE 2 Citi denies wrongdoing as Greece probes debt email | Greece says probe launched into Citi email
Citi says no wrongdoing by the bank or employees
Email cites increased noise over debt restructuring
Adds detail background
By Lefteris Papadimas and Douwe Miedema
ATHENS LONDON April 21 Reuters Citigroup said it had
done nothing wrong after Greece launched a probe into market
rumours about an imminent restructuring of the country s
sovereign debt that had hit Greek bank stocks
Greek banks dropped 4 6 percent on Wednesday with traders
citing an email that said the country could restructure its debt
as soon as this weekend showing how nervous investors are about
Greece
Greek government and court officials said on Thursday that a
prosecutor had launched an investigation prompted by an e mail
sent by a employee of Citigroup the third largest U S bank
The prosecutor is investigating this particular email and
the person who sent it because it spread false rumours with an
effect on the stock market a court official said speaking on
the condition of anonymity
In defiance of market sentiment Greek European Union and
International Monetary Fund officials have said the country will
not restructure its debt A strong majority in a Reuters poll is
saying Greece will do just that in the next two years
Citi said the bank and its employees were not to blame We
are cooperating with the authorities and do not consider there
to have been any wrongdoing by Citi or its employees the bank
said in an emailed statement
The email the content of which was forwarded to Reuters and
confirmed by Citi cites increased noise over a Greek debt
restructuring as early as this Easter weekend and notes how
spreads in the bond market were widening
A time stamp on the e mail which was also published in
Greek newspaper Imerisia showed it was sent at 1342 GMT some
20 minutes after an already declining market started losing
ground more rapidly
Greek five year Credit Default Swaps CDS an indicator
of the risk of default of an underlying bond hit fresh record
highs on Wednesday with markets citing a lingering perception
of an upcoming restructuring
It s understandable that the minister tries to quell
rumours I would do the same in his place But there s no way
the rumours will stop with actions like this a trader said
speaking on the condition of anonymity
It is the second time in a few months that Greek prosecutors
leapt into action on suspicion that unsubstantiated e mails
caused jitters on the local bourse
Earlier this year authorities arrested a jobless man on the
charge of spreading rumours about a Greek bankruptcy in an
e mail he sent from an internet cafe to banks and media He is
facing misdemeanour charges
Additional reporting by Harry Papachristou in Athens and
Dominic Lau in London Editing by Erica Billingham |
C | GRAINS Weather woes send wheat to 2 month high corn jumps | Harsh weather threatens wheat and corn output
Drought trimming US HRW wheat prospects
Wet weather slows US Canada spring wheat seedings
Wet weather stalling US corn plantings
Coming up USDA s weekly crop progress report
Recasts to include close of U S trading session adds
details and quotes on crop weather
By Sam Nelson
CHICAGO April 25 Reuters U S wheat jumped 3 percent
to a two month high on Monday and corn rose 3 percent notching
its biggest percentage gain in three weeks as harsh weather
threatened production of both crops
It s all weather The two week forecast doesn t look good
for corn planting It indicates we could lose corn acreage
said Terry Reilly an analyst for Citigroup
Soybean prices rose on spillover buying from the big gains
in wheat and corn
While drought is damaging the U S winter wheat crop and
threatening production levels excessively wet weather is
hampering spring seedings of wheat and corn
Corn planting has stalled as a result of the heavy rains
The active rains should continue across the Midwest and
northern Delta through mid week keeping fieldwork stalled and
flooding prevalent said Don Keeney agricultural meteorlogist
for MDA EarthSat Weather
The U S Department of Agriculture was scheduled to release
its updated weekly crop progress report Monday afternoon
Analysts on average expected U S corn plantings at 13
percent below the five year average of 22 percent and well
below the 50 percent planted at this time a year ago
Although plantings are behind schedule there is still time
for farmers to plant corn and realize good yield per acre As a
general rule corn yield potential should not decline until
plantings are delayed past mid May
CBOT wheat for May delivery was up 26 1 2 cents per bushel
at 8 26 May corn was up 25 1 4 at 7 62 1 2 and May soy was
up 9 cents at 13 89 1 2
Wheat prices are now less than 7 percent below their
post 2008 peak from February Corn is struggling to restart its
nearly year long rally that topped out several weeks ago with
signs of demand rationing in the ethanol and feed industries
Keeney said a few showers would move through the U S
Plains winter wheat region this week but the rainfall would be
limited
A dry pattern is expected to return to the central and
southern Plains by next week which will allow moisture shortage
and stress to increase once again he said
Kenney also said current dry weather is a problem for crops
grown in the North China Plain and in central and northwest
Europe
Reporting by Sam Nelson additional reporting by Mark
Weinraub and Suzanne Cosgrove in Chicago editing by Jim
Marshall |
C | European stocks advance as UBS rallies DAX up 0 4 | Investing com European stock markets advanced on Tuesday as strong corporate earnings results from Swiss banking giant UBS boosted shares in the financial sector while U S futures indexes pointed to a higher open on Wall Street During European morning trade the EURO STOXX 50 climbed 0 5 France s CAC 40 rose 0 45 while Germany s DAX 30 advanced 0 4 Switzerland s largest bank UBS saw shares rally 5 8 after it reported first quarter net income totaled CHF1 81 billion beating expectations of CHF1 69 The firm said inflow of cash from wealthy clients had rebounded to the highest levels since 2007 signaling improving confidence in its private banking arm The upbeat results boosted other shares across the sector with Deutsche Bank climbing 1 15 Banco Santander gaining 1 6 while BNP Paribas added 0 8 Meanwhile Dutch financial service group Aegon saw shares jump 3 9 after it agreed to sell its Transamerica Reinsurance unit to French insurer Scor for approximately EUR625 million Shares in Italian dairy giant Parmalat soared 11 85 after privately held French dairy company Groupe Lactalis announced that it launched a EUR3 4 billion takeover bid for the Italian company Lactalis already owns a 29 stake in Parmalat In London the FTSE 100 edged 0 3 higher led by gains in the technology sector Chip manufacturer ARM Holdings saw shares jump 2 after Citigroup upgraded the stock and raised its price target Software developer Autonomy which posted better than expected first quarter earnings results last week climbed 1 9 Meanwhile shares in oil and gas giant British Petroleum added 0 75 as investors positioned themselves in the stock ahead of its quarterly earnings report due out on Wednesday The outlook for U S equity markets meanwhile was upbeat ahead of earnings reports from Coca Cola Ford as well as online retailer Amazon The Dow Jones Industrial Average futures pointed to a gain of 0 2 S P 500 futures indicated a rise of 0 3 while the Nasdaq 100 futures added 0 25 Later in the day the U S was to publish reports on house price inflation and consumer confidence as well as official data on manufacturing activity in Richmond |
C | UPDATE 2 Bulgaria opens tender to sell cigarette maker | Strategic financial investors invited to buy Bulgartabak
Winner expected to be picked up in September
Price purchase of local tobacco key for successful bidder
Adds detail background
SOFIA April 26 Reuters Bulgaria opened a long delayed
tender to sell its majority stake in state cigarette maker
Bulgartabak as it tries to boost public revenue and ensure a
market for Bulgarian tobacco
The privatisation agency invited strategic and financial
investors to buy tender documents by June 10 Binding offers
have to be filed by August 28 the agency said on Tuesday
The Balkan country is offering to sell its 79 8 percent in
the company which has two cigarette mills and a tobacco
processing unit The remaining 20 2 percent is already floated
on the Bulgarian Stock Exchange
Bulgaria has been slow to offload state assets fearing it
may lead to serious job losses and a spike in social discontent
But it also needs the proceeds to cut its fiscal deficit to
2 5 percent of gross domestic product this year from 3 9 percent
in 2010 and avoid pressure on its currency peg to the euro
The government had pledged to sell Bulgartabak by the end of
2009 in an open auction but the plan failed to attract investor
interest and the cabinet hired Citigroup to structure a deal
estimated to be worth 100 million euros 145 3 million
The sale aims to keep and develop the activities of the
company ensure a market for Bulgarian tobacco and attract
investment privatisation agency head Emil Karanikolov said
Japan Tobacco the world s No 3 cigarette maker Korea based
Kt G and Philip Morris as well as several financial investors
have expressed initial interest in the deal Karanikolov told
reporters
The winner to be picked in September would be obliged to
buy out about 60 000 tonnes of Bulgarian tobacco a year for its
production for at least five years Karanikolov said
This will be the fourth attempt to sell the holding which
was first slated for sale 10 years ago Analysts have said
political bickering and interest groups benefiting from
lucrative cigarette smuggling and state financed contracts with
the company have blocked a deal
The sale is also politically sensitive because many of the
Balkan country s ethnic Turks who make up about 10 percent of
the population of 7 4 million are tobacco growers
The cabinet has recently signed a deal to provide 143
million levs 106 2 million in subsidies to tobacco growers
for this and next year
We are trying to ensure a market for Bulgarian tobacco If
the price was the only target Bulgartabak should have been sold
a long time ago But we have a number of economic and social
challenges here Karanikolov said
Bulgartabak holds a dominant market share of 37 percent and
posted a profit of 5 8 million levs 4 3 million for 2010
Reporting by Tsvetelia Tsolova and Irina Ivanova Editing by
Jon Loades Carter
1 0 6883 euro 1 346 leva |
C | Strong earnings help FTSE hit 9 week closing high | FTSE up 0 9 percent highest close since Feb 18
Earnings from Ford and UBS help spur gains
Technology firms gain ARM results eyed
By David Brett
LONDON April 26 Reuters Britain s FTSE 100 closed at
its highest level in over two months on Tuesday albeit in light
volumes as earnings from the U S and Europe supported gains
ahead of results from UK companies such as ARM and BP
The blue chip FTSE 100 closed up 0 9 percent at 6 069 36
with volumes still thin after the four day Easter weekend and
ahead of another four day holiday weekend starting with the
Royal Wedding on Friday
Index volumes were just 66 percent of their 90 day average
Forecast beating earnings from both UBS and Ford Motor Co
have continued the positive theme emanating out of company
earnings recently to support equity markets Joshua Raymond
market strategist at City Index said
Technology stocks were a feature following recent results
from U S peers including Apple and some upbeat broker comment
ARM Holdings which reports first quarter results on
Wednesday rose 3 4 percent as Citigroup raised its target price
on the British firm in a preview of upcoming first quarter
results from European semiconductor groups
Enterprise search software maker Autonomy Corp added 0 6
percent as Goldman Sachs Investec Canaccord Adams all raised
their target prices for the firm whose first quarter results
beat market forecasts on Thursday
Given the strong start to the year and correspondingly
strong commit backlog metrics consensus expectations continue
to look very conservative to us Goldman says in a note
Of the 17 FTSE 100 companies due to report in the current
quarterly earnings season 18 percent have already done so with
67 percent missing estimates with an average negative surprise
of 1 1 percent according to Thomson Reuters data
IT firm Micro Focus International jumped 6 8 percent after
saying it had received a takeover approach
FED EYED
Slightly weaker were the miners pausing following their
strong performance over the last three sessions and ahead of the
U S Federal Reserve meeting on Tuesday
The Fed s quantitative easing programme has fuelled bumper
gains for a range of commodities so comments around the Fed
meeting will be closely watched for hints it could tighten
policy quicker than expected
U S consumer confidence rose in April as inflation
expectations eased somewhat a private sector report showed
In the UK integrated oils added the most points to the
index with heavyweight Royal Dutch Shell up 1 2
UBS named the oil major as a top pick in the sector on
valuation grounds and remained positive on the prospects for the
integrated oils share prices
BP gained 0 8 percent ahead of first quarter results due on
Wednesday
Drugmaker GlaxoSmithKline and UK bank Barclays both due to
report earnings in the next session added 1 percent each
International Airlines Group climbed 4 5 percent as UBS
named it the top pick among flagship carriers saying shares in
European airlines could rise if the oil price stabilised and
recent trends in capacity started to come through
Vodafone rose 2 3 percent adding around 8 points to the
FTSE rebounding from Thursday s falls when the stock was hit
after Dutch peer KPN cut forecasts
The FTSE technicals suggested further index upside is
possible although the index has struggled to keep above these
levels since mid February
The bottom rung of the uptrend around 5 870 had been given
a fairly thorough examination recently and held up So that is
a convincing and compelling reason to remain long of UK
equities as far as I am concerned Charles Stanley technical
analyst Bill McNamara said
Editing by Jon Loades Carter |
C | Central Banks And Wall Street Insiders Are Preparing For Something Big | If you want to figure out what is going to happen next in the financial markets carefully watch what the insiders are doing Those that are connected have access to far better sources of information than the rest of us have and if they hear that something big is coming up they will often make very significant moves with their money in anticipation of what is about to happen Right now Wall Street insiders and central banks all around the globe are making some very unusual moves In fact they appear to be rapidly preparing for something really big So exactly what are they up to In a previous article entitled Are The Government And The Big Banks Quietly Preparing For An Imminent Financial Collapse I speculated that they may be preparing for a financial meltdown of some sort As I noted in that article more than 600 banking executives have resigned from their positions over the past 12 months and I have been personally told that a substantial number of Wall Street bankers have been shopping for prepper properties this summer But now even more evidence has emerged that quiet preparations are being made for an imminent financial collapse That doesn t guarantee that something will happen or won t happen Like any good detective we are gathering clues and trying to figure out what the evidence is telling us Why Is George Soros Selling So Much Stock And Buying So Much Gold I am certainly not a fan of George Soros He has funneled millions upon millions of dollars into organizations that are trying to take America in the exact wrong direction However I do recognize that he is extremely well connected in the financial world Soros is almost always ahead of the curve on financial matters and if something big is going to go down George Soros is probably going to know about it ahead of time That is why it is very alarming that he has dumped all of his banking stocks and that he is massively hoarding gold The following is from shtfplan com In a harbinger of what may be coming our way in the Fall of 2012 billionaire financier George Soros has sold all of his equity positions in major financial stocks according to a 13 F report filed with the SEC for the quarter ending June 30 2012 Soros who manages funds through various accounts in the US and the Cayman Islands has reportedly unloaded over one million shares of stock in financial companies and banks that include Citigroup 420 000 shares JP Morgan 701 400 shares and Goldman Sachs 120 000 shares The total value of the stock sales amounts to nearly 50 million What s equally as interesting as his sale of major financials is where Soros has shifted his money At the same time he was selling bank stocks he was acquiring some 884 000 shares approx 130 million of Gold via the SPDR Gold Trust Why would you dump over a million shares of stock in major banks and purchase more than 100 million dollars worth of gold Well it would make perfect sense if you believed that a collapse of the financial system was about to happen Earlier this year George Soros told the following I am not here to cheer you up The situation is about as serious and difficult as I ve experienced in my career Soros tells Newsweek We are facing an extremely difficult time comparable in many ways to the 1930s the Great Depression We are facing now a general retrenchment in the developed world which threatens to put us in a decade of more stagnation or worse The best case scenario is a deflationary environment The worst case scenario is a collapse of the financial system It looks like he is putting his money where his mouth is Perhaps even more disturbing is what he believes is coming after the financial collapse As anger rises riots on the streets of American cities are inevitable Yes yes yes he says almost gleefully The response to the unrest could be more damaging than the violence itself It will be an excuse for cracking down and using strong arm tactics to maintain law and order which carried to an extreme could bring about a repressive political system a society where individual liberty is much more constrained which would be a break with the tradition of the United States That doesn t sound good George Soros has told us what he believes is going to happen and now he is making moves with his money that indicate that he is convinced that it is actually about to start happening But he is not the only one that has been busy accumulating gold Billionaire John Paulson the one that made on the subprime mortgage meltdown has been buying gold like crazy and his company now So why are Soros and Paulson buying up so much gold Central Banks Are Also Hoarding Gold According to the amount of gold bought by the central banks of the world absolutely soared during the second quarter of 2012 The 157 5 metric tons of gold bought by the central banks of the world last quarter was an increase of 62 9 percent from the first quarter of 2012 and a 137 9 percent increase from the second quarter of 2011 Prior to 2009 the central banks of the world had been net sellers of gold for about two decades But now that has totally changed and last quarter central banks stocked up on gold in quantities At 157 5 metric tons gold buying among central banks came in at its highest quarterly level since the sector became a net buyer of the precious metal in the second quarter of 2009 data in the organization s quarterly Gold Demand Trends report show So why have the central banks of the world become such gold bugs Is there something they aren t telling us Rampant Insider Selling Wall Street insiders have been dumping a whole lot of stock this year In my I linked to a CNN article First quarter earnings have been decent if not spectacular And many corporate executives are issuing cautiously optimistic guidance for the rest of the year But while insiders lips are saying one thing their wallets are saying another The level of insider selling among S P 500 SPX companies is the highest in nearly 10 years That is not good A lot of insiders appear to be getting out at the top of the market while the getting is still good Other insiders appear to be bailing out before the bottom falls out from beneath them Just check out what has been happening to Facebook stock It hit another new record low on Thursday as insiders dumped stock The following is from a Facebook s life as a public company has been a nightmare from day one and the pain continued on Thursday as some company insiders got their first chance to dump shares Facebook stock hit a new intra day low of 19 69 Thursday morning and ended the day 6 3 lower at 19 87 Sadly Facebook has now lost close to half of its value since the IPO Will Facebook end up being the poster child for the irrational stock market bubble that we have seen over the past couple of years Overall retail investors have been very busy pulling money out of stocks in recent weeks The following are the net inflows to equity funds over the past five weeks in millions of dollars 7 11 2012 537 7 18 2012 637 7 25 2012 2 999 8 1 2012 6 866 8 8 2012 3 684 According to the figures above more than 10 billion dollars has been pulled out of equity funds over the past two weeks alone So does this mean anything Maybe Maybe not But it is very interesting and it bears watching Why Does The U S Government Need So Much Ammunition In my I also noted that the U S government appears to be very rapidly making preparations for something really big This week it was revealed that the Social Security Administration plans to buy hollow point bullets which will be delivered to 41 different locations all over America Now why in the world does the Social Security Administration need 174 000 bullets And why do they need hollow point bullets Those bullets are designed to cause as much damage to internal organs as possible But of course this is only the latest in a series of very large purchases of ammunition by U S government agencies The following is from a recent article Back in March of 40 caliber hollow point bullets that are designed to expand upon entry and cause maximum organ damage prompting questions as to why the DHS needed such a large amount of powerful bullets merely for training purposes This was followed by asking for a further 750 million rounds of assorted bullets including 357 mag rounds that are able to penetrate walls Now why in the world would the government need over a billion rounds of ammunition If it was the U S military I could understand this You can burn through a whole lot of ammunition fighting wars But this makes no sense unless they believe that big trouble is coming Personally I wouldn t blame them for getting prepared Our economy and there are everywhere around us The American people are more frustrated and more angry than at any other time in modern history This upcoming election is only going to cause Americans to become even more angry and even more divided All it would take is just the right spark to cause this country to erupt It could be the upcoming election It could be the collapse of the financial system Or it might be something else But the conditions are definitely there for it to happen Unfortunately the American public is never told to prepare because authorities never want to panic the general population We are always the last to know and that stinks So don t wait for someone to come on the television and announce that a crisis is happening If you wait that long it will be too late Instead open up your eyes and think for yourself We all need to work hard to for the coming crisis while we still can As you can see Wall Street insiders the U S government and the central banks of the world are busy getting prepared Don t put your head in the sand The warning signs are there and time is running out |
C | ETF To Hedge Single Currency | In effort to reduce exposure to the faltering euro and reduce exposure to Europe based financial services equities WisdomTree NASDAQ WETF said it expects to restructure the WisdomTree International Hedged Equity Fund NYSE later this month The announcement was made in a research note penned by WisdomTree Research Director Jeremy Schwartz The new HEDJ will provide exposure to European dividend paying companies that derive more than 50 of their revenues from outside of Europe while hedging the single euro currency HEDJ which tracks the WisdomTree DEFA International Hedged Equity Index debuted in late 2009 The fund charges an annual expense ratio of 0 58 and has nearly 15 3 million in assets under management Given the euro zone s ongoing battle with its sovereign debt woes HEDJ has been a pleasant surprise this year gaining 7 2 That performance has come despite the fact that more than 31 of HEDJ s currency weight goes to the euro and almost 22 of its sector weight goes to financials Sole FocusHEDJ currently offers exposure to 13 currencies including the euro but when the fund is restructured it will focus solely on hedging the euro against the U S dollar according to the research note By hedging a single currency rather than multiple currencies we anticipate tighter trading spreads which may result in greater trading volumes and interest in HEDJ WisdomTree said in the note Twenty two countries are currently featured within HEDJ with the U K Japan and Australia representing more than 48 of the fund s weight Ten euro zone members are also found in the ETF with France Germany Italy and Spain combining for nearly a quarter of the fund s total weight Inverse RelationshipPerhaps adding to the case for HEDJ after its rebirth is the fact that stocks from the European Monetary Union have on a historical basis shown a tendency to rise while the euro declines That scenario bolsters the case for HEDJ reallocating toward Europe based firms that derive more than half of their revenue from outside the continent Europe has recently been mired in turmoil and both its equity market and the euro have exhibited uncertainty Schwartz said However investors may find that the markets mirror sovereign risks rather than specific company fundamentals which creates opportunities for those aware of the risks Focus On Exporters One of the primary risks for investors remains the currency movements of the euro compared to the U S dollar but we think exporters who can execute in such an environment could benefit from a weakening euro which may stoke demand for their products in the global market If this scenario plays out an investor may be better positioned in a portfolio of dividend paying equities that derive more than half their revenues beyond Europe while hedging the euro In that type of environment we believe that a hedged equity strategy focusing on dividend paying exporters in Europe has the potential to outperform a strategy that overlooks the impact of a depreciating euro for U S investors HEDJ which is home to over 670 stocks has a 30 day SEC yield of 4 11 After financials and industrials telecom and consumer staples are the fund s next largest sector weights combining for over a third of the ETF s total weight c 2012 Benzinga com Benzinga does not provide investment advice All rights reserved |
C | Will South African Union Battle EU Recession Bring Platinum Market | The Association of Mineworkers and Construction Union AMCU is promising higher wages and better conditions for South African miners willing to move from the National Union of Mineworkers NUM to their growing ranks To what extent they are really interested in workers welfare rather than growing their own power base is debatable The readiness to put workers in the line of fire to stir up emotions suggests this has more to do with a turf war among unions than a heartfelt desire to look after miners and their families but it is the seething cauldron of discontent with which the government mining companies workers and ultimately the market are going to have to contend Platinum was supposed to be the jewel in South Africa s precious metal crown Citigroup has estimated South Africa s platinum group metal PGM reserves are worth over 2 trillion and the sector is said to hold 80 percent of the world s known reserves yet platinum is trading at a discount to gold compared to a premium in the 90s One problem is that the metal is heavily exposed to the diesel focused sluggish European car market According to Reuters diesel vehicles use a higher loading of platinum than the exhausts for gas engines favored elsewhere We are forecasting a 122 000 ounce surplus this year Citigroup analyst David Wilson is quoted as saying Lonmin were producing 60 000 ounces a month so if they were out for two months that would bring the market back to a balance The firm is said to produce 12 percent of global output so the strikes are increasingly significant as time goes by In the short term the turf war between the NUM and AMCU will set the agenda However in the medium to longer term instability is going to come from the marginal profitability of a sector with rapidly rising power and labor costs and a global market relying on such a small production base by Stuart Burns |
C | Copper Leads Global Growth | Market NotesApple AAPL has become the world s largest company by market capitalisation ever It has now eclipsed Microsoft s market cap peak in late December 1999 during the technology bubble in nominal terms not inflation adjusted terms Amazingly he parabolic run has created gains of 81 times over the last 10 years Disclosure I have started shorting Apple with OTM 2014 Puts The Nasdaq Composite approached March highs on the back of some of the weakest and narrowest breadth I have ever seen When we look at the number of tech stocks making 52 Week New Highs and smooth it out over an one month time frame the results are flashing warning signals as majority of the tech companies are failing to confirm the rally A few weeks ago I wrote about how the British Pound was a good short I still believe this to be the case as I think the pound s major consolidation pattern will resolve to the downside I believe that the UK is going to enter a more serious slowdown but I seem to be in the minority as many traders turn very optimistic towards future prospects of the British pound Precious metals are breaking out from their technical pressure points We saw platinum start the move followed by silver and finally gold has now joined the party too While gold bugs are celebrating I think the real test is ahead of us PMs need to prove that they can rally even if volatility rises risk assets including stocks sell off and the US dollar starts to rally again We continue to see that industrial economic barometers like copper and crude oil are failing to rise above the 200 day MA and confirm the S P 500 s new highs in 2013 The Emerging Markets saviour of global growth in the post Lehman recovery also continue to lag other equity indices indicating that not all is well with the BRICs Furthermore the short term rise in the DAX 30 Commodity Currencies and Brent crude not shown here has been almost vertical and caution is advised Finally gold seems to be attempting a technical upside breakout but the real test will be coming as global risk asset s volatility rises and the US dollar starts to rally again Leading Indicators Global economic data continues to beat economist s expectations Like previously stated this is a positive for the time being and it has been helping global stocks and other risk assets move higher in the last couple of weeks However keep in mind that this indicator does not actually state weather or not global economy is improving but just weather the data is coming in below or above economists expectations During the middle of 2008 US economic data improved relative to economists expectations and yet the recession just intensified and markets crashed afterwards Bulls from CNBC to Bloomberg are trying to convince bearish investors that the US economy is improving Even some of the more respected investors are falling into the bullish trap as well Some of them are even celebrating the fact that the ECRI Growth Index has risen from 3 5 to 0 6 chart below over recent weeks Can I just ask since when did a negative leading economic number deserve so much celebration and bullish speculation Do not believe the hype as there is no strong evidence to support economic improvements Money printing is having less and less of an effect on the economy The chart above shows that every one of the intermediate tops over the current secular bear market came during a negative divergence between falling leading economic indicators and rising equity prices We currently have higher rising prices during falling leading economic activity another bearish non confirmation so will this time be different The chart above thanks to alsosprachanalyst com shows that Chinese electricity output remains flat at best Chinese National Bureau of Statistics showed that hydroelectric power was the recent overall output growth remained above 0 More importantly thermal power output growth keeps sliding in July towards 4 5 Why is this important you ask Because electricity production has high correlation with Chinese GDP which cannot be completely trusted and global mining sector performance All in all Chinese leading data continues to slow China holds the key to future prospects of copper prices and the feature article below explains why Featured Article I have been reading a variety of investment bank newsletters in my inbox over the last few days The ones I always look forward to reading are commodity related newsletters because it is my opinion that commodities are still in a secular bull market which started in 1999 The comment that stood out for me was by UBS Commodity Connections Q3 2012 newsletter which stated that China the primary fundamental driver of the global copper price has reported record high semi manufactured production rates and a corresponding large drawdown in inventories Now short copper China s likely to buy throughout H2 supporting the metal s price So UBS is bullish on copper one of the main barometers of global growth I am in no position to argue for or against USB as they have large team studying ground conditions regarding various copper fundamentals as well as in house export technical analysts Nevertheless I thought I would investigate matters further but before we begin it is important to understand that even though we are in a secular commodity bull market there are periods when bears take over cyclical fundamental forces against the overall bullish price trend One could say that we have been in a cyclical bear market for commodities for about a year now chart below Personally I follow copper prices very closely and the reasoning is mainly towards its ability to predict global economic activity I do not own any copper nor do I own any copper mining companies As we can see in the chart above copper prices have a close relationship with OECD Global Leading Economic Indicators Therefore one could easily understand that the peak in copper prices which occurred in February 2011 corresponded with the peak in global economic growth The global economy has been slowing since than just as copper prices have been in a downtrend bear market Now am I sure all the investors want to know if the bear market is over Well to answer that question one has to start paying closer attention to economic activity in Asia This is most important for US centric investors who tend to hold a narrow minded vision towards the US and Europe old world economy You see while the majority of investors are constantly focused on Europe and discussing Greece or Spain it is China together with the rest of Asia that holds major upside as well as major downside risks to both the price of copper and therefore the overall global economic activity The overall region consumes almost 60 of the global copper supply including Japan as we can see from the chart above thanks to UBS It becomes plainly obvious that inter linked growth spreads even further towards many commodity exporting countries like Brazil Australia Canada Indonesia South Africa New Zealand Argentina Mongolia among many others In other words if China as well as overall Asia slow down world growth will be heavily affected One region that is not affected yet is the United States One important observation to make is that while Copper has been weakening since February 2011 which most likely tells us that Asia is slowing down meaningfully the S P 500 has continued to flirt with new highs in 2012 Therefore bulls have started using the de coupling phrase for the first time since late 2007 The UBS team of researchers also does not see any major problems ahead We forecast global copper demand growth of 3 2 to 20 6mt in 2012 driven by 6 in China 8 1mt with only 0 4 in the G7 5 3mt China s record high semis production rate has resulted in a sharp drawdown in metal As such we should expect some price supporting buying in H2 Policy easing in China aimed at promoting economic activity would also be price supportive events for the credit driven trade of copper UBS forecasts a deficit of 167kt in 2012 and market should then return to equilibrium in 2013E Note A genuine supply response to the prolonged strength in the copper price is underway mainly out of South America From the supply side perspective I tend to agree with UBS that a genuine supply response is underway due to prolonged strength in the copper price as we can see with the chart above Copper prices have been trading in a whole new range averaging about 4 00 per pound on the upside and 2 50 per pound on the downside Having said that I am much more concerned about the demand side as I do not believe all is well with the Chinese economy It is difficult to judge the current true growth in the Chinese economy with official data saying 7 6 while some well respected analysts say it is closer to 4 With that in mind I rather give the market a chance to tell me what is happening while I sit back watch and listen The chart above explains perfectly what I mean We can see that the price of copper has essentially gone nowhere over the last year or so and we have now triangulated into the climax of a decision point A proper break out no reversals would establish a bullish foundation in a sign that the Chinese economy together with rest of Asia is not crashing with demand remaining strong Global economic activity would therefore pick up across the globe and copper prices would rise into new highs This would stimulate the global mining sector which is currently experiencing a severe downturn On the other hand a break down would most likely signal that Asia as well as China is in trouble and that the Chinese property sector is entering a hard landing scenario Demand would be overwhelmed by supply which is still coming onboard and prices could fall hard in a continuation of a cyclical downturn The chart above shows that inverse price of copper correlates very well with the VIX which currently finds itself at very complacent levels which in my opinion is a major warning signal Sentiment on copper is slightly negative but not extremely depressed The Daily Sentiment Index shows 30 bulls as of yesterday Do keep in mind that bulls dropped below 10 during September of 2008 only to see copper prices continue to crash in late 2008 Those who jumped in as brave contrarians dismissing selling pressure during the awful fundamental backdrop lost their shirt and their socks Therefore one needs to understand that demand and supply fundamentals can overwhelm the technical picture at times One also needs to understand that further price disappointments do occur from negative sentiment levels especially when there is failure to recover on the back of stimulus rumours For example in the chart above we can see that hedge funds have been shorting copper for weeks which tends to be a contrarian buy signal and yet copper prices have failed to stage a proper recovery from June lows Compare that to the likes of US or German equities Nasdaq or DAX which seem to be rising vertically and you can safely assume not all is well within the copper market In summary one can conclude that copper is now at decision point and its technical break in either direction could tell us more about the future direction of the global economic activity than any analyst on CNBC or Bloomberg Therefore make sure you keep your eyes on the price of copper over the coming weeks and months As for my own view I m bearish and expect copper to eventually break down before we bottom Trading Diary Last update 22nd of August 12 Outlook I am of the opinion that the risk asset bear market is upon us and that the global economy continues to slow rapidly into a recession United States GDP has grown 5 out of the last 6 quarters below 2 which tends to be stall speed German GDP is also at stall speed similar to 2008 China and India are slowing meaningfully and could experience a serious hard landing At the same time US corporate earnings and gross profit margins are at record highs so I expect a mean reversion unlike so many stock analysts Cash levels with mutual funds retail investors and money market funds are at extreme lows financial stress is starting to rise volatility is at very complacent levels and credit spreads are very narrow relative to fundamentals so I expect a risk off scenario in due time Long Positioning Long focus is towards secular commodity bull market with precious metals and agriculture offering the best value Largest commodity position is held in silver as central banks will eventually print money as the global economic activity deteriorates Since silver has broken out recently hedges have been removed and a small purchase was made Any negative reversal as global risk asset volatility rises will call for hedging again NAV long exposure is about 100 Short Positioning Short focus is towards secular equity bear market with cyclical sectors and credit offering best selling opportunities due to deteriorating global growth Mild to modest exposure is held short in the Junk Bond market as well as various economically sensitive cyclical sectors like Technology Discretionary and Dow Transportation Recently the Apple parabolic has been shorted with long dated 2014 OTM puts NAV short exposure is about 60 Watch list Commodity currencies like aussie kiwi and loonie are also on my watch list of potential shorts right now as negative surprises await with China slowing dangerously With the euro being the most hated currency a better risk off trade could be selling the British pound A major short in due time will be US Treasury long bonds as they are extremely overbought and in a mist of a huge bubble mania but first we have to wait for the eurozone dust to settle Finally while grains have exploded up softs still present amazing value for long term investors with sugar being my second favourite commodity after Silver Below You May Find The Video |
JPM | Fed inadvertently publishes staff forecast for 2015 rate hike | By Jason Lange and Howard Schneider WASHINGTON Reuters Staff economists at the Federal Reserve expect a quarter point U S interest rate increase this year according to forecasts the Fed mistakenly published on its website in a gaffe that drew criticism about its ability to keep secrets The rate forecast was included with a series of bearish projections on U S economic growth and inflation that were presented to policymakers at their June 16 17 meeting The disclosure of the sensitive information is the latest blow to the Fed s reputation for secrecy around policy deliberations Later on Friday evening the Fed said the inadvertently released document was not the correct document It provided a new table showing slightly lower outlooks for gross domestic product and inflation in 2015 as well as other revisions Federal prosecutors are currently probing an alleged leak at the Fed of market sensitive information to a private financial newsletter in 2012 It regrettably appears once again that proper internal controls are not in place to safeguard confidential Federal Reserve information said Representative Jeb Hensarling of Texas a Republican who chairs the House Financial Services Committee and is pressing Fed Chair Janet Yellen for documents regarding the 2012 leak The Fed said in a statement that the forecasts were inadvertently included in a computer file posted to its website on June 29 Fed officials said the disclosure was due to procedural errors at a staff level and that the mistake was discovered on Tuesday this week The matter has been referred to the Fed s inspector general The forecasts do not represent the views of the central bankers who set interest rate policy Those policymakers many based outside of Washington in regional Fed branches create their own forecasts the most recent of which were released on June 17 But Board of Governors staff views are sensitive and influential enough that the Fed normally releases them about five years after they were made ONE HIKE IN 2015 In the projections prepared in June and in the revised table released on Friday the staff expected policymakers would raise their benchmark interest rate known as the Fed funds rate enough for it to average 0 35 percent in the fourth quarter of 2015 That implies one quarter point hike this year as the Fed funds rate is currently hovering around 0 13 percent Analysts at JPMorgan NYSE JPM and Barclays LONDON BARC said this suggested the staff expected a rate hike before a scheduled Dec 15 16 policy meeting The Fed also has policy meetings scheduled for July 28 29 Sept 16 17 and Oct 27 28 All but two of the Fed s 17 policymakers said last month they think rates should rise in 2015 They were divided between whether it would be best to raise rates once or twice this year The staff views were less optimistic about the economy than several key policymaker forecasts In the revised projections which stretched from 2015 to 2020 the staff did not expect inflation to ever reach the Fed s 2 0 percent target By the fourth quarter of 2020 they saw the PCE personal consumption expenditure inflation index rising 1 97 percent from a year earlier The Fed s staff also took a dimmer view of long run economic growth expecting gross domestic product to expand 1 73 percent in the year through the fourth quarter of 2020 The views of Fed policymakers for long term growth range from 1 8 percent to 2 5 percent The Fed goes to great lengths to manage the release of sensitive information Policymakers and staff avoid making public comments just ahead of policy meetings and the Fed makes journalists turn in their phones before letting them into a locked room to see a policy statement and prepare news stories just before the interest rate decision is published electronically A Department of Justice probe is looking into an analyst note in 2012 that included details on a policy meeting before that information was made public
It is baffling that these leaks continue to occur said Congressman Randy Neugebauer a Texas Republican who chairs the House subcommittee on financial institutions and consumer credit |
C | US STOCKS Wall St drops on U S cut global economic worry | S P revises U S outlook to negative
China s tightening of bank reserves creates nervousness
Greece denies it is seeking debt restructure plan
Indexes off Dow 1 4 pct S P 1 4 pct Nasdaq 1 5 pct
For up to the minute market news see STXNEWS US
Updates to open
By Chuck Mikolajczak
NEW YORK April 18 Reuters U S stocks dropped on
Monday after ratings agency Standard Poor s cut its long term
outlook on the United States and another step by China to stem
growth reignited worries about the global economy
S P downgraded the outlook for the United States to
negative saying it believes there s a risk U S policymakers
may not reach agreement on how to address the country s
long term fiscal pressures For details see ID nN18195555
It is not good news and it is not good news because to
move towards austerity when the U S economy is not on sound
footing is not a good idea said Hugh Johnson chief
investment officer of Hugh Johnson Advisors LLC in Albany New
York
This is going to put pressure on policy makers
Democrats and Republicans alike to get their act together
And I m not sure the timing of getting their act together is
that good
The Dow Jones industrial average dropped 177 02
points or 1 43 percent to 12 164 81 The Standard Poor s
500 Index lost 17 94 points or 1 36 percent to
1 301 74 The Nasdaq Composite Index fell 40 77 points
or 1 47 percent to 2 723 88
The CBOE volatility index better known as Wall
Street s fear gauge surged nearly 20 percent its largest
percentage jump since March 16
The move by the ratings agency came after China s decision
to raise banks required reserves for the fourth time this year
on Sunday stepping up efforts to fight high inflation
ID nL3E7FH05Y
The move by China hurt commodities sending copper prices
lower Miner Freeport McMoran Copper Gold Inc
fell 0 6 percent to 50 85 ID nLDE73H0PN
Further adding to global concerns Athens reiterated it has
no plans to restructure its government debt a move its central
bank chief said would be catastrophic but markets speculated
that some form of debt rescheduling was likely
ID nLDE73H17X
Citigroup Inc s stock advanced 0 2 percent to 4 43
after first quarter profit fell 32 percent Citi s bond trading
revenue plunged and operating expenses jumped ID nN18189113
Reporting by Chuck Mikolajczak Editing by Kenneth Barry |
C | Miners lead FTSE rebound Burberry results cheered | FTSE up 0 7 percent sell off overdone
Miners rally Fresnillo gains as gold hits fresh highs
Burberry rises after Q4 sales beat
By David Brett
LONDON April 19 Reuters Rebounding miners helped
Britain s top share index rally on Tuesday while Burberry was
the top performer after the luxury goods firm beat consensus
estimates with a fourth quarter sales beat
By 0808 GMT the FTSE 100 was up 38 89 points or 0 7 percent
at 5 908 97 having closed down 2 1 percent at 5 870 08 its
lowest close since March 23 after ratings agency S P cut its
U S credit outlook to negative
The FTSE 100 volatility index a barometer of investor
anxiety fell 4 3 percent having jumped nearly 26 percent on
Monday its biggest one day percentage gain since November 2009
It was a bit of a knee jerk reaction I don t think it s a
step changing issue where you are going to have further
problems Paul Mumford who manages a 25 million pound 40 6
million fund at Cavendish Asset Management
UBS said S P s warning was a case of jumping the gun
The broker says the U S marketable debt to GDP ratio is 63
percent and would expect that this ratio could rise to 80
percent over the next 2 years
It is still well below the 100 percent plus levels that
have prompted downgrades in other triple AAA rated countries in
the past Additionally none of the countries whose debt was
downgraded at those levels was the global reserve currency
Miners were the strongest performers as investors bought
back on recent weakness with Cavendish s Mumford saying the
sell off was a good opportunity to add to holdings
Precious metals miner Fresnillo was 2 6 percent higher
boosted by a surging gold price which hovered near all time
highs
Vedanta rose 1 5 percent as the India focused miner snapped
up a 11 percent stake in Cairn India sources said
Cairn Energy which agreed in August to sell a majority
stake in Cairn India to Vedanta rose 1 2 percent
LUXURY IN FAVOUR
British luxury group Burberry climbed 7 8 percent after
reporting a 33 percent rise in fourth quarter underlying sales
Sentiment among luxury goods firms was helped after French
peer LVMH beat first quarter sales expectations
Retailer Marks Spencer added 1 9 percent with traders
citing an upgrade to buy from hold by Citigroup as a
catalyst
Tesco fell 1 percent after the world s third largest
retailer fell short of its expectations in a tough home market
Tesco results are fundamentally strong although the
performance is mixed analysts at Espirito Santo Investment
Bank said
However the broker says on 9 8 times calendar 2011
earnings the shares look too cheap form a company offering 15
percent earnings growth and strong fundamentals
Rivals Sainsbury and Wm Morrison were also lower
Banks were mixed as they remained hamstrung by global
sovereign debt concerns and ahead of Goldman Sachs results
expected at around 1200 GMT
Editing by Louise Heavens
1 6163 Pound |
C | Weighing The Week Ahead Time To Assess The Evidence | Many times we can plan for the week ahead by considering the calendar of data releases and the schedule for official policy announcements This week is extremely light on all fronts Even Congress has left town for the August recess It is still a little early for election intensity Many are enjoying vacations and the Olympics Just as nature abhors a vacuum the market media must fill all of that space and air time How I expect a week with a focus on reassessment Journalists and pundits at least those who are not at the beach can digest the recent economic data the Q2 earnings results the promises of policy leaders and the latest political polls With all of this information at hand I expect a series of stories looking ahead to the rest of the year economy politics and markets There are a lot of exciting investment themes right now but most investors are missing them While this weekly article focuses on short term events I always include a special section for long term investors This week I have more to say but I also suggest four ideas that illustrate the many good themes available right now I ll offer some of my own expectations in the conclusion but first let us do our regular review of last week s news Background On Weighing the Week Ahead There are many good sources for a list of upcoming events With foreign markets setting the tone for US trading on many days I especially like the comprehensive calendar from Investing com There is also helpful descriptive and historical information on each item In contrast I highlight a smaller group of events My theme is an expert guess about what we will be watching on TV and reading in the mainstream media It is a focus on what I think is important for my trading and client portfolios This is unlike my other articles at A Dash where I develop a focused logical argument with supporting data on a single theme Here I am simply sharing my conclusions Sometimes these are topics that I have already written about and others are on my agenda I am putting the news in context Last Week s Data Each week I break down events into good and bad Often there is ugly and on rare occasion something really good My working definition of good has two components The news is market friendly Our personal policy preferences are not relevant for this test And especially no politics It is better than expectations The Good There was plenty of news the market liked but it is still a mixed picture ECB chief Mario Draghi Day 2 Before the ink was dry on stories about Draghi s failure to deliver on last week s promise the revisionist thinking began See one of the best examples Initial jobless claims declined 35 000 to 353K This continues a wild series of gyrations possibly influenced by fewer auto plant closings this year It does provide another decline in the four week moving average and it looks nothing like recession territory as with some great charts well worth checking These data were not part of the survey period for next week s employment situation report Rail traffic is stronger now at the highest level of the year I think the economy is slugging along and growing not running but certainly not falling backwards When you couple rail data with what is happening in both the auto sector and now the housing sector we have to discount the recession talk Earnings reports have continued to beat the lowered expectations and revenues are also a little better with the expected great chart The recent upturn in economic surprises is The growth of payroll jobs at 163 000 beat expectations nicely and broke the trend of lower growth See of the data Like every monthly report the story has a lot of complexity see below in The Bad One factor is the continuing discussion about seasonal adjustments typically quite large in July The key question is whether this year s adjustment is over stated because of unusually small auto plant closings The growth was actually about the same as last year for private employment The difference The loss of government jobs was lower Bob Dieli s clients get his monthly analysis of the jobs data This was a key insight If you compare the blue columns from last year and this and then also compare the red and black columns you will see the key point A surprising economic indicator one of my favorite sources in print online and on TV The Bad The was a lot of negative news Everything seems to come with spin Bernanke did nothing except talk Those looking for an instant QE buzz were disappointed As i noted in last week s preview the expectations were too high The FOMC statement did seem to indicate higher awareness Draghi did nothing except talk Markets sold off hard on the disappointment The initial reaction was that he had made bold and impulsive promises but could not deliver Most market pundits see this as part of a continuing pattern of vague solutions for Europe ISM Manufacturing was once again below 50 indicating contraction in that sector While this is still roughly consistent with other growth indicators it is discouraging and charts for the overall index and key subgroups The household component of the employment situation report disappointed on all fronts The labor force was smaller The number of employed was smaller The unemployment rate upticked to 8 3 from 8 2 While this change was overstated by rounding this is the data point that most captures public attention While the household survey has only 60 000 participants this is adequate for the purpose of avoiding sampling error It is plausible that this survey captures the people who are working outside of traditional jobs that the two approaches are coming together in the overall forecast and that it is not recessionary Job gains may be overstated Here is some negative news you will not see anywhere else Each month I suggest that there are multiple estimates of the truth which is not known until we have the reports from state employment agencies Since we do not have that for eight months or so no one pays much attention This should be featured as a way of keeping score On Thursday we got the and it was very disappointing This shows that job gains were only 368K in Q411 not the 550K or so that we thought The ADP estimates of private employment were even higher The BLS now tries to do concurrent adjustments in the birth death model to reflect new data There will eventually be revisions to job growth and some may come quickly The Ugly The Knightmare trading glitch wins the ugly award for this week Professionals just as in the flash crash could see quickly that something was wrong in certain stocks The average investor requires some protection so the big story is about risk Do the computers and algorithms endanger investors Do exchange procedures offer enough protection Is government regulation adequate These themes are newsworthy so expect plenty of continuing attention It contributes to a sense that the average investor has no chance to succeed in a rigged market I especially like the who looks both at Knight Trading and a high yield product that some investors bought I put these different situations together because they seem symptomatic of today s world We are promised wonderful execution in the markets but can pay a tremendous price when the machinery doesn t work correctly Desperate for yield we buy the sausage from the structured finance factory and don t know what is in it liking the taste of the income and not paying attention to the poisoning that might come our way The game is out of control We have engineered in everything except common sense See Tom s My own take is that the biggest dangers are for those who blindly seek yield and those who have inflated ideas about their own short term trading skills The threat to the average long term investor is exaggerated The Indicator Snapshot It is important to keep the current news in perspective My weekly snapshot includes the most important summary indicators The The key measures from our Felix ETF model An updated analysis of recession probability The SLFSI reports with a one week lag This means that the reported values do not include last week s market action The SLFSI has moved a lot lower and is now out of the trigger range of my pre determined risk alarm This is an excellent tool for managing risk objectively and it has suggested the need for more caution Before implementing this indicator our team did extensive research discovering a warning range that deserves respect We of 1 1 or higher as a place to consider reducing positions The SLFSI is not a market timing tool since it does not attempt to predict how people will interpret events It uses data mostly from credit markets to reach an objective risk assessment The biggest profits come from going all in when risk is high on this indicator but so do the biggest losses The C Score is a weekly interpretation of the best recession indicator I found Bob Dieli s aggregate spread I ll explain more about the C Score soon We are working on a modification that will make this method even more sensitive None of the recession methods are worrisome Bob also has a group of coincident indicators Like most of the top recession forecasters he uses these to confirm the long term prediction These indicators are also not close to a recession signal The evidence against the ECRI recession forecast continues to mount It is disappointing that those with the best forecasting records get so much less media attention The idea that a recession has already started is losing credibility with most observers Here are some of the best stories from last week New Deal Democrat does a long thoughtful and careful analysis of the ever changing story from the ECRI He shows how the story has changed over the last 10 months timing which indicators how to measure the variables and finally the current claim that the recession has started This article is chock full of detailed evidence and charts Here is the key conclusion but you really need to read the whole article With yesterday s release of June real income we now have full data through midyear 2012 Unless there are downward revisions to the critical series upon which the NBER relies it can confidently be stated that no recession began by that time Doug Short also does with great charts of the NBER s big four factors Here is the key summary Doug also cites Dwaine van Vuuren of RecessionAlert using a shorter time frame from the one we include each week Dwaine s analysis now puts the implied probability of recession at 2 1 For more on his analytical approach see his Readers might also want to review my new which explains many of the concepts people get wrong The single best resource for the ECRI call and the ongoing debate is Doug Short who has a complete and balanced story with frequent updates Our Felix model is the basis for our official vote in the weekly We have a long public record for these positions This week we switched to back to bullish We have been bullish since June 23rd with a one week move to neutral last week These are one month forecasts for the poll but Felix has a three week horizon This week s decision shows the ratings strength but we assign a low confidence rating For more on the penalty box see For more on the system ratings you can write to etf at newarc dot com for our free report package or to be added to the free weekly ETF email list You can also write personally to me with questions or comments and I ll do my best to answer The Week Ahead This is a very light week for data and also for other news On Thursday we have trade data significant for the current quarter GDP as well as the weekly installment on initial jobless claims We will also get the JOLTS report on labor turnover but this is older and less significant than last week s data In the quiet environment we can expect any story about Europe or politics to get a bigger play Trading Time Frame Our trading positions continued in fully invested mode last week This surprised me since I was expecting a move to the sidelines Felix actually became more aggressive in a timely fashion Since we only require three buyable sectors the trading accounts look for the bull market somewhere even when the overall picture is neutral Having said this the overall advice from Felix remains cautious Investor Time Frame This is a very important time for the individual investor so I want to emphasize some key points Most individual investors are making serious mistakes Here they are They try to be traders The successful investment strategy differs markedly from trading It is especially important to establish good long term positions when prices are favorable Most individual investors seriously underperform long term results by selling low and buying high Most successful professionals of course do the opposite Even successful years have significant drawdowns 15 is not unusual The investor needs to expect this If it feels stressful then your asset allocation is wrong They think they are experts on world events Taking a long term perspective is easier said than done With everyone on TV explaining with great confidence what just happened please check out my article on the message of the markets it is easy for the average person to think he is out of step For several weeks I have emphasized the folly of attempts at short term market timing They want to wait too long until there are no problems This is the single most costly mistake If there were no problems the market would be at 20K or higher Investing requires balancing risk and reward not waiting for complete safety There is no magic moment Resolving market worries is a process not an event I tried to explain the most important concept for individual investors in this article about the Wall of Worry I have had many emails from people who had a personal breakthrough in their investing when they understood this concept If you missed it I urge you to take a look You can contrast this with the many pundits who The market action in the last three weeks has once again illustrated market moves based on unpredictable factors After Bernanke and Draghi who would have guessed that the market would move 3 in a few hours and finish higher on the week They fail to see what is working Our single best strategy through the various gyrations has been buying dividend stocks and selling calls for enhanced yield This week provided great opportunities to set new positions early in the week and sell calls against existing holdings late in the week just as we suggested last week Anyone unhappy with bonds should be doing this for a yield of 8 10 with greater safety than pure stock ownership Take what the market is offering and here are my examples Final Thoughts on the Mid Year Assessment There are a number of key themes all of which are on my agenda As usual in the weekly column I am sharing my conclusions but I ll write more on the various themes Recession Not close Recessions start by definition at cycle peaks This market cycle will be longer than average We might be in the third inning Europe The market is gradually learning how this works It is a multi part bargaining process Draghi held out the carrot and then explained the requirements The ECB gets a better deal as a result It is happening one step at a time but few of the market pseudo experts have the vision to see the outcome Earnings Revenues are a bit lower partly due to currency effects which also helped costs Earnings are OK and multiples are low because of expected declines Politics Plenty of news to come with the market incorrectly viewing a Romney victory as bullish It is a lot more complicated More later Cliff Diving Great media story but it will not happen The election outcome does not matter to this one The nature of the solution will change but something will get done |
C | YELP Stock Rises After Earnings Vol Diff Opens | Yelp Inc Yelp formerly Yelp Inc connects people with local businesses Its users contribute reviews of every type of local business from restaurants boutiques and salons to dentists mechanics and plumbers This is a quick note on an interesting calendar vol diff I found using a real time custom scan This one hunts for calendar spreads between the front two months Custom Scan DetailsStock Price GTE 5Sigma1 Sigma2 GTE 8Average Option Volume GTE 1 000Industry isNot Bio techDays After Earnings GTE 5 LTE 70Sigma1 Sigma2 GTE 1The goal with this scan is to identify back months that are cheaper than the front by at least 8 vol points I m also looking for a reasonable amount of liquidity in the options thus the minimum average option volume want to avoid bio techs and their crazy vol and make sure I m not selling elevated front month vol simply because earnings are approaching Let s start with the Skew Tab to examine the line by line and month to month vols The skew shapes are pretty normal with the downside puts priced to higher vol than the ATM options and OTM calls What we do see quite clearly is the monotonic vol increase from the back to the front It s that vol diff between the first two months that triggered the scan Let s turn to the Charts Tab below The top portion is the stock price the bottom is the vol IV30 red vs HV20 blue vs HV180 pink On the stock side we can see that YELP just released earnings a week ago AMC The stock popped from 18 82 to 22 on 8 2 2012 or 17 off of the news Here s a quick snippet Shares of lifestyle recommendations and ranking purveyors Yelp YELP today are up 3 14 or almost 17 at 21 96 after the company last night beat Q2 estimates and offered better than expected Q3 and year views buoyed by results from local and brand advertising There were no upgrades today that I can see and as a consequence the Street is still entirely lukewarm on the stock with four hold ratings on Yelp The company got plenty of admiration for its accomplishments but the valuation is tempering the enthusiasm today even though price targets are actually comfortably above the current share price Yelp is expected to lose 31 cents a share this year on a GAAP basis but it trades at 129 times next year s expected 17 cents a share profit Aaron Kessler of Raymond James today reiterates a Market Perform rating on the shares while raising his estimates for this year and next writing that the valuation is too rich for his taste Citigroup s Mark Mahaney reiterates a Neutral rating on Yelp and a 28 price target Jason Helfstein with Oppenheimer Co reiterates a Perform rating on the shares while raising his price target to 25 from 24 Goldman Sachs s Heath Terry reiterates a Neutral rating on the stock and a 27 price target Source Barron s via Yahoo Finance Written by Tiernan Ray I do note that since 8 2 2012 and the 17 rise YELP has risen another 17 as of this writing over the last five calendar days Impressive Looking to the vol side we can see that the implied collapsed after earnings which is expected and has remained relatively quiet during the stock move up The 52 wk range in IV30 is 50 42 115 96 putting the current value in the 45th percentile annual Finally let s turn to the Options Tab for completeness Across the top we can see the monthly vols are priced to 84 05 77 36 and 70 42 respectively for Aug Sep and Nov Looking to some OTM options as an example we can see the vol diff between the Aug Sep 28 calls is more than 11 vol points while the Aug Sep 21 put spread shows more than a 12 point vol diff This is trade analysis not a recommendation |
C | Checking The Mood Of The Market | Market NotesDow Jones Industrial index is now up for a fifth weekly gain while Dow Jones Transportation has only managed one weekly gain in the last five I continue to monitor what I believe to be a serious between these two indices especially as the VIX remains at extremely complacent levels The chase for yield continues from retail investors If government bond yields at extremely low levels aren t already proof of that one only needs to look at the euphoric buying in and With a slowing economy record fund inflows and historically low default rates I d argue that a storm is brewing in this sector of credit It has been consolidating in a long term triangle pattern from a technical perspective Downside support has come from political and central bank intervention while upside resistance has come from BoE QE programs on going EU crisis and UK s double dip recession since it bottomed in late June at 88 50 per barrel The bottom was a V trough reversal which usually signals an oversold snapback rally at best From the technical perspective Brent Crude Oil is now trading at 200 day MA resistance while it is 2 SDs away from the 50 day MA and the daily RSI is currently 70 plus overbought Big PictureUS equities remain the only risk asset trending towards new bull market highs in 2012 All major equities currencies and industrial commodities do not look as good Emerging Markets continue to under perform the Developed Markets and European currencies continue to under perform Commodity Asian currencies Copper just like all other industrial metals seems to be struggling the most out of all commodities All in all from an objective chart outlook there are no signs that a major risk off trend has ended apart from the current safe haven status US equities maintain Leading IndicatorsGlobal economic data continues to beat economists expectations with a stand out improvement occurring in Emerging Economies This is a positive for the time being On the other hand data coming out of Europe is signalling that the recession is intensifying further Eurozone and China are trending deeper into slowdown territory while United States remains in growth for now Conference Broad s LEI s are looking troublesome too with the worst readings coming out of South Korea and Japan both down over 1 on the month Remember that these two export powerhouses relay heavily on China as its main customer ECRI Weekly Leading Index has not changed much in recent weeks It still remains well below the 2 Yr MA as well in a so called downtrend of lower highs There is currently a strong divergence in place between this economic leading indicator Main Street and the stock market itself Wall Street Previous divergences between the economy and stocks over the last decade have always resulted toward the downside Featured Article It has been awhile since I ve checked the beat of the overall market sentiment which includes outlook towards currencies commodities and credit So let me put forward some recent key points regarding what I see as the prevailing mood in the overall market environment today A lot of market pundits continue to argue that due to the ongoing negative news the prevailing mood within the risk asset environment is predominantly bearish To a certain degree there is evidence to support this but in my opinion it is not as clear cut as that Basically this view comes from the fact that many follow which show pessimism at high levels One of the first charts I would like to put forward is the AAII Allocation Survey As we can see while retail investors say that they are bearish they are acting in quite a bullish manner Consider the fact that equity exposure to a normal portfolio is at a decently high 60 while cash exposure is a very low 21 If we do not count the mania years of the late 90s when mum and dads were euphoric over equities we can see that there is definitely optimism towards the stock market and exposure to match If a correction was to strike us as of tomorrow cash levels could swell up to 25 and over quite easily and if a bear market would occur over the coming quarters cash levels could jump higher than 35 before a pessimistic signal points to a major buying opportunity Sentiment reflecting exposure to commodity currencies like the Canadian Dollar has now moved to extreme bullish levels only seen a handful of times over the last half decade As we can see in the chart above readings above 75 and towards 80 have topped the Canadian Dollar from intermediate perspective perfectly every time The reason I bring this up is because currencies like the Canadian Dollar Aussie Dollar New Zealand Dollar and others have been screaming higher in recent weeks and the obvious catalyst is hope from Hope is not the best strategy in this game to say the least Since we all know risk assets globally have high corrections I investigated this concept further First of all we should all know by now that the and the Loonie is no exception with a correlation coefficient over 20 50 100 and 200 days averaging 88 Therefore what I did in the chart above was to overlap the Canadian Dollar sentiment with the S P 500 Interestingly the results are worth discussing Bullish sentiment readings this high in the Canadian Dollar have been powerful signals of major tops for US equities in both 2007 and 2011 The only other time sentiment was this high but failed to call a prior top was during mid 2009 but even then stocks experienced a multi month correction Now let us not just focus on indicators without paying attention to current conditions The backdrop in middle of 2009 was one of a recovering economy from the worst recession since WW2 a recovering stock market post 55 decline with a VIX as high as 80 and most importantly the beginning of a new business cycle with earnings completely destroyed Today the backdrop is completely different with the economy expanding at stall speed for the last 5 out of 6 quarters global PMIs are contracting and equities like the S P 500 have more than doubled since the March 09 lows Nasdaq 100 is up 180 in three years And let us not forget that today the VIX is at 15 Inflows into junk bond mutual funds are now on track to reach a new record high this year Bloomberg reported an even bigger figure last night stating that inflows in Junk mutual funds have now reached 43 billion which is a record high with 9 3 billion alone coming in during July 2012 Last time inflows were this strong was in March 2012 just as equities were peaking If that is not a sign of strong risk appetite and chase for return then it should be stated that many junk ETFs are trading at high premiums to NAV with ETFs like HYG showing If I could borrow a phrase from another smart blogger this is a sign of an overheating market Furthermore subprime loans are back in favour again with auto loan credit selling 10 billion of junk debt through to July 2012 the fastest pace of subprime sales since 2007 At the meantime the current backdrop is one of the or should I say no defaults in Junk Bond market history The default rate for junk grade quality all the way to triple Cs is extremely low and in some cases at record lows Financing conditions tend to be the strongest at the end of the business cycle with excesses and over leveraging peaks I was reading the Bloomberg website on the weekend and what I found interesting was an article recording exposure to the overall commodity asset class Bloomberg reported that hedge funds increased weekly exposure on commodities in the longest streak since 2006 Hedge funds raised their net long positions across 18 U S futures and options by 4 9 percent to 1 22 million contracts in the week to July 31 the highest since Sept 6 U S Commodity Futures Trading Commission data show Bets more than doubled since reaching this year s low on June 5 capping the longest increase since the data began in June 2006 The number of contracts outstanding across the 24 members of the S P GSCI rose 0 3 percent in July the first increase since April according to data compiled by Bloomberg Inflows to raw material funds totaled 564 million in the week ended Aug 1 snapping a five week streak of outflows according to EPFR Global which tracks the funds In my personal chart which is shown above I do not track options contracts so the cumulative exposure is just below 1 1 million contracts According to my data we are now approaching 1 SD above mean but the three month moving average is closer to neutral Sentiment is not extreme on either end but what I m more concerned about is the fundamental backdrop as Asia slows down further and also the technical picture of the current CC Index bottom Let me explain Proper intermediate and long term bottoms within the commodity complex occurred in 1998 2001 2003 2006 2008 and even 2010 They can be seen in both the and charts Majority of those bottoms experienced basing patterns which took several months and some quarters to develop On average it was between four to five months What I find disturbing about the current technical picture of the CC Index is the fact that we did not base for more than a couple of weeks and then experienced a major V trough reversal the weakest of all technical bottoms usually present to just overwork oversold technical conditions Therefore while I remain constructive towards the secular bull market in commodities over the longer run I am currently very discouraged by a weak fundamental and technical picture I remain cautious in the short to medium term Sentiment in the Precious Metals sector remains depressed Public Opinion on Gold Silver and Platinum is still very low and pretty much unchanged from previous weekly charts GLD physical tonnage holdings seen above tends to be a good barometer of retail investor appetite and here too the picture is quite similar Recent outflows in the month of July have come about as Gold sits around its 1530 support level and its 1640 resistance in a tight range It seems retail money is scared of a further breakdown in the Gold price but it is usually smarter to do the opposite just like in September and December 2011 It is also worth discussing that when it comes to increasing or decreasing Gold exposure More interestingly and that tends to be a decent contrarian signal too In summary while I believe Gold could drop further during any future deflationary shocks it makes a lot more sense to own PMs right now as central banks around the world are teaming up for a mother of all olympic money printing events Trading DiaryOutlook I am of the opinion that the risk asset bear market is upon us and that the US GDP has grown which tends to be stall speed Over the last 60 years whenever stat like that occurred we always entered a recession At the same time and are at record highs so I expect a mean reversion unlike so many stock analysts Cash levels in pension funds and retail money market funds and credit spreads are so I expect a risk off scenario in due time Positioning Long focus is towards secular commodity bull market with Precious Metals and Agriculture offering the best value Substantial position is held especially in Silver because I believe central banks will continue to print money and devalue currencies whenever global economic activity deteriorates Precious Metals longs are hedged because Silver could but an upside break out will take hedges off Short focus is towards secular bear equity bear market with cyclical sectors and credit offering best selling opportunities Mild to modest exposure is held short in the US High Yielding Junk Bond market as well as various US stock sectors like Technology Discretionary and Dow Transportation Watch list Commodity currencies like Aussie Kiwi and Loonie are also on my watch list of potential shorts right now as negative surprises await as China slows further With Euro being the most hated currency a better risk off trade could be A major short in due time will be US Treasury long bonds and in a mist of a huge bubble mania Below You May Find The Video |
C | How Much Stimulus Will Be Done By China The EU And UK | Much weaker than expected trade data out of China on Friday indicates more economic stimulus will be forthcoming there soon Even bigger stimulus is expected from the ECB as it revs up the printing presses to bail out Spain and Italy unless Germany stops it of course According to a recent released report the recessionary economy in the UK may need massive doses of quantitative easing to recover Exports in China rose by only 1 year over year in July and this was well below forecasts of an increase of 8 6 Imports were up 4 7 For a country that has an export based economy like China does this is a serious problem Like the U S Europe and Japan China engaged in a massive amount of stimulus during the Credit Crisis in 2008 2009 spending 586 billion or 14 percent of its GDP in addition to cutting interest rates and lowering banking reserves This led to a big expansion of local government debt a major housing bubble that has yet to burst and consumer inflation Apparently there are unfortunate side effects when governments apply a lot of economic stimulus notice you rarely read about them in the mainstream media This time around China has already cut interest rates twice and reserve requirement ratios for banks three times since November Its economy has slowed for the last six quarters and probably by much more than official figures indicate China s economic numbers should be taken with a grain of salt China is still in spectacular shape though compared to Japan which had a massive trade deficit in the first half of 2012 Japan has been economically troubled for 22 years and despite zero percent interest rates and an unending number of stimulus measures its economy remains in the doldrums While all the stimulus hasn t solved Japan s economic problems it has led to a debt to GDP ratio of over 200 worse than Greece s One reason China s exports are doing so poorly is the weakening economy in Europe On Thursday the ECB cut its growth forecasts and is now predicting the eurozone economy will contract by 0 3 in 2012 They are still hopeful of slight growth in 2013 however Maybe they think it will come from all the money they plan on printing to bail out Spain and Italy The Eurozone is basically tapped out from all the bailouts it has already done in Greece Portugal and Ireland Cyprus and banks in Spain are now on the list as well Greece needs a third bailout and is struggling to make it through the month until it receives its next welfare payment in September The situation there is potentially explosive The IMF has stated Ireland will need another bailout by next spring When ECB President Draghi said on July 9th that the central bank will take any measures within its mandate to save the euro the inevitable conclusion was that he was willing to engage in massive money printing The amount of money needed for the huge bailouts that Spain and Italy would require simply doesn t exist so it has to be created out of thin air The Draghi proposal is for the ECB to buy bonds but the ECB has already tried buying bonds under the SMP program The moment the buying stopped interest rates shot right back up This approach is costly and only effective in the very short term a typical government program It won t prevent the Eurozone s failure it will merely delay it and make it worse when it happens The UK is not part of the Eurozone but its economy is also contracting Citigroup economists have stated that the UK will need to print an additional 500 billion and lower interest rates to 0 25 to prevent continued stagnation Apparently they don t think there are serious risks if this approach is taken Neither did the Weimar Germans in the early 1920s the Zimbabweans in the 2000s the Chinese in the 1940s the Brazilians for most of the 20th century the Yugoslavians in the 1990s or the Hungarians in 1946 In fact countries that create hyperinflation always claim the risks of money printing are minimal before it takes place And there are usually a large number of top economists that support this view There are serious structural problems in the major economies today The usual Keynesian quick fixes that have been applied since World War II no longer seem to work nor will they These have led to a world drowning in debt and all debtors eventually reach their borrowing limit When this happens with countries they then try to print their way to prosperity History makes it quite clear that this doesn t work either Disclosure None |
C | Resistance For S P500 Is Near Be Aware Of Risk Off Moves | After some dollar weakness seen on Friday and a stock market rally during the US trading hours we see more upside for risky assets but only for the near term Keep in mind that the S P500 cash market is trading very close to the 1415 1430 resistance area where a bearish turning point is expected based on Elliott Wave corrective count from June lows and based on some strong Fibonacci resistance levels If we take a look on the S P Futures intra day then we can see a triangle shape which is nice Why Because we know that triangle occurs prior to the final move of the larger pattern so we should see a final trust out of a triangle before bears come into the market So if we consider the outlook for the S P then limited gains will also form resistance on EUR USD and AUD USD On EUR USD we can already count five waves down so current three wave bounces in wave 2 should find a top around 1 2350 1 2370 is also trading higher in three waves but here new high is expected as we are tracking a larger ending diagonal formation in wave C We expect test of 1 0615 1 0630 zone before we may look to the downside Also from an educational point of view keep in mind that all five waves within ending diagonal are structured by three legs So if we are on the right track with the market sentiment then we should get some nice trading opportunities in direction of risk off moves |
JPM | JPMorgan reaches 388 million settlement in mortgage securities case | Reuters JPMorgan Chase Co N JPM agreed to pay 388 million to settle a suit by investors claiming that the largest U S bank had misled them about the safety of 10 billion worth of residential mortgage backed securities it sold before the financial crisis The lawsuit brought by Fort Worth Employees Retirement Fund and other investors in offerings made before the 2008 financial crisis accused JPMorgan of misleading them about the underwriting appraisals and credit quality of the home loans underlying the certificates The lawsuit said that after Lehman Brothers Holdings Inc failed the certificates were worth at most 62 cents on the dollar JPMorgan agreed to a 13 billion settlement with the Justice Department in 2013 over allegations that the bank had misled investors in mortgage backed securities about the soundness and risks of the investments that helped bring on the subprime mortgage crisis of 2008 Throughout the litigation process JPMorgan has said that the poor performance of the certificates was not due to the quality of the loans but was caused by the collapse of the overall economy The 388 million settlement was disclosed in a court filing on Friday It is subject to approval by a judge
The case whose caption names a different plaintiff is Fort Worth Employees Retirement Fund v JPMorgan Chase Co U S District Court Southern District of New York No 09 03701 |
JPM | StanChart CEO Winters grabs reins in management shake up | HONG KONG Reuters Standard Chartered Plc L STAN Chief Executive Bill Winters will take more direct responsibility for the bank s biggest business divisions as he seeks to restore the fortunes of the emerging markets focused bank Under a new management structure to be phased in from Oct 1 the heads of major business units will report directly to Winters rather than his deputy Mike Rees StanChart said on Sunday The group needs to kick start performance reduce its cost base and bureaucracy and speed up decision making Winters said in a statement The lender is aiming for cost savings of 1 8 billion by the end of 2018 StanChart s shares fell by a third over the past two years hurt by problems including fines from U S regulators for misconduct plunging commodities prices and a weakened trading environment The stock has recovered by 5 percent this year after the lender said in January it would eliminate around 4 000 jobs and close its struggling equities division Winters a former JPMorgan N JPM banker took over in June The new structure sees Winters take over StanChart s investment bank commercial and private bank and retail banking divisions the three major units that had previously reported to Rees Rees who was deputy to previous Chief Executive Peter Sands and who oversaw the buildout of the investment banking division is the most senior survivor of the bank s previous management regime
Rees will work with Winters on the formulation of the bank s strategy StanChart said |
JPM | U S Israel make arrests related to JPMorgan hack Bloomberg | Reuters U S and Israeli law enforcement agencies have arrested four people in Israel and Florida related to securities fraud tied to computer hacks of JPMorgan Chase Co NYSE JPM and other financial institutions Bloomberg reported citing sources Israeli police spokesman Micky Rosenfeld said he did not have details of a scam involving JP Morgan but confirmed three arrests Three Israeli citizens were arrested on Thursday and have been remanded in custody appearing in court in Rishon Lezion near Tel Aviv Rosenfeld told Reuters A fifth person remains at large Bloomberg reported quoting officials JPMorgan said last October that names addresses phone numbers and email addresses of about 83 million customers were exposed in a hacking attack making it one of the biggest data breaches in history In the indictment which was unsealed on Tuesday two people were charged with securities fraud in a plan to pump up the value of low volume stocks Bloomberg said
Two people arrested in Florida are charged with running an unlicensed money remitting business related to the scheme Bloomberg added |
BMY | Celgene Gets FDA Approval For Inrebic In Bone Marrow Cancer | Celgene Corporation NASDAQ CELG announced that the FDA has approved Inrebic fedratinib for the treatment of adult patients with intermediate 2 or high risk primary or secondary post polycythemia vera or post essential thrombocythemia myelofibrosis The drug provides a new once daily oral option for patients affected by rare bone marrow cancer Between 16 000 and 18 500 patients are estimated to be living with myelofibrosis and 1 5 of every 100 000 people are expected to be diagnosed with the same annually The approval was based on positive results from the JAKARTA2 study The results of the study showed that 37 of patients treated with Inrebic 400 mg experienced a 35 or more reduction in spleen volume compared to just 1 1 of 96 of patients who received placebo However Inrebic an oral kinase inhibitor with activity against wild type and mutationally activated Janus Associated Kinase 2 JAK2 and FMS like tyrosine kinase 3 FLT3 carries a boxed warning for serious and fatal encephalopathy including Wernicke s The drug was added to Celgene s portfolio through the acquisition of Impact Biomedicines in 2018 Competition is stiff in this market Incyte s NASDAQ INCY Jakafi a first in class JAK1 JAK2 inhibitor is already approved for intermediate or high risk myelofibrosis Nevertheless the approval will strengthen Celgene s oncology portfolio Approval of new drugs and label expansion of the existing ones will drive the top line Celgene s shares have soared 47 8 so far this year against the decline of 2 In July 2019 the FDA approved Otezla an oral selective inhibitor of phosphodiesterase 4 PDE4 for the treatment of adult patients with oral ulcers associated with Beh et s Disease In May 2019 the European Commission EC approved a label expansion of lead drug Revlimid lenalidomide in combination with Velcade and dexamethasone RVd for the treatment of adult patients with previously untreated multiple myeloma who are not eligible for transplant Also during the same month the FDA approved Revlimid in combination with a rituximab product for the treatment of adult patients with previously treated follicular lymphoma FL or marginal zone lymphoma MZL Meanwhile the FDA accepted for review the new drug application NDA for ozanimod to treat patients with relapsing forms of multiple sclerosis RMS in the United States The European Medicines Agency EMA also accepted for review the Marketing Authorization Application for the drug to treat adults with relapsing remitting multiple sclerosis in the European Union The FDA also accepted the company s Biologics License Application BLA for investigational erythroid maturation agent luspatercept The candidate is being developed in collaboration with Acceleron Pharma Inc NASDAQ XLRN to treat adult patients with very low to intermediate risk myelodysplastic syndromes MDS associated anemia who have ring sideroblasts and require red blood cell RBC transfusions and also those with beta thalassemia associated anemia who require RBC transfusions Celgene has been in the news since January 2019 due to a merger announcement with large cap pharma Bristol Myers Squibb Co NYSE BMY for a whopping 74 billion Celgene currently carries a Zacks Rank 3 Hold You can see The Hottest Tech Mega Trend of AllLast year it generated 8 billion in global revenues By 2020 it s predicted to blast through the roof to 47 billion Famed investor Mark Cuban says it will produce the world s first trillionaires but that should still leave plenty of money for regular investors who make the right trades early |
BMY | Exelixis EXEL Stock Up 15 2 YTD On Strong Cabometyx Sales | Shares of Exelixis Inc NASDAQ EXEL have rallied 15 2 in the year so far while the performance of the remained flat Exelixis lead drug Cabometyx a tablet formulation of cabozantinib which was approved in the United States in April 2016 for the treatment of patients with advanced renal cell carcinoma RCC who have received prior anti angiogenic therapy continues to maintain momentum despite competition The company also expanded the drug s label for the treatment of previously untreated advanced RCC in December 2017 Cabometyx received another FDA approval for the treatment of patients with hepatocellular carcinoma HCC in January 2019 Cabometyx generated 189 million of net product revenues in the second quarter of 2019 The drug gained market share throughout the second quarter for the RCC indication The initial traction for the HCC indication in the second and third line settings was encouraging as well In the recently reported quarter patient demand rose 26 year over year and 9 sequentially driven by both RCC and HCC Prescriber base grew 45 The company ended the quarter with 34 market share backed by its broad label for advanced RCC The company s stellar performance in the first half of 2019 has created a solid platform for growth in the second half as well Concurrently Exelixis is working to expand the drug s label further It has collaboration agreements with Bristol Myers Squibb NYSE BMY and Roche OTC RHHBY to evaluate cabozantinib in combination with immunotherapy agents In May CheckMate 9ER the phase III trial evaluating the combination of cabozantinib and Opdivo versus Pfizer s NYSE PFE Sutent in patients with previously untreated advanced or metastatic RCC completed enrollment The study was sponsored by Bristol Myers Squibb Company BMY and co funded by Exelixis and partners Ipsen and Takeda Results are expected by early 2020 Exelixis also initiated a multi center randomized double blinded controlled phase III study COSMIC 313 to evaluate Cabometyx in combination with Opdivo and Yervoy versus Opdivo and Yervoy in patients with previously untreated advanced RCC Meanwhile the company made amendments to its multi center open label phase Ib study COSMIC 021 evaluating Cabometyx in combination with Roche s Tecentriq in patients with locally advanced or metastatic solid tumors Exelixis is looking to strengthen its pipeline as well It inked an exclusive option and license agreement with Aurigene a biotechnology company from India focusing on oncology and inflammatory disorders to in license up to six oncology programs from the latter Per the terms Exelixis will make an upfront payment of 10 0 million for exclusive options to license three pre existing programs Exelixis currently carries a Zacks Rank 3 Hold You can see Legalizing THIS Could Be Even Bigger than MarijuanaAmericans spend an estimated 150 billion in this industry every year more than twice as much as they spend on marijuana Now that 8 states have fully legalized it with several more states following close behind Zacks has identified 5 stocks that could soar in response to the powerful demand One industry insider described the future as mind blowing and early investors can still get in ahead of the surge |
BMY | New Strong Buy Stocks For August 20th | Here are 5 stocks added to the Zacks Rank 1 Strong Buy List today AngloGold Ashanti Limited AU This gold mining company has seen the Zacks Consensus Estimate for its current year earnings increasing 14 9 over the last 60 days AngloGold Ashanti Limited Price and Consensus
Bristol Myers Squibb Company NYSE BMY BMY This company that discovers develops licenses manufactures markets distributes and sells biopharmaceutical products has seen the Zacks Consensus Estimate for its current year earnings increasing 2 2 over the last 30 days Bristol Myers Squibb Company Price and Consensus
Integer Holdings Corporation ITGR This company that operates as a medical device outsource manufacturer has seen the Zacks Consensus Estimate for its current year earnings increasing 2 3 over the last 60 days Integer Holdings Corporation Price and Consensus
Waddell Reed Financial Inc WDR This company that provides investment management and advisory services has seen the Zacks Consensus Estimate for its current year earnings increasing 7 6 over the last 60 days Waddell Reed Financial Inc Price and Consensus
BRP Inc DOOO This company that designs develops manufactures distributes and markets powersport vehicles and marine products has seen the Zacks Consensus Estimate for its current year earnings increasing 1 8 over the last 60 days BRP Inc Price and Consensus
You can see Legalizing THIS Could Be Even Bigger than MarijuanaAmericans spend an estimated 150 billion in this industry every year more than twice as much as they spend on marijuana Now that 8 states have fully legalized it with several more states following close behind Zacks has identified 5 stocks that could soar in response to the powerful demand One industry insider described the future as mind blowing and early investors can still get in ahead of the surge |
C | UPDATE 2 Japan s Kokusai wants to raise euro weight in 33 bln bond fund | Kokusai Asset looking to boost already overweight euro
weighting
Euro attractive due to solid outlook for euro zone
economies
No major outflows from Kokusai s 33 bln bond fund after
quake
Unlikely to increase weightings in East European bonds
Lowered exposure to Aussie to 6 pct from 15 5 pct in Dec
Adds details more comments
By Chikafumi Hodo and Michiko Iwasaki
TOKYO April 15 Reuters Japan s Kokusai Asset Management
said it plans to increase the weighting of euro denominated
bonds in its 33 billion bond fund the world s second largest
due to a solid outlook for euro zone economies
Masataka Horii who oversees Kokusai Asset s Global
Sovereign Open fund also told Reuters he was looking for
opportunities to buy U S dollar bonds but was so far holding
back due to uncertainty over the Federal Reserve s monetary
policy
Global Sovereign invests in government bonds globally with
high credit ratings It is popular with Japanese retail
investors and has 2 75 trillion yen 33 billion in assets
under management making it the world s second largest bond fund
after PIMCO s Total Return Fund according to data from Thomson
Reuters Lipper
The fund s euro weighting rose to 31 8 percent as of April
7 up from about 24 percent in June
While the weighting is above the benchmark of 30 7 in
Citigroup s World Government Bond Index WGBI Horii said there
was room to add to its euro holdings citing expectations the
European Central Bank would tighten credit further this year
At a peak in late 2009 Kokusai had 43 percent of the fund
in euro assets
The euro zone economy is improving led by growth in
Germany We expect this to continue to make the euro the most
attractive currency relative to others Horii said in an
interview
Global Sovereign s weighting in U S Treasuries and U S
agency bonds stands at 22 9 percent below the benchmark of 26 5
percent
We want to see how the Fed will end QE2 At this point
it s not clear there are still much speculation over this
Horii said referring to the Fed s 600 billion bond buying
program known as QE2
EAST EUROPE INVESTMENTS TO SLOW
The fund raised its yen cash positions to prepare for major
selling by investors following Japan s devastating earthquake
and tsunami on March 11 but so far has not suffered heavy
outflows Horii said
The weighting for yen denominated bonds including cash
has risen to 9 1 percent after the quake from about 7 percent in
February Horii said the fund planned to cut the weighting back
down to around 7 percent in the near term
Kokusai Asset will keep its exposure to yen bonds sharply
below the benchmark of 30 9 percent with interest rates expected
to remain at unattractive levels said Executive Officer Satoru
Yamanouchi who was also present at the interview
Yamanouchi said a series of downgrades to Japan s sovereign
ratings did not influence the fund s stance on yen bonds
Moody s Investors Service warned last month after the
earthquake that the huge financial needs Japan faces may erode
investor confidence in the country s ability to repay its debts
but said that a fiscal crisis was not imminent
Standard Poor s cut Japan s rating by a notch to AA minus
AA three levels below the top grade at AAA in late January
for the first time since 2002
Global Sovereign may slow its investments in East European
bonds after a sharp rise in those weightings from the second
half of last year Horii said For example the weighting for
Sweden nearly doubled to 10 8 percent from 5 9 percent in July
The fund has reduced holdings in Australian dollar assets to
around 6 1 percent as of April 7 from a recent high of 15 5
percent in December because the currency became less attractive
relative to the euro Horii said
Still the fund s exposure to the Aussie remains sharply
above benchmark of 0 9 percent
Global Sovereign generated a postive return of 1 1 percent
over the past 6 months to April outperforming the benchmark
WGBI which was flat But over the past one year it has
underperformed slightly registering a loss of 2 9 percent
The fund has also lagged the benchmark since its inception
in December 1997 with a return of 34 8 percent against WGBI s
gain of 47 3 percent
1 83 510 Japanese Yen
Editing by Chris Gallagher and Nathan Layne |
C | INTERVIEW Terra Firma s Hands says in talks with Odeon buyer | BOAO CHINA April 15 Reuters Terra Firma Capital
Partners Ltd is in talks with a buyer for the planned
sale of its cinema chain Odeon UCI Cinemas Group
the buyout group s founder Guy Hands said on Friday
Hands told Reuters the buyout firm would want at least 1 2
billion pounds 1 96 billion for the asset
We ve had a number of unsolicited inquiries and we are in
discussions with one party Hands told Reuters in an interview
at the Boao Economic Forum in China
Terra Firma has been in the spotlight since its 4 billion
pound deal to take music business EMI private done at the
height of the buyouts boom in 2007 turned sour
Battling under the weight of its debt the company finally
fell into the hands of its lender Citigroup Inc in
February wiping out Terra Firma s 1 7 billion pound equity
investment in the business ID nLDE71102O
1 0 612 British Pounds
Reporting by Farah Master Editing by Denny Thomas |
C | INTERVIEW UPDATE 1 Terra Firma s Hands says in talks with Odeon buyer | Hands seeks at least 1 96 bln for Odeon
Hands interested in green technology investments in China
Adds details background
By Farah Master
BOAO CHINA April 15 Reuters Terra Firma Capital
Partners Ltd is in talks with a buyer for the planned
sale of its cinema chain Odeon UCI Cinemas Group
the buyout group s founder Guy Hands said on Friday
Hands told Reuters the buyout firm would want at least 1 2
billion pounds 1 96 billion for the asset
We ve had a number of unsolicited inquiries and we are in
discussions with one party Hands told Reuters in an interview
at the Boao Economic Forum in China
Terra Firma has been in the spotlight since its 4 billion
pound deal to take music business EMI private done at the
height of the buyout boom in 2007 turned sour
Battling under the weight of its debt the company finally
fell into the hands of its lender Citigroup Inc in
February wiping out Terra Firma s 1 7 billion pound equity
investment in the business ID nLDE71102O
Hands declined to comment on EMI
On Odeon he said Our choice is either to keep the company
and continue to expand it or sell it But we are very happy with
the management team very happy with their plans and we will
evaluate the offer against what the alternatives are Hands
added
Terra Firma received approaches for Odeon last year after
rival cinema chain Vue Entertainment was sold to
Doughty Hanson One of those approaches for Odeon
came from BC Partners which had been narrowly pipped
in the Vue auction
Hands who has been making more frequent trips to China in
recent months said he was not planning direct investments into
China but would instead look to partner with local companies
particularly in the green technology such as wind where
technology expertise is relatively underdeveloped
We are talking to a handful of companies to try and bring
it down to a few companies We would look at waste energy
solar water treatment Hands said
Both state and private companies are being considered he
added but was unable to provide specific company names
1 0 612 British Pounds
Reporting by Farah Master Editing by Denny Thomas |
C | GLOBAL MARKETS WEEKAHEAD Interest rates back to fixate investors | By Jeremy Gaunt European Investment Correspondent
LONDON April 15 Reuters Financial markets have swung
back into a new but familiar phase worrying about interest
rates and not coincidently the euro zone debt crisis is
also bubbling after a brief hiatus
It all points to a couple of weeks ahead that are likely to
be volatile risk on risk off with a particular focus on
the U S Federal Reserve s meeting on April 26
The interest rate issue is at its most obvious on the
foreign exchange market where carry trading has returned
Investors are borrowing in low yielding currencies to invest in
higher yielding ones
The euro for example is at its highest in 15 months
against the dollar
This is being driven by yield differentials now available
after the European Central Bank raised interest rates with more
likely to come while Japan keeps monetary conditions
ultra loose following its devastating earthquake and tsunami
A sort of middle ground is being held by the Fed which is
not likely to raise rates until next year but which has to
decide on the future of its asset buying quantative easing QE
programme due to end in June
It is at this point that equity investors come into the
picture QE has produced a flood of liquidity into markets that
has essentially driven investors into stocks in part because it
has made a lot of fixed income unattractive
Equity markets have been remarkably resilient shrugging off
just about everything that is being thrown at them from
rocketing oil prices wobbly euro zone debt a big blow to
Japan s economy and a revolt in the Arab world
Gary Baker head of European equity strategy for Bank of
America Merrill Lynch says equity investors are actually
reluctant bulls who can t fight Fed driven liquidity
They see very little alternative to equities he said
It all makes markets highly vulnerable to sudden surprising
change So any comments from the various factions in the U S
central bank hierarchy over the next few weeks may be even more
market moving than usual
Flash PMIs from across the euro zone may also be signposts
to the ECB s next move
SPILLOVER
Interest rate speculation is also playing into the euro zone
debt crisis with the tighter ECB policy and strong euro doing
few favours for the struggling peripheral economies
This is most evident in Greece where the spread between
10 year bonds and German equivalents is now more than 1 000
basis points and talk is rife of restructuring being needed
Prime Minister George Papandreou said on Friday that Greece
would present details of fresh austerity and privatisation plans
after Easter They are an attempt to convince markets it can
tidy up its finances and avoid restructuring
Investors however continue to pressure peripheral debt
despite various plans to draw a line under the problem
Papandreou s announcement that details would come later did
little to ease concerns
Differing interest rate prospects in the meantime have
been a major catalyst behind the recent shift of investment
flows into emerging markets
Fears of tightening in red hot emerging economies put some
investors off at the beginning of the year but a belief that
the rate cycle was peaking opened the door to aggressive new
flows
Again this makes markets particularly vulnerable to
surprises epitomised by the risk averse reaction to China s
increasing growth and higher consumer price inflation reported
in the past week
India also reported higher than expected inflation
The coming week brings central bank meetings in a number of
major emerging markets notably Hungary Brazil Turkey Israel
and Thailand
Turkey may be the most interesting as it will feature a
newly appointed central bank governor Erdem Basci widely seen
as the main architect of the country s unorthodox monetary
policy which twins rate cuts with rises in bank reserve ratios
in order to tighten policy
MORE EARNINGS
The remarkable performance of world equities meanwhile
will be tested in the coming week by the latest earnings season
this time with Europe joining in with Wall Street
The U S reports will be dominated by banks including
Goldman Sachs Citigroup and Wells Fargo Europe will hear from
the likes of Novartis LVMH and Peugeot
Europe may disappoint Thomson Reuters StarMine data
suggests STOXX Europe 600 companies may post first quarter
figures that will be on average 1 percent below expectations
Sentiment on the equity market nonetheless remains
constructive as seen in commodity trader Glencore s planned 12
billion initial public offering next month
Additional reporting by Sujata Rao and Dominic Lau Editing by
Catherine Evans |
C | European stocks drop as financials decline DAX down 0 5 | Investing com European stock markets were broadly lower on Monday as shares in the financial sector led losses amid concerns over the region s ongoing debt crisis while U S futures indexes pointed to a lower open on Wall Street During European morning trade the EURO STOXX 50 sank 0 85 France s CAC 40 dropped 0 7 while Germany s DAX 30 slumped 0 5 Shares in the financial sector performed poorly amid speculation over Greek debt restructuring and after Finland s anti euro party True Finns made big gains in the country s parliamentary election on Sunday raising the risk of disruption to a euro zone bailout plan for Portugal Europe s third largest banking group Societe Generale dropped 3 shares in Spain s biggest lender Banco Santander fell 2 25 while Italian banking giant Unicredit saw shares slump 2 2 Shares in Italy s largest phone company Telecom Italia tumbled 5 1 after it said it would increase its fixed line monthly fee by 2 5 to EUR16 5 per month and apply new rates starting July 1 Meanwhile Swiss medical device manufacturer Synthes saw shares surge 6 8 after it confirmed it was in talks with Johnson Johnson The Wall Street Journal reported on Friday that J J was looking to buy Synthes in a deal that could be valued at roughly USD20 billion Shares in Dutch consumer electronics giant Philips added 0 5 after it reported first quarter revenue rose 5 5 to EUR5 26 billion The company said it expected headwinds in 2011 due to the Japan tragedy impacting our revenue and supply chain In London the FTSE 100 shed 0 3 as shares in Barclays dropped 1 9 after the Sunday Telegraph reported that a group of investors which together hold more than 10 of its equity have told the board they would prefer the British bank to be domiciled outside of the U K Shares in Lloyds Banking Group fell 1 45 while Royal Bank of Scotland saw shares slide 1 2 The outlook for U S equity markets meanwhile was downbeat ahead of earnings reports from Citigroup and semiconductor manufacturer Texas Instruments The Dow Jones Industrial Average futures pointed to a drop of 0 3 S P 500 futures indicated a loss of 0 4 while the Nasdaq 100 futures shed 0 35 Later in the day Federal Reserve Bank of Dallas President Richard Fisher was due to speak at two events in Atlanta |
C | GLOBAL MARKETS Euro zone reels over Finnish vote Greek struggle | Potential Greek debt restructuring in focus
Finnish vote adds concerns about euro zone bailouts
Earnings disappoint
Wall Street set for losses
By Jeremy Gaunt European Investment Correspondent
LONDON April 18 Reuters The euro sank on Monday and
European stocks fell into the red for the year as the rise of a
euro sceptic party in Finland and growing unease about Greek
debt battered investor sentiment in the single currency zone
Equities were also weaker on disappointing European earnings
and concerns about Japan s coming reporting season and Wall
Street looked set for losses
Gold and silver hit new record highs on inflation fears
MSCI s all country world stock index started
what is in many places a holiday shortened week trading down
more than half a percent led by Europe where the FTSEurofirst
300 was off 1 percent
The fall wiped out the European index s gains this year
leaving it in negative territory for 2011
Japan s Nikkei earlier closed down 0 36 percent
In a weekend election Finnish voters handed the anti euro
True Finns party a crucial role in parliament and possibly a
path into government
Finland s parliament has the right to vote on European Union
requests for bailout funds meaning it could in theory hold up
costly plans to shore up Portugal and bring stability to debt
markets ID nLDE73G02L ID nHEL010101
Talk about Greek debt restructuring has also boiled up in
recent weeks including a Greek newspaper report on Monday that
the government had asked the International Monetary Fund and
European Union to start discussions on a restructuring
A Greek finance ministry source said the report was not
true ID nATH006025 ID nLDE73H0DR
Equities were also being hurt by an increasing concern that
the current earnings season is not going to be as good as recent
quarters
Company results haven t been that great and there are
concerns that margins for a lot of companies are not going to
rise The bias for the market is more on the downside There are
a lot of risks and you may get a serious knock said Koen De
Leus strategist at KBC Securities in Brussels
Dutch consumer electronics major Philips Electronics
posted lower than expected first quarter net profit and
said it would divest its struggling television business
ID nLDE73H03T
Citigroup Inc is expected to report a drop in
quarterly profit and revenue later as an uncertain trading
environment and weak consumer loan demand hinder its efforts to
move past the financial crisis ID nN17260604
WEAKER EURO
The euro hit a 10 day low against the dollar on concerns
about Greek restructuring and the Portuguese bailout
It fell 0 9 percent to 1 4305
The focus is turning towards the Greek situation and is
acting as a dampener on the euro it would be the first
restructuring and the market has no idea when or whether it will
happen said Mic Ingenuus currency strategist at Nordea in
Copenhagen
Analysts were sceptical the Finnish vote could derail the
Portugal s bailout but it added to already negative sentiment
On bond markets Portuguese Spanish and other lower rated
euro zone government debt came under pressure
Greece s five year credit default swaps the cost of
insuring against default rose 84 basis points on the day to a
new record high of 1 220 basis points also dragging peripheral
peers with them
Additional reporting by Atul Prakash and Jessica Mortimer
Editing by John Stonestreet |
C | ANALYSIS Asia s derivative reforms set to heap pain on banks | Banks may close derivative operations in some countries
Countries reluctant to cede sovereign control of clearing
Pan regional clearing still a long way off
By Rachel Armstrong
SINGAPORE April 18 Reuters Asia s derivative markets
risk becoming more fragmented and significantly more expensive
to trade than those in Europe and the United States due to
government reluctance to cede sovereign influence over clearing
and trade settlement
That means banks may eventually stop trading derivatives in
some Asian centres as the cost will no longer be worth it
Asia s governments are in the process of responding to the
Group of 20 leading economies agreement to force as many
over the counter OTC derivatives through central clearing
houses as possible
At present each country is coming up with separate plans for
using their own national clearing house and setting different
rules for which products should be cleared rather than looking
at some kind of pan regional system
The decision by Australia s government to block the
Singapore Exchange s bid for the Australia Exchange
on the grounds they didn t want clearing and settlement
services in foreign hands highlights the reluctance to
relinquish control over these operations
But industry experts warn the increased expense and
bureaucracy incurred by having to use many different clearing
houses means some banks could shut down their derivative
business in some countries
In some countries you may see banks saying I don t do
enough business in this country to justify becoming a clearing
member I might as well shut down my business here said Keith
Noyes Asia Pacific director of the International Swaps and
Derivatives Association ISDA
The drive for reform of the 600 trillion OTC market comes
from the chaos that followed the collapse of Lehman Brothers in
2008 The opaque nature of the OTC market meant widespread
confusion over who was exposed to the stricken bank
That prompted the move to push derivatives through central
counterparties to ensure trades will be completed even if one
side defaults
The United States has put in place reforms under the Dodd
Frank law to force more derivatives trading onto exchanges and
almost all through clearing houses The European Union is set to
approve a similar law
LESS IS MORE
Those reforms will make it more costly to trade derivatives
in those markets But the one advantage of trading in the United
States or Europe is a greater ability to put many different
types of trade through a single clearing house
Using a smaller number of clearing houses makes it easier
for investors to manage the collateral needed to back their
trades reconcile all of their trading positions and lower the
overall execution costs
If you have multiple clearing houses with different
requirements the investor has to be in separate relationships
with all of them so this may lead to increased capital
requirements and initial margins even if they go through one
general clearing member said Pierre Mengal Head of Collateral
Management Services for Asia Pacific at Citigroup
In Asia the likes of Hong Kong South Korea Tokyo China
and India have all stated their plans to meet the G20
commitments but there is little expectation for any kind of
link up between their clearing houses anytime soon
The Asian market is fairly fragmented and it s hard to see
certain countries linking up for historical reasons said
ISDA s Noyes
That means that a hedge fund for example would not be able
to use just one or two clearing houses in Asia to handle all of
their derivative trades in the region
We may end up having several clearing facilities across
different markets such as Singapore Hong Kong India Korea and
Japan with potentially no interoperability between them said
Mengal at Citi
So a Singapore based client may not just use the SGX s CCP
central counterparty clearing house to access the Tokyo market
because the requirements for membership will be different he
added
HOPE FOR REGIONAL HOUSE
The first major bourse in Asia to begin offering clearing
services for financial OTCs is the Singapore Exchange despite
the city state not putting in place any mandatory requirements
for derivatives to be cleared
SGX president Muthukrishnan Ramaswami is hoping the
first mover advantage will make them a dominant clearing
provider in the region He argues moves by each country to set
up separate clearers will likely prove futile
The cost of building this service and the expertise you
need to operate these services do not support the volume of
business that exists in each country he said
Quite a few countries say they ll have the infrastructure
but I don t think in the long run it will pan out that way
there will be consolidation
The hope for market participants is that this consolidation
or at least some kind of link up happens sooner rather than
later
Failure to have a sensible degree of interoperability
between the major market participants could end up being quite
negative both for the sell side and buyside said Andrew
Gordon who oversees Bank of New York Mellon s broker dealing
and alternative investment services in Asia
He says a lot of the fund mangers he advises in the region
are waiting to see how the reforms pan out before deciding how
to change their OTC trading operations
But the big fear is that the emergence of regional clearing
houses will take longer than hoped for given each country s
determination to show they re meeting their G20 commitments but
with a reluctance to link up with other countries and lose a
degree of control
ISDA s Noyes says some Asian governments may force as many
OTCs through their clearing houses as possible in order to
recoup their costs even though some financial products may not
be traded often enough to make central clearing feasible
I think the potential risks are that there is political
pressure to do more and that because the volumes aren t great
there is incentive to take on more products simply to get the
clearing house up to break even or profitable volume levels he
said
The long term vision for many banks and investors in Asia is
a single pan regional clearing house However as Europe s
experience shows financial market integration tends to need
political integration first something unlikely in Asia anytime
soon
This is the journey that Europe s been on for 30 years so
there s no reason to believe that Asia s going to find a magical
solution said SGX s Ramaswami
1 1 243 Singapore Dollars
Editing by Muralikumar Anantharaman |
C | Talking Forex Daily Wrap | EUR USDThe pair settled the session sharply higher after ECB s Draghi said that the bank will do whatever is needed to preserve the EU adding that if premia on government borrowing hurt monetary policy transmission they would come within the bank s mandate In turn this resulted in an aggressive EUR short squeeze which saw the pair post gains of over 100pips Also supporting the move higher were reports citing European sources that the ECB is considering implementing palliative measures to ease market pressure exerted on countries with more economic difficulties specifically Italy and Spain In terms of technical levels supports are seen at 1 2200 1 2118 and then at 1 2100 On the other hand resistance levels are seen at 1 2334 95 and then at 1 2401 GBP USDThe pair traded in tandem with the EUR USD and settled the session with a net gain of around 200pips after ECB s Draghi said that the bank will do whatever is needed to preserve the Euro In terms of U K related commentary the FT reported that following yesterday s poor GDP figures leading bond investors have warned that the growth report may well hasten a sovereign downgrade The U K is rated triple A by all three major ratings agencies with a stable outlook from S P and a negative outlook from both Moody s and Fitch Elsewhere Michael Saunders a U K economist at Citigroup said that the Bank of England could conduct further growth measures including reducing the Bank Rate to nearly zero In terms of technical levels supports are seen at 1 5600 1 5500 and then at 1 5458 On the other hand resistance levels are seen at 1 5738 and then at the 200 DMA line at 1 5747 USD JPYThe pair settled higher after encouraging comments by ECB s Draghi prompted a relief rally across the board In terms of Japan specific commentary Japan s public pensions fund said it has been selling JGBs as the number of people eligible for retirement payments increases The President of the Government Pension Investment Fund said that payouts are getting bigger than insurance revenue so selling JGBs is necessary to raise cash adding that the fund must now consider investing in assets beyond the conventional In terms of technical levels supports are seen at 77 94 65 and then at 77 36 On the hand resistance levels are seen at 78 28 39 and then at 78 54 |
C | The Fed Takes Bronze In The Gold And Silver QE3 Race | I will go out on a limb as I always do and predict something most won t expect to come from today s Federal Reserve decision on whether to implement QE3 or not I don t think they will My reasoning is based more on credibility than it is on anything else The Fed has to maintain the perception that they are in control If they don t have that what do they have This is a tortoise race for the Fed right now They are still relevant as I first pointed out back in September of 2008 in where I pointed outUnfortunately the Fed is expanding their duties to produce market stability They ve been doing it all year by interfering in the markets via the lowering of the Fed Funds rate This IMO and the opinion of many others will eventually come back to haunt them That eventually comment is still in our future Treasuries are at historic lows and the Fed still has perceived relevance The smart money however has been systematically putting money into gold and silver which are still in their second stage where the market makers will try and buck you out of the trade along with the financial media Obama and QE3 In the past I have said that I think Obama will force the Fed to play the QE3 card in order to get elected a second term If there is any implementation of QE3 it will come straight from the top But if you are Bernanke you have to look at what s happening right now and since the Fed has got interest rates have come down to historic lows and we have had a recent bounce in the stock market on speculation of QE3 and the unemployment picture is somewhat stagnant at the 8 range at least based on government figures I think he will just use strong language saying we re ready and willing to use QE3 when we need to Bernanke doesn t want to come across as political and any move for QE3 will make it look that way when the Fed tries as hard as possible not to be in favor of one party or the other QE3 would help Obama and guarantee him the election What will Bernanke do Auditing The Fed Another reason Bernake doesn t want to interfere in the market right now is because the House just passed another and it is heading to the Senate for a possible vote where Harry Reid makes the decision whether or not to allow it to even come to the floor While Harry Reid in the past has constantly asked for an audit of the Fed today s version of Harry Reid won t pay it any attention Congressional hypocrite s at their finest Bernanke can breath a sigh of relief Euro Woes Continue Nothing New Here But Perception Of Solutions Still Exist There Are None Moving to Europe we see what the empty words of ECB President Mario Draghi did when he said they would The markets rose dollar crashed and gold and silver bounced But reality is already slipping back in today with the disappointing jobs report out of Europe where since the euro was born Did you expect differently The euro is still heading down to its 118 119 danger zone I spoke of in January in 2012 Predictions For Gold Silver Stock Market Economy and Elections The dollar will be the primary benefactor of that still pressuring gold and silver prices Yesterday gold hovered around 1 615 and silver just under 28 after the ECB President s comments set off a bounce But I believe it to be another dead cat bounce and I still see that one last push down to get people to scream The bottom of most all declines end with that kind of price movement I spoke of in Gold Price Doing Better Than You Think Watch for that candlestick tail My Intuition On Gold And Silver I feel I have developed an intuition as to what s occurring in the economy and with the Fed based on the enormous amount of reading I am doing I am one of the few who speak of the banks in detail and I don t need to write an article everyday and talk about gold and silver and the markets I would write more but am knee deep in writing my next book and what I do write is still words one can act upon without all the day to day manipulation dollar crashing hoopla from the gold community I get a kick out of reading the headlines over at Kitco com and seeing how in one minute gold and silver are up because of dollar weakness in one headline and then a few hours later read gold and silver down on selling pressure euro problems They can pick a reason out of a hat and make a title out of it based on whether gold is up or down I feel we will be somewhat status quo with gold and silver for the time being and I think we need to look for that one burst down for the final opportunity to catch the bottom My advice is still to dollar cost average into a position and this will give you a better overall price After the elections we will see some real movement in the price of gold and silver as it s simple math We should also see the beginning of the end of the Fed with or without an audit in the next few years when our next President tries to get We the People to bailout the banks again It s the banks I watch most Someone asked on another site who was the face of the melt down of 2008 2009 I replied the following Those who said the repeal of the Glass Steagal Act in 1999 with the passing of the Financial Services Modernization Act deserve kudos but I come to a different conclusion as to the real face of the meltdown In 1999 it was a Congressional bi partisan effort led by Charles Schumer D NY Christopher Dodd D CT and Phil Gramm R TX who received millions from the Banking Insurance and Securities industry that led to the deregulation bill Citigroup s Sandy Weill also influential in the passing has now come out against it nice of him to do living off the millions he made off it sipping on his Mai Tai s enjoying his retirement Of course Dodd says he s wrong lol But what no one in the media is discussing except me are the sub investment grade derivatives as opposed to the 600 trillion of normal interest rate swaps some in the media do discuss held by the nations top 5 banks that today total more than at the height of the 2008 2009 financial crisis Dodd Frank did nothing to curtail this activity Why When you put the Fox in charge of the Hen House what do you expect Dodd was part of the repeal of Glass Steagal and Frank who said in 2003 that Fannie and Freddie are fine and won t need to be bailed out Who leads this sorry bunch of top banks that will take the banking system down Jamie Dimon s J P Morgan Chase who just lost 1 billion no 2 billion no now 5 billion on an alleged London whale trader s activity This is what happens when you have no counterparty to the over 2 trillion of sub investment grade derivatives that Chase has coming due in the next 5 years In reality the only counterparty will be the Federal Reserve the lender of last resort and you know they won t get caught taking a hit so this leaves only one face for the meltdown We the People via some Chicken Little crying by Timmy Geithner see Secretary Paulson circa 2008 It is We who keep electing these same clowns like Dodd and Frank into office It is We who don t put enough pressure on Congress to Audit the Fed It is We who bailed out the banks under Bush It is We who pay for Obama s trillion dollar budget It will be We who they try and stick with the bill for the nations top 5 banks gambling habit in sub investment grade derivatives We the People are becoming We the Serfs right before our very eyes We need to stop bailing out failed institutions take the hit on practicing austerity and living within our means stop policing the world with money only the Fed can print and get back to producing what the world wants On a side note those Olympic medals that U S athletes and others are winning have a metal value of 4 71 All the money they make off of advertisers sponsors etc you would at least think the athlete s would get the real thing |
JPM | For U S banks depositors could spoil joy of higher interest rates | By David Henry NEW YORK Reuters Rising U S interest rates may not boost bank profits by as much as many executives and investors hope JPMorgan Chase Co N JPM Chief Executive Jamie Dimon said on Tuesday Investors expecting the Federal Reserve to lift rates this year have purchased U S bank shares helping them perform much better than the overall U S stock market Rising rates allow banks to charge higher rates on their loans which can boost their income But higher rates can also increase a bank s costs in particular the interest that they have to pay depositors In past business cycles higher costs could take some time to kick in Banks could be slow in paying higher rates to depositors because customers were often reluctant to complete the paperwork necessary to switch their money to a different bank But this time it will be easier for depositors to move money around online and with their mobile phones JPMorgan believes it will have to be faster to offer more interest to retain depositors Dimon said We re assuming that whatever happened in the last cycle this one will be worse Dimon said in a conference call with analysts after his bank posted quarterly results In other words we will gather less of the benefit from rates going up than we have in the past Dimon said If Dimon is right investors could be disappointed as banks struggle more than expected to generate revenue increases from higher rates Analyst Chris Mutascio of Keefe Bruyette Woods said some banks will likely find they have to pay more than others to keep deposits Banks with more deposits resting in checking accounts will have an advantage because customers are often reluctant to switch banks and re enter all their bill payment information Customers may also hesitate to switch deposits if they use the same bank for multiple services Mustacio said John Stumpf chief executive officer of Wells Fargo Co N WFC who spoke on his own call with analysts after his bank posted results on Tuesday said Wells Fargo will have an easier time keeping depositors We ve modeled this Stumpf said One of the great undervalued parts of our business today is the quality of our deposit franchise and you ll see that in the backup of interest rates Dimon said JPMorgan Chase has been going through intensive analysis to estimate how much more rivals would have to offer to woo away customers While few people may switch when the Federal Reserve first lifts overnight rates by one quarter of a percentage point many more will change after the third such hike Dimon said When interest rates rise closer to historical levels having to pay more for deposits is a key reason JPMorgan expects its profit margin on loans known as net interest margin to widen to about 2 7 percent instead of a full 3 percent Its net interest margin was 2 09 percent in the second quarter down from 2 19 percent a year earlier the bank said Some banks have quietly tested the market by selectively offering higher rates to see how many deposits they attract according to a report by analyst Ken Usdin of Jefferies
A JPMorgan spokeswoman declined to say if the bank has made such offers |
JPM | European markets rise before Yellen speech Greek vote | By Marius Zaharia LONDON Reuters European stocks rose and bond yields fell on Wednesday with investors optimistic that the Greek parliament will approve a vital third bailout although the moves were limited before a speech by Federal Reserve chief Janet Yellen The dollar DXY was little changed against a basket of major currencies trading at 96 64 before Yellen s congressional testimony which might offer more hints about the timing of an interest rate hike after a surprise fall in U S retail sales on Tuesday Investors will be keen to see to what extent the prolonged uncertainty over Greece s debt crisis and the slump in Chinese stocks have affected the Fed s outlook U S stock futures indicated a marginally higher open on Wall Street The latest developments in Greece and China have wider ramifications as they could affect the Federal Reserve s decision to normalize policy JPMorgan NYSE JPM Asset Management global strategist Thushka Maharajat said We maintain our view of a September rate increase but that view has become more balanced It is predicated on Europe containing risks from the Greek crisis The Greek parliamentary vote is seen as the major hurdle to a final agreement for the bailout which could end at least temporarily months of intense uncertainty volatility and frequent risk aversion in financial markets The pan European FTSEurofirst 300 index FTEU3 was up 0 2 percent to 1 583 77 having risen for five days in a row The euro which has lost 1 5 percent this week was up 0 1 percent at 1 1017 Ten year yields on Spanish Italian and Portuguese bonds seen as vulnerable to Greek contagion fell 5 8 basis points to 1 99 percent 2 03 percent and 2 72 percent respectively Bonds were the biggest movers among European assets the difference being made by daily European Central Bank buying under its trillion euro stimulus program Yields on German Bunds fell 4 basis points to 0 80 percent Investors are betting that despite all the opposition from his own party Greek Prime Minister Alexis Tsipras will get sufficient votes to pass the reforms today said Nick Stamenkovic a bond strategist at RIA Capital Markets An International Monetary Fund study published on Tuesday showed that Greece needs far more debt relief than European governments have been willing to consider CHINA GROWTH China s second quarter gross domestic product grew an annual 7 percent flat on the previous quarter and slightly higher than analyst forecasts Fixed asset investment and industrial output growth also beat economists forecasts But Shanghai s benchmark composite index SSEC fell 3 percent and the CSI300 index CSI300 of the largest listed companies in Shanghai and Shenzhen dropped 3 5 percent Further stimulus is expected after the quarter ended with a savage correction that shaved about 30 percent off stock markets value since last month before Beijing s support stemmed the freefall for a while Stock investors at present care more about what the government policy toward the market is whereas the connection between the economy and the market has somehow loosened Haitong Securities senior stock analyst Zhang Qi said Oil prices dipped as the market prepared for a gradual increase in supply after Iran signed a nuclear deal with six world powers under which sanctions imposed by the United States the European Union and the United Nations are to be lifted in exchange for curbs on Tehran s nuclear program
Brent crude was down 41 cents from its previous settlement trading at 58 10 a barrel U S futures were down 35 cents at 52 69 |
BMY | Mallinckrodt MNK Q2 Earnings Beat Generics Spin off On Hold | Shares of Mallinckrodt Public Limited Company NYSE MNK were down 12 after the company reported mixed results for the second quarter of 2019 and provided an update on its business separation plan The company reported adjusted earnings of 2 53 per share in the quarter up from the year ago quarter s 2 16 Also the bottom line beat the Zacks Consensus Estimate of 2 10 Net sales in the quarter came in at 823 3 million down 0 2 year over year The figure missed the Zacks Consensus Estimate of 824 million Mallinckrodt s stock has gained 2 in the year so far compared with the industry s growth of 8 8 Quarter in DetailThe company now operates two reportable segments aligned to the previously announced separation the Specialty Brands and the Specialty Generics Specialty Brands sales came in at 627 8 million down 0 6 year over year Acthar Mallinckrodt s largest product generated sales of 266 4 million down 9 1 year over year primarily due to continued reimbursement challenges impacting new and returning patients and continued payer scrutiny on overall specialty pharmaceutical spending Inomax the company s second largest product generated sales of 139 7 million up 6 6 driven by continued demand and contract renewals Ofirmev sales increased 5 7 year over year to 90 5 million owing to strong demand and order timing Sales of the Therakos immunology platform were 60 9 million up 7 2 owing to growth in the United States Specialty Generics sales amounted to 195 5 million up 0 9 driven by the recapture of market share Adjusted selling general and administrative expenses in the quarter were 208 6 million down from 215 8 million in the year ago quarter Research and development expenses decreased from 92 6 million to 79 6 million owing to timing of certain developmental milestone payments in the prior year Update on Specialty Generics SeparationIn December 2018 the company announced that it intends to spin off the Specialty Generics business into a new company However based on current market conditions and developments including increasing uncertainties regarding the opioid litigation the company has shelved this plan for now Mallinckrodt continues to evaluate a range of options for the separation of the Specialty Generics business Guidance UpdateSpecialty Brands sales are expected to be down 5 to up 1 The company continues to expect the hospital products to collectively achieve high single digit net sales growth for the year Given the current market uncertainties the company now believes Acthar Gel net sales for 2019 are unlikely to exceed 1 billion Total sales for Specialty Generics are expected to increase 2 5 Earnings per share are now projected to be 8 40 8 70 up from the previous projection of 8 30 8 60 Our TakeThe news of the company s plan to suspend the separation of the specialty generics business overshadowed its second quarter results Shares of the company have decreased 65 7 year to date compared with the s decline of 7 6 Mallinckrodt is currently facing multiple challenges The company was under the scanner for the sale and marketing of opioid drugs which contributed to the ongoing opioid epidemic in the United States The company has been in the news since the last couple of months as there were allegations against Acthar s previous owner Questcor for conducting illegal sales and marketing activities related to the drug Thereafter it reached an agreement in principle with the U S Department of Justice DOJ in relation to the Questcor litigation to resolve the previously disclosed government investigation of the drug s legacy sales and marketing activities Mallinckrodt expects to pay 15 4 million related to legacy Questcor activities per the civil False Claims Act settlement We expect investors to focus on how the company grapples with these ongoing lawsuits and revives its business Zacks Rank Key PicksMallinckrodt carries a Zacks Rank 3 Hold Some better ranked stocks are Roche OTC RHHBY Bristol Myers Squibb Co NYSE BMY and Novartis NYSE NVS While Roche sports a Zacks Rank 1 Strong Buy the other two carry a Zacks Rank 2 Buy You can see Roche s earnings per share estimates have increased from 2 41 to 2 50 for 2019 in the past 60 days Bristol Myers earnings per share estimates have increased from 4 20 to 4 24 for 2019 in the past 30 days Novartis earnings estimates have increased from 5 01 to 5 06 for 2019 in the past 30 days This Could Be the Fastest Way to Grow Wealth in 2019Research indicates one sector is poised to deliver a crop of the best performing stocks you ll find anywhere in the market Breaking news in this space frequently creates quick double and triple digit profit opportunities These companies are changing the world and owning their stocks could transform your portfolio in 2019 and beyond Recent trades from this sector have generated 98 119 and 164 gains in as little as 1 month |
BMY | Oncology Stocks To Watch Through The Second Half Of 2019 | The oncology industry is a massive and growing one In fact with estimates suggesting that oncology drugs will generate 120 billion in revenue annually over the next few years it s one of the largest markets in the world
Of course where we find big money like this we tend to find strong investment opportunities Oncology companies with data readouts and regulatory updates on the horizon tend to represent the largest of these opportunities With that said here are what I believe to be the that represent the largest opportunities ahead
Exelixis NASDAQ EXEL A Blockbuster Drug With Strong Potential Ahead
Exelixis Inc NASDAQ EXEL is no newcomer to the oncology scene in fact the company won its first approval back in 2012 with Cometriq The company s treatments act by inhibiting the production of enzymes that cause cancer tumors to grow This approach has proven to be effective time and time again with multiple FDA approvals under the company s belt Any FDA approval can prove to be a big win So the 2012 approval of Cometriq was great news However the drug was approved for the treatment of a rare form of thyroid cancer and didn t yield a blockbuster opportunity Nonetheless the drug does add to the underlying opportunity here In 2014 the company won FDA approval with Roche for Cotellic in combination with Zelboraf in treating advanced melanoma In 2016 the approval was followed up with Cabometyx earning the FDA greenlight as a treatment for advanced renal cell carcinoma the most common form of kidney cancer However it wasn t until 2017 that the treatment was approved as a first line option for advanced RCC This was the biggest win as of yet leading to Cabometyx to generate 2018 sales close to 600 million In early 2019 yet another approval came in for Cabometyx only expanding the opportunity The drug is now indicated as an option in previously treated liver cancer Nonetheless the label is likely to grow even more ahead pointing to the real opportunity here Cabometyx is currently being studied as a first line treatment for kidney cancer and liver cancer Moreover there are four other late stage clinical studies that center around the treatment across several more cancer types Additionally there are more than 50 phase 1 or phase 2 studies underway around the world that feature the drug While Cabometyx is already becoming a blockbuster treatment with all of the clinical activity around the drug there is plenty of opportunity ahead Investors can look forward to the publication of several data readouts as well as new drug applications and potential regulatory approvals down the road As a result this is a stock that should be at the top of your watchlist
Ziopharm Oncology NASDAQ ZIOP Several Ongoing Studies Will Open The Door To OpportunityZiopharm Oncology is working to provide solutions for some of the most difficult to treat types of cancer out there However the company s method of action is a bit different from what we see from Exelixis and other companies that focus on more traditional cancer therapies
Instead of starving cancer tumors of the enzymes needed for growth ZIOPHARM Oncology Inc NASDAQ ZIOP is focused on harnessing the power of the body s own immune system in an approach that has been dubbed immuno oncology
This approach is interesting as many believe that immuno oncology will prove to be more effective than currently approved treatments and it is thought that by supporting the body s own immune system there is the potential to minimize the risks of toxicity and adverse events
Essentially the company s drug candidates support the immune system through controlled gene expression and innovative cell engineering technologies
Ziopharm Oncology s focus is on two clinical candidates both with several catalystic events ahead The first known as AD RTS hIL 12 is the subject of one preclinical development program three Phase 1 development programs and one Phase 2 development program These programs range across a variety of oncology indications with the clinical studies showing promise
The company is also working on a variety of Car T and TCR therapies These therapies are involved in two preclinical and one Phase 1 development program They are also at the center of partnerships with the National Cancer Institute and MD Anderson Cancer Institute
Considering the multiple clinical trials underway and early promise suggested by previously announced data there are several catalysts ahead that have the potential to yield impressive gains So keep a close eye on this stock
Hemispherx Biopharma NYSEAMERICAN HEB Ampligen Has Explosive Potential
Hemispherx BioPharma Inc NYSE HEB is also working on harnessing the body s own immune system as a way to fight various forms of cancer The company s flagship product is known as Ampligen and it s one that has already won approval in the world of immunology for the treatment of myalgic encephalomyelitis chronic fatigue syndrome ME CFS in Argentina In fact it is the first treatment in the world to be approved for this indication Nonetheless Ampligen is not a one trick pony The treatment is being assessed as an immuno oncology option across various indications In fact Ampligen is being assessed as an option in ovarian colorectal and breast cancers and the design of a study to treat renal cell carcinoma and melanoma is underway As an immuno oncology option Ampligen is believed to enable the body s immune system to fight cancer and potentially other ailments For instance by modulating a tumor s microenvironment Ampligen may allow the immune system to target and more effectively attack cancer cells Not only is it anticipated that the treatment may perform well as a monotherapy it also displays synchronicities with other options suggesting that it holds potential as a combination therapy In fact it is believed that Ampligen has the ability to enhance responses from immune blockade inhibitor drugs commonly referred to as checkpoint inhibitors At the end of the day Hemispherx is a company that comes with incredible potential Its candidates are being tested across a diverse line of difficult to treat cancers With multiple clinical studies and an active search for a commercialization partner there are several catalysts that investors have to look forward to ahead
Incyte NASDAQ INCY Corporation NASDAQ INCY On Its Way To LeadershipIncyte NASDAQ INCY Corporation is a relatively large company With a market cap of just over 18 billion it s no Abbvie NYSE ABBV Market Cap Nearly 110 billion but it has the potential to become one
The company is focused in the world of immuno oncology Like Ziopharm Oncology and Hemispherx Biopharma the company s candidates enlist and enable the body s own immune system to battle cancer a method of action that Incyte NASDAQ INCY has shown time and time again is effective
The company s claim to fame is a product known as Jakafi The company s first commercial product Jakafi is approved in the United States for patients with intermediate or high risk myelofibrosis and for patients with polycythemia vera who have had an inadequate response to or are intolerant to hydroxyurea While Jakafi is already driving significant revenue the company is working its way toward label expansions that could compound the value of the drug
In fact Jakafi is at the center of 12 clinical programs at Incyte NASDAQ INCY Moreover the company s pipeline shows that Jakafi isn t the only trick up its sleeve In fact the pipeline at Incyte includes 19 clinical candidates that are designed around 17 molecular targets
With Jakafi sales likely to climb and several ongoing clinical programs Incyte NASDAQ INCY is likely to have plenty of news to share ahead So keep your eyes peeled
Bluebird Bio NASDAQ BLUE Commercialization And Regulatory Catalysts Ahead
Bluebird bio Inc NASDAQ BLUE is an up and coming biotechnology company just starting to move into commercialization phases Recently the company announced European approval for its gene therapy Zynteglo As a result of the approval investors are watching closely for sales updates which will be interesting The company put a 1 8 million price tag on the drug which could be a challenge in terms of payor coverage However they may have saved themselves with a key term Payments can be made over the course of five years If the treatment doesn t work payors no longer have to make payments on the treatment This may make the high price more acceptable It s also worth mentioning that Bluebird Bio may see approval in the United States for Zyntego relatively soon It is expected that the company will submit an application to the FDA by the end of the year With priority review designation the FDA will make a decision with regard to the drug within six months of the application date So you may be wondering why a company with a flagship treatment that addresses a blood stream disorder made it into an oncology post Take a look at bb2121 The company is gearing up to submit the treatment as a potential late line treatment option for multiple myeloma This move is likely to happen quickly After all Bluebird licensed the commercialization of the treatment to Celgene NASDAQ CELG a biotech that recently announced a deal to be acquired by Bristol Myers Squibb NYSE NYSE BMY Part of this deal includes a contingent value right based on three of Celgene s candidates making it to market in a prespecified amount of time As part of this covenant bb2121 must be approved by the FDA by March 31 2021 for the deal to meet CVR requirements So there s going to be a push to move quickly here It s also worth mentioning that the company has multiple preclinical and clinical development programs in its pipeline With coming data readouts commercialization announcements and regulatory updates likely ahead Bluebird Bio is a must watch stock
Final ThoughtsThe field of oncology is one that represents tremendous opportunities for investors With several catalysts in the near term calendar expected from the companies above these are stocks that are well worth your attention |
C | Malaysia tycoon explores 1 bln sale of gaming firm stake sources | HONG KONG April 12 Reuters Malaysian tycoon Vincent Tan
is considering selling a 49 percent stake in the unlisted gaming
unit of Berjaya Sports Toto Bhd for about 1 billion
including debt and has hired Citigroup Inc as adviser
sources with direct knowledge of the matter said
The potential sale is expected to generate interest from
private equity firms who have shown an appetite for gaming
assets in Southeast Asia in the past
Carlyle Group and Providence Equity Partners were
among those recently approached to buy the stake according to
sources familiar with the matter It is unclear whether the
buyout funds have proceeded with the bidding
The sources declined to be named because the discussions
were private Berjaya Sports Toto Carlyle Citigroup and
Providence declined to comment
Reporting by Stephen Aldred and Fong Min Hung Editing by
Chris Lewis |
C | US STOCKS Wall St edges up but bank stocks slip | JPMorgan CEO Don t expect another dividend hike soon
US March retail sales up 0 4 pct on gasoline
President to lay out deficit plan focus on tax spending
Stocks up 0 3 pct S P 0 2 pct Nasdaq 0 6 pct
Updates to early morning
By Angela Moon
NEW YORK April 13 Reuters U S stocks edged up on
Wednesday but were off their earlier highs as bank shares
turned negative
Gains came from energy stocks after a steep selloff in
commodity shares in the previous session
Shares of JPMorgan Chase Co were up 0 3 percent at 46 75
after rising more than 1 percent The bank reported
better than expected first quarter results before the bell but
in an analyst call the company s chief executive said there
would not be another dividend hike soon
The Financial Select Sector SPDR Fund turned negative Bank
of America shares fell 0 1 percent to 13 45 and Citigroup
slipped 0 7 percent to 4 52
There is really a disparity between large cap banks and
regional community banks The large caps will be mostly
influenced by the stock move in JPMorgan said Jay Suskind
senior vice president at Duncan Willams in Jersey City New
Jersey
The Dow Jones industrial average was up 32 54 points or
0 27 percent at 12 296 12 The Standard Poor s 500 Index was
up 2 62 points or 0 20 percent at 1 316 78 The Nasdaq
Composite Index was up 17 09 points or 0 62 percent at
2 761 88
Reporting by Angela Moon Editing by Kenneth Barry |
C | EMERGING MARKETS Brazil Mexico FX surge Colombia eyes upgrade | Peru sol at four month low on election jitters
Colombia peso jumps helped by ratings upgrade bets
Brazil real firms 0 7 pct Mexico peso 0 52 pct
U S jobless claims back bets for low rates
By Michael O Boyle
MEXICO CITY April 14 Reuters Brazil s real and
Mexico s peso jumped on Thursday backed by bets that weaker
U S growth will keep ultra easy monetary policy in place but
a possible retreat in the euro could reverse gains
After rallying since mid March the two Latin American
currencies have settled into tighter ranges and further strong
gains could be limited as investors gauge whether risks to
global growth from high oil prices and inflation are
increasing
As long as fears about global growth do not rise markedly
slower expansion in the United States would cause the Federal
Reserve to stick with its 600 billion asset buying program
until June and keep U S rates near zero through 2011
That is good for emerging markets People still want
higher yielding risky assets said Doug Smith head of Latin
America research at Standard Chartered in New York
Data showed U S initial claims for unemployment benefits
rose unexpectedly last week adding to a string of weaker data
For details see ID nN14146589
If things turn out even worse it could have a negative
effect on Mexico but we are not at that point yet Smith
added The United States is Mexico s top trading partner
Mexico s peso strengthened 0 5 percent to
11 7190 per U S dollar pulling back from an intraday high
that marked its strongest since October 2008
Brazil s real bid 0 7 percent firmer to 1 5780 per
dollar Brazilian authorities are trying to contain the real s
advance which is hurting local manufacturers
But investors continue to find ways around authorities
efforts and recently pushed the real to its strongest since
August 2008
Brazil has seen a tide of speculative flows from investors
seeking to game low interest rates in developed economies
against the pay off of Brazil s double digit interest rates
Strategists at Citigroup noted that Latin American
currencies have recently increased their correlation with the
euro while the tendency of the region s currencies to track
U S stocks has faded
The dollar has weakened against the euro and emerging
market currencies as the U S central bank is seen lagging
Europe in raising interest rates
At this point we continue to expect euro to move higher
and hence think Latam FX may not sell off too much should the
S P 500 drift lower near term Citigroup strategists wrote in
a note to clients However with a lot of hikes already priced
into the euro the risk of Latam FX selling off due to a
weaker euro has admittedly increased they added
Both Mexico s peso and Brazil s real have so many investors
betting on further gains that any sharp reversal can spur
cascading losses as the hoard of investors rush to get out of
positions as was seen earlier this week nN12198414
Colombia s peso rose 0 72 percent to 1 806 per
dollar pushed up by dollar inflows for tax payments and
expectations of another credit rating upgrade
Traders said rumors Colombia which regained its
investment grade credit status from Standard and Poor s last
month would soon get an upgrade from another rating agency
A second agency upgrade is a requirement before many
institutional investors could pick up Colombian assets
Chile s peso bid 0 15 percent weaker at 472 70 per
dollar on falling prices for copper the country s top export
Reports of quickening inflation in China pointed to more
monetary tightening which investors worried would hit demand
for industrial metals
Peru s sol closed at its weakest since December amid
continued concerns that a left wing candidate could win a
presidential run off election ID nVOTEPE
But the currency pulled back from its session low as the
countries stock market rebounded after a 12 percent slump
The sol bid 0 07 percent weaker at 2 8210 per
dollar Peru s currency has shed nearly 2 percent since
mid March on concerns of a victory by left wing nationalist
Ollanta Humala He will face right wing candidate Keiko
Fujimori in a a June 5 run off
Additional reporting by Silvio Cascione in Sao Paulo Ursula
Scollo in Lima and Nelson Bocanegra in Bogota Editing by Dan
Grebler |
C | Outlook For EUR USD Double Zigzag Triple Three | 12th June The Wave b came more directly than I had considered but stalled precisely at the 38 2 retracement at 1 2667 Thus we should now see Wave c of Wave iii develop that should drop below 1 20HOURLY STRUCTURE17th July The decline in Wave a extended to the 1 2162 low on Friday and we finally appear to be mapping out a Wave b This may be limited initially to the Wave b of Wave v around 1 2324 33 but the way this is now developing I suggest we should probably allow for the 38 2 retracement at 1 2364 and the 50 58 6 retracement area at 1 2427 1 2473 This will require attention in identifying bearish reversal patterns Indeed it may last a little longer depending on whether this develops directly or in a complex correction Somehow I am moving towards a double zigzag triple three |
C | Dollar Posts First Two Day Drop In A Month Risk Slow To Confirm | The Dow Jones FXCM Dollar Index DX dropped for the second consecutive trading day Monday This is the first back to back decline for the benchmark currency since the hefty two day drop through June 15 a move that notably deflated the currency s bullish ambitions Normally we would expect a slide of this magnitude to match a risk based run that actively undermines the currency s safe haven status That said the major equity indexes across all three sessions were notably mixed and quiet for the day This would suggest a unique weakness for the US dollar itself Looking to the traditional sources of fundamental drive we had a pretty busy economic docket and rather active newswire For data the top headline was the tumble in June retail sales The 0 5 percent contraction in domestic consumption through the month extends the series to three consecutive contractions the most consistent contraction since December 2008 Yet weakness for the world s largest consumer and economy is generally bullish for a currency that represents the US Treasury and stands as the top global reserve That said neither dollar nor equities responded along the expected risk lines In headline news the IMF downgraded its global growth forecast for 2013 to 3 9 percent from 4 1 and warned the eurozone crises posed a severe risk to the system Again this would normally cater to risk aversion Then there was continuation of the 2Q US earnings season with Citigroup s better than expected EPS which left US stocks unimpressed With risk trends withholding guidance what was pushing the dollar Without active encouragement one way or the other the dollar finds itself in a naturally exposed position Technically we can point to EUR USD s bounce from an extreme low a more than two year low and the midpoint of its historical range Fundamentally we find that without a rise in implied volatility risk the negative real rates of return from the greenback put it under pressure In the upcoming session the headlines will pick up in importance Earnings and June inflation figures are noteworthy but those hoping for a stimulus boost will be watching Fed Chairman Bernanke s testimony on policy to the Senate Euro Faces IMF Growth Downgrade ECB Talk Of Dropping Seniority Merkel Push Back There was nothing tangible this past session to flatter the euro The IMF s update shaped the region as the greatest threat to global stability and downgraded its 2013 GDP forecast 0 7 percent previously 0 9 percent while the 0 3 percent expected contraction for 2012 was left unchanged Moving back to the day to day viewing of the slow motion train wreck that is the crisis fight reports Monday reflected a supposed fundamental shift in the ECB s bailout position Originally against delivering senior bond holders losses when a bailout is offered as with Ireland s banking sector bailout unnamed officials have said the policy body is now willing to accept a distribution of losses that would very likely weigh investor confidence That said eurozone finance ministers supposedly opposed the call Also worth noting was German Chancellor Merkel s reiteration that she would not tolerate sharing liability without common oversight reiterating the gridlock in implementing the EU Summit vows In the upcoming session euro traders should watch the bond auctions and investor confidence figures Though don t bank on trend development British Pound Best Performer Monday Without Data And Record Low Yield Though it was an extremely tight race with the yen the sterling was the best performer through Monday s session That is a rather remarkable turn for the sterling given the lack of fundamental support and even a lack of correlation to risk trends themselves virtually unmoved What was the pound s source of strength The euro A notable rise for the shared currency against the dollar suggests the figurative bleeding from the region s financial crisis has been staunched That isn t likely a lasting state for the euro however and the sterling needs active encouragement Otherwise we will turn back to a reality where the 10 year Gilt yield has closed at a recent historical low Tuesday watch for King and CPI New Zealand Dollar Briefly Slides After CPI Hits A 12 Year Low In fundamental FX trading we need to follow what is most important to the market Risk trends whether they be stationary and act as an anchor or in motion and catalyst seem to have curbed a kiwi dollar reaction to an important economic release The year over year 2Q CPI figures expectations were already set low but the 1 0 percent reading printed under the consensus and pegged the slowest rise in price pressures since 1999 RBNZ Governor Bollard soon to be replaced has maintained a neutral stance but will we start to see capitulation Japanese Yen Tumbling Early Tuesday As Risk Advances Azumi Speaks With a sharp rally for the Hang Seng on Tuesday s open we have seen a proactive push on risk trends that was completely absence on the opening trading day of the week In turn we have seen a market wide rally for the yen yesterday turn into an early wholesale tumble today Risk appetite will guide the yen though its carry connections Another factor that may filter through though limit expectations here was a warning from Finance Minister Azumi He stated that he would contemplate the need for further stimulus after the 2Q GDP figures were released Canadian Dollar Data Shows The Largest Net Investment In Canadian Assets On Record The Canadian dollar continues to position itself fundamentally as one of the most attractive currencies amongst the majors Between the roles as an investment currency and safe haven we learned from Stats Canada that there was a net CAD 26 1 billion investment capital inflow into Canada in May That is a notch for the currency s position as an investment currency In the upcoming session the nation s benchmark rate and economic financial forecasts will receive an update from the Bank of Canada Will they further support the loonie |
C | The Unacceptable Behavior Of The Market | Last night I arrived at my family s home in Spain just in time to catch Spain play Italy The whole family and lots of friends watched it while feeding on great seafood and lots of wine at a neighboring chiringuito on the beach and I guess if you weren t there you can only imagine the excitement I suppose this spectacular win by Spain means that Spain will be able to stay in the euro a little longer than I otherwise expected although I am not so sure about Italy It would make sense for me to start off with some football related comments but instead most of the this issue of the newsletter will attempt to describe the way pro cyclical behavior can be embedded into balance sheets and how this can create significant risk for developing countries especially Because most analysts do not seem to understand balance sheet dynamics it is worth pointing out that the more pro cyclical the balance sheet the much more widely off the mark projections are going to be both on the way up and on the way down To start off in mid June just a couple of days before the Spanish treasury raised 2 2 billion in an auction one in which the cost of borrowing surged with 10 year bonds breaking 7 France s new president complained about the unfairness of the financial markets According to an two weeks ago the Financial Times It s not acceptable that Spain which just got a promise for support has interest rates around 7 per cent Mr Hollande said It s not acceptable that countries that are making efforts like Italy to improve their public finances were paying high interest rates on their bonds It would be useful if policymakers and not just in France had an understanding of how markets actually work Hollande is effectively complaining that markets are reacting not to what policymakers propose they will do but rather to something else and he believes that this is unfair even unacceptable But clearly it isn t Since that something else to which the market is responding is the underlying process of balance sheet unraveling and this is happening no matter what policymakers might say in the G20 meetings or elsewhere it actually makes a lot of sense that markets overall continue to deteriorate Last Friday continuing I think the confusion between the politics and economics of the crisis Reuters had the Yet though the obstacles facing the euro are daunting the main lesson of the debt crisis so far is that markets underestimate at their peril the political commitment of Europe s leaders to do what is necessary to preserve the single currency The euro crisis is in some ways mind bogglingly simple to solve because it isn t economics it s politics Jim O Neill chairman of Goldman Sachs Asset Management told Reuters If Angela Merkel and her colleagues stood there together with the rest of the euro area and if they behaved as a true union this crisis would be finished this weekend he added I am not sure what O Neill means by Europe s behaving like a true union but if he means Europe s immediately becoming the United States of Europe overnight which is certainly not a mind bogglingly simple policy to implement then the euro part of the euro crisis will certainly end What won t end however is the need to write down a staggeringly large amount of bad loans and to cover the banking losses with transfers from the housing sector nor the rapid slowdown in growth even in countries like Germany This I would argue is more than just about politics and that while the political commitment of Europe s leaders to do what is necessary to preserve the single currency may indeed be quite high in disagreement with the author of the article I would suggest that overestimating the impact of this commitment is at least as perilous as underestimating it The market reaction is no longer nor should it be about the lack of trust or confidence Why Because yet another agreement for a temporary bailout of Spain will do little to address Spain s real problems which are its massively insolvent banks its uncompetitive economy and the fact that the country is caught in the downward spiral typical of debt crises in which every sector of the economy not least its political elite are acting in ways that systematically undermine growth and creditworthiness The continued deterioration in Spain and elsewhere is now part of a fairly mechanical process that operates under its own dynamic and it will take a lot more than exhortations to reverse the process and it was noteworthy that a lot of comments and advertising during last night s game explicitly tried to tie a Spanish victory with a boost in confidence sufficient to turn the corner of the crisis We need more than trust But what the market needs is not for investors to start trusting policymakers more Rather it needs actions that reverse the downward spiral in which countries like Spain find themselves in which each sector of the economy from workers to creditors to businessmen to middle class savers to policymakers themselves are rationally and in self defense acting in ways that increase the country s debt reduce growth and exacerbate balance sheet fragility Unfortunately there isn t much that can be done in a big enough or credible enough way to reverse the downward spiral and this is why I don t pay too much attention any more to the proposals and counterproposals that are on offer in Europe I think it is probably too late for that but certainly by continuing to behave as if this is all about trust or lack of trust or for the more conspiratorially minded about underhanded actions by speculators hoping to bring the system down policymakers are building in their own disappointment and extending the crisis At this point the only thing that can save the euro is a combination of moves in which the European banks are guaranteed by a credible institution and in which Germany takes steps to stimulate its economy quickly and dramatically Until Germany is willing to boost domestic spending enough to run a deficit that allows Spain to run a surplus it is impossible for Spain to repay its debt This is just basic balance of payments arithmetic Of course within days of Hollande s complaint that the market didn t trust policymakers events showed just why the markets would have been anyway wrong to grant policymakers their trust is the Financial Times just four days later Leaders of the eurozone s four largest economies pledged on Friday to back a 130bn growth package and defend the common currency but remained divided over the credit crisis as Germany continued to resist proposals to issue common debt and use bailout funds to stabilise financial markets The meeting in Rome was intended to demonstrate a coming together ahead of next week s EU summit but ended in disagreement over the need for short term intervention in the markets and how to achieve greater political and financial union At a joint press conference Angela Merkel German chancellor declined to endorse affirmations by all three of her co heads of government Italy s Mario Monti Fran ois Hollande of France and Spain s Mariano Rajoy of the need to use the eurozone s bailout funds to stabilise financial markets I don t want to be too glib here I recognize that policymakers are in an extremely difficult position and that there is no longer any easy solution but railing at the markets rather than trying to understand why they are doing what they do which anyway makes them far more rational than if they responded to the pronouncements coming out of Brussels is counterproductive In fact this kind of pouting is just a part of the self reinforcing downward spiral that I have described many times before Policymakers are complaining that economic agents are behaving in ways that reinforce the crisis even as they do the very same thing Given all the excitement over the speed of the deterioration in European markets I suppose we are going to see urgent new measures announced and a temporary respite in the crisis but ultimately I think this will be little more than a blip on the way to sovereign debt restructuring and the break up of the euro Nothing has changed fundamentally in Europe in the past few weeks and there is no reason to assume that the crisis is on its way to being resolved It s different this time To move away from Europe among economists at long last we are beginning to see an increasing reluctance to respond to evidence of bubble like behavior in China with explanations of how these things don t mean the same thing in China as they do in other countries Our normal understanding of economics doesn t apply to China we are earnestly told by the China bulls because either 1 China has a different set of economic rules under which it operates and so the economic processes that have adverse consequences in other countries are unlikely to have the same consequences in China how many times for example have we heard someone say that China cannot have a real estate bubble because unlike in the US surging real estate prices have not been fueled by a deregulated mortgage bubble or 2 China s very wise policymakers have invented a new and brilliant form of economics that isn t understood in the West although strangely enough it seems well understood by the many Westerners who regularly proffer up this explanation For an especially hard hitting counterargument to this kind of claim much beloved of China bulls check out this by Minxin Pei We still hear the China s economy is different nonsense from non economists but among the many academic economists and research analysts who used to trot out these arguments regularly even two or three years ago there is a growing awareness I think that they are starting to wear thin There is no such thing as a different kind of economics and even a very cursory glance at Chinese economic history should have made clear that if China really does exist in a different economic universe with its own set of rules then this has been a fairly new phenomenon For most of its history the same old set of rules seemed to apply to China that applied everywhere else The massive credit expansion in China with its associated problems of overinvestment and asset price bubbles is no different than any other credit bubble I mention this because until recently it was not just China that was supposedly following a new set of economic rules and I was reminded of this after reading an in the Financial Times about the Spanish bank Bankia According to the article During Spain s housing boom mortgage lending at Caja Madrid the largest of the savings banks that formed Bankia started to grow so quickly that by 2007 some executives were trying to slow things down After its mortgage book expanded by 25 per cent in 2006 Carlos Stilianopoulos Caja Madrid s then head of capital markets and later Bankia s chief financial officer said We don t want to grow this fast We are a savings bank so we don t have to keep shareholders happy We prefer to have a solid institution At the same time warnings from abroad about the overheating of Spain s property market were dismissed Perhaps in other countries this pace of growth would be seen as a bubble he told Euromoney But not in Spain Perhaps in other countries but not in Spain This statement alone should have been a warning signal We know why it is impossible for property prices ever to become unsustainable in China actually I don t know but I have been told that it is because of the immutable urbanization process of which more later but why is that the case in Spain This it turns out I can explain I remember in 2003 my mother had a New Year s Eve party at our family home in M laga in southern Spain at which over 80 people sat for dinner including most of my old friends still around from high school days That night I had one of those epiphanies as you often do on New Year s Eve I guess about the real estate market when I suddenly realized that nearly every one at the party was involved in one way or the other in real estate Most of the people there including my Persian sister in law were real estate developers real estate agents real estate lawyers architects or owners of building and construction companies All of them lived off and had prospered mightily from the real estate boom in southern Spain But this cannot be I thought in my naivet If the only industry around is real estate then we must be living through a real estate bubble of enormous proportions Later that night I spoke to one of my old high school friends Andy who was at the time a prosperous real estate agent with houses in Marbella purchased on borrowed money naturally a Mercedes and all the trappings that accrue to an immensely charming and self confident real estate agent during a real estate boom In our conversations and ones that took place subsequently over the next few years I warned him that the property market in the south of Spain looked out of control and it would be a good idea from him to diversify his savings out of real estate Same old same old Of course Andy didn t He explained to me that what we were seeing in southern Spain was not a bubble because there were very strong reasons to believe that real estate prices were undervalued and were going to rise a lot more Europe he told me is aging rapidly and old people as everyone knows like nothing better than to retire in some warm and sunny place preferably on the beach With an infinite supply of European old people and limited European beachfront property mostly in Spain Italy and Greece where in addition you had great food warm hearted people and plenty of immigrants to keep the prices of services and servants down it was certain Andy explained that real estate prices would not decline The demand was insatiable at almost any price This seemed like a perfectly reasonable argument on the face of it and it was widely proposed to justify ever soaring Spanish real estate prices for many years not just on the Spanish coast but also perhaps a little bizarrely in every nook and cranny of the country including some pretty gray and inaccessible building projects outside cold northern industrial cities The weakness in the argument of course was that although there might have been near infinite demand this could not justify near infinite increases in prices especially since the demand itself was likely to be highly pro cyclical because the Spanish economy had itself become dependent on real estate development As long as the economies of the cold northern European countries were booming in other words the demand from retirees for beach houses would stay high but any slowdown in the economy would reduce demand in Spain at the worst possible time And as Spanish real estate slowed the impact would be exacerbated by a much sharper slowdown in the Spanish economy caused by the slowdown in real estate which had become a major driver of the economy If a substantial portion of the Spanish workforce depends on a booming real estate market and not just those directly dependent but also those indirectly dependent like bankers restaurateurs retailers travel agents and so on then any slowdown in the real estate sector is itself seriously self reinforcing We have now seen how this works in Spain but in China we are still using a similar argument to explain why real estate prices cannot drop significantly Our Chinese version of the old people love to live on the beach argument is the urbanization argument As long as Chinese workers continue to move from the country to the cities and urbanization has been one of the most dramatic consequences of Chinese growth in the past three decades then there is likely to be a near infinite demand for city property and so prices can only go up And because prices can only go up speculative demand for real estate is not speculative it is precautionary This claim seems at least as plausible as the Spanish argument justifying infinite price increases and was probably true a decade ago but it runs into the same problem that the Spanish story ran into and indeed that nearly every previous case in history of a real estate bubble which has always started with a plausible story First no matter how much demand we can project into the future rising prices can nonetheless outpace rising demand because rising prices can themselves stimulate further demand in which case rising prices are unsustainable This should be obvious but the point is often lost in the giddiness that accompanies rapidly rising prices Second and this is key the rising demand is itself pro cyclical This is the most dangerous part of the process and perhaps the least well understood Rising demand driven by the urbanization process is itself subject to underlying growth in the economy since it is growth in turn that drives the urbanization process What s more when we reach the point as we did in Spain several years ago and have reached in China too in which a substantial part of the growth that drives the urbanization process is itself created by real estate development then any slowdown in underlying growth is likely to be seriously exacerbated by a corresponding slowdown in real estate development This is because the economy is caught in the reverse side of the feedback loop that helped drive prices on the way up slowing growth leads to slower demand for urban real estate which leads to slower real estate development which itself leads to slower growth This is part of the reason why declining real estate prices and slowing sales which Beijing has insisted for years it wanted to see is causing so much worry It is both a consequence and cause of economic slowing and these kinds of self reinforcing relationships always lead to unexpectedly sharp outcomes both on the way up and on the way down Minsky on balance sheets Without wanting to sound obsessive I want to re emphasize this idea In trying to judge the probability of a crisis we need to think not just about the probability and impact of positive or negative events in and of themselves It is extremely important that we also understand the balance sheet mechanics that force the system into self reinforcing behavior The structure of the balance sheet itself in other words is as important in determining the impact of adverse events as the direct impact of those events on the asset side of the balance sheet This is of course one of Hyman Minsky s key insights and in that light I thought I would pass on part of a lecture by James Galbraith on Keynes which Galbraith gave at the 5th annual Dijon conference on Post Keynesian economics delivered in Copenhagen in May last year In the Galbraith made a brief detour on the subject of Minsky in which he said Hyman Minsky developed an economics of financial instability of instability bred by stability itself Minsky s approach very different from Godley s is conceptual rather than statistical A key virtue is that it puts finance at the center of economic analysis analytically inseparable from what is sometimes called real economic activity for the simple reason that capitalistic economies are run by banks And of course his second great insight is into the dynamics of phase transitions the famous movement from the hedge position to the speculative position to the intrinsically unsustainable doomed to collapse ponzi position which arises from within the system and is subject actually to formalization in the endogenous instabilities of non linear dynamical models To grasp what Minsky is about it seems to me is to go immediately beyond the coarse notion of the Minsky moment a concept which implies falsely that there are also non Minsky moments It is to recognize that the financial system is both necessary and dangerous that strict financial regulation is both indispensable and imperfect Any attempt to predict the likelihood and extent of a breakdown in an economic system country region or company that starts only from the asset operational side of the economic entity what Galbraith refers to above as real economic activity without taking into account the feedback mechanisms inherent in the relationship between the asset and liability sides is pretty useless What s more the recent history of disturbances in that economic entity tells us nothing about the future impact of similar disturbances as long as the balance sheet structure is changing and as Galbraith reminds us the lack of instability during previous disturbances will itself change the structure of the balance sheet Stability is itself destabilizing as Minsky warned us because it changes the nature of the relationship between the two sides of the balance sheet Commodities and growth Volatility in other words is a function not just of volatility in real economic factors but also and perhaps even more so of the structure of the balance sheet The structure of the balance sheet can either smooth out normal economic fluctuations or it can turn them into highly destabilizing events One example of a destabilizing feedback mechanism worth pondering is the relationship between commodity prices and Chinese growth Here is a very interesting from last week sFinancial Times Chang Zhenming chairman of Citic Pacific is unambiguous about the significance of his company s Sino Iron mine in the desolate red soiled Pilbara region of Western Australia The whole of China is watching this project he says More to the point China is watching with some trepidation as his Hong Kong listed company faces increasing cost overruns and delays The stakes are high Mr Chang says Sino Iron is four times bigger than any iron ore project at home While outside observers often fear Chinese companies are unstoppable juggernauts in their ravenous pursuit of the world s minerals much of this perception is inaccurate China s int ernational resource expansion is not running smoothly The world s second biggest economy had hoped it would more easily control its economic destiny by taking huge mineral stakes robbing companies such as BHP Billiton Vale and Rio Tinto of the ability to dictate commodity prices But the Sino Iron project far from being a showcase for China s might has become instead a cautionary tale of the difficulties Chinese enterprises face as they seek to expand abroad When it was first conceived in 2006 the total cost was estimated at under 2bn By now it has already cost Citic Pacific 7 1bn Analysts at Citigroup calculate the bill could swell to a possible 9 3bn while others say they expect the ultimate bill will be closer to 10bn The mine is at least two years behind schedule This is no longer about commercial goals says a senior executive at one leading Asian trading company with extensive sourcing operations in Australia It is about Chinese machismo They have plonked down too much money to pull out now Leaving aside that rather interesting and even surprising last paragraph one obvious comment on this article is that vastly overspending on a project of this nature is not at all surprising in a system in which privileged operators have near infinite access to cheap funding little accountability and no budget constraints for any project that can be proposed as being of national importance and it is astonishing how many projects fit under that category But the lesson I want to draw is a very different one a balance sheet lesson In projects like this and in the extent of commodity stockpiling we have seen more generally China has taken a huge long position Some analysts argue that China by buying far more in the way of commodities and commodity producing companies than it requires for its immediate needs is hedging its future demand Others make an even stronger case Dambisa Moyo a former investment banker turned economic writer has argued in her book Winner Take All that the world is facing a crisis in the form of a commodity shortage According to a recent in the Guardian If Moyo s calculations are correct we are in big trouble which makes the central premise of her book Winner Takes All all the more arresting Governments across the world she writes have singularly failed to grasp what s coming with one sensational exception Simply put the Chinese are on a global shopping spree State sponsored Chinese corporations are busy buying up commodities across Africa North America the Middle East South America anywhere they can in a concerted strategy to seize control of resources before the rest of the world wakes up to the looming crisis They re striking deals with what she calls the axis of the unloved developing countries rich in commodities but poor in political and economic capital in return for much needed investment employment and infrastructure Extravagant shoppers the Chinese are happy to pay over the odds treating their trading partners not as poverty ridden charity cases nor political pariahs but valued commercial equals But when the resources begin to run dry the consequences will be catastrophic Already since 1990 at least 18 violent conflicts worldwide have been triggered by competition for resources If nothing is done now warns Moyo commodity wars on a terrifying scale are all but inevitable Inverted balance sheets Perhaps it is my natural skepticism but we have heard warnings like these many times before and they have usually proven to be spectacularly wrong largely because they are based on projections of recent trends that are clearly unsustainable In my opinion the next few years are not going to see soaring commodity prices but rather collapsing commodity prices in large part because it has been China s unsustainable investment boom that has both driven demand up ferociously accounting for only 10 of global GDP China nonetheless absorbs roughly 40 of global copper production and nearly 60 of global iron ore and cement production and driven up investment in extractive industries Once China brings down its infrastructure investment rate the combination of declining demand in fact China has stockpiled so much that it will soon turn from importing copper iron ore and other commodities to exporting them and expanding supply is likely to have a very deleterious effect on prices In my opinion China is paying overly high prices in a market in which prices are likely to drop sharply But reasonable people can differ on whether or not commodity prices are going to rise substantially What reasonable can never do is place too much confidence in their predictions Dambisa Moyo may be right that commodity prices will soar and remain permanently high I doubt it but the real reason I think China is making a mistake in stockpiling commodities is not because I think prices will inevitably decline but rather because it is a risky balance sheet strategy for China It exacerbates the volatility impact of commodity prices which are already very volatile and this brings us back full circle to Hyman Minsky Why is stockpiling a bad strategy for China It is risky because of the inverted relationship between Chinese growth and commodity prices It is widely agreed in the commodity industry that the biggest cause of rising commodity prices in the past decade has been the ferocious growth in Chinese demand and this growth has been primarily a consequence of Chinese investment growth If China keeps growing rapidly of course we may very well see higher commodity prices in the future but and this is the problem if China slows significantly the price of commodities is likely to decline at least in the next few years So China has effectively made a big bet on commodity prices and it wins the bet if it continues to grow quickly It loses the bet however if its growth rate slows sharply This is what I referred to as an inverted capital structure in my 2002 book The Volatility Machine An inverted structure is the opposite of a hedged structure when the asset operational side of your balance sheet does well your liability side also does well but when the asset operational side does badly the liability side does too Inverted balance sheets exacerbate volatility good times are automatically better than they otherwise would have been and bad times are automatically worse Countries or companies with inverted balance sheets are more volatile than countries with hedged balance sheets and unless you can get all your speculative bets right this higher volatility lowers growth over the long term Inverted balance sheets I argued in my book are one of the key differences between countries that are able to recover successfully from crisis and countries that aren t and I would propose that this may be one of the differences between countries that can escape the middle income trap and countries that can t Of course a country s balance sheet is affected by a lot more than just commodity stockpiling There are many other aspects of China s balance sheet that matter but I would argue that good liability management consists of eliminating sources of volatility in the balance sheet by structuring it in ways that cause the performance of the liability side and the asset side or to put it another way the structure of expenses and the structure of revenues to move in opposite ways not in the same way This isn t happening in at least one aspect of the national balance sheet commodity stockpiling To take another example hot money flows are automatically volatility enhancers when the economy is growing quickly money pours into the country and causes even more growth but when the economy gets into any trouble money flees and so causes even more contraction China in principle has capital controls which should prevent this from happening but in practice Chinese capital controls are extremely porous and as Chinese prospects have gotten worse in the past two years we have seen what is clearly a surge in capital flight If China is serious about internationalizing the renminbi and relaxing capital controls it will only increase the balance sheet inversion which is why I think we are going to see a reversal of RMB internationalization in the next few years Or to take two more obvious examples first asset based lending for example against real estate is also a source of balance sheet inversion When asset prices rise the value of debt collateralizing the assets also rises but when asset prices drop the debt becomes less credible and its implicit cost to the economy rises Second borrowing short term or borrowing in a foreign currency has the same risk profile When the country is doing well the real cost of short term or foreign currency debt declines only to surge when the economy gets into trouble Sometimes inverted capital structures are inevitable but liability management consists in my opinion of identifying ways of eliminating inversion when you can and embedding as much hedged liability structures as you can so as to make the overall economy less not more volatile In the case of China stockpiling commodities is exactly the wrong thing to do but of course it is hard to convince anyone that this is the case when we are in the good part of the volatility cycle My baby drove off in my brand new Cadillac It is only when conditions turn for the worse that everyone recognizes albeit usually too late the risk We see this happening in Europe When Europe was booming and the borrowing costs for the peripheral countries were converging with that of countries like Germany it was hard to convince anyone that this was an extremely risky balance sheet structure Now that Europe is in crisis and the very source of interest rate convergence the euro is causing a massive divergence in borrowing costs everyone recognizes albeit too late the danger of highly inverted balance sheets But as I pointed out in my book no matter how often history repeats during the good part of the volatility cycle it is brutally difficult to convince anyone of the need to change the structure of the balance sheet The riskier and more inverted it is the more money everyone makes All you can really do is write about it and point out the occasional country like Chile in the past two decades that have learned however temporarily how the volatility machine embedded in balances sheets works Ed Chancellor about this process recently for the Financial Times To point out a slightly lighter story of balance sheet inversion here is another Financial Times that I found very interesting Cash strapped local governments in China have begun auctioning off fleets of officials luxury cars as part of efforts to bolster revenues hit by the country s slowdown Wenzhou a south eastern coastal city hit hard by the cooling economy sold 215 cars at the weekend fetching Rmb10 6m 1 7m It plans to sell 1 300 vehicles 80 per cent of the municipal fleet by the end of the year Government revenues from tax and land sales in Wenzhou have been declining after years of heady growth With the city s risk taking businesses struggling to pay back debts the burden has fallen on the local government to turn things around State media noted the auctions would directly boost the city s coffers Wenzhou is not alone Across the country from Kunming in the south to Datong in the north officials have been tightening their belts paring back on banquets curtailing travel and trimming the fleets of tinted window luxury cars that have long been standard issue even in the middle ranks of government Buying fleets of expensive cars when everyone else is buying them when the economy is booming and selling them when everyone else is selling them when times get tough is a great way to lose money just when you can least afford it This in itself is not a serious balance sheet problem for China since the municipal losses are gains for people who want to buy luxury cars on the cheap but this story is interesting for two reasons First it shows how quickly perceptions have changed Just a few years ago it seemed so inconceivable that we would face tough times that no one really questioned the wisdom of extravagant spending but now clearly those questions don t seem so absurd What is especial worrying about this story is not just that municipalities have splurged on cars in recent years They have also see a surge in personnel and larger than ever numbers of workers depend on the solvency of municipal governments for their paychecks This solvency is becoming a big issue and unfortunately the only way to solve it temporarily of course seems to be by igniting another property bubble Second I can t help but see this except as a part of a bigger process of wealth transfers from municipalities and so households in general toward the buyers of distressed assets who tend already to be quite wealthy My guess is that for anyone with lots of liquidity and no real hurry to invest it the next few years are going to produce quite a lot of bargains at the expense of the poor and middle classes who will inevitably foot the bill In itself this story is more amusing than serious but it does illustrate I think the way certain types of systems create incentives that tend to exacerbate volatility and a thorough analysis of the risks associated with a country like China requires an understanding of the incentive structure and how it builds up balance sheet inversions To continue on this topic and at the risk of making this issue of the newsletter look like an advertisement for the Financial Times let me turn to one last FT article this time from the FT Alphaville section which has a habit of teasing out very interesting stories long before they are widely noticed According to an entry earlier last week ChinaScope reports that China s total outstanding foreign debt was 751 26bn at the end of March 2012 according to data released Monday by the State Administration of Foreign Exchange SAFE Here s the trend to date also courtesy of ChinaScope As we can see not only is the foreign debt getting larger in particular the SAFE portion it s getting shorter term in duration too We are far from having in China a risky external debt structure but this does bring up two issues First rising external debt simply adds to the many ways in which the national balance sheet has built up instability This often happens in the late stages of an unsustainable credit boom because as stresses in the system appear they are often resolved by structures that are by my definition inverted As Chinese companies find it harder to borrow in RMB for example they increasingly take to dollar borrowing And as Chinese companies find it harder to borrow long term they borrow more short term As the price of their commodity stockpiles declines they add to their hoard to reduce average prices As perceptions of financial fragility rise the system switches even more to collateralized borrowing We don t know what the cumulative impact of all this balance sheet inversion is but we need to acknowledge that the range of expected outcomes has become more volatile The second issue is just a history reminder When Brazil went through its own debt financed investment boom in the 1960s and early 1970s during the period of the Brazilian miracle most of it was domestically financed By the mid 1970s however Brazil began reaching domestic debt capacity limits and so the economy began slowing The party however didn t quite end At around the same time the huge increases in oil prices had created massive petrodollar surpluses that weighed on bank balance sheets and banks were eager to lend them out Fortunately for them or unfortunately as it turned out the developing countries including Brazil were able to turn to the banks and borrow their way through the economic slowdown of the mid 1970s The rest of course is history Countries like Brazil were able to continue overinvesting and continued growing in the late 1970 even as the US and Europe slowed sparking much excited talk of decoupling This went on until debt levels became unsustainable and in 1981 82 credit abruptly stopped flowing This was when the 1980s LDC debt crisis began I am not suggesting that China today is undergoing the same process as Brazil and that it will switch from domestic to external financing as the Chinese banking system finds it increasingly difficult to keep credit growth high I certainly hope that this doesn t happen since it will simply allow China to postpone the necessary adjustment in its growth model for a few more years but at the cost of a much more difficult adjustment Brazil in the 1980s showed how painful that can be Before closing I want to recommend two pieces on China for interested readers First Andy Xie a very smart economist who spends a lot of time trying to understand balance sheets as part of his economic analysis has another very interesting in Caixin called Dealing with a Double Whammy that is as usual well worth reading Second Chen Long and Wang Chen at INET take CLSA to for some recent upbeat myth busting In their piece CLSA argue that China s debt position is quite healthy Chen and Wang will have none of it This is an abbreviated version of the newsletter that went out two weeks ago Academics journalists and government and NGO officials who want to subscribe to the newsletter should write to me at chinfinpettis yahoo com stating your affiliation please Investors who want to buy a subscription should write to me also at that address |
C | The Economic Surprise Index | Downward revisions are in fashion this summer though eventually they should be replaced by upward revisions which may be in season later this year Yesterday the IMF cut its forecast for global economic growth Also yesterday economists lowered their Q2 forecasts for real GDP in the U S following a weaker than expected retail sales report for June Last Friday Citigroup s Economic Surprise Index ESI was at 64 where It s been fluctuating for the past two weeks Last time it was that low was about a year ago It s slightly below 2010 s lowest reading The forward P E of the S P 500 is positively correlated with the index The former tends to rise or fall when the latter does the same The weakening outlook for global and U S economic growth is driving the 10 year Treasury bond yield to record lows Prior to 2007 falling bond yields tended to boost the P E multiple Since then the P E has tended to rise and fall along with the yield The good news is that the S P 500 s P E is holding up reasonably well so far this year While the ESI is down from a peak of 92 at the start of the year to 64 now and the bond yield remains at a record low the P E peaked at 12 9 on March 26 fell to 11 5 on June 1 but is back to 12 0 presently It remains well above last year s low of 10 2 on October 3 Today s Morning Briefing Global Revenues Outlook 1 Downward revisions for global and US growth 2 Economic Surprise Index deep in negative territory 3 Valuation multiple down but not out 4 IMF global forecast jibes with our S P 500 revenues forecast 5 A good proxy for revenues is up 5 6 Retail sales are down and up 7 The IMF s assumptions 8 German Constitutional Court has a date 9 China is building more trains again |
C | Stocks Rise Despite Bernanke Disappointment | EquitiesAsian markets rose on Tuesday despite Monday s weak retail sales data from the US amid hopes that the weak data would encourage new easing measures The Nikkei rose 4 to 8755 the Kospi edged up 2 to 1822 and the ASX 200 jumped 9 to 4141 In greater China the Hang Seng surged 1 8 to 19455 led by insurers and the Shanghai Composite bounced 6 to 2161 after Monday s steep slide European stocks ended mixed as the FTSE sank 6 the CAC40 eased 1 while the DAX rose 2 Alacatel Lucent shares plunged 19 after warning it would not meet its profit forecast Nokia shares tumbled 6 1 as investors anticipate a weak earnings report which is due on Thursday US stocks gained erasing early losses The Dow advanced 78 points to 12806 the Nasdaq rose 5 to 2910 and the S P 500 climbed 7 to 1364 In his testimony to Congress Bernanke once again failed to deliver any new easing policies but indicated that uncertainty is increasing Mattel NASDAQ MAT jumped 9 7 after earnings beat forecasts and Citigroup NYSE C rallied 2 1 after its profits exceeded expectations CurrenciesThe Australian dollar rallied 7 to 1 0317 as the dollar traded mostly lower against global currencies The euro and Swiss franc edged up 2 to 1 2298 and 9770 respectively The pound inched up 1 to 1 5656 Japanese officials warned they may intervene in the currency markets lifting the yen 3 to 79 08 Economic OutlookCPI data was in line with forecasts at 0 and industrial production rose 4 meeting forecasts The NAHB housing market index rose to 35 from 29 versus forecasts for a reading of 30 |
JPM | Exclusive JPMorgan to pay over 125 million to settle U S credit card debt probes sources | By Karen Freifeld NEW YORK Reuters JPMorgan Chase Co NYSE JPM has agreed to pay at least 125 million to settle probes by U S state and federal authorities that the bank sought to improperly collect and sell consumer credit card debt according to people familiar with the matter The settlement also includes about 50 million in restitution the sources said The nation s largest bank has been accused of relying on robo signing and other discredited methods of going after consumers for debts they may not have owed and for providing inaccurate information to debt buyers Robo signing refers to signing documents in mass quantities without reviewing records The U S Consumer Financial Protection Bureau CFPB 47 states and the District of Columbia are expected to announce the settlements as soon as Wednesday the people said The states will split some 95 million while the CFPB will get 30 million the people said JPMorgan Chase and the CFPB did not return calls for comment A spokesman for Iowa Attorney General Tom Miller who has been leading a group of states in probing JPMorgan s debt sales and collection actions declined to comment Mississippi and California are not expected to settle at the same time sources said Both have lawsuits pending against JPMorgan over debt collection practices California Attorney General Kamala Harris sued in 2013 claiming the bank engaged in fraudulent and unlawful debt collection practices against 100 000 California credit card borrowers over some three years The state claims the bank flooded state courts with questionable lawsuits filing thousands every month including 469 such lawsuits in one day alone Kristin Ford a spokeswoman for the California attorney general did not return calls for comment Mississippi Attorney General Jim Hood s lawsuit filed a similar lawsuit against JPMorgan in 2013 The Mississippi lawsuit said employees described a chaotic and disorganized workplace marred by rampant mistakes inadequate training constantly changing policies high turnover and unrealistic quotas Rachael Ring a spokeswoman for the Mississippi attorney general would only say the lawsuit is pending In September 2013 the U S Consumer Financial Protection Bureau ordered JPMorgan to refund 309 million to about 2 million customers for illegal credit card practices including charging consumers for credit card monitoring services they did not receive The Office of the Comptroller of the Currency that month also issued a consent order against JPMorgan after identifying unsound practices in connection with the bank s sworn document and collections litigation The order demanded changes including to debt sales At the time JPMorgan said collection issues affected less than 1 percent of customers and that it stopped filing collection lawsuits in 2011 and stopped enrolling customers in credit monitoring services in 2012 In 2012 Iowa s Attorney General Miller helped negotiate a 26 billion settlement with the nation s largest banks over mortgage abuses which also included robo signing |
JPM | JPMorgan to pay 136 million over credit card collection practices | Reuters JPMorgan Chase Co N JPM has agreed to pay 136 million to settle with U S state and federal authorities for credit card collection practices and bad debt sales New York Attorney General Eric Schneiderman said on Wednesday
The U S Consumer Financial Protection Bureau 47 states and the District of Columbia joined in the settlement which was first reported by Reuters on Tuesday |
JPM | Ex accounting executive avoids prison in Madoff fraud case | By Joseph Ax NEW YORK Reuters A former associate of Bernard Madoff avoided prison on Thursday for his role in perpetuating the fraudster s massive Ponzi scheme because of his extensive cooperation with prosecutors Paul Konigsberg 79 a lawyer and accounting firm executive pleaded guilty in June 2014 to charges of conspiracy and falsifying books and records At the time his cooperation deal was seen as a signal that prosecutors were still pursuing a criminal case against Madoff s son Andrew who died of cancer three months later U S District Judge Laura Taylor Swain in New York citing an otherwise admirable life said Konigsberg had been punished enough by the loss of his reputation You ve demonstrated sincere remorse she said Prosecutors said Konigsberg was unaware of the scheme but helped by conspiring with Madoff employees to create some of the fraudulent customer statements at its heart Not a day goes by that I don t regret that I trusted Mr Madoff a tearful Konigsberg told Swain As we ve all come to know this man was truly a monster Konigsberg s plea last year included references to two unnamed co conspirators who allegedly received sham tax free loans from Madoff Sources told Reuters the two people were Madoff s sons Mark and Andrew Mark Madoff committed suicide in December 2010 on the second anniversary of his father s arrest Andrew Madoff died in September The Madoff brothers denied any knowledge of or involvement in their father s fraud Bernard Madoff is serving a 150 year sentence after pleading guilty to running the Ponzi scheme estimated to have cost investors 17 billion in principal In the 1990s Madoff began steering some of his biggest clients to Konigsberg s accounting firm In several instances Konigsberg agreed to return customer account statements to Madoff s firm to be replaced by amended statements with fraudulent backdated trades He then filed clients tax returns based on the revised statements Konigsberg also allowed Madoff to pay a relative for a no show job at Madoff s firm prosecutors said Konigsberg has forfeited more than 4 million of commissions his firm received for Madoff clients Prosecutors said Konigsberg aided the investigation into Madoff s longtime bank JPMorgan Chase Co N JPM The bank agreed in January 2014 to pay 2 6 billion to resolve criminal and civil claims related to Madoff Fifteen defendants including Madoff have been convicted in connection with the fraud
The case is U S v Konigsberg U S District Court for the Southern District of New York No 10 cr 228 |
JPM | U S pre market top movers of the day | Investing com U S stock futures pointed to a higher open on Monday as market sentiment recovered after a deal over a third bailout deal for Greece was reached after marathon all night talks between European leaders
Ahead of the open in New York the Dow Jones Industrial Average futures rose 115 points or 0 65 the S P 500 futures tacked on 13 points or 0 65 while the Nasdaq 100 futures increased 36 points or 0 85
Amongst the most active pre market stocks U S listed shares of the National Bank of Greece NYSE NBG pointed to gain of 16 5
Drug maker Anacor Pharmaceuticals NASDAQ ANAC soared 38 3 after announcing positive top line results from a Phase 3 study assessing its lead product candidate Crisaborole Topical Ointment 2 for the treatment of mild to moderate atopic dermatitis in children and adults
No significant earnings are expected on Monday but the second quarter earnings season gets underway with a slew of major reports on Tuesday that include JPMorgan Chase NYSE JPM and Wells Fargo NYSE WFC
Across the Atlantic European stock markets rallied with France s CAC 40 jumping 2 and Germany s DAX 30 rising 1 5 Meanwhile the euro was lower after initially spiking on news of a Greek debt deal as investors turned their attention to prospects for higher U S interest rates later this year
European Council President Donald Tusk said early Monday that a program for Greece was all ready to go with serious reforms and financial support
The Greek parliament must pass new legislation on Monday and Tuesday to implement the measures agreed in Brussels including on pensions reform and a new sales tax regime Parliaments in several euro zone countries will also have to approve any new bailout
Eurogroup President Jeroen Dijsselbloem said talks on bridge financing for Greece will begin immediately to help cover its debt repayments this summer He also said that 50 billion of state owned Greek assets would be set aside in a fund to contribute to the recapitalization of Greek banks
The U S dollar index which measures the greenback s strength against a trade weighted basket of six major currencies was last at 96 48 up 0 55 for the day
The greenback remained supported after Federal Reserve Chair Janet Yellen said in a speech Friday that the central bank is on track to raise interest rates at some point this year The comments from Yellen are her most definitive to date on the timing of a 2015 rate hike
Fed Chair Yellen appears before the House Financial Services Committee on Wednesday Her testimony will be closely watched for further clues on when U S interest rates may start to rise
Elsewhere Chinese trade data released earlier showed that the country s trade surplus narrowed to 46 5 billion last month from 59 5 billion in May compared to estimates for a surplus of 55 7 billion
Chinese exports rose 2 8 from a year earlier beating forecasts for a decline of 0 2 while imports fell 6 1 better than expectations for a drop of 15 0
A slowdown in domestic demand indicated a recovery in the broader economy remains fragile and may need further government stimulus
China is scheduled to release data on second quarter gross domestic product on Wednesday The report is expected to show the world s second largest economy grew 6 9 slowing from 7 0 in the preceding quarter |
JPM | JP Morgan rises 1 5 in pre market trade after Q2 earnings beat | Investing com JP Morgan Chase NYSE JPM the largest U S bank reported stronger than expected second quarter earnings and revenue ahead of Tuesday s opening bell sending its shares higher in pre market trade
JP Morgan said adjusted earnings per share came in at 1 54 in the three months ended June 30 up from 1 46 a share a year earlier and above expectations for adjusted earnings of 1 44 a share
The bank s revenue totaled 24 53 billion in the April to June quarter beating estimates for revenue of 24 5 billion
Jamie Dimon Chairman and CEO commented on the financial results Our Company had strong results this quarter and each of our businesses performed well with broad and consistent underlying growth This quarter was another example of the power of our platform and risk discipline and of being there for our clients as we always are in good times and in volatile markets
Traders will now turn their attention to the bank s conference call due to start at 8 30 a m Eastern Time
Following the release of the report shares in JPM rose 1 47 in pre market trade to trade at 69 05 from Monday s closing price of 68 05
Meanwhile U S equity markets pointed to a flat open The Dow futures pointed to a drop of 0 1 the S P 500 futures shed 0 05 while the Nasdaq 100 futures inched up 0 05 |
BMY | 3 Reasons Why Bristol Myers BMY Is A Great Growth Stock | Investors seek growth stocks to capitalize on above average growth in financials that help these securities grab the market s attention and produce exceptional returns But finding a great growth stock is not easy at all
In addition to volatility these stocks carry above average risk by their very nature Also one could end up losing from a stock whose growth story is actually over or nearing its end
However the task of finding cutting edge growth stocks is made easy with the help of the Zacks Growth Style Score part of the Zacks Style Scores system which looks beyond the traditional growth attributes to analyze a company s real growth prospects
Bristol Myers Squibb BMY is one such stock that our proprietary system currently recommends The company not only has a favorable Growth Score but also carries a top Zacks Rank
Research shows that stocks carrying the best growth features consistently beat the market And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank 1 Strong Buy or 2 Buy
While there are numerous reasons why the stock of this biopharmaceutical company is a great growth pick right now we have highlighted three of the most important factors below
Earnings Growth
Earnings growth is arguably the most important factor as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors For growth investors double digit earnings growth is highly preferable as it is often perceived as an indication of strong prospects and stock price gains for the company under consideration
While the historical EPS growth rate for Bristol Myers is 18 6 investors should actually focus on the projected growth The company s EPS is expected to grow 5 this year crushing the industry average which calls for EPS growth of 1 3
Cash Flow Growth
Cash is the lifeblood of any business but higher than average cash flow growth is more beneficial and important for growth oriented companies than for mature companies That s because high cash accumulation enables these companies to undertake new projects without raising expensive outside funds
Right now year over year cash flow growth for Bristol Myers is 24 2 which is higher than many of its peers In fact the rate compares to the industry average of 12 2
While investors should actually consider the current cash flow growth it s worth taking a look at the historical rate too for putting the current reading into proper perspective The company s annualized cash flow growth rate has been 13 6 over the past 3 5 years versus the industry average of 5
Promising Earnings Estimate Revisions
Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions A positive trend is of course favorable here Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near term stock price movements
The current year earnings estimates for Bristol Myers have been revising upward The Zacks Consensus Estimate for the current year has surged 1 4 over the past month
Bottom Line
While the overall earnings estimate revisions have made Bristol Myers a Zacks Rank 2 stock it has earned itself a Growth Score of A based on a number of factors including the ones discussed above
You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
This combination indicates that Bristol Myers is a potential outperformer and a solid choice for growth investors |
BMY | Is Bristol Myers Squibb BMY Stock Undervalued Right Now | Here at Zacks we focus on our proven ranking system which places an emphasis on earnings estimates and estimate revisions to find winning stocks But we also understand that investors develop their own strategies so we are constantly looking at the latest trends in value growth and momentum to find strong companies for our readers
Looking at the history of these trends perhaps none is more beloved than value investing This strategy simply looks to identify companies that are being undervalued by the broader market Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits For example value investors will be interested in stocks with great grades in the Value category When paired with a high Zacks Rank A grades in the Value category are among the strongest value stocks on the market today
One stock to keep an eye on is Bristol Myers Squibb BMY BMY is currently sporting a Zacks Rank of 2 Buy and an A for Value The stock holds a P E ratio of 10 06 while its industry has an average P E of 14 49 Over the past 52 weeks BMY s Forward P E has been as high as 16 67 and as low as 9 72 with a median of 12 11
Another valuation metric that we should highlight is BMY s P B ratio of 4 62 The P B is a method of comparing a stock s market value to its book value which is defined as total assets minus total liabilities This stock s P B looks solid versus its industry s average P B of 6 93 Over the past year BMY s P B has been as high as 8 19 and as low as 4 57 with a median of 5 88
Value investors also use the P S ratio The P S ratio is is calculated as price divided by sales This is a prefered metric because revenue can t really be manipulated so sales are often a truer performance indicator BMY has a P S ratio of 3 11 This compares to its industry s average P S of 4 27
Finally investors should note that BMY has a P CF ratio of 12 18 This metric takes into account a company s operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook This stock s P CF looks attractive against its industry s average P CF of 15 36 BMY s P CF has been as high as 95 99 and as low as 12 05 with a median of 15 02 all within the past year
These figures are just a handful of the metrics value investors tend to look at but they help show that Bristol Myers Squibb is likely being undervalued right now Considering this as well as the strength of its earnings outlook BMY feels like a great value stock at the moment |
BMY | Exelixis EXEL Q2 Earnings Sales Beat Cabometyx Shines | Exelixis Inc NASDAQ EXEL delivered better than expected results for second quarter 2019 wherein both earnings and revenues beat estimates on strong performance by Cabometyx The company s shares have gained 8 1 in the year so far against the decline of 0 5 Exelixis reported earnings of 25 cents easily beating the Zacks Consensus Estimate of 23 cents However the bottom line declined from 28 cents in the year ago quarter Net revenues came in at 240 3 million up from 186 1 million in the year ago quarter The top line also surpassed the Zacks Consensus Estimate of 228 97 million Quarter in DetailNet product revenues came in at 193 7 million up 32 8 from the year ago quarter driven by continued growth of Cabometyx in the United States for the treatment of advanced renal cell carcinoma RCC In April 2016 the FDA approved a tablet formulation of cabozantinib distinct from the capsule form under the brand name Cabometyx for the treatment of advanced RCC in patients who have received prior anti angiogenic therapy The company also expanded the drug s label for the treatment of previously untreated advanced RCC in December 2017 Cabometyx received another FDA approval for the treatment of patients with hepatocellular carcinoma HCC in January 2019 The launch of the drug for this indication in the United States also boosted sales Cabometyx generated 189 million of net product revenues Patient demand grew 26 year over year and 9 sequentially driven by both RCC and HCC Prescriber base grew by 45 Cometriq cabozantinib capsules for the treatment of medullary thyroid cancer generated 4 7 million in net product revenues Total collaboration revenues were 46 6 million up from 40 3 million in the year ago quarter primarily owing to the recognition of a 20 0 million milestone from Daiichi Sankyo Company Limited Daiichi Sankyo for the launch of Minnebro esaxerenone tablets as a treatment for patients with hypertension in Japan In the reported quarter research and development expenses increased 92 7 to 81 9 million owing to high clinical trial costs license and other collaboration costs personnel expenses and stock based compensation Selling general and administrative SG A expenses were 58 8 million up 13 3 year over year driven by increase in personnel expenses and stock based compensation Pipeline UpdateThe pipeline progress in the year so far has been encouraging In April CheckMate 9ER the phase III trial evaluating the combination of cabozantinib and Opdivo versus Pfizer s NYSE PFE Sutent in patients with previously untreated advanced or metastatic RCC completed enrollment The study was sponsored by Bristol Myers Squibb Company NYSE BMY and co funded by Exelixis and partners Ipsen and Takeda Results are expected by early 2020 Exelixis initiated a multi center randomized double blinded controlled phase III study COSMIC 313 The study is evaluating Cabometyx in combination with Opdivo and Yervoy versus Opdivo and Yervoy in patients with previously untreated advanced RCC The primary endpoint of the trial is progression free survival and the secondary endpoints are overall survival and objective response rate Exelixis announced that amendments have been made to its multi center open label phase Ib study COSMIC 021 evaluating Cabometyx in combination with Roche s OTC RHHBY Tecentriq in patients with locally advanced or metastatic solid tumors Two original cohorts are being expanded and four cohorts being included in the COSMIC 021 study The original immunotherapy refractory non small cell lung cancer NSCLC and metastatic castration resistant prostate cancer CRPC cohorts are being expanded to 80 patients each based on encouraging early efficacy and safety data Also four cohorts consisting of two expansion and two exploratory cohorts are being added to the study The two new expansion cohorts will evaluate the above mentioned combination in patients with metastatic CRPC who have received prior enzalutamide or abiraterone therapy with or without prior docetaxel therapy Last month Exelixis inked an exclusive option and license agreement with Aurigene a biotechnology company from India focusing on oncology and inflammatory disorders to in license up to six oncology programs from the latter Per the terms Exelixis will make an upfront payment of 10 0 million for exclusive options to license three pre existing programs 2019 GuidanceR D expenses are expected between 330 million and 350 million and SG A expenses between 220 million and 240 million Our TakeExelixis second quarter results were impressive despite increasing competition from Pfizer s Inlyta The drug gained market share throughout the second quarter for the RCC indication The initial traction for the HCC indication in the second and third line setting was encouraging as well The company ended the quarter with 34 market share backed by its broad label for advanced RCC We expect a strong performance in the second half of 2019 as well Zacks RankExelixis currently carries a Zacks Rank 3 Hold You can see Looking for Stocks with Skyrocketing Upside
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
BMY | Is A Beat In Store For Nektar NKTR This Earnings Season | We expect Nektar Therapeutics NASDAQ NKTR to beat expectations when it reports second quarter 2019 results on Aug 8 after market close In the last reported quarter the company delivered a positive earnings surprise of 4 23 While the company surpassed the Zacks Consensus Estimate in three of the last four quarters it matched the same once with the average beat being 8 83 Shares of the company have lost 13 4 so far this year against the s increase of 7 5 Let s see how things are shaping up for this announcement Factors at PlayNektar earns revenues from proprietary PEGylation material sales to partners and royalties on sales of partnered drugs like AstraZeneca s Movantik and Takeda s Adynovate Royalty revenues displayed an upward trend in the past few quarters and the momentum is likely to continue in the soon to be reported quarter The company s lead candidate bempegaldesleukin previously NKTR 214 an immuno stimulatory CD122 biased agonist is expected to be in focus on the second quarter earnings call Nektar has collaborations with multiple drug companies to develop bempegaldesleukin in combination with their cancer candidates including Pfizer s NYSE PFE Bavencio talazoparib or Bavencio Xtandi A phase III study is evaluating bempegaldesleukin in combination with Bristol Myers NYSE BMY Opdivo for treating first line advanced melanoma patients The company also has a late stage candidate Onzeald which is being developed for pain management Nektar is also developing NKTR 358 for auto immune disorders and NKTR 255 for virology indications These studies are likely to drive research and development costs higher in the second quarter Investors will likely focus on the progress of clinical studies especially bempegaldesleukin on the second quarter earnings call Nektar s analgesic candidate NKTR 181 is under FDA review for treating chronic low back pain in patients new to any opioid therapy A decision is expected later this month In May the company formed a new wholly owned subsidiary which will mainly be responsible for the potential launch and commercialization of NKTR 181 We expect the company to provide details on the launch plan following potential approval of NKTR 181 and the path forward for Inheris Biopharma Earnings WhispersOur proven model indicates that Nektar is likely to beat earnings estimates this quarter This is because a stock needs to have both a positive and a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold for this to happen Earnings ESP Earnings ESP which represents the difference between the Most Accurate Estimate loss of 79 cents and the Zacks Consensus Estimate loss of 80 cents stands at 1 43 You can uncover the best stocks to buy or sell before they re reported with our Zacks Rank Nektar has a Zacks Rank 3 The combination of a positive Earnings ESP and a favorable Zacks Rank makes us reasonably confident of an earnings beat Note that we caution against stocks with a Zacks Rank 4 Sell or 5 Strong Sell going into an earnings announcement especially when the company is seeing negative estimate revisions Nektar Therapeutics Price and Consensus
Another Stock That Warrants a LookHere is a biotech stock that you may also want to consider as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release Regeneron Pharmaceuticals Inc NASDAQ REGN has an Earnings ESP of 3 64 and a Zacks Rank 3 The company is scheduled to release second quarter results on Aug 6 You can see Looking for Stocks with Skyrocketing Upside Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
C | FOREX Euro rise to 14 month high vs dollar before ECB | Euro rallies ECB chief Trichet expected to stay hawkish
Yen at 11 month low vs euro 6 month low vs dollar
Carry trade revival hurts yen BOJ policy loose
Updates prices adds Portugal announcement
By Wanfeng Zhou
NEW YORK April 6 Reuters The euro rose on Wednesday to
a 14 month high against the dollar on speculation the European
Central Bank will signal further interest rate rises following
an expected increase this week though there s room for
disappointment
The yen slid to an 11 month low against the euro and a
six month low against the dollar More losses were expected for
the yen as investors such as macro hedge funds add to bearish
bets with the Bank of Japan looking set to lag other central
banks in tightening policy
The ECB is widely expected to raise its benchmark rate by
25 basis points on Thursday its first increase since July
2008 Many analysts expect ECB President Jean Claude Trichet to
continue sounding a hawkish tone on inflation which would
stoke market expectations for more rate rises this year
The markets are very bullish with respect to the
anticipated Trichet communique tomorrow They expect quite
strongly that the ECB is heading toward normalization of
monetary policy said Dean Popplewell chief currency
strategist at OANDA in Toronto
The expectation for higher euro zone rates contrasted with
uncertainty in the United States over when the Federal Reserve
may begin to tighten policy The U S economy remains too
fragile for the Fed to begin raising rates Atlanta Fed
President Dennis Lockhart said on Wednesday
The euro rose as high as 1 4350 according to Reuters
data its highest since late January 2010 It was last up 0 8
percent at 1 4334 shrugging off an announcement from
Portugal s caretaker government that it needs financing from
the European Union
Traders reported steady buying by Asian central banks but
said large option barriers cited at 1 4350 and 1 4400 could
cap gains in the near term
Citigroup currency strategist Todd Elmer said euro zone
rate expectations are close to their recent peaks with money
markets discounting more than 100 basis points of ECB
tightening through November
Expectations for ECB hawkishness are at unprecedented
levels since the onset of the financial crisis and this could
leave room for disappointment if President Trichet fails to
validate the moves in market interest rates at his press
conference tomorrow he said in a note to clients
CARRY TRADE REVIVES
The struggling yen was in danger of breaching key long term
support levels against most currencies having already fallen
to a 2 1 2 year low against the Australian dollar
The yen has slid since the first G7 intervention in a
decade last month after the earthquake in Japan stirring talk
of a carry trade revival a strategy of selling low yielding
currencies to fund investment in currencies with higher
interest rates
The yen is taking a lead as the global carry trade makes a
return with the Bank of Japan likely to ease policy while the
other central banks seek to tighten it said Lena Komileva
head of G 10 currency strategy at Brown Brothers Harriman in
London
The euro was up 1 4 percent at 122 45 yen having earlier
touched an 11 month peak with stop loss buying earlier in the
session adding to its rise
The dollar was up 0 6 percent at 85 43 yen after hitting a
six month peak of 85 52 yen almost 10 yen above its record low
of 76 25 yen hit in March days after Japan s northeast was
devastated by a massive earthquake and tsunami
The high yielding Australian dollar surged to 89 28 yen
its highest since September 2008 with 90 yen seen as the next
possible target
Against a basket of currencies the dollar was down 0 5
percent at 75 540
Additional reporting by Nick Olivari Editing by James
Dalgleish |
C | European stocks near 1 mth closing high miners up | FTSEurofirst 300 rises 0 5 percent eye 1 month closing
high
Market breaks through key technical levels
For up to the minute market news click on
By Brian Gorman
LONDON April 8 Reuters European shares headed for their
highest close in more than a month on Friday with miners up as
metals prices were boosted by an improving economic outlook and
a weaker dollar
At 1058 GMT the FTSEurofirst 300 index of top European
shares was up 0 5 percent at 1 150 11 points on course for the
highest close since early March and a third weekly gain
The European benchmark is up more than 78 percent from its
lifetime low of March 2009
Strategists said monetary stimulus such as the U S Federal
Reserve s quantitative easing was a key factor in continuing to
boost markets It was helping investors look past a host of
negatives such as Japan s nuclear crisis tension in the Arab
world and the euro zone s debt crisis and rising interest
rates
The resilience the market is showing against a hostile
background is quite remarkable said Richard Jeffrey chief
investment officer at Cazenove Capital Management which has 15
billion pounds under management
In some respects it s an indication of the liquidity in
the international finance system through quantitative easing It
would appear that is a more powerful force than the ECB
tightening
However the Fed is likely to end its 600 billion
bond buying programme within the next two or three months and it
may raise interest rates Jeffrey said markets might then
hesitate
Gold struck a record high on Friday and silver crossed 40
an ounce for the first time since 1980 as a weaker dollar and
concerns about inflation sent investors piling into precious
metals
Base metals also gained sharply Miners to gain included
Anglo American BHP Billiton and Fresnillo up between 2 1 and
2 7 percent
Insurance stocks were also among the top gainers on Friday
with AXA Swiss Life Old Mutual and Aviva up between 1 7 and
3 3 percent
In a note to clients UniCredit recommended investors to
take long positions on European insurance stocks and short
retailers stocks as the ECB s rate rise will be supportive to
the insurance sector while crimping consumer spending
TNT FALLS
Among individual shares Dutch mail company TNT fell 10
percent after saying it will push ahead with spinning off its
express unit despite changing the outlook for the unit due to
oil prices political unrest and natural disasters
Technical indicators were positive with the pan European
index having broken through key levels The index rose above its
50 day moving average and is also above the 61 8 percent
Fibonacci retracement level of its fall to its lowest point in
2011 in March from a February high
A bullish continuation pattern is confirmed said
Philippe Delabarre technical analyst at Trading Central in
Paris writing about the Stoxx 50 which rose 0 4 percent to
2 649 46 points He gave a short term target of 2 920
As expected the European Central Bank raised interest rates
for the first time since the 2008 financial crisis on Thursday
and market expectations of more hikes this year sent the euro to
a 15 month high against the dollar boosting foreign investors
appetite for the region s stocks as they seek exposure to the
rallying currency
The ECB s move is sort of removing the punch bowl which is
a good thing at this point The message is that overall the
European economy has been improving a Paris based trader said
Citigroup said in a note that global growth should support
double digit earnings growth for European companies
It added We forecast double digit returns for equities as
markets track expected earnings growth in 2011 Stay bullish
Absolute valuations are around average while equities continue
to look attractive relative to bonds in a more inflationary
world
Additional reporting by Blaise Robinson Editing by Erica
Billingham |
C | Miners insurers push FTSE nearer 2011 highs | FTSE up 0 9 percent technicals point to further upside
Miners lifted by record metal prices RIO Tinto M A
Unicredit urges investors to buy insurers
By David Brett
LONDON April 8 Reuters Rallying miners pushed Britain s
top share index higher on Friday boosted by M A activity and
record high metal prices as analysts saw further upside
momentum to the index s recent rally
By 1058 GMT the FTSE 100 climbed 53 68 points or 0 9
percent to 6 061 05 having closed down 0 6 percent in the
previous session
Quotes remain within an upward sloping channel drawn from
March 25 and the 30 minute relative strength index is holding
above its support base around 35 Philippe Delabarre technical
analyst at Trading Central said
Furthermore a broadening wedge is taking shape and calls
for a further rise
London s blue chip index has rallied near 8 percent since
its March low and edged closer to its 2011 high of 6 105 77
following the lead set by Asian markets after it appeared a
strong aftershock that struck Japan s earthquake ravaged
northeast late on Thursday had not done major damage
Another strong earthquake in Japan temporarily unsettled
the capital markets on Thursday Yet investors subsequently
shifted their attention back to the good macro data Stefan
Angele Head of Investment Management Swiss Global Asset
Management which has around 80 billion swiss francs of funds
under management
Angele sees the IT sector as well as energy and materials
benefiting most from the global economic recovery and the
business cycle
Miners gained after gold and silver struck record highs on
Friday A weaker dollar and concerns about inflation sent
investors piling into precious metals
Global miner Rio Tinto rose 1 8 percent after it assumed
control of Mozambique focused coal miner Riversdale
Indian focused miner Vedanta gained 1 2 percent after
fourth quarter production figures But uncertainty lingers over
its long delayed purchase of Cairn Energy s Cairn India unit
INTEREST RATE CONUNDRUM
UK Government data showed producer output prices rose by 5 4
percent confounding expectations of a slowdown to an annual 5 1
percent
This would likely raise expectations of a interest rate
rise Investors are almost fully pricing in a 25 basis point
rate hike in July with a better than a 50 percent chance being
priced in for May
The buy case for equities remained strong compared to other
asset classes according Citigroup analyst Jonathan Stubbs
Absolute valuations are around average while equities
continue to look attractive relative to bonds in a more
inflationary world he said
We forecast double digit returns for equities as markets
track expected earnings growth in 2011 Stay bullish
Insurers were among the top performers on the FTSE 100
helped by a note from UniCredit which recommended investors to
long the sector and short retailers
The broker says the European Central Bank s interest rate
rises will be supportive to the insurance sector though the
monetary tightening will crimp consumer spending
Old Mutual which completed the sale of its U S life
business to Harbinger Group on Thursday rose 2 3 percent while
Prudential added 1 9 percent
Shire gained 1 6 percent after an after an update from U S
regulator FDA on a safety review of hyperactivity medications
including the pharma company s Vyvanse and Adderall XR
recommends no changes to the labels or use of the medications at
this time
Utility Scottish Southern Energy climbed 1 6 percent as
Credit Suisse upgraded its stance to outperform
A downgrade to underperform from neutral by the same
broker however saw broker ICAP shed 4 3 percent
Intertek fell 1 7 percent as JPMorgan cut its rating on the
testing firm to neutral from overweight on valuation
grounds
Editing by Hans Peters |
C | UPDATE 2 CVC Cinven eye 1 bln Turkish pharma deal sources | Private equity funds eye Bilim Ilac stake sources
CVC Turkven Cinven Actera Advent said to mull purchase
Drugmaker Bilim Ilac may be worth about 1 bln sources
Writes through adds background on Biofarma sale
By Seda Sezer and Ceyda Caglayan
ISTANBUL April 8 Reuters European buyout firms Cinven
CVC and Advent International are among potential buyers of a
stake in Bilim Ilac in a sale that may value the Turkish
drugmaker at about 1 billion sources familiar with the deal
said
London based CVC Capital Partners is working with with
Turkish private equity firm Turkven while Cinven has Actera as
its local partner the sources said adding that the sale will
have high valuation multiples
Advent International which manages more than 21 billion
of assets and last year opened an Istanbul office is also
interested in the stake sale they added
The size of the stake to be sold was not clear
Bilim Ilac which is the third biggest Turkish drugmaker by
revenue and box sales was not immediately available to comment
It had a 5 1 percent market share in 2010 according to the
company s website The Turkish drug market had revenue of 14 8
billion lira 9 74 billion in 2010 according to Bilim Ilac
Turkey is attracting larger generic manufacturers and major
drugmakers with one of the highest economic growth rates in
Europe with gross domestic product GDP growth at 9 2 percent
in the fourth quarter and with robust growth in the
pharmaceutical market
Bilim Ilac s auction comes as investors explore the sale of
another major Turkish drugmaker generics company Biofarma
Pharmaceutical Industry
In December Reuters reported that Biofarma s owners who
include Citigroup s venture capital arm had hired JPMorgan to
run a sale which could interest major drugmakers such as
GlaxoSmithKline Plc
London representatives for Cinven CVC and Advent were not
immediately available for comment
Writing by Seda Sezer Additional reporting by Quentin Webb
and Simon Meads in London Editing by Hans Peters and Ben
Hirschler
1 1 520 Turkish Lira |
C | PRECIOUS Gold hits record on euro silver jumps to 31 year top | Gold strikes record silver above 41 an ounce
Gold is heading towards 1 518 technicals ID nL3E7FB03J
Coming Up France Feb industrial output 0645 GMT
Updates prices adds activity in physical market
By Lewa Pardomuan
SINGAPORE April 11 Reuters Gold jumped to a record high
for a fifth straight trading day on Monday as the prospect of
more declines in the U S dollar drove investors into the
precious metal with record exchange traded fund holdings
helping silver to its highest in more than three decades
Heightened inflationary threats despite interest hikes by
China and the European Central Bank boosted gold s safe haven
appeal while silver also attracted buying from investors
looking for a cheaper alternative to bullion The gold to silver
ratio was at a 28 year low around 35
Spot gold was steady at 1 472 80 an ounce by 0335
GMT having risen as high as 1 476 21 as the euro jumped to a
15 month high against the U S dollar
I think there is a good chance that gold could hit 1 500
an ounce within this quarter And perhaps even higher if we see
the weakness in the dollar persist and the Federal Reserve
continues their relatively easy monetary policy said Ong Yi
Ling investment analyst at Phillip Futures in Singapore
This week perhaps the focus could be on whether the
Federal Reserve actually indicates to the market whether they
will be exiting their loose monetary policy and whether they
display any hawkish signals
Gold has gained more than 10 percent since late January when
political unrest began to flare in the Middle East and North
Africa
But Monday s gains could be capped by a drop in energy
prices Brent crude fell below 126 after the African
Union said Muammar Gaddafi has accepted a roadmap to end the
civil war in Libya including an immediate ceasefire in the
North African producer
The metal is still far below its all time inflation adjusted
high estimated at almost 2 500 an ounce set in 1980 an era of
Cold War tension oil shocks and hyperinflation
Spot gold is heading towards 1 518 per ounce based
on its wave pattern and a Fibonacci projection analysis
according to Wang Tao a Reuters market analyst for commodities
and energy technicals
Spot silver rose as high as 41 51 an ounce its
strongest in 31 years IShares Silver Trust said its
holdings hit another record at 11 242 89 tonnes by April 8 from
11 192 80 tonnes on April 7
The yen stayed on the backfoot on Monday while the euro
extended gains to 15 month highs around 1 4488 paving
the way for a test of 1 4582 the January 2010 high
The ECB raised rates by 25 basis points at its April meeting
last week and signalled it was ready to tighten further if
needed to check rising prices but in contrast both the Fed and
Bank of Japan are expected to keep interest rates near zero for
an extended period of time
Janet Yellen Fed Vice Chair said on Saturday the U S
economy is still not strong enough for the Fed to start
reversing its extremely accommodative monetary policy
ID nN09236621
NY Fed chief William Dudley speaks later on Monday and
should also sound dovish
U S gold futures for June were steady at 1 474 2 an
ounce after rising to a record at 1 478 an ounce
The physical sector saw selling from Thailand and Indonesia
but volume was light as holders waited for more gains in gold
prices before cashing in Premiums were steady at between 70
cents and 1 an ounce to the spot London price in Singapore
Selling started last week but I don t think the quantity
is huge Thailand has quietened down a lit bit and I think
because people are still bullish about gold said a dealer in
Singapore
My premiums are unchanged at 70 cents he added
Another Singapore based dealer said selling picked up from
Indonesia on Monday but it had little no impact on premiums
I sold my last deal into Thailand at 80 cents so I presume
the premiums are about there he added
In other markets the Nikkei edged lower after Citigroup
slashed its ratings on major automakers to sell although
buying of reconstruction related stocks supported the market
Precious metals prices 0335 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1472 80 0 10 0 01 3 76
Spot Silver 41 44 0 59 1 44 34 28
Spot Platinum 1808 74 4 99 0 28 2 33
Spot Palladium 796 72 5 97 0 75 0 35
TOCOM Gold 4021 00 2 00 0 05 7 83 46467
TOCOM Platinum 4948 00 2 00 0 04 5 37 11030
TOCOM Silver 113 00 3 10 2 82 39 51 2322
TOCOM Palladium 2182 00 18 00 0 83 4 05 305
Euro Dollar 1 4464
Dollar Yen 84 70
TOCOM prices in yen per gram Spot prices in per ounce
Reporting by Lewa Pardomuan Editing by Michael Urquhart
Reuters Terminal users can see related news and prices by
double clicking on the codes in brackets
All precious metals headlines
Precious metals market reports
Daily fixing headlines
Technical analysis
Indian gold reports
European gold prices 0 PREC
London interbank gold forward rates 0 GOFO
London silver forwards
Gold lease rates 0 LGLR
London Bullion Market Association
New York Comex gold 0 GC and silver 0 SI
New York platinum 0 PL and palladium 0 PA
Asian gold prices 0 PREC
Australian precious metals prices 0 AUPREC
Shanghai Gold Exchange prices
Hong Kong gold exchange prices
Hong Kong bullion prices
Indian bullion prices 0 PREC IN
Japanese producer prices
For Related News and other topics double click on one of these
codes
SPEED GUIDES |
C | Hedging For The Short Term And The Long Term | Whether or not an investor utilizes hedging techniques can have a large impact on both their short term and long term performance Hedging involves trade offs You are minimizing losses but also likely capping gains Our portfolio however features a differne tkind of hedge and it is one that we would like readers to be aware of The AdvisorShares Active Bear ETF HDGE has a unique approach to hedging one that differs from traditional short ETF s The most well known short ETF is the ProShares Short S P 500 SH This fund gives investors short exposure by shorting every stock in the S P 500 The ETF is a good short term hedge against market volatility Problems begin however when the ETF is held for long periods of time The ProShares ETF resets itself daily which over time means that it loses its ability to act as a hedge The fund s performance over the past year serves as proof of this Over the past year the S P 500 has lost a bit less than 1 Common wisdom would suggest that the ProShares Short S P 500 ETF would be up around that much Yet the fund is down over 7 due to the the fact that it resets daily How is an ETF that shorts the market down more than the market It is because that ETF is meant as a short term hedge and a trading vehicle not a long term holding The AdvisorShares Active Bear ETF however takes a different approach to shorting It is an actively managed fund and rather than shorting the entire market it shorts select stocks that its portfolio managers think have poor earnings quality accounting issues or other financial weaknesses that will make their shares fall This approach works in both the short term and the long term In the short term this ETF acts like a general market hedge because the companies it shorts are the ones that are the most likely to fall and fall the hardest in a weak market Currently 2 of the funds top holdings are Citigroup C and Deutsche Bank DB And whenever the market is in a panic over either the situation in Europe or some other macroeconomic pressure point these 2 companies are almost always sell off more than the market The Active Bear ETF s emphasis on financially weak companies helps drive outperformance in the short term It is why over the past year the fund is up over 8 far more than one would expect from a short ETF based on the performance of the S P 500 As for the long term we are confident that this fund will prove to be a useful long term hedge At the moment however the fund has not yet proven itself in the long term because it launched in February 2011 which has not given it enough time to build a long term track record That being said the fund s emphasis on financially weak companies will drive long term outperformance Among the companies the fund has shorted or still shorts are Green Mountain GMCR and OpenTable OPEN 2 companies that have experienced dramatic collapses in their share price We are confident that the managers of this ETF can continue to successfully find new companies that are poised for meaningful drops in their share prices |
C | Merkel Question On Liability For Future Bank Bailouts Undecided | Markets OvernightIt has been a calm weekend with a light newsflow In the US the political debate is intensifying ahead of the autumn election Obama has announced that he seeks to extend the Bush era tax cuts but only for those families with an adjusted gross income of less than USD 250 000 and military families see Bloomberg Merkel said on Sunday that the question on liability for future bank bailouts remain undecided She said that According to the rules the Spanish government is naturally liable for the Spanish program The confusion on this issue remains intact see WSJ At last week s Eurogroup meeting ECB s Draghi pushed for senior bond holders to take part of the losses in the most severely damaged Spanish banks This is a turnaround for ECB and a contrast to the Irish case from 2010 The finance ministers rejected the idea as they feared financial markets would react badly see WSJ EBA chairman Andre Enria said the temporary capital requirement of 9 of RWA could become permanent We don t want the capital to be released We want the banks maintaining this capital level and gradually moving to the Basel III full implementation We will be asking the banks to develop capital plans to get there see FT The Spanish banking sector is increasingly relying on ECB funding Data released on Friday by Bank of the Spain showed that the country s banks borrowed EUR 365bn from ECB in June the borrowing has doubled since the beginning of the year The lending to Spanish banks accounts for 30 of all ECB s lending and is clear evidence of increased fragmentation of the banking sector within the EMU see WSJ Risk appetite improved on Friday and the positive sentiment carried over to US equities The S P500 ended the trade up by 1 6 supported by a earnings report from J P Morgan that exceeded expectations In Asia stock indices are trading in positive territory this morning Hang Seng is up 0 2 Japan is closed today Also US bond yields increased slightly from the very low levels with 10 year Treasury yields ending at 1 49 on Friday In FX markets the EUR USD is trading sideways around 1 225 close to a two year low Brent oil remains in triple digit territory after the US announced additional sanctions against Iran last week Focus today will be on US retail sales and empire manufacturing PMI We expect another weak reading with retail sales dropping 0 2 m m despite a decent increase in both autos and building materials Excluding these components we expect a drop of 0 4 m m This will be the third month in a row with decreasing retail sales and an indication that the uncertainty regarding the fiscal outlook and the European crisis is weighing down on consumption The empire manufacturing PMI will be watched closely in the market as we await Bernanke s semi annual monetary policy report to the Senate tomorrow The weakness in job growth will keep the Fed alert and we still see a good chance of additional easing For an update on US growth outlook see Research US Revising down US growth The earnings season continues with Citigroup reporting today Scandi DailyNo major Scandi events scheduled for today but watch out for data on the trade balance in Norway and Danish wholesale prices DisclosureThis research report has been prepared by Danske Research a division of Danske Bank A S Danske Bank Analyst certificationEach research analyst responsible for the content of this research report certifies that the views expressed in the research report accurately reflect the research analyst s personal view about the financial instruments and issuers covered by the research report Each responsible research analyst further certifies that no part of the compensation of the research analyst was is or will be directly or indirectly related to the specific recommendations expressed in the research report RegulationDanske Bank is authorized and subject to regulation by the Danish Financial Supervisory Authority and is subject to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business Danske Bank is subject to limited regulation by the Financial Services Authority UK Details on the extent of the regulation by the Financial Services Authority are available from Danske Bank upon request The research reports of Danske Bank are prepared in accordance with the Danish Society of Financial Analysts rules of ethics and the recommendations of the Danish Securities Dealers Association Conflicts of interestDanske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high quality research based on research objectivity and independence These procedures are documented in the research policies of Danske Bank Employees within the Danske Bank Research Departments have been instructed that any request that might impair the objectivity and independence of research shall be referred to the Research Management and the Compliance Department Danske Bank Research Departments are organised independently from and do not report to other business areas within Danske Bank Research analysts are remunerated in part based on the over all profitability of Danske Bank which includes investment banking revenues but do not receive bonuses or other remuneration linked to specific corporate finance or debt capital transactions Financial models and or methodology used in this research reportCalculations and presentations in this research report are based on standard econometric tools and methodology as well as publicly available statistics for each individual security issuer and or country Documentation can be obtained from the authors upon request Risk warningMajor risks connected with recommendations or opinions in this research report including as sensitivity analysis of relevant assumptions are stated throughout the text Expected updatesThis publication is updated on a daily basis First date of publicationPlease see the front page of this research report for the first date of publication Price related data is calculated using the closing price from the day before publication General disclaimerThis research has been prepared by Danske Markets a division of Danske Bank A S It is provided for informational purposes only It does not constitute or form part of and shall under no circumstances be considered as an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments i e financial instruments mentioned herein or other financial instruments of any issuer mentioned herein and or options warrants rights or other interests with respect to any such financial instruments Relevant Financial Instruments The research report has been prepared independently and solely on the basis of publicly available information which Danske Bank considers to be reliable Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading no representation is made as to its accuracy or completeness and Danske Bank its affiliates and subsidiaries accept no liability whatsoever for any direct or consequential loss including without limitation any loss of profits arising from reliance on this research report The opinions expressed herein are the opinions of the research analysts responsible for the research report and reflect their judgment as of the date hereof These opinions are subject to change and Danske Bank does not undertake to notify any recipient of this research report of any such change nor of any other changes related to the information provided in the research report This research report is not intended for retail customers in the United Kingdom or the United States This research report is protected by copyright and is intended solely for the designated addressee It may not be reproduced or distributed in whole or in part by any recipient for any purpose without Danske Bank s prior written consent Disclaimer related to distribution in the United StatesThis research report is distributed in the United States by Danske Markets Inc a U S registered broker dealer and subsidiary of Danske Bank pursuant to SEC Rule 15a 6 and related interpretations issued by the U S Securities and Exchange Commission The research report is intended for distribution in the United States solely to U S institutional investors as defined in SEC Rule 15a 6 Danske Markets Inc accepts responsibility for this research report in connection with distribution in the United States solely to U S institutional investors Danske Bank is not subject to U S rules with regard to the preparation of research reports and the independence of research analysts In addition the research analysts of Danske Bank who have prepared this research report are not registered or qualified as research analysts with the NYSE or FINRA but satisfy the applicable requirements of a non U S jurisdiction Any U S investor recipient of this research report who wishes to purchase or sell any Relevant Financial Instrument may do so only by contacting Danske Markets Inc directly and should be aware that investing in nonU S financial instruments may entail certain risks Financial instruments of non U S issuers may not be registered with the U S Securities and Exchange Commission and may not be subject to the reporting and auditing standards of the U S Securities and Exchange Commission |
JPM | Euro markets set for major jolt after Greek No look to ECB for calm | By Carmel Crimmins and Nigel Stephenson LONDON Reuters European stock and bond markets are set to take a sharp hit on Monday after Greece voted No to harsh bailout conditions and bankers said the European Central Bank s response was now key to the extent of contagion Many economists including those at U S banking giant JPMorgan NYSE JPM reckon the outcome of Sunday s referendum will probably hasten Greece s exit from the euro Although the situation is fluid at this point Greek exit from the euro appears more likely than not JPMorgan s Malcolm Barr told clients on Sunday evening adding Grexit was now the bank s base case No most likely means EMU exit Barclays LONDON BARC told its clients As Asia Pacific currency trading got underway the euro fell more than 1 percent against the U S dollar and more than 2 percent against Japan s yen EURJPY While currency weakness in itself won t damage the euro zone economy the reaction of other southern euro zone government bond markets and the stock markets first thing Monday will be a better measure of the sort of shock that has been largely missing in markets through the weeks and months of the latest standoff As recently as Friday many investors had assumed a yes vote would win out in the end ECB NOW CRITICAL The ECB s decision on whether to continue emergency funding to Greek banks closed for the past week and enforcing capital controls on deposit withdrawals will now be critical People familiar with the matter told Reuters on Sunday the ECB would continue funding at last week s restrictive levels But many banks said the central bank may also have to issue a statement on anti contagion measures perhaps holding out the possibility of accelerating or expanding its quantitative easing or bond buying program in order to calm wider markets Earlier on Sunday ECB Executive Board member Benoit Coeure said the bank was prepared for all outcomes The ECB has been clear that if we need to do more we will do more We will find the necessary instruments Coeure said at an economics conference in Aix en Provence southern France Our will to act in this matter should not be doubted Sergio Capaldi fixed income strategist at Italy s Intesa Sanpaolo MILAN ISP said he expected the ECB to try to reassure markets and reduce volatility They will show their muscle to the markets Capaldi reckoned peripheral bond yield premia over German bunds would widen with Italy s spread widening by 10 15 basis points to between 150 and 160 bps Barclays strategists were gloomier seeing a move out in Italian spreads to as wide as 200 basis points Gary Jenkins chief credit strategist at ING Capital said Unless there is a pre market announcement by the ECB I expect the market to be in turmoil Euro equity markets too which had one of their worst weeks of 2015 last week were set for another selloff The ECB has the capacity to limit the spread of contagion But we might still see a fall of 3 percent on European markets on Monday said Antonin Jullier head of equity trading strategy at Citi Asked whether there would be a big market hit come Monday Mohamed El Erian chief economic adviser at Allianz XETRA ALVG said Yes you will see one With the extent and duration a function of whether the ECB steps in with new anti contagion measures CONTINGENCY PLANNING European banks went over contingency plans and drafted in extra staff on Sunday paving the way for large swings when markets open Europe s financial firms have been preparing for a possible Greek exit from the euro zone for three years and having drastically cut their exposure to the country believe they are well shielded from the fallout from the weekend vote We ve been preparing for years and there s nothing more you can do We just have to see what happens said one banker from a large euro zone bank Foreign exchange traders at Barclays were in the office from Sunday afternoon to follow developments and research and sales staff were monitoring the Greek referendum over the weekend a spokesman for the bank said Deutsche Bank said it was prepared for any market volatility
We have adjusted our processes and procedures to take into account the new situation which we continue to monitor ensuring the continuity of business operations and client services the bank said in an emailed statement |
JPM | JPMorgan to add 1 000 jobs keep 2 600 in New Jersey | Reuters JPMorgan Chase Co N JPM will create 1 000 jobs and retain over 2 600 workers in Jersey City and invest more than 76 million in New Jersey under a state tax credit program The state s Economic Development Authority said on Tuesday that New Jersey will reap a net benefit of 1 1 billion through the program JPMorgan qualified as a mega project and was eligible for a base award of 5 000 per employee the EDA said about the Grow New Jersey Assistance Program which provides annual tax credits per job of 500 to 5 000 and bonus credits of 250 to 3 000 JPMorgan was looking at options to expand its regional technology and operations hub the EDA added in a statement The company also received bonus increases for transit oriented development jobs with high salaries large numbers of new and retained full time jobs and for being in the targeted industry of finance the EDA said JPMorgan which had 241 145 employees worldwide as of the end of March declined to comment
Earlier on Tuesday the Wall Street Journal reported that JPMorgan was looking to relocate 2 150 jobs to New Jersey from New York |
BMY | Bristol Myers Squibb BMY Q2 Earnings And Revenues Beat Estimates | Bristol Myers Squibb BMY came out with quarterly earnings of 1 18 per share beating the Zacks Consensus Estimate of 1 06 per share This compares to earnings of 1 01 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 11 32 A quarter ago it was expected that this biopharmaceutical company would post earnings of 1 09 per share when it actually produced earnings of 1 10 delivering a surprise of 0 92
Over the last four quarters the company has surpassed consensus EPS estimates four times
Bristol Myers which belongs to the Zacks Large Cap Pharmaceuticals industry posted revenues of 6 27 billion for the quarter ended June 2019 surpassing the Zacks Consensus Estimate by 3 86 This compares to year ago revenues of 5 70 billion The company has topped consensus revenue estimates two times over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
Bristol Myers shares have lost about 16 8 since the beginning of the year versus the S P 500 s gain of 20 5
What s Next for Bristol Myers
While Bristol Myers has underperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for Bristol Myers was mixed While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 3 Hold for the stock So the shares are expected to perform in line with the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 1 05 on 5 84 billion in revenues for the coming quarter and 4 16 on 23 94 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Large Cap Pharmaceuticals is currently in the top 18 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
BMY | Bristol Myers BMY Upgraded To Buy Here s Why | Bristol Myers Squibb BMY appears an attractive pick as it has been recently upgraded to a Zacks Rank 2 Buy This upgrade is essentially a reflection of an upward trend in earnings estimates one of the most powerful forces impacting stock prices
The Zacks rating relies solely on a company s changing earnings picture It tracks EPS estimates for the current and following years from the sell side analysts covering the stock through a consensus measure the Zacks Consensus Estimate
The power of a changing earnings picture in determining near term stock price movements makes the Zacks rating system highly useful for individual investors since it can be difficult to make decisions based on rating upgrades by Wall Street analysts These are mostly driven by subjective factors that are hard to see and measure in real time
Therefore the Zacks rating upgrade for Bristol Myers basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price
Most Powerful Force Impacting Stock Prices
The change in a company s future earnings potential as reflected in earnings estimate revisions and the near term price movement of its stock are proven to be strongly correlated That s partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company s shares An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock and institutional investors typically buy or sell it Their bulk investment action then leads to price movement for the stock
Fundamentally speaking rising earnings estimates and the consequent rating upgrade for Bristol Myers imply an improvement in the company s underlying business Investors should show their appreciation for this improving business trend by pushing the stock higher
Harnessing the Power of Earnings Estimate Revisions
Empirical research shows a strong correlation between trends in earnings estimate revisions and near term stock movements so it could be truly rewarding if such revisions are tracked for making an investment decision Here is where the tried and tested Zacks Rank stock rating system plays an important role as it effectively harnesses the power of earnings estimate revisions
The Zacks Rank stock rating system which uses four factors related to earnings estimates to classify stocks into five groups ranging from Zacks Rank 1 Strong Buy to Zacks Rank 5 Strong Sell has an impressive externally audited track record with Zacks Rank 1 stocks generating an average annual return of 25 since 1988 You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
Earnings Estimate Revisions for Bristol Myers
For the fiscal year ending December 2019 this biopharmaceutical company is expected to earn 4 18 per share which is a change of 5 from the year ago reported number
Analysts have been steadily raising their estimates for Bristol Myers Over the past three months the Zacks Consensus Estimate for the company has increased 1 1
Bottom Line
Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations the Zacks rating system maintains an equal proportion of buy and sell ratings for its entire universe of more than 4000 stocks at any point in time Irrespective of market conditions only the top 5 of the Zacks covered stocks get a Strong Buy rating and the next 15 get a Buy rating So the placement of a stock in the top 20 of the Zacks covered stocks indicates its superior earnings estimate revision feature making it a solid candidate for producing market beating returns in the near term
You can learn more about the Zacks Rank here
The upgrade of Bristol Myers to a Zacks Rank 2 positions it in the top 20 of the Zacks covered stocks in terms of estimate revisions implying that the stock might move higher in the near term |
C | FTSE rally stalls on Europe concerns oil prices | FTSE down 0 3 percent
Banks down on Europe debt concerns
TUI Home Retail and ARM higher on M A talk
By David Brett
LONDON April 5 Reuters London s blue chip stock index
was lower early on Tuesday pressured by European debt worries
and high oil prices while M A spurred stocks such as Tui Travel
and ARM
By 0805 GMT the FTSE 100 was down 15 40 points or 0 3
percent at 6 001 58 having gained in eight of the past nine
trading days to end at a six week closing high on Monday
The 8 percent rally on Britain s top share index stretches
back to March 15 as investor confidence returned following the
shock of Japan s earthquake and unrest in the Arab world with
focus switching to the improving economic outlook in the United
States
Banks were the biggest drag on the index after Moody s cut
Portugal s sovereign debt by one notch
Barclays and Lloyds Banking Group fell 2 1 percent and 1 3
percent respectively
The ratings agencies have been warning that further cuts
were likely so it seems as though this has given investors a
reason to bank some profits from recent gains said Jimmy
Yates head of equities at CMC Markets
Rising oil prices were also a factor in keeping stocks
subdued as profit margins come under pressure Miners which
had led gains on Monday were among those feeling the pinch
Brent crude rose to 121 a barrel or near
two and a half year highs as unrest in the Middle East and
North Africa and delays to elections in Nigeria supported
prices
M A GAINS
M A is seen as a big factor to help drive demand for
equities over other asset classes
Longer term gains remain to be had with companies using
strong cash balances to improve returns for share holders
CMC s Yates said
TUI Travel rose 4 7 percent on news its German parent TUI AG
had found an alternate route to exit its container shipping
business Hapag Lloyd after putting on ice plans for a flotation
Home Retail climbed 5 percent as talk of a takeover bid for
Britain s biggest household goods retailer was stoked by news
that U S private equity firm Madison Dearborn Capital Partners
MDCP had built up a 4 25 percent stake
M A prospects in the sector boosted chip designer ARM
Holdings 1 6 percent as U S firm Texas Instruments Inc
announced the acquisition of National Semiconductor Corp
Elsewhere insurance consolidator Resolution rose 2 4
percent as Citigroup raised its target price
Rexam gained 1 8 percent after Keybanc initiated the
canmaker with a buy rating pointing to a leaner structure
and more settled business portfolio
On the downside Vodafone slipped 1 3 percent as Nomura cut
its estimates on the mobile communication firm citing impending
changes to Indian telecom policy and a tough Spanish outlook
National Grid shed 1 9 percent after HSBC cut its
recommendation to underweight from neutral
Technical analysts said wile short term gains could be
limited longer term the outlook for equities remained bright
If we spend the day above 5 970 you ve got to still look
for it higher the absence of reversal signals means our bias
would be to stick with the trend said Phil Roberts chief
technical strategist at Barclays Capital citing 6 050 the high
just prior to the earthquake in Japan as the next significant
level of resistance
Editing by Will Waterman |
C | Miners drag on FTSE as China hikes rates banks slip | FTSE down 0 3 percent
Miners slip as China hikes interest rates
Banks lower as Moody s cuts Portugal debt rating
By David Brett
LONDON April 5 Reuters Britain s top shares fell on
Tuesday after miners fell on China raising rates while banks
were hit by European debt concerns but analysts said near term
support should keep the FTSE from falling further
Miners were lower along with commodities on
demand concerns after China s central bank said it was raising
lending rates and deposit rates by 25 basis points
ID nL3E7F51LX
Whilst there s angst about China tightening too
aggressively most investors accept that it s necessary and the
alternative is that China don t do enough and inflation becomes
embedded It s a tightrope they re walking Philip Poole
global head of macro investment strategy at HSBC Global Asset
Management said
He said moves to keep inflation under control in China would
not impact his investment strategy greatly for the year and
demand from emerging countries should remain robust
Vedanta Resources rose 2 5 percent after its
chairman said he believed the Indian government would approve
its plan to buy Cairn Energy s India assets in the next
few days
Brokers have been bullish on the benefits for Vedanta of the
takeover saying it would be earnings accretive in the first
year
By 1117 GMT the FTSE 100 was down 16 66 points or
0 3 percent at 6 000 32 having gained in eight of the past
nine trading days to end at a six week closing high on Monday
Banks fell as Moody s cut Portugal s sovereign
debt by one notch and saying a bailout was needed urgently
ID nLDE68T0M
Barclays and Lloyds Banking Group fell 1 8
percent and 1 2 percent respectively
TECHNICAL SUPPORT
Technical analysts said while short term gains could be
limited longer term the outlook for equities remained bright
If we spend the day above 5 970 you ve got to still look
for it higher the absence of reversal signals means our bias
would be to stick with the trend said Phil Roberts chief
technical strategist at Barclays Capital citing 6 050 the high
just prior to the earthquake in Japan as the next significant
level of resistance
Despite the 8 percent rally on Britain s top share index
since March 15 FTSE technical indicators suggested shares
remain attractively price
The index is still trading below over bought territory on
its relative strength index
M A is seen as a big factor to help drive demand for
equities over other asset classes
TUI Travel rose 3 7 percent on news its German parent TUI AG
had found an alternate route to exit its container
shipping business Hapag Lloyd HPLG UL after putting on ice
plans for a flotation ID nLDE734073
M A prospects in the sector boosted chip designer ARM
Holdings 2 1 percent as U S firm Texas Instruments Inc
announced the acquisition of National Semiconductor Corp
Elsewhere insurance consolidator Resolution rose
2 6 percent as Citigroup raised its target price
Rexam gained 1 8 percent after Keybanc initiated the
canmaker with a buy rating pointing to a leaner structure
and more settled business portfolio
Meanwhile Vodafone slipped 1 5 percent as Nomura
cut its estimates on the mobile communication firm citing
impending changes to Indian telecom policy and a tough Spanish
outlook
National Grid shed 1 8 percent after HSBC cut its
recommendation to underweight from neutral
U S stock index futures pointed to a lower open on Wall
Street on Tuesday ahead of ISM non manufacturing data and the
Federal Open Market Committee minutes from the March 15 meeting
Editing by Louise Heavens |
C | FTSE slips as China rate hike hurts miners | FTSE 100 down 0 2 percent
Miners slip on China interest rate rise
Banks lower as Moody s cuts Portugal s debt rating
By Tricia Wright
LONDON April 5 Reuters Britain s top share index edged
lower on Tuesday as miners fell on concerns that an interest
rate hike in China could hurt demand for metals and banks
dropped on worries over European debt
The FTSE 100 closed down 9 92 points or 0 2 percent at
6 007 06 having rallied 7 4 percent off lows hit in March
following the earthquake in Japan
Miners were among the biggest laggards after China s central
bank increased interest rates for the fourth time since October
Banks fell after credit ratings agency Moody s cut
Portugal s sovereign debt by one notch saying it believed an
incoming government would need to seek financing support from
the European Union as a matter of urgency
Barclays and Lloyds Banking Group shed 0 5 percent and 1 2
percent respectively
Concerns were mounting as to how cyclical assets were going
to fare against the backdrop of global monetary tightening
Interest rates are rising in the developing world we are
going to get an ECB rate increase this week and maybe in June
we re going to see the Fed bringing its QE quantitative easing
to an end all of this suggests that the tide is turning a
bit Mike Lenhoff chief strategist at Brewin Dolphin said
We could be entering a phase where maybe the defensive
stocks begin to show a bit of leadership
OIL PRICE WATCHED
Observers also said an elevated oil price created conditions
for weakness in equities with Brent crude topping 122 a barrel
on Tuesday on unrest in oil exporting countries in the Middle
East and Africa
At some point these prices are going to be impacting costs
and margins and obviously if you re increasing costs you re
going to have to increase prices and if you can t then
you re going to shrink your margins Michael Hewson analyst at
CMC Markets said
While the FTSE 100 is below 6 050 its highs in March I
think we ll come lower and we ll test the 5 900 levels that we
saw at the end of last week
Among individual stocks heavyweight Vodafone dropped 1 5
percent with traders citing a downgrade to reduce by
Evolution Securities
The share price falls also came as Nomura cut its estimates
on the mobile communication firm citing impending changes to
Indian telecom policy and a tough Spanish outlook
Vedanta Resources grabbed the top spot on the blue chip
leader board up 4 4 percent after its chairman said he
believed the Indian government would approve its plan to buy
Cairn Energy s India assets in the next few days
Meanwhile TUI Travel rose 2 4 percent on news its German
parent TUI AG has found an alternate route to exit its container
shipping business Hapag Lloyd after putting on ice plans for a
flotation
Insurance consolidator Resolution climbed 3 2 percent
boosted as Citigroup raised its target price
Additional reporting by David Brett Editing by Erica
Billingham |
C | FTSE up after M S sales surprise boosts retailers | FTSE up 0 1 percent
Retailers spurred by M S sales beating forecast
Miners higher as gold holds near highs
By David Brett
LONDON April 6 Reuters Retailers helped Britain s top
share index higher on Wednesday after Marks Spencer beat sales
forecasts while TUI Travel rose after an upgrade from
Citigroup
Marks Spencer climbed 3 9 percent leading Britain s
beleaguered retail sector higher after saying in a trading
update it had not seen a major deterioration in consumer
confidence recently
Next up 3 percent and Burberry up 1 7 percent rose along
with Britain s biggest clothing retailer
Tesco was up a more modest 0 4 percent after Liberum cut its
rating to hold from buy ahead of results due on April 19
saying the world s third biggest retailer and rival Sainsbury
look most exposed to stagflation in euro zone markets
Separately Citigroup said of Tesco Given the recent UK
trading slowdown another year of lacklustre cash flow progress
looks probable There would appear to be no room for upgrades to
consensus earnings per share expectations
The FTSE 100 was up 6 98 points or 0 1 percent at 6 014 04
by 0811 GMT having closed down 0 2 percent on Tuesday in
cautious trade ahead of policy decisions from the Bank of
England and Eurpean Central Bank on Thursday
Although the close was slightly lower on Tuesday the
chart pattern still suggests that traders have a bias to the
upside although they continue to remain reluctant to buy
strength Autochartist analyst James Hyerczyk said
He said the main uptrend was 5 879 90 to 6 035 12 adding a
close on Friday under 6 009 92 would form a closing price
reversal top and signal the start of a potential break to
5 795 00 and 5 660 00
HAVE UPGRADE WILL TRAVEL
TUI Travel rose 2 8 percent after Citigroup raised its
rating on the tour operator to hold from sell while FTSE
250 peer Thomas Cook climbed 3 5 percent as its rating was
raised to buy from hold
Both stocks have fallen sharply in the last two months on
the back of disruption to their Egypt and Tunisia programs
concerns about weak consumer confidence in the UK and a strong
oil price As a result we think that valuations now look
attractive Citigroup said
Miners and energy stocks were the main supports for the FTSE
100 rising with commodity prices as Brent crude hovered near
multi year highs on unrest in the Arab world and gold remained
close to its high around 1 458 80 as investors bought into its
safe haven qualities on worries over inflation and a weaker
dollar
Miner Vedanta added 2 4 percent as it took a step closer to
its purchase of Cairn s Indian assets
Vedanta subsidiary Sesa Goa announced receipt of clearance
from Indian regulator SEBI to send offer letters Cairn India
shareholders and proceed with the open offer of up to 20 percent
of Cairn India The takeover remains conditional on Indian
government consent
Banks were subdued Euro zone debt worries continue to
hamper the sector as Moody s cut the credit ratings of seven
Portuguese banks sending the country s bond yields above 9
percent
Minutes from the U S Federal Reserve s March 15 meeting
revealed members were less hawkish than investors first feared
with the central bank seemingly intent on completing a 600
billion bond buying plan despite signs of a stronger economy
Ex dividend factors knocked 0 96 point off the FTSE 100 on
Wednesday with Pearson and Wolseley trading without their
payout attractions
Editing by Dan Lalor |
C | Utilities banks weigh on weaker European shares | FTSEurofirst 300 down 0 2 percent
Utility banking shares feature among top losers
For up to the minute market news click on
By Atul Prakash
LONDON April 6 Reuters European equities drifted lower
on Wednesday after hitting four week highs with EDF dragging
down utilities following a target price cut while banks fell on
worries about the euro zone debt crisis
The FTSEurofirst 300 index of top European shares was down
0 2 percent at 1 141 49 at 0905 GMT after earlier touching
1 146 54 its highest since March 9
The STOXX Europe 600 Utilities index down 0 8 percent
topped the losers list while EDF fell 4 1 percent after
Citigroup cut its price target and said EDF remained its least
favoured utility in France as well as in the sector
Banks also lost ground with the sector index down 0 4
percent Allied Irish Bank slipped 16 7 percent as sentiment
worsened after Standard and Poor s downgraded its ratings on
Irish banks on Tuesday
Across Europe Portugal s PSI 20 fell 1 1 percent while
Italy s FTSE MIB was down 0 7 percent
Portugal and the threat of a required bailout continue to
dominate investor thoughts While any bailout of Portugal is not
seen as tipping Europe over the edge the failure of the
region s politicians to resolve the big issues continues to
apply pressure Hargreaves Lansdown analyst Keith Bowman said
An expected ECB rate hike is also mudding waters with some
investors believing the move is primarily being made to jolt
politicians into action
Investors waited for the sale of Portuguese treasury bills
on Wednesday Portuguese yields reached new euro lifetime highs
as the country s ratings were downgraded after the government
collapsed
Local banks have threatened to stop buying government bonds
unless the country seeks a foreign loan soon Retailers
however gained ground as after Marks Spencer beat a sales
forecast and said it had not seen a major deterioration in
consumer confidence recently M S shares rose 5 3 percent while
the STOXX Europe 600 Retail index gained 0 6 percent
Reporting by Atul Prakash Editing by Dan Lalor |
C | Weaker utilities banks drag European shares down | FTSEurofirst 300 index falls 0 2 percent
For up to the minute market news click on
By Atul Prakash
LONDON April 6 Reuters European equities drifted lower
on Wednesday after hitting four week highs with EDF dragging
down utilities following a target price cut while banks fell on
worries about the euro zone s debt crisis
The FTSEurofirst 300 index of top European shares was down
0 2 percent at 1 142 07 points at 0946 GMT after earlier
touching 1 146 54 its highest since March 9
The STOXX Europe 600 Utilities index down 0 7 percent
topped the losers list EDF fell 3 9 percent after Citigroup
cut its price target and said the company remained its least
favoured utility in France as well as in the sector
Banks also lost ground with the sector index down 0 2
percent Allied Irish Bank slipped 15 7 percent as sentiment
worsened after Standard and Poor s downgraded its ratings on
Irish banks on Tuesday
Across Europe Portugal s PSI 20 fell 1 1 percent while
Italy s FTSE MIB was down 0 6 percent
Portugal and the threat of a required bailout continue to
dominate investor thoughts While any bailout of Portugal is not
seen as tipping Europe over the edge the failure of the
region s politicians to resolve the big issues continues to
apply pressure Hargreaves Lansdown analyst Keith Bowman said
An expected ECB rate hike is also mudding waters with some
investors believing the move is primarily being made to jolt
politicians into action
Investors waited for the sale of Portuguese treasury bills
on Wednesday Portuguese yields reached new euro lifetime highs
as the country s ratings were downgraded after the government
collapsed
Local banks have threatened to stop buying government bonds
unless the country seeks a foreign loan soon Retailers
however gained ground after Marks Spencer beat a sales
forecast and said it had not seen a major deterioration in
consumer confidence recently M S shares rose 5 5 percent while
the STOXX Europe 600 Retail index gained 0 8 percent
KEY ISSUES
Don Fitzgerald fund manager at Tocqueville Finance which
manages 2 2 billion said the market faced some key issues such
as commodity price inflation and the monetary policy tightening
If oil climbs much further above current levels and remains
high for say six months or more it will definitively slow down
the global economy he said adding there was a risk that a too
aggressive too fast monetary tightening could result in more
struggle for indebted western economies
Fitzgerald said it seemed sectors sensitive to emerging
market growth had clawed back some of the underperformance
versus sectors such as financials and utilities
Oil prices stayed near a 2 1 2 year peak supported by
widespread unrest in the Middle East and North Africa and a
weakness in the dollar
Barclays Capital however said the overall macro
environment remained positive and earnings had continued to show
upward momentum Valuations remained cheap and fund flow data
suggested rising institutional interest in equities
We reiterate our bullish stance on European equities with
a 2011 target of 3 350 for the Euro STOXX 50 and 325 for the
STOXX 600 in spite of the aforementioned risks the broker said
in a note The indexes were at 2 621 27 points and 280 40 points
respectively on Wednesday
Reporting by Atul Prakash Editing by Erica Billingham |
C | Banks push FTSE higher M S sales boosts retailers | FTSE up 0 6 percent Investec sees index at 6 600 by
end 2011
Banks gain Lloyds rises on break up hopes
Investors swoon over M S update
By David Brett
LONDON April 6 Reuters Britain s top shares rose by
midday on Wednesday as a sales beat by Marks Spencer lifted
retailers while Investec said it sees the FTSE at 6 600 by
end 2011 with banks and industrials among its preferred sectors
We argue that equities remain undervalued unlike HMG
her majesty s government or the consumer corporate UK has
weathered the downturn well Investec analysts said
While corporates will continue to pay down debt in
uncertain times the outlook for M A and dividend income remains
positive Earnings momentum has been strong
The broker said market yield relative to the long bond
remains near a 30 year low while the All Share trades on a
modest 2012 estimated price to earnings ratios of 9 3 times
Investec recommends biasing portfolios towards certain key
defensive sectors banks and industrials
Banks bounced off the previous session s falls despite
Moody s cutting the credit ratings of seven Portuguese banks
sending the country s bond yields above 9 percent
Lloyds Banking Group rose 3 8 percent
There s talk that Lloyds may avoid a call for a break up of
its business by the Independent Commission on Banking that s
acted as a bit of a catalyst along with a touch of bargain
hunting a London based trader said
Investors took heart from less hawkish minutes from the U S
Federal Reserve s March 15 meeting
The FTSE 100 was up 33 56 points or 0 6 percent at
6 040 62 by 1035 GMT having closed down 0 2 percent on Tuesday
ahead of policy decisions from the Bank of England and European
Central Bank on Thursday
A shock fall in British industrial output in February raised
doubts of a rate hike in the UK
The data suggests that GDP estimates for the first quarter
are likely to disappoint both the Bank of England and the Office
for Budgetary Responsibility reducing the likelihood of a
rise in interest rates tomorrow or indeed in this half of the
year Schroders European Economist Azad Zangana said
M S SURPRISE
Retailers provided the main focus for investors after Marks
Spencer up 5 8 percent said in an update it had not seen a
major deterioration in consumer confidence recently
With the shares trading on just 9 7 time our 2011 EPS
forecast we do not think the market is accurately reflecting
the opportunity offered by the new management team and new
strategy Espirito Santo Investment Bank said
Fashion retailer Next rose 3 7 percent
Tesco was up a more modest 0 4 percent after Liberum cut its
rating to hold from buy and downbeat comment from Citigroup
ahead of results due on April 19
Elsewhere TUI Travel rose 3 percent after Citigroup raised
its rating on the tour operator to hold from sell while
FTSE 250 peer Thomas Cook climbed 3 2 percent as its rating was
raised to buy from hold
Miners and energy stocks were the main supports for the FTSE
100 rising with commodity prices as Brent crude hovered near
multi year highs on unrest in the Arab world and gold hit a
fresh all time high 1 460 40 as investors bought into its safe
haven qualities on worries over inflation and a weaker dollar
Miner Vedanta added 1 3 percent as it took a step closer to
its purchase of Cairn s Indian assets
Ex dividend factors knocked 0 96 point off the FTSE 100 on
Wednesday with Pearson and Wolseley trading without their
payout attractions
UK housebuilders Taylor Wimpey Barratt Development and
Redrow fell up to 3 percent after Citigroup cut all three stocks
to hold from buy on valuation grounds
Wall Street was set to extend recent gains that have seen
key indexes hit their highest since 2008 while technical
analysts said near the UK FTSE trend looks positive
Although the close was slightly lower on Tuesday the
chart pattern still suggests that traders have a bias to the
upside although they continue to remain reluctant to buy
strength Autochartist analyst James Hyerczyk said
Editing by Hans Peters |
C | FTSE hits 7 week closing high on banks retailers | FTSE 100 up 0 6 percent
Banks rally after Portuguese debt auction
M S leads retailers on update observers bearish on sector
By Tricia Wright
LONDON April 6 Reuters Banks helped drive Britain s top
shares to a near seven week high on Wednesday following a
Portuguese debt auction while Marks Spencer rose on
better than expected sales lifting sentiment in retailers
The FTSE 100 ended up 34 07 points or 0 6 percent at
6 041 13 its highest closing level since Feb 18
Lex van Dam hedge fund manager at Hampstead Capital is
bullish on the FTSE 100 s prospects in 2011 seeing an enormous
switch out of bonds into equities
The big issue at the moment is the worry about inflation
and the search for yield and there s a lot of people who own
lots and lots of bonds they are starting to get really
worried about it because it s just not a great asset class to
hold when there s inflation coming in
Banks were in favour notching up a 4 1 percent rise this
month in the wake of March s 6 2 percent decline as the sale in
Portugal of 6 and 12 month treasury bills brought some
temporary relief for a country fighting to avoid a bailout
But the yield on 12 month T bills spiked to 5 902 percent
from 4 311 percent three weeks ago and on six month bills to
5 117 percent from 2 984 percent highlighting the financial
pressure ahead of big redemptions this month and in June
Lloyds Banking Group led the sector higher firming 3 9
percent with traders citing expectations that it will avoid a
call for a break up of its business by the Independent
Commission on Banking
HIGH STREET CHEER
Marks Spencer was the standout blue chip riser up 6
percent after beating sales forecasts and winning market share
with innovative products like stormproof suits new food ranges
and staples like lingerie
Sector peers which endured a torrid time last week on
downbeat news from companies including Dixons Mothercare and
John Lewis found support with Next the third biggest riser
ahead 3 2 percent
Jamie Seaton manager of the 58 7 million pound 95 97
million SVG UK Focus Fund run by SVG Investment Managers is
bearish on the retailers
We think there s limited pricing power The consumer is
going through a process of deleveraging and it s very very hard
to see how these firms unless in exceptional circumstances
can grow their top line in this type of environment
He does however have a small holding in Tesco on account of
its dominant position in the retail space and as it is seen as
longer term undervalued
Whilst a potential price war is not beneficial to the
sector in general long term the last man standing is said to
clean up so any issues which Tesco might have
Sainsbury Morrison whoever are going to feel it significantly
harder and Tesco we believe is the ultimate beneficiary
Elsewhere FTSE 100 tour operator TUI Travel and midcap peer
Thomas Cook advanced 2 6 percent and 3 2 percent respectively
after Citigroup upgraded its ratings on the pair on valuation
grounds
Cairn Energy topped the FTSE 100 fallers list off 2 8
percent as the Indian cabinet further delayed a decision on its
sale of a majority stake in Cairn India to Vedanta Resources
Vedanta reversed earlier gains dropping 0 8 percent
Pearson and Wolseley both fell after going ex dividend
1 6116 Pound
Editing by Jon Loades Carter |
C | FOREX Euro rises broadly ahead of ECB yen weaker | Euro climbs to 14 month high vs dollar ECB ahead
Yen at 11 month low vs euro 6 month low vs dollar
Carry trade revival hurts yen BOJ policy loose
Updates prices adds details quote adds byline
By Wanfeng Zhou
NEW YORK April 6 Reuters The euro rose on Wednesday to
a 14 month high against the dollar on speculation the European
Central Bank will signal further interest rate rises following
an expected increase this week though there s room for
disappointment
The yen slid to an 11 month low against the euro and a
six month low against the dollar More losses were expected for
the yen as investors such as macro hedge funds add to bearish
bets with the Bank of Japan looking set to lag other central
banks in tightening policy
The ECB is widely expected to raise its benchmark rate by
25 basis points on Thursday its first increase since July
2008 Many analysts expect ECB President Jean Claude Trichet to
continue sounding a hawkish tone on inflation which would
stoke market expectations for more rate rises this year
The markets are very bullish with respect to the
anticipated Trichet communique tomorrow They expect quite
strongly that the ECB is heading toward normalization of
monetary policy said Dean Popplewell chief currency
strategist at OANDA in Toronto
The expectation for higher euro zone interest rates
contrasted with uncertainty in the United States over when the
Federal Reserve may begin to tighten policy The U S economy
remains too fragile for the Fed to begin raising interest
rates the president of the Atlanta Fed Dennis Lockhart said
on Wednesday ID nN06207079
The euro rose as high as 1 4350 according to
Reuters data its highest since late January 2010 and was last
up 0 8 percent at 1 4328
Traders reported steady buying by Asian central banks but
said large option barriers cited at 1 4350 and 1 4400 could
cap gains in the near term
Citigroup currency strategist Todd Elmer said euro zone
rate expectations are close to their recent peaks with money
markets discounting more than 100 basis points of ECB
tightening through November
Expectations for ECB hawkishness are at unprecedented
levels since the onset of the financial crisis and this could
leave room for disappointment if President Trichet fails to
validate the moves in market interest rates at his press
conference tomorrow he said in a note clients
CARRY TRADE REVIVES
The struggling yen was in danger of breaching key long term
support levels against most currencies having already fallen
to a 2 1 2 year low against the Australian dollar
The yen has slid since the first G7 intervention in a
decade last month stirring talk of a carry trade revival a
strategy of selling low yielding currencies to fund investment
in currencies with higher interest rates
The yen is taking a lead as the global carry trade makes a
return with the Bank of Japan likely to ease policy while the
other central banks seek to tighten it said Lena Komileva
head of G 10 currency strategy at Brown Brothers Harriman in
London
Carry trade graphic
The euro was up 1 3 percent at 122 35 yen having earlier
touched an 11 month peak with stop loss buying
earlier in the session adding to its rise
The dollar was up 0 5 percent at 85 35 yen after
hitting a six month peak of 85 52 yen almost 10 yen above its
record low of 76 25 yen hit in March days after Japan s
northeast was devastated by a massive earthquake and tsunami
The high yielding Australian dollar surged to
89 28 yen its highest since September 2008 with 90 yen seen
as the next possible target
Against a basket of currencies the dollar was down 0 5
percent at 75 504
Additional reporting by Nick Olivari
Editing by Theodore d Afflisio |
C | Takeover Rumors Push Lincare Up 35 Vol At Annual High High Enough | Lincare Holdings Inc LNCR is a provider of oxygen respiratory and other chronic therapy services to patients in the home The Company s customers suffer from chronic obstructive pulmonary disease COPD such as emphysema chronic bronchitis or asthma and require supplemental oxygen respiratory and other chronic therapy services This is a stock and vol note in a company that has been ripping as of a few days ago due to takeover and bidding war rumors Let s start with the news then get into the stock and vol moves Lincare Holdings Inc LNCR a U S provider of oxygen and respiratory therapy services is seeking a buyer and has attracted interest from companies including Germany s Linde AG LIN two people familiar with the sale said Air Liquide SA AI of France has also expressed interest one of the people said JPMorgan Chase Co is advising Clearwater Florida based Lincare in talks with potential buyers said the people who asked not to be identified because the process is private Linde the world s second biggest maker of industrial gases has also hired investment banks to advise it on a possible bid one person said Since the close of June 26 Lincare has risen more than 32 percent valuing the firm at 2 9 billion euros as of 12 21 p m New York time today The Financial Times s FT Alphaville reported on June 27 that Linde is leading the bidding in an auction for the U S company citing unidentified sources Linde Chief Executive Officer Wolfgang Reitzle has identified health care as one of the firm s growth areas and in January agreed to buy Air Products Chemicals Inc APD s home care business Lincare may be worth 40 or more per share if it s bought Jefferies Group Inc analyst Brian Tanquilut said in a note this week raising the stock to buy The stock was at 33 46 in early afternoon trading Private equity firms may also be interested in the company said one of the people The company is an ideal leveraged buyout target Citigroup Inc analyst Gary Taylor wrote in a note this week Source Bloomberg via Yahoo Finance written by Aaron Kirchfeld and Jeffrey McCracken Very exciting Let s turn to the Charts Tab six months below The top portion is the stock price the bottom is the vol IV30 red vs HV20 blue vs HV180 pink On the stock side we can see the abrupt pop that the article referenced This was a 25 stock a few days ago and had been trading in a fairly tight range over the last six months roughly between 22 and 28 The 52 wk range is 19 17 33 19 meaning the levels reached today are new highs On the vol side we can see the implied popping with the short term historical realized vol In English the implied has moved with the stock The 52 wk range in IV30 is 21 08 72 49 where that top number was reached on 6 27 2012 One interesting question may be to ask that while the vol is at or near an annual high is 70 really high enough I mean is this company literally in a bidding war Will the decision or news be announced soon Let s turn to the Skew Tab to examine the monthly vols We can see a clear vol increase from the back to the front While earnings are due out in the Jul cycle that vol is not just from earnings it s the event or possible event risk surrounding a takeover target that s driving the risk I do note that the OTM calls actually do have lower vol than the ATM strikes that s normal but this company isn t normal right now the takeover stuff is known The skew shape is odd which is to say it s oddly normal IMHO Finally let s turn to the Options Tab for completeness We can see the monthly vols across the top are 68 39 53 81 and 38 54 for Jul Aug and Nov respectively Or in English the options reflect substantially more risk in the near term than the medium to longer term DISCLAIMER This is trade analysis not a recommendation |
C | Weekend Update VIX Retests Its Wave 2 Low | VIX retested its wave 2 low but did not break below it This action may be interpreted as a smaller wave 2 The Master Cycle low on June 21 still stands The effort to suppress the VIX has not changed either the Elliott Wave action or the Cycle pattern SPX has a window dressing moment Although SPX made a spirited end of day surge it did not overtake its previous high made on June 19 The end of quarter window dressing was not quite enough to break the downtrend even at the retracement level The possible reason may be that the short covering rally ran out of steam Short interest in SPY reached 14 7 billion shares as of June 15 the highest since October 2011 This is also tied for the 3rd highest short interest since July of 2009 Does the chart below mean that the only technical item that matters is Short Interest as well as short interest in the highly levered and beta rally inducing EUR and every time this number rises above a given threshold the various Wall Street repo desks will merely engage in forced buy ins and cause epic short squeeze like the one today NDX rally fails to take out June 19 high NDX appears to have made yet another retracement that failed the June 19 high This puts it in the position for a very nasty fall on Monday and possibly more declines for the rest of the week This decline has the potential to take NDX to its Cycle Bottom at 1753 60 over the next two weeks Stocks opened around 2 gap higher this morning after the late night headlines from Europe made many think that the tooth fairy and Santa are real once again S P 500 e mini futures saw some selling into the open but then stabilized amid a very narrow range for much of the rest of the day leaking higher on low volume driven short covering The news from Germany of ESM ratification was greeted with absolutely no price movement as an indication of just how insane things are but the need to drive stocks up in the last few minutes was crazy Into the close volume exploded as ES rose 10pts in minutes from absolutely nowhere The short squeezed Euro retests its neckline fails The Euro bounced again to retest the neckline of its Head Shoulders formation at 126 70 The retest of the neckline may also have failed leaving a potential 5 week decline in front of it The Liquidity Cycle that my subscribers have been following suggests a solid decline through August to parity or below Today s 4 sigma up over 220pips from pre Summit statement is very reminiscent of the 10 26 11 reaction to the EURUSD rallied magnificently squeezing a dominating short crowd over 400 pips higher that time But it is the impulse reaction that we note within two days the entire rally had faded and indeed went on to sell off for a few more months as reality struck The US Dollar is primed for a breakout The US Dollar retested the lip of a new Cup with Handle formation and 10 week moving average at 81 31 This formation now has an 80 probability of meeting or exceeding its Cup with Handle target This is not as impressive as the inverted Head Shoulders 93 success rate but having the two together is reassuring for the uptrend When the US current account deficit starts closing the dwindling supply of dollars eventually leads to a panicked rush for dollars Non US companies that binged on dollars when the money was cheap and the dollar was forever going down now find themselves caught out Every entity with a negative cash flow in dollars scrambles for dollars even through selling local assets and converting the proceeds depressing risk assets everywhere Gold is still trapped in a sideways consolidation Gold closed just above its Head Shoulders neckline at 1570 00 after failing two attempts to rally above the higher neckline at 1640 It also stopped short of its 10 week moving average at 1606 24 The next goal is to break the massive neckline and begin a three week decline that may find a low near gold s Cycle Bottom at 1180 52 Gold will be a screaming buy down the road but still has some unwinding to do beforehand The and silver and I mean physical gold and silver are pretty straightforward So let s begin with the primary reasons to own gold To protect against monetary recklessnessAs insulation against fiscal foolishnessAs insurance against the possibility of a major calamity in the banking financial systemFor the embedded option value that will pay out if and when gold is remonetized U S Bonds signal further decline ahead USB appears to have completed a 48 2 retracement of the decline from its top at 152 56 A fall below the 10 week support line is likely to bring on a flood of selling One more safe haven bites the dust With Operation Twist being extended for another 6 months forcing Primary Dealers to buy up all the short end bonds from the Fed the last thing the Dealer community needed at today s 2 Year bond auction was to be stuck holding the bag Which is precisely what happened the Treasury sold 35 billion in fresh 2 year paper as the first auction of this week s trio of bond issuance at a yield of 0 313 the highest since March even if in line with the When Issued and a Bid To Cover of 3 62 the lowest since February But the key internal indicator was the distribution between the Primary Dealer take down and everyone else at 60 4 of the entire offering or 21 billion going to Dealers Crude holders cover shorts West Texas Crude bounced back through throught its Head Shoulders neckline at 80 00 this week due primarily to end of quarter window dressing and short covering This trap door is open for a fall as far as Cycle Bottom support at 69 29 and possibly a massive crash in the coming Master Cycle low due in early August The wave 2 consolidation is easy to miss especially in the weekly chart This decline may be similar if not more intense than the 2008 decline crude oil prices range a fair bit according to the quality of the crude and the challenge of moving it from wellhead to refinery Those factors are currently wreaking havoc on oil prices in North America a range of oil qualities and a raft of infrastructure issues are creating record price differentials And with no solution in sight we think those differentials are here to stay China stocks lose ground as false data is revealed The decline in the Shanghai index is picking up speed The next level of support is the Cycle Bottom support at 2137 66 which would give way to the Head Shoulders neckline at 2120 00 This may lead to a cascade of epic proportions as the Shanghai indes is about to lose over 50 of its value in a wave iii decline In what may come as a shocking surprise to exactly nobody the next great discovery as more and more layers of the global ponzi onion are exposed is that China was in fact lying about everything Yes we know stunning may be the most read news source in the world but as of today it is no longer available in China Why According to Bloomberg TV News Editor Denise Pellegrini all it takes is for some investigative reporting exposing the dirty laundry or in this case the even dirtier assets of one Xi Jinping the man in line to be China s next president The India Nifty completes a 60 retracement The India Nifty retracement briefly probed above weekly mid Cycle resistance at 5194 58 in an effort to window dress the quarter end It becomes bearish again once it declines below its 10 week support at 5049 22 The next objective is a test of the Head Shoulders neckline and may bring downside acceleration to the India 50 index The Cycles Model suggests that the decline in the CNX Nifty Index may resume through early August The Bank Index completes a reversal pattern BKX attempted to better its retracement high this week but failed creating a reversal pattern A decline beneath its 10 week moving average at 45 07 puts BKX back on a sell signal and a probable decline to its smaller Head Shoulders target at 31 03 in the next month The lesser Head Shoulders pattern may meet its target by early August I expect to see the decline speed up considerably starting next week this week prove once again that the big banks are literally criminal enterprises Initially all of the big banks have engaged in of municipal bonds to bilk money from to the collective tune of tens billions of dollars And Barclays and other large banks including manipulated the world s primary interest rate Libor which virtually every adjustable rate investment globally is pegged to Not to mention What next |
C | Why Deflation Is The Biggest Catalyst For Precious Metals | By now everyone has seen the chart of Homestake Mining and its bull market run from 1924 through 1935 Hence there is no need to repost it shows a handful of charts of gold stocks and gold stock indices during the Depression era US Gold producers apparently bottomed in 1929 while the Financial Times Gold Index bottomed in 1931 The time to buy the gold stocks was when deflation set in More recently the time to buy gold stocks and physical Gold or Silver has coincided with fears of deflation Below is a chart that that shows the Google search volume for deflation Predictably there is a big spike at the end of 2008 There is also a mini spike in 2010 Unfortunately Google doesn t have search data pre 2004 Policy makers had a fear of deflation during 2002 and 2003 Below we plot Bonds Gold Silver and the HUI Gold Bugs index We highlight the periods in which deflation fears emerged That would be 2002 2003 October 2008 and briefly in the spring of 2010 All of course were buying opportunities within the bull market in precious metals Note that the peak in Bonds in 2005 coincided with a major bottom in precious metals So why does the onset of or fear of deflation act as a catalyst for the precious metals sector We must understand that in cyclical terms this sector is counter cyclical It naturally underperforms when conventional sectors and the economy perform well In that environment there is declining investment demand for Gold In the current era economic recovery and growth are inflationary While that sometimes is bullish for the metals it can be detrimental for the shares as they struggle to maintain margins within an inflationary environment Thus it is the fear of deflation and fear of recession that prompts the inflationary policies which are bullish first and foremost for the precious metals complex Timing these deflationary catalysts is critical It s not so much the fear of deflation or deflation itself that is a catalyst but more importantly it s the response In 1929 deflation caused prices to fall Because the price of Gold was fixed margins of producers improved immediately causing profits to rise which led to higher share prices and higher dividends The response didn t come until 1933 In 2001 the Fed slashed interest rates and wouldn t stop until 2003 The bull market was well underway by 2002 More recently the Fed began to cut rates in 2007 QE 1 was initiated in November 2008 weeks after the bottom in the sector though it began to recover substantially thanks to the QE announcement Finally we can t forget QE 2 in 2010 So what does this imply going forward Bonds are elevated Gold is rising in real terms and the global economy is dissapointing expectations at an alarming pace as shown by the Citigroup Economic Surprise Index Although extremely oversold and forming a major bottom in a long term sense the precious metals sector is waiting for a catalyst to springboard its next cyclical bull market Because the US economy is not in recession and the equity market is near its highs new action from Bernanke is unlikely anytime soon Europe appears unlikely to agree on any major action without a preceding crisis or panic The precious metals complex may be able to sustain its May bottom without a major catalyst That being said it is the eventual actions of the European Central Bank the Bank of Japan as well as the Federal Reserve which will springboard precious metals into their next cyclical bull market which could in a few years evolve into a bubble For now we are making our lists and identifying the various stocks poised for substantial gains as Gold returns to 1900 and beyond |
C | Fools Rush In After Netflix CEO s Boast | The wild ride of Netflix NFLX shares continues having plunged from above 300 a share to around 60 within the past year mostly due to poor management Netflix shares spiked more than 21 in one week to close at 81 89 the highest level in two months on Friday July 6 While Netflix isn t scheduled to report its full earnings for Q2 until after the market close on July 24 the renewed enthusiasm came primarily from an upbeat Facebook update by CEO Reed Hastings Netflix monthly viewing exceeded 1 billion hours for the first time ever in June When House of Cards and Arrested Development debut we ll blow these records away Shares Deemed Highly Reasonable The stock also got a bump after Citigroup reiterated a buy rating on Netflix shares calling the price highly reasonable with a target of 130 a share about 56 from the current level Judging from the price movement the unexpected buying action most likely also resulted in a massive short squeeze Hastings Facebook page has almost 206 000 subscribers Nevertheless Netflix shares are still down 26 in the last three months and off 72 in the past year Content Acquisition Netflix has been beefing up its program offerings by acquiring exclusive content to stay competitive with rivals like Amazon AMZN Apple AAPL Hulu and Comcast CMCSA Bloomberg reports that Netflix said in January that viewing in Q4 of 2011 totaled just over 2 billion hours So this new figure of one billion viewing hours in June alone does seem to suggest a faster growth rate for Netflix streaming service Nevertheless since Netflix streaming service charges a flat fee per month at least part of the increase in total hours could come from an increase of viewing hours per subscriber which is actually bearish for the stock So the one billion monthly streaming hours reflects more the content and marketing strength of Netflix rather than a compelling story of the bottom line or growth in a very competitive market sector Fundamentally a more troubling picture also emerges with a look at the company s balance sheet For the quarter ending March 31 2012 the company had 804 5 million in cash but 1 45 billion in current liability with a scant quick ratio of 0 6 and a current ratio of 1 4 barely above the minimum threshold of 1 Off Balance Liabilities Then there is also this 3 7 billion off balance liability buried deep in the company s 10Q filing Based on a Bloomberg review these off balance liabilities are the minimum estimates i e the actual could be a lot higher for payments due for future content already under contract Out of the 3 7 billion 3 1 billion will come due within three years Including this 3 7 billion Netflix Debt to Capital would balloon to 618 from the current 60 3 From a valuation standpoint since profit will likely get squeezed pretty hard with the company s ambitious international expansion plan Netflix stock looks overvalued with a current forward P E of 38 63 By comparison the same ratio for the Nasdaq 100 is 13 78 12 95 for S P 500 and under 12 for both Apple and Google I guess Netflix share price is only highly reasonable if you compare it to high flying stocks like Amazon which has a forward P E of 87 67 Competition Heats UpFor now Netflix does appear to be the leader of the video on demand VOD pact primarily benefiting from the first mover advantage However competition is becoming fierce and cut throat It looks like cable companies are getting anxious to punish Netflix for its sins of free riding on their expensive fiber optic network For example in a clear declaration of war against Netflix Comcast recently announced its intention to offer a similar service albeit with a much weaker library for 5 per month and many free movies to its Xfinity subscribers Amazon Prime offers streaming video in addition to expedited shipping for 79 annually Not to mention sooner or later tech giants like Apple and Google GOOG will start throwing cash around and get more aggressive in this space as well Ultimately content is king in this sector So it is doubtful Netflix would keep getting exclusive content deals and maintain its lead in the long run considering most of Netflix major rivals are equipped with much deeper pockets Buyer Beware The self congratulatory social media update from the CEO seems a bit pre mature to suggest an entry into the stock We maintain our recommendation to stay away from this stock as there are more compelling stocks to invest in with either better growth and or value prospect For investors who got in during the past week instead of holding to Citigroup s bullish biased 130 target it d be best to gradually cash out as the stock is likely to hit a bit of volatility going into next month s earnings |
JPM | U S SEC and JPMorgan in talks to settle probe regarding product steering WSJ | Reuters JPMorgan Chase Co N JPM is in talks with the U S Securities and Exchange Commission to settle a probe by the agency on whether the bank inappropriately advised its private banking clients toward its own investment products the Wall Street Journal reported citing people familiar with the matter A settlement may come as early as this summer and could include a fine the size of which was not known WSJ said citing people familiar with the matter JPMorgan Chase Co disclosed in May that it received subpoenas from the Securities and Exchange Commission over how it sells its mutual funds Other government authorities and a self regulatory organization apart from the SEC have also sought information about the bank s use of proprietary products in its wealth management business JPMorgan said in a regulatory filing last month Representatives at JPMorgan and the Securities and Exchange Commission were unavailable for comment outside regular business hours |
JPM | Global factory growth eases on weak Asia Europe PMI | LONDON Reuters Global manufacturing growth slowed last month as most Asian economies remained weak while Greek debt talks that dominated debate in Europe kept the euro zone in check a business survey showed on Wednesday
JPMorgan s Global Manufacturing Purchasing Managers Index PMI produced with Markit nudged down to 51 0 in June matching April s near two year low It was 51 3 in May
However June was the 31st month the index has been above the 50 level that separates growth from contraction although some of that activity was again driven by running down old orders
The growth of manufacturing output remained subdued during the second quarter with the rates of increase in new business and output slipping to their lowest since the first half of 2013 said David Hensley a director at JPMorgan NYSE JPM
The global PMI combines survey data from countries including the United States Japan Germany France Britain China and Russia |
JPM | Big U S investors expect Greeks to vote in favor of bailout Reuters Poll | By Tariro Mzezewa and Ross Kerber Reuters U S investors expect Greek citizens to back a cash for reforms deal proposed by the nation s creditors in a July 5 referendum according to a Reuters poll conducted this week Reuters spoke to large U S money managers across several asset classes and 15 of 21 said they expected Greek voters to answer yes to a question whether Athens should accept the proposal submitted by the European Commission the European Central Bank and the International Monetary Fund on June 25 The Greek people must be very scared at this stage said David Kelly chief global strategist at JPMorgan NYSE JPM Funds which manages 800 billion in assets Things will get increasingly dire in Greece as the week goes on and if the Greek people vote no it will be a somewhat catastrophic situation Not one investor interviewed believed the Greeks would reject the proposal even though polling in Greece currently suggests that may well happen Polls suggest citizens there oppose the bailout though a breakdown of results shows that the gap has narrowed since the banks closed and capital controls were imposed The arguments in favor of a yes vote grow every minute the ATM machines don t dispense money said David Kotok chief investment officer at Cumberland Advisors in Sarasota Florida At 6 p m ET Tuesday Greece missed the deadline for a 1 6 million euro 1 8 billion payment to the IMF making it the first developed country to do so A yes vote investors said may quell the ructions in markets that have emerged as the crisis has come to a head in the last week and as the possibility of Greece leaving the euro zone or a Grexit has increased Although the markets may find stability in the result of a yes vote or be minimally affected it will force all parties back to the drawing table and further lengthen the process of reaching a deal A yes vote will eliminate some instability but we have to expect it will initiate a long process of further negotiation said Alan Gayle senior investment strategist and director of asset allocation at Ridgeworth Investments in Atlanta which has 50 billion in assets under management Six investors interviewed were either not sure or did not say whether they thought the vote would pass Most believed the reaction in markets worldwide would be contained because of years of efforts by banks and funds to reduce exposure to Greece and the monetary stimulus efforts undertaken by the European Central Bank I think the markets are indicating that whatever happens the rest of the world will not be greatly adversely affected by the decision said Margie Patel managing director and senior portfolio manager at Wells Capital Management which has 351 billion in assets under management A yes vote has the potential to end Prime Minister Alexis Tsipras time in office according to investors The prime minister who is against some terms of the proposed austerity measures has urged citizens to vote against the bailout even as he continued to negotiate for better terms The looming possibility of a no vote for some stands as a buying opportunity There s certainly going to be volatility and that would be the time to add to European equities said Audrey Kaplan head of the international equity team at Federated Investors which has about 4 billion under management and is overweight European stocks
The quantitative easing plan is nothing short of spectacular for European investments and Greece is not big enough to derail the growth |
BMY | Will Bristol Myers BMY Beat Estimates Again In Its Next Earnings Report | If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report you should consider Bristol Myers Squibb BMY This company which is in the Zacks Large Cap Pharmaceuticals industry shows potential for another earnings beat
This biopharmaceutical company has an established record of topping earnings estimates especially when looking at the previous two reports The company boasts an average surprise for the past two quarters of 5 75
For the most recent quarter Bristol Myers was expected to post earnings of 1 09 per share but it reported 1 10 per share instead representing a surprise of 0 92 For the previous quarter the consensus estimate was 0 85 per share while it actually produced 0 94 per share a surprise of 10 59
Price and EPS Surprise
Thanks in part to this history there has been a favorable change in earnings estimates for Bristol Myers lately In fact the Zacks Earnings ESP Expected Surprise Prediction for the stock is positive which is a great indicator of an earnings beat particularly when combined with its solid Zacks Rank
Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank 3 Hold or better produce a positive surprise nearly 70 of the time In other words if you have 10 stocks with this combination the number of stocks that beat the consensus estimate could be as high as seven
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Bristol Myers has an Earnings ESP of 0 28 at the moment suggesting that analysts have grown bullish on its near term earnings potential When you combine this positive Earnings ESP with the stock s Zacks Rank 3 Hold it shows that another beat is possibly around the corner The company s next earnings report is expected to be released on July 25 2019
When the Earnings ESP comes up negative investors should note that this will reduce the predictive power of the metric But a negative value is not indicative of a stock s earnings miss
Many companies end up beating the consensus EPS estimate but that may not be the sole basis for their stocks moving higher On the other hand some stocks may hold their ground even if they end up missing the consensus estimate
Because of this it s really important to check a company s Earnings ESP ahead of its quarterly release to increase the odds of success Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported |
C | FOREX Dollar gains vs yen as U S yields continue rise | Yen at post intervention low euro yen soars
Japan repatriation expectations seen overstated
Hawkish chatter helps lift US yields
Fed still seen lagging ECB in rate hike arena
Recasts updates prices adds detail comment
By Steven C Johnson
NEW YORK March 29 Reuters Rising U S bond yields on
Tuesday lifted the dollar above 82 yen for the first time since
Japan s recent currency intervention and technical indicators
suggested the greenback may be poised to extend those gains
The euro also rose to its highest level against the yen
since May as markets braced for higher euro zone interest
rates But the single currency was flat against the dollar as
another Federal Reserve official mused about the need to
tighten monetary policy
The dollar rose to 82 51 yen its highest in more
than two weeks and above the 81 98 peak of March 18 the day
Japanese authorities intervened to stop runaway yen gains
A wider gap between U S and Japanese yields helped with
the two year U S Treasury yield up eight basis points at 0 81
percent It was up 21 basis points since March 15
A dollar close above 81 50 yen in coming days could signal
a re test of 83 30 yen a level hit immediately after the March
11 earthquake followed by the February high of 83 98 said BNP
Paribas technical strategist Andrew Chaveriat
The 82 25 82 50 area is key and if we get above there
you could see a substantial retracement of the overall February
decline he said
The euro rose 1 percent to 116 24 yen a
10 1 2 month high
The yen hit a record high after the earthquake and tsunami
on speculation the diaster would force Japanese investors to
liquidate overseas assets and bring money home
But Steven Englander head of G10 strategy at Citigroup
said it is becoming increasingly clear that repatriation flows
to Japan are not panning out and if anything will be
limited
He said recent Bank of Japan data suggests investors share
of foreign assets was already low before the quake
FED SEEN LAGGING ECB
A steady rise in U S yields gained traction this week as
several Fed policymakers said the central bank would have to
start tightening monetary policy soon to avoid inflation
St Louis Fed President James Bullard a non voting member
of the Fed s rate setting committee said Tuesday the U S
economy was strong enough to curtail the Fed s 600 billion
bond buying program by 100 billion ID nLDE72S0RJ
That weakened the euro briefly though it recovered from
1 4045 to trade up 0 1 percent at 1 4096
But analysts said markets still expect the ECB to beat the
Fed by hiking rates next week and have noted that Fed officials
do not all agree
Chicago Fed President Charles Evans unlike Bullard a
voting member said late Monday that the Fed should complete
its bond buying program as planned ID nN28211644
We do need to see a shift from the Fed for the dollar to
rally but not just from the known hawks said Vassili
Serebriakov senior currency strategist at Wells Fargo
However if the euro were to close below 1 3994 an
ascending channel base that could signal a significant price
correction said RBC Capital Markets strategist George Davis
That could expose 1 3754 followed by the February low of
1 3428 he said
On the upside heavy options related barriers around
1 4250 were expected to cap gains but a break of that level
may see a test of the November high of 1 4283
Additional reporting by Julie Haviv Editing by Dan Grebler |
C | UPDATE 4 Lloyds CEO gets potential 10 mln stg pay package | Basic salary of new CEO increased to 1 06 million sterling
New CEO also given Lloyds shares worth 3 6 million
sterling
Lloyds CEO maximum 2011 bonus to be 225 percent of basic
pay
Lloyds top earner got 4 83 million sterling cash and
shares deal
Adds further detail on CEO s pay deal closing share price
By Sudip Kar Gupta
LONDON March 30 Reuters Part nationalised British bank
Lloyds gave its new chief executive Antonio Horta Osorio a
long term pay deal potentially worth some 10 million pounds 16
million according to its annual report
Horta Osorio who joined Lloyds this year after running
rival Santander UK got his basic salary increased to 1 061
million pounds from an original 1 035 million since Lloyds
deemed the original pay to be behind the market
Lloyds added he would also be compensated for various share
and cash awards which he had forfeited upon leaving his previous
job to replace Eric Daniels as Lloyds new chief executive
This comprised a share package worth some 3 6 million
pounds based on Lloyds recent share price of around 60 pence
Lloyds gave Horta Osorio 1 71 million shares due to vest in
2013 subject to how the bank performs against its peers It
also awarded him a further 4 35 million shares due to vest
between 2011 2013 provided he remains at Lloyds
His maximum potential bonus for 2011 was 225 percent of his
basic salary namely around 2 4 million pounds but Horta Osorio
was granted a long term incentive award worth 420 percent of his
salary which would be equivalent to 4 5 million pounds
Horta Osorio also got a cash payment package of 516 000
pounds due to vest in three equal tranches between 2011 2013
and a retirement benefit scheme worth around 280 000 pounds
Under new rules forcing banks to disclose the remuneration
of their most highly paid executives Lloyds added that one
un named individual received a package worth 4 83 million
pounds made up of 500 000 in basic salary and the rest in
shares which can t be cashed in until an unspecified later date
Its second highest paid executive got a 3 05 million pound
pay deal Lloyds said Neither are board members as in many
other banks where the top earners are traders or dealmakers and
are not the most senior executives
Lloyds pay remains well below that of many rival banks
however since it has a minimal investment banking presence
British rival Barclays Plc paid new boss Bob Diamond and two
other top directors 28 million pounds last year
The British government holds 41 percent of Lloyds and has an
83 percent holding in Royal Bank of Scotland Group Plc after
bailing out both banks with billions of pounds worth of
taxpayers money during the credit crisis
Earlier this year RBS said its chief executive Stephen
Hester could get up to 4 5 million pounds in shares under a
long term incentive plan
Due to the state bailout both RBS and Lloyds were ordered
by European regulators to sell a string of assets and earlier
this week Lloyds appointed JP Morgan and Citigroup to oversee
the sale of 600 bank branches
Britain hopes eventually to sell its RBS and Lloyds stakes
although authorities have said any sale is unlikely until the
UK s Independent Commission on Banking ICB publishes its final
report on the sector in September
Lloyds shares closed down 2 8 percent at 58 55 pence
1 6225 Pound
Editing by Hans Peters and Mike Nesbit |
C | ANALYSIS Israel c bank regains credibility with big hike | Market was expecting above target inflation for 5 years
This week s rate hike bigger than almost all forecasts
Yield curve flattens a bit in response
Some switch from inflation linked to fixed rate bonds
But still not clear if more half point hikes on the way
By Steven Scheer
JERUSALEM March 30 Reuters Central banks around the
world are struggling to regain their inflation fighting
credibility in the face of high commodity prices but the Bank
of Israel may have succeeded for now at least with an
aggressive interest rate hike
Israel s central bank on Monday raised its benchmark lending
rate by a larger than expected half a percentage point to 3 0
percent Virtually all analysts had predicted a third straight
quarter point move from the bank s governor Stanley Fischer
The bravest central banker in the world read a headline
in the Haaretz newspaper
Haaretz columnist Eytal Avriel wrote on Tuesday that Fischer
was not the only central banker facing a terrible dilemma
between supporting economic growth and keeping a lid on
inflation and asset bubbles but that he might be more
effective than most
Many will think Fischer is crazy But Fischer is simply
doing his job properly uncompromisingly ignoring political
pressure Avriel said
Other central bank governors are the crazy ones They are
keeping interest rates too low and sacrificing the medium and
long term for the short term
In its rate hike statement the central bank cited a high
inflation environment of more than 4 percent and expanding
economic activity the economy grew an annualised 7 7 percent in
the fourth quarter of 2010 ID nLDE72R1Z6
The pre emptive move to hike rates more than expected will
be conducive for restoring the Bank of Israel s credibility
said Kubilay Ozturk an economist at Deutsche Bank
This will also send a good signal to the markets that
inflationary expectations will not remain unanchored
PRESSURE
Before the latest rate increase the Bank of Israel had
already boosted its key rate eight times since August 2009 from
a low of 0 5 percent But as consumer prices started to rise
rapidly in the past few months repeatedly topping analysts
monthly forecasts many investors believed policymakers were
losing the battle with inflation
Despite the rate hikes the benchmark 10 year government
bond yield rose 30 basis points over the past
month peaking at 5 35 percent on Monday just before the latest
rate move In all the yield a barometer for the inflation
outlook jumped some 70 bps since the beginning of the year
That trend was at least temporarily reversed on Tuesday
when the 10 year yield slipped to 5 33 percent while short term
yields rose to reflect expectations for more rate hikes this
year Most analysts and the Bank of Israel s own model now
forecast the key rate rising another percentage point to 4 0
percent by the end of the year ID nLDE72T1KA
Gil Chen head bond trader at the IBI brokerage said there
had been heavy selling of inflation linked bonds in favour of
fixed rate bonds after the Bank of Israel s action
HSBC economist Jonathan Katz noted that before the latest
hike the market was expecting inflation to exceed the
government s target of 1 to 3 percent for the next five years
It is not yet clear how much those expectations are changing
the central bank will next release monthly data on inflation
expectations in late April ID nLDE72L0LH
But Katz said People were basically saying that he will
consistently miss the inflation target so he was losing a bit
of credibility I think he has regained that in part
SHEKEL
Inflation boosted by housing energy and food costs
reached an annual rate of 4 2 percent in February and is
expected by private analysts to stay around 4 percent for the
rest of 2011 ID nJES000058
Fischer had been reluctant to move interest rates more than
a quarter point at a time to prevent rapid appreciation of the
shekel which would damage exports more than
40 percent of Israel s econonic activity
The shekel currently at a 29 month high of 3 51 per dollar
has moved little since the latest rate hike largely because of
expectations that the central bank could intervene in the market
if necessary or authorities could conceivably impose stricter
capital controls
Also investors are expecting a European Central Bank
interest rate hike next week while the U S Federal Reserve
might raise rates sooner than originally anticipated
Analysts are unsure whether Monday s half point increase in
Israel was a one off event or the start of a trend for the
central bank
But Barclays economist Daniel Hewitt the lone analyst who
had predicted a half point move this week in a Reuters poll
expects a similar move next month
Its gradual rate increases have not been enough to keep
inflation under control he said of quarter point hikes
David Lubin an emerging markets strategist at Citigroup
wrote in a note to clients that the half point hike appears to
be an admission of failure to some extent and probably leaves
the market in a state of confusion about how the bank will
pursue its tightening strategy
Editing by Andrew Torchia |
C | UPDATE 2 India s Bilt Paper pulls 330 mln London IPO | Says U S firm s acquisition of rival could boost value
India paper firms stocks surge after rival s deal
Rocky month for European initial public offerings IPOs
Adds details background updates stock activity
By Anurag Kotoky and Sanjeev Choudhary
NEW DELHI April 1 Reuters BILT Paper s 330 million
London float has been pulled after the acquisition of a rival by
a U S firm convinced its parent company to seek a higher
valuation than achievable in the current rocky European market
U S paper and packaging company International Paper Co
agreed on Tuesday to buy a majority stake in India s Andhra
Pradesh Paper Mills APPM India s third largest paper company
by market value for about 257 million
It is important to study the impact of this acquisition
valuation over the next few months and the potential rerating
possibilities as against the IPO valuation in London at this
time which is dependent on the current UK IPO market
sentiments Ballarpur Industries India s largest paper maker
said in a statement on Friday
Ballarpur will reconsider plans to list its BILT Paper unit
in the next two to three months group finance head B Hariharan
said
Unless we get a substantial increase in valuation or a
significant increase in valuation in India we will not look at
listing he told Reuters
Shares of Ballarpur have risen about 10 percent since the
Andhra Paper deal announcement while those of smaller rival JK
Paper Ltd have jumped 20 5 percent
Emkay Global Financial Services noted that Indian paper
companies currently trade at average price to earnings ratio of
6 7 multiple while the Andhra Paper deal was done at an
multiple of 44 2 based on fiscal year 2011 estimates
The valuations offered in the Andhra Paper deal is likely
to trigger a rerating of all the paper companies in India since
current valuations of Indian paper companies are substantially
lower than the deal multiples the brokerage wrote in a note on
Wednesday
Ballarpur trades at 12 times its price to earnings ratio
according to Thomson Reuters data
Ballarpur owns 79 5 percent of Bilt Paper part of the
Mumbai based Avantha group with the remainder held by private
equity investors JPMorgan Mauritius and Lathe Investment
The delay in the IPO will not have any impact on the
company s expansion plans and have only a slight impact on debt
reduction plans Hariharan said by phone
The maker of writing and printing paper had plans to use
around 170 million of the IPO proceeds to fund its capital
expansion and around 140 million to reduce long term debt
TURBULENT EUROPEAN MARKET
The European IPO market has had a rocky month with
volatility in global stock markets due to unrest in North Africa
and the Middle East and fears of a nuclear crisis in Japan
derailing two of the region s biggest listings so far this year
Although markets have rebounded encouraging many firms to
press ahead with their plans to list before Easter the risk of
further uncertainty and the glut of offerings competing for
investor attention means buyers can afford to be discerning
Oman s Renaissance Services pulled the plug on a 500
million London float of its oilfield services unit Topaz on
Thursday due to concerns over valuation and growing regional
unrest
If you look at the deals that are out there at the moment
the bottom of their price ranges are at a 30 to 40 percent
discount to where their main comparables are trading said a
source close to the BILT offering
It is a combination of IPO market sentiment in terms of
what investors are willing to pay on deals and then this
other deal happening crystallised value in the market for Indian
paper companies
BILT which is involved in all stages of paper making from
tree plantations to distribution has increased its annual paper
production capacity by nearly 90 percent over the last two years
and plans to grow it by another 50 percent by the end of 2014
The listing which was due to be completed in mid April
was being run by Citigroup and JP Morgan
Additional reporting by Kylie MacLellan in London Editing by
Tony Munroe and Jon Loades Carter |
C | Hong Kong shares up 1 5 pct HKEx Macau casinos outperform | Hong Kong shares up 1 5 pct IPO flurry boosts HKEx
Casino operators surge after strong Macau revenue report
China markets closed for public holiday
Updates to close
By Clement Tan
HONG KONG April 4 Reuters Hong Kong shares ended higher
on Monday in brisk trade largely supported by financial firms
as signs of reviving IPO activity boosted bourse operator Hong
Kong Exchanges and Clearing Ltd HKEx
Shares of HKEx one of the world s largest exchange
operators by market value surged 5 3 percent to a 2 month high
Volume in the stock was more than four times its 30 day average
This is a sign of investors confidence in the Hang Seng
Index said Mark To a Wing Fung Financial Group analyst
Investor confidence also improved after the benchmark Hang
Seng index breached 23 700 23 800 points a key technical
resistance level on Friday
The Hang Seng index ended Monday trade up 1 5 percent
at 24 150 6 a level not seen since Jan 20 this year This
follows gains of 2 8 percent last week and 3 9 percent the week
before
The index had finished the first quarter up 2 1 percent
outperforming the Nikkei but underperforming the
Shanghai Composite Index
Markets in China and Taiwan were closed for a holiday on
Monday and will be shut in Hong Kong China and Taiwan on
Tuesday
Analysts cite 24 800 the Hang Seng s January peak as the
next resistance point with support seen at 23 400
In a note released on Sunday Citigroup Global Markets
upgraded HKEx to to buy from their earlier sell rating with
a revised target price of HK 206 up from HK 160 That would
imply a further 14 percent upside for the stock from Monday s
close
Citi also said in the same note that HKEx has underperformed
the Hang Seng Index by 6 percent in the year to date
HKEx looks fairly valued at the current price There s
still some room on the upside said Alan Lam Greater China
equities analyst at Julius Baer We think it could reach HK 210
in the next 6 12 months
Analysts said investor confidence was boosted by news of
Glencore International AG s impending 10 billion
listing tentatively scheduled for mid April Several other high
profile firms including fashion house Prada are looking to do
the same ID nLDE7300Z9 ID nL3E7F11G0 ID nLDE72U1RX
According to Citi HKEx received 37 listing applications in
March the largest monthly number since 2009
An ongoing spate of merger and acquisition attempts among
exxchange oeprators could also be fueling investors optimism in
HKEx after Nasdaq OMX and IntercontinentalExchange
bid 11 3 billion for NYSE Euronext in an effort
to trump Deutsche Boerse s deal and pushed their case with an
appeal to U S patriotism ID nL3E7F11TO
Macau casino operators also outperformed the broader market
on Monday after gaming revenue surged to a record high blowing
away concerns of a potential slowdown in the world s largest
gaming market ID nL3E7EV0CK
Robust demand from gamblers from mainland China helped the
former Portuguese colony post a total of 20 1 billion patacas
2 5 billion in March gaming revenue ID nH9E7EL02A
Wynn Macau Ltd controlled by casino magnate Steve
Wynn jumped 10 2 percent to HK 23 70 posting both its all time
biggest intra day jump and a record closing high
U S billionaire Sheldon Adelson s Sands China Ltd
surged 6 9 percent
We see the recent correction as a good opportunity to
accumulate said Kenneth Fong analyst at J P Morgan in Hong
Kong referring to Sands China s 6 percent drop late last week
after it said it was under investigation by the Hong Kong
Securities and Futures Commission
Additional reporting by Farah Master and Elizio Barreto
Editing by Kim Coghill
ASIA PACIFIC MARKETS
Pan Asia Japan S Korea
S E Asia Hong Kong Taiwan
Australia NZ India China
OTHER MARKETS
Wall Street Gold Currency
Eurostocks Oil JP bonds
ADR Report LME metals US bonds
Stocks News US Stocks News Europe
DIARIES DATA
IPO diary data Asia earnings diary
U S earnings diary European diary
Taiwan diary Wall Street Week Ahead
Eurostocks Week Ahead World forecasts
TOP NEWS
For top Asian company news double click on
U S company news European company news
Forex news Global Economy news
Technology news Telecoms news
Media news Banking news
Politics General news Asia Macro data
A multimedia version of Reuters Top News is available at
LIVE PRICES DATA
World Stocks 0 INDEX Currency rates
Dow Jones NASDAQ Nikkei
FTSE 100 Debt 0 USBMK
Hong Kong Dollar LME price overview |
C | GRAINS Corn soars again matches all time high set in 2008 | CBOT corn jumps over 3 percent
Corn could top record 7 65 set during 2008 food crisis
Spring fieldwork delays in the U S provide support
Wheat rallies on dry conditions in U S Plains
Soy shows weakness on competition from South America
Updates with midday market action fresh quote
By Carey Gillam
KANSAS CITY Mo April 4 Reuters Corn futures rallied
on Monday matching the record high price set during the 2008
global food crisis and extending sharp gains posted last week
due to very tight supplies
Futures added over 3 percent to a rally that began on
Thursday when the U S Department of Agriculture pegged
quarterly corn stocks as of March 1 at levels well below trade
expectations The tightening supply underscored the strong
demand for the feed grain
The market was also supported by the prospect of delays in
spring plantings in the United States due to rains
Corn prices have jumped over 14 percent since the rally
started Thursday and all signs point to even bigger gains
There are no signs saying corn won t go higher Stocks
were bullish for corn and now planting weather doesn t look
good said Mario Balletto analyst for Citigroup
Analysts said it could take years to replenish corn stocks
which USDA predicts will hit their lowest levels in 15 years
this summer The estimate will be updated in a government
report on Friday
The USDA last week pegged quarterly U S corn stocks as of
March 1 at 6 523 billion bushels below estimates for 6 690
billion and down 15 percent from a year ago Strong demand from
the livestock sector ethanol distillers and importing nations
have drawn supplies down the government said
The tight stocks estimate raises prospects that any
production hiccups over the course of 2011 will make feed grain
supplies critically tight over the next year analysts said
The USDA last week pegged U S corn plantings this spring at
92 2 million acres above an average trade estimate for 91 839
million acres and the second highest since 1944
Some analysts were eyeing the potential for planting
delays however amid forecasts for a cool wet spring Those
worries only accelerated the rally
WINTER WHEAT WORRIES
Wheat futures were also rallying as dry weather conditions
in the U S Plains threatened production of the largest U S
class of wheat Extended drought conditions were limiting
production potential of hard red winter wheat particularly in
western growing areas
Wheat has an issue with conditions said Roy Huckabay an
analyst for The Linn Group I have some clients saying they
might have to tear up their crop
Soybean futures opened higher but gains faded rapidly The
market was pressured by favorable harvest weather in Argentina
and in southern Brazil and by talk that China may be shifting
soybean orders from the U S to Brazil traders said
At 11 41 a m CDT the most active Chicago Board of Trade
corn for May delivery was up 3 7 percent at 7 63 a bushel
after hitting a new high for the May contract and matching the
all time high of 7 65 Prices are at their highest levels
since summer 2008 and are poised to set new records
Chicago Board of Trade soft red winter wheat was up 2 5
percent at 7 78 3 4 after rising as high as 7 85 1 2 early
Kansas City Board of Trade hard red winter wheat futures led
wheat gains rallying 3 8 percent early
Soybeans futures meanwhile were lower with the May
contract down 6 1 4 or 0 5 percent at 13 87
Additional reporting by Sam Nelson and Julie Ingwersen in
Chicago Nigel Hunt in London and Manolo Serapio Jr in
Sydney Reporting by Carey Gillam editing by Sofina Mirza Reid
and Jim Marshall |
C | GLOBAL MARKETS Oil up on Middle East M A boosts equities | Brent crude tops 120 a barrel on Middle East unrest
Corn futures match record high price from 2008
Wall Street little changed ahead of earnings season
Euro slips back after hitting multi month highs
Rewrites updates prices adds details
By Leah Schnurr
NEW YORK April 4 Reuters Commodities rose on Monday as
Brent crude topped 120 a barrel on concerns over the impact on
supply from unrest in the Middle East while corn surged to
match a record high price set during the 2008 global food
crisis
Merger and acquisition activity helped global equities eke
out gains Wall Street was little changed as the broad S P 500
struggled to break above its high for the year ahead of
the quarterly earnings season that kicks off next week
Expectations of higher euro zone interest rates took the
euro briefly to an 11 month high against the Japanese yen
before easing back with expectations of an increase already
priced in
Brent crude oil prices rose above 120 a barrel to the
highest level since before the collapse of Lehman Brothers and
the global financial crisis in September 2008 After choppy
trading U S crude settled up 53 cents at 108 47 a barrel
the highest close since September 2008
Libya s continuing conflict and unrest in Yemen could pose
threats to supply in the Middle East while investors expect
demand for oil could grow on signs of improvement in the U S
economy
Corn futures extended a rally that began last week when the
U S Department of Agriculture pegged quarterly corn stocks as
of March 1 at levels well below trade expectations with
tightening supply underscoring the strong demand for the feed
grain For details see ID nLDE7300TD
There are no signs saying corn won t go higher Stocks
were bullish for corn and now planting weather doesn t look
good said Mario Balletto analyst for Citigroup
Earlier in the day spot corn equaled its record high of
7 65 per bushel set on June 27 2008 Chicago Board of Trade
corn futures unofficially ended up at 7 59
EQUITIES STRUGGLE
World stocks as measured by MSCI were up
0 3 percent hovering around a one month high and up nearly 5
percent for the year to date European shares rose to a
three week closing high
Among the day s M A Belgian chemicals group Solvay
bid for French rival Rhodia driving up
Rhodia s shares 48 percent and Vodafone said it was
selling its 44 percent stake in France s second biggest telecom
operator SFR to Vivendi ID nLDE66P0SY
ID nLDE73319N
The FTSEurofirst 300 closed up 0 04 percent at
1 142 84 points the highest close since March 9 But the S P
was slightly lower in the early afternoon hovering just under
1 333 a level that it has been unable to close above since
mid February
The S P recorded its best two week period since December on
Friday and the Dow industrials hit the highest intraday
level since June 2008
The Dow Jones industrial average added 10 33 points
or 0 08 percent to 12 387 05 The Standard Poor s 500 Index
was off 1 50 points or 0 11 percent to 1 330 91 The
Nasdaq Composite Index dipped 6 19 points or 0 22
percent to 2 783 41
Bruce Zaro chief technical strategist at Delta Global
Asset Management in Boston said the earnings season would
likely push the S P 500 to 1 400 by mid May as stocks come off
the seasonally strong November April period
If we make a successful break from here I think you ve
got the 1 400 range and I think that s probably likely during
the final seasonally favorable push Zaro said
Economic improvement has cemented expectations that the ECB
will raise interest rates Thursday and led to speculation the
U S Federal Reserve may be getting closer to withdrawing
exceptional liquidity ID nLDE7330AC
A top Federal Reserve official said on Monday that U S
inflation is likely to remain low for now but policymakers
will keep a close eye on potentially self fulfilling consumer
expectations for higher prices ID nN04244409
Reflecting expectations of differing rate paths the euro
hit an 11 month high against the yen and touched a five month
peak against the dollar The euro later slipped back
The euro briefly popped above 120 yen for the
first time since May 2010 and was later at 119 50 yen It hit a
five month high against the dollar of 1 4269 and was later at
1 4223
Reporting by Leah Schnurr Additional reporting by Edward
Krudy and Robert Gibbons in New York Carey Gillam in Kansas
City and Atul Prakash in London Editing by Leslie Adler |
C | Italian ETFs The Next Domino To Fall | As traders and investors so often do they re wondering what the next European shoe to drop will be and we re not talking Christian Louboutin or Prada We re talking euro zone members and all eyes appear to be on Italy as the next European problem child to need some form of financial assistance also known as a bailout Mired In RecessionItaly has one of the highest debt to GDP ratios in the developed world That metric could top 129 this year and Citigroup has said Italy s debt GDP could reach 137 in 2014 Not to mention as the Euro Zone s third largest economy financial assistance for Italy would be a daunting task perhaps one that can t be fulfilled Italian banks while not quite in the dire straits as their Spanish counterparts are not in the best of health and it has been speculated excess capital or lack thereof is an issue in the Italian financial system That might be one reason why yields on 10 year Italian sovereigns were around 5 83 on Monday The OECD forecast that Italy s economy will shrink 1 7 this year is almost certainly another reason Italian bond yields remain high and investor skepticism about Italy continues to be elevated For ETF investors there is more than just the iShares MSCI Italy Index Fund NYSE to keep an eye These other ETFs could be sensitive to glum news out of Italy going forward Some members of the list may be surprises Global X FTSE Argentina 20 ETF NYSE This one may come as a surprise to some folks but this is why the Global X FTSE Argentina 20 ETF makes a list involving Italy ARGT allocates about 14 of its weight to bank stocks That s not the problem What is the problem is that some Argentine banks are heavily exposed to European sovereign debt Several European Union countries including Italy enjoy trading partnerships with Argentina but there is speculation those relationships have become strained in the wake of the Argentine government nationalizing YPF S A NYSE That move has hurt Argentina with key economic partners and cast a black cloud over ARGT PowerShares S P International Developed High Beta Portfolio NYSE IDHB The PowerShares S P International Developed High Beta Portfolio which debuted in February lives up to its name and doesn t skimp on beta or exposure to controversial European nations While stodgy Sweden represents almost 18 of IDHB s weight five Euro Zone members combine for about 40 of the fund s weight including a 10 3 allocation to Italy Again IDHB isn t for the faint of heart as it devotes almost a third of its weight to bank stocks PowerShares DB Italian Treasury Bond Futures ETN NYSE ITLY tracks the DB USD BTP Futures index which features securities with an original term of no longer than 16 years and remaining term to maturity of not less than 8 years and 6 months The ETN has a leveraged cousin in the form of the PowerShares DB 3x Italian Treasury Bond Futures ETN NYSE As one might imagine owning ITLY and ITLT hasn t been good for a portfolio s health recently The fund s are down 5 8 and 16 5 respectively in the past three months WisdomTree Europe SmallCap Dividend Fund NYSE In a more sanguine market environment the WisdomTree Europe SmallCap Dividend Fund would be an ETF plenty of folks would want to cozy up to The combination of global stocks dividends and small caps under one umbrella is compelling but a deeper look at this fund leaves one thinking not now maybe later Industrial consumer discretionary and financial services names combine for about 62 of DFE s weight and those are sectors to be avoided amid Europe s backdrop of slowing growth As if that s not bad enough all of the PIIGS except Greece are represented in DFE Italy leads the way with a weight of 8 8 No wonder this ETF is down almost 12 in the past three months BY The ETF Professor |
C | EUR Trading Below 1 255 Vs USD | The single currency has started the week trading below 1 255 versus the greenback after it has been stable around this level following its falling last Thursday after Moody s decision to lower the credit ratings of 15 of the top global financial institutions including Barclays and Citigroup The single currency also came under pressure last Thursday following the release of Philadelphia June manufacturing index data The index fell to 16 6 from 5 8 while the market was waiting for a rise to zero to add more pressure on the equities markets which have been actually depressed by worries about the debt crisis in EU with the current global slow pace of growth The single currency has come also under pressure from another side following the announcement of the Spanish banking sector s stress test which have shown that it may require between 16b and 25b euros in the case of central scenario and from 51b to 62b euros in the case of stronger collapse in adverse scenario However the EFSF Ceo Regling has tried to come out calling down the markets saying that the plan is able to give Spain up to 10 of its GDP To avoid exposure to the financial market it can increase put more weight on it driving up its cost of borrowing It is well known that while Spain is planning on selling about EUR 82b of bonds this year the EU s Rehn has said also that the rescue plan for Spain will be prepared to target its banking and financial sectors It is expected to proceed by next 9th of July to drive down the yield of 10 year Spanish government bonds to 6 7 The single currency is waiting now for the EU summit which is expected to discuss new terms for reaching a stronger EU banking and financial union which can open the way for issuance of the EU bond if Germany relents its opposition The EU summit is also expected to discuss using the EFSF funds for buying peripheral bonds directly from the indebted ailing governments inside the eurozone In the case of rising the single currency can meet resistance level 1 2748 again whereas it failed to continue rising versus the greenback in the beginning of last week Crossing above it can be met by a higher resistance at 1 2822 before the psychological level at 1 30 which its breaking can open the way for more resistance levels at 1 3063 1 3180 and this can be followed by 1 3281 Breaking this level can open the way to 1 3384 again before 1 3489 whereas it has formed its recent top In the case of breaking 1 3489 while the way down can be met by supporting levels now at 1 2518 1 2433 1 2408 1 2357 before 1 2286 which could hold the pair decent after the US nonfarm payrolls release of May The breaking of it can lead again to 1 2151 which if broken can open the way for 1 1876 again whereas the pair has rebounded forming its bottom on 7th of June 2010 which drove the pair later to reach 1 4939 on 4th of May 2011 whereas the pair has managed to ease back again |
C | EQT Midstream Partners LP Energy Sector IPO | Based in Pittsburgh PA EQT Midstream Partners LP EQM EQT Midstream Partners LP EQM scheduled a 250 IPO with a market capitalization of 708 million at a price range mid point of 20 for Wednesday June 27 2012 EQM is one of four IPOs scheduled for the week of June 25th Full IPO Calendar EQM s S 1 was updated EQM s original S 1 filed February 13 2012UNDERWRITERSManager Joint Managers Citigroup Barclays SUMMARYEQM is a growth oriented limited partnership formed by EQT Corporation NYSE EQT to own operate acquire and develop midstream assets in the Appalachian Basin EQM s General PartnerEQT Corporation 7 6 billion market cap is EQM s general partner sponsor largest customer and is one of the largest natural gas producers in the Appalachian Basin EQM s projected minimum annual payout at the price range mid point of 20 is 7 As of Monday June 25 the five stocks we use for sector comparisons are down an average of 4 in the last five calendar days NRGM IPO d Dec 15 2011 at 17 below price range mid point of 20Even so some IPO sources are suggesting EQT might go to a 50 cent premium from the price range mid point of 20 Based on the 5 day 4 sector decline our conclusion is that EQT should be priced lower than the price range midpoint of 20 to minimize sector risk unless Obamacare is neutered later this week in which case the stock market is expected to go up And at 7 annual minimum payout EQM is not offering a particularly high payout rate relative to other midstream LPs but the price is at the lower end of the price to book value range PARTNERS CAPITALEQM s proforma partners capital is 434mm post IPO Post IPO EQM s market capitalization would be 708 million at the price range mid point of 20 BUSINESSEQM is a growth oriented limited partnership formed by EQT Corporation to own operate acquire and develop midstream assets in the Appalachian Basin for natural gas transmission and storage EQM provides substantially all of its natural gas transmission storage and gathering services under contracts with fixed reservation and or usage fees with a significant portion of revenues being generated from long term firm contracts EQM initially focuses operations in the Marcellus Shale fairway in southern Pennsylvania and northern West Virginia a rapidly growing natural gas play and the core operating area of EQT EQT Corporation 7 6 billion market cap is EQM s general partner sponsor largest customer and is one of the largest natural gas producers in the Appalachian Basin ABOUT EQT CorporationEQT Corporation conducts its business through three business segments EQT Production EQT Midstream and Distribution EQT Production is a natural gas producer in the Appalachian Basin with 5 4 trillion cubic feet equivalent of proved reserves across 3 5 million acres as of December 31 2011 CONTRACT RATESAs of March 31 2012 54 of EQM s contracted transmission firm capacity was subscribed at the maximum recourse rate allowed under the tariff The remaining 46 of contracted transmission firm capacity was subscribed by customers under negotiated rate agreements at rates generally above the maximum recourse rate under the tariff COMPETITIONPrincipal competitors in the natural gas transmission and storage market include companies that own major natural gas pipelines such as Dominion Transmission D Columbia Gas Transmission Corp National Fuel Gas Company NFG and Texas Eastern division of Spectra Energy SE In addition EQM competes with companies such as Caiman Energy a division of Williams Partners L P WPZ M3 Midstream LLC Superior Pipeline Company LLC and MarkWest Energy Partners MWE who are building high pressure gathering facilities that are not subject to FERC jurisdiction to move volumes to interstate pipelines DISTRIBUTION POLICYEQM s partnership agreement requires EQM to distribute all available cash quarterly EQM anticipates that distributions from the operating surplus will generally not represent a return of capital EQM does not anticipate that it will make any distributions from capital surplus INTERCONNECTIONSEQM depends upon third party pipelines and other facilities that provide receipt and delivery options to and from EQM s transmission and storage system USE OF PROCEEDSEQT expects to net 230 million Proceeds are allocated as follows To fund a cash distribution of approximately 182 million to EQT in part for reimbursement of capital expenditures associated with EQM s assets To provide 14 million in working capital to replenish amounts distributed by Equitrans to EQT in the form of trade and other accounts receivable in connection with the closing of this offering To pre fund 32 million of maintenance capital expenditures the majority of which is expected to be incurred over the next two years related to two identified regulatory compliance initiatives andPay 2 million in revolving credit facility origination fees |
C | The Fed Is Putting An End To The Tru PS Market | Trust preferred securities TruPS used to be quite popular among banks as a form of funding These high dividend securities were effectively junior debt instruments getting interest treatment for tax purposes but got equity like treatment for capital purposes Tier 1 capital Many used to trade at a deep discount because of bank risk government bailout would subordinate TruPS and guys like David Tepper made a great deal of money buying these in 2009 Before the financial crisis investors even used to But under the new regulatory regime Fed s interpretation of Basel III that s changing Knight Capital Group Several banks have decided to redeem their trust preferred securities following the Fed s June 7 meeting that proposed a phase out of the Tier 1 capital treatment of the securities Banks have 90 days from the June 7 meeting to redeem the securities under the capital treatment event clause The TruPS market is now rapidly shrinking as banks refinance these securities replacing them with regular equity and debt Citigroup JP Morgan and SunTrust Bank are planning to redeem more than 15 billion of trust preferred securities next month following the US Federal Reserve s release of new capital rules last week BAC TCB BBT WBS KEY are some of the other banks redeeming This was a fairly unique asset class and it s not clear where this capital will end up moving For example PFF the preferred securities ETF 9bn market value was loaded with these As TruPS pay down the ETF will be forced to move capital into far lower yielding or riskier securities |
C | Global Equities Mixed Ahead Of European Summit Equities | Asian markets traded mostly lower on Tuesday as investor sentiment remained weak The Nikkei sank 8 to 8664 the Kospi dropped 4 to 1818 and the ASX 200 fell 15 points to 4013 Markets in greater China outperformed as the Hang Seng climbed 5 to 18982 while the Shanghai Composite eased 1 to 2221 In Europe the major indexes closed mixed while Italian and Spanish debt yields continued to rise The DAX inched up 1 to 6137 while the CAC40 fell 3 to 3013 and the FTSE eased 1 to 5447 Citigroup downgraded BMW sending the stock down 2 3 and weighing on auto makers US stocks managed a moderate gain following Monday s slide The Dow gained 32 points to 12535 the Nasdaq advanced 6 to 2854 and the S P 500 climbed 5 to 1320 New Corp surged 8 3 following a report in the Wall Street Journal which said the company may spin off its publishing division Zynga shares tanked 5 after announcing the Zynga with Friends network which will allow users to connect outside of Facebook Apollo Group jumped 10 3 after reporting earnings which blew past analyst forecasts CurrenciesThe dollar traded mostly lower on Tuesday with commodity currencies the primary beneficiaries The Australian dollar climbed 6 to 1 0067 and the Canadian dollar gained 5 to 1 0238 The British pound rose 4 to 1 5642 and the yen ticked up 2 to 79 49 The euro and Swiss franc both slipped fractionally Economic OutlookTuesday s economic reports were mostly negative The Conference Board s consumer confidence index dropped to 62 from 64 4 more than expected The Richmond manufacturing index unexpectedly tumbled to 3 from last month s 4 reading On the upside home prices fell less than expected slipping 1 9 year over year besting forecasts for a 2 4 drop |
C | Stocks End Higher For Second Day Energy Financial Industrial Sectors | Stocks End Higher for Second Day Energy Financial Industrial Sectors Climb on Positive DataStocks finished with broad gains for a second day supported by positive domestic economic data ahead of the start of a European Union summit tomorrow Shares of energy companies led today s advance rising over 2 as a group joined by strong results among financial healthcare and industrial stocks The mining and materials segment also rose supported by a rise in gold and copper prices Durable good orders showed improvement with new factory orders rising 1 1 during May up from 0 2 the prior month and beating consensus estimates for a 0 4 gain For the year new orders are up 4 6 lagging last year s 6 9 pace Excluding transportation orders of items intended to last at least three years came in at 0 4 for the month beating April s negative 0 6 reading Analysts on average were expecting 0 8 growth There was more good news today from the housing sector as the pending home sales index rose from a prior level of 95 5 to 101 1 At 5 9 it well surpassed both the previous level of 5 5 and consensus estimates of 1 2 range 1 6 to 4 0 Moreover the gain was realized relatively evenly across regions rather than being centered in one geographic location In company news shares of Arena Pharmaceuticals ANRA soared today after regulators cleared the company s lorcaserin weight loss drug for U S sales becoming the first new prescription diet pill approved in this country in 13 years The move by the U S Food and Drug Administration sent shares of other drug makers working on similar weight loss medication highers as well Vivus VVUS established a new 52 week high with the FDA expected to rule July 17 its Qnexa diet drug Also rising was Orexigen Therapeutics OREX Also traded Google GOOG finished with a small gain with the company today unveiling its entry into the tablet computer market The Nexus Seven is designed specifically for Google Play the online store that sells movies music books apps and other media content GOOG also announced a home entertainment device called Nexus Q Here s where the markets stood at end of day Dow Jones Industrial Average up 92 34 0 74 to 12 627 01S P 500 up 11 86 0 90 to 1 331 85Nasdaq Composite Index up 21 26 0 74 to 2 875 32GLOBAL SENTIMENTHang Seng Index up 1 03 Shanghai China Composite Index down 0 23 FTSE 100 Index up 1 41 UPSIDE MOVERS ZZ Q2 profit tops analyst consensus by 0 02 Revenue also beats estimates NWSA Hires JPMorgan Goldman Sachs to advise on possible spinoff of publishing entertainment operations HERO Initiated with Equal Weight rating 5 price target at Stephens LEN Q2 net income soars on a tax adjustment deliveries new orders also increase ENTR Raises Q2 guidance now sees 81 million to 82 million in sales 0 08 a share projected profit tops analyst consensus by 0 05 DOWNSIDE MOVERS GIS Q4 EPS beats by 0 01 but sales lag forecasts FY13 earnings guidance also trails Street ORLY Auto parts retailer cuts Q2 same store guidance now sees 2 0 to 2 5 growth Rivals AAP AZO also fall but PBY rises M Citigroup downgrades retailer to Neutral JWN SKS ratings also cut OMER Announces public offering of common stock with proceeds to fund two ongoing Phase III clinical trials |
JPM | Fed doves ranks may be growing possibly pushing hike into 2016 | By Ann Saphir SAN FRANCISCO Reuters Federal Reserve Chair Janet Yellen insisted only two weeks ago that the U S economy remained on a path that would allow the central bank to raise rates in 2015 for the first time in nine years Now however some of her colleagues are suggesting it might be better to wait until late this year or even 2016 citing concerns about the international economic outlook and U S consumers reluctance to open their wallets Those concerns will be back in focus on Friday when May job numbers are due The figures are expected to show a 225 000 gain in employment broadly in line with recent averages but a disappointing reading could strengthen the dovish camp Lael Brainard a voting member of the Federal Open Markets Committee signalled this week that it may be prudent to delay a rate rise She was followed on Thursday by Daniel Tarullo another voting member who said data this year had so far failed to show a rebound from the first quarter We get another job number tomorrow but I think in a broader sense there are more questions at this point in 2015 than at this point in 2014 Tarullo said Long time dove Charles Evans of the Chicago Fed suggested he might push his preferred timing for a first rate rise into the second half of 2016 from early next year matching the view of his colleague Narayana Kocherlakota at the Minneapolis Fed While Brainard who has been on the Fed board for a year did not rule out a move this year she warned of the possibility of a more significant drag on the economy from weaker exports and weak manufacturing Back in March Brainard projected a 2015 rate hike along with 14 other Fed policymakers Fourteen of 17 Fed policymakers at that time expected at least two rate increases this year a summary chart of their forecasts shows Two hikes this year would now appear to be less likely particularly if the June meeting at which new projections are released passes as now expected without a rate rise Another policymaker who had penciled in at least one hike in 2015 Boston Fed President Eric Rosengren also struck strongly dovish notes earlier this week Rosengren warned that not enough progress had been made on the jobs front or on pushing inflation towards the Fed s two percent goal Both Rosengren and Brainard also worried that weak consumer spending could augur a more lasting slowdown in growth than earlier thought The latest data released on June 1 after Yellen s most recent speech showed spending unexpectedly stalled in April as consumers saved more Even St Louis Fed President James Bullard typically one of the Fed s more hawkish officials suggested on Wednesday that weaker than expected retail sales had raised some doubts about the strength of the recovery though he still supported a hike in 2015 Brainard or Rosengren could shift their projections for a rate hike to 2016 when the Fed releases its rate decision on June according to JPMorgan NYSE JPM economist Michael Feroli While that would still leave a solid majority expecting rate hikes to start in 2015 more of those Fed officials may favor just one cautious move Bank of the West chief economist Scott Anderson like most economists still believes the first rate hike will take place in September but the next rate hike might not happen until January 2016 he said To TD Securities strategist Millan Mulraine a strong payroll report on Friday will do little to change the Fed s dial currently set to two rate hikes this year starting in September
Still a weak print will feed into the current concerns and push the Fed further away from near term hikes he said |
JPM | JPMorgan warns Brexit could trigger Scottish independence vote | By Guy Faulconbridge LONDON Reuters If Britain votes to leave the European Union in a referendum Scottish nationalists would push for another independence vote as the world s fifth largest economy grappled with exiting the EU JPMorgan NYSE JPM said in a research note Cameron whose Conservative party won a surprise majority in a general election last month has promised to renegotiate Britain s EU relationship and hold a referendum on membership by the end of 2017 JPMorgan said Cameron would probably hold the referendum in 2016 and that he would not deliver substantive change in his renegotiation but that he would claim the relationship had been reset and win a referendum to stay in Our base case is that the EU referendum will take place in the second half of 2016 and that the UK will vote to stay in it said But the U S investment bank s analysts cautioned that economic uncertainty about the outcome could hurt the economy and that any vote to leave could trigger demands for a second independence referendum from the Scottish National Party SNP It is likely that the SNP would claim that the decision to exit should precipitate another referendum on independence for Scotland JPMorgan analysts Malcolm Barr and Allan Monks said in the note to clients The prospect of another referendum on Scottish independence would add to the uncertainties facing the UK after a vote to leave the EU they added Scottish nationalists say they would like to hold another referendum eventually and have warned that if England votes to leave the EU but Scotland votes to stay a constitutional crisis would follow Scotland voted 55 45 to preserve the United Kingdom in the Sept 18 referendum last year A British exit known as a Brexit would take some time to implement after a vote to leave JPMorgan said adding that the uncertainty over an exit could hurt business sentiment investment decisions and headline growth That uncertainty could intensify following a vote to leave given the lack of clarity about how Brexit would work in practice it added The transitional costs are likely to be substantial as uncertainty over future arrangements would likely cause investment to fall and consumers to defer spending said the bank which has assets of 2 6 trillion |
JPM | European stocks bounce back amid Greece hopes Dax up 0 63 | Investing com European stocks rose on Thursday as equities recovered from a six day downtrend sparked by a selloff in European bonds and as hopes for progess on the Greek debt front lent some support
During European morning trade the EURO STOXX 50 gained 0 41 France s CAC 40 rose 0 35 while Germany s DAX 30 advanced 0 63
European equities came under pressure following a recent selloff in European government bonds with German 10 year bund yields rising to the highest levels since September 2014 on Wednesday
Investors remained cautious as uncertainty over Greece continued but hopes for an agreement on a cash for reforms deal lent some support
Greece s bailout agreement with the European Union and the International Monetary Fund is set to expire at the end of this month and it cannot make further debt repayments without a new deal
Financial stocks were broadly higher as French lenders BNP Paribas PARIS BNPP and Societe Generale PARIS SOGN rose 0 32 and 0 59 while Germany s Deutsche Bank XETRA DBKGn gained 0 49
Among peripheral lenders Italy s Intesa Sanpaolo MILAN ISP edged up 0 09 while Spanish banks Banco Santander MADRID SAN and BBVA MADRID BBVA added 0 08 and 0 14 respectively
Elsewhere LVMH Moet Hennessy Louis Vuitton SA PARIS LVMH rallied 1 73 after JPMorgan NYSE JPM raised its rating on the stock to the equivalent of buy saying the French company may have one of the best growths in the luxury industry
In London FTSE 100 inched up 0 02 as U K lenders mostly tracked their European counterparts higher
Shares in Lloyds Banking LONDON LLOY rose 0 36 and Barclays LONDON BARC gained 0 48 while the Royal Bank of Scotland LONDON RBS jumped 0 99 HSBC Holdings LONDON HSBA underperformed however with shares sliding 0 33
In the mining sector stocks were mixed Glencore Xstrata LONDON GLEN saw shares drop 0 52 and Fresnillo LONDON FRES tumbled 1 29 while rivals Bhp Billiton LONDON BLT and Rio Tinto LONDON RIO gained 0 24 and 0 67 respectively
Meanwhile Royal Mail LONDON RMG led losses on the index with shares plummeting 3 10 following news Britain s new government is selling half of its 30 stake in the company
In the U S equity markets pointed to a steady open The Dow Jones Industrial Average futures pointed to a 0 01 uptick S P 500 futures signaled a 0 04 dip while the Nasdaq 100 futures indicated a 0 01 gain |
BMY | AVEO Pharmaceuticals Down More Than 50 YTD Here s Why | Shares of AVEO Pharmaceuticals Inc NASDAQ AVEO have plummeted 57 4 against the growth of 6 5 in the year so far
AVEO faced a major setback when it had to delay the submission of a new drug application NDA for its vascular endothelial growth factor VEGF tyrosine kinase inhibitor TKI Fotivda tivozanib for the first line treatment of advanced renal cell carcinoma RCC in January The company decided not to file an NDA in the United States after the FDA informed that it was not satisfied with the preliminary overall survival OS data reported along with the top line results from the TIVO 3 study announced last November
The phase III TIVO 3 program evaluated Fotivda in highly refractory advanced or metastatic RCC patients compared with Bayer DE BAYGN AG s OTC BAYRY Nexavar sorafenib
AVEO has planned for an additional interim OS analysis in August 2019 results of which are expected in the fourth quarter of 2019 Based on these mature OS results the company will decide on the NDA filing following the FDA s recommendation Investors are keen to know the outcome of the same as a positive news might be able to pull the stock up which has been down for a while now
Notably in August 2017 AVEO and its partner EUSA Pharma received approval from the European Commission for Fotivda for the first line treatment of advanced RCC The drug is already available in Germany Spain Austria and the United Kingdom The company is focused on launching the medicine across various European countries as it receives royalties from Fotivda sales in the region
Meanwhile AVEO is evaluating Fotivda combined with Bristol Myers NYSE BMY Opdivo an immune checkpoint PD 1 inhibitor in a phase II study for the treatment of advanced RCC The company is also examining the drug in a phase I II probe coupled with AstraZeneca s NYSE AZN Imfinzi for treating first line hepatocellular carcinoma
Apart from Fotivda AVEO has a promising candidate ficlatuzumab in its pipeline The candidate is currently being evaluated in early mid stage studies for various oncological indications In April the company along with partner Biodesix Inc announced positive results from the phase Ib expansion cohort of ficlatuzumab combined with cytarabine in patients with relapsed and refractory acute myeloid leukemia AML
The company is also developing ficlatuzumab in combination with Lilly s Erbitux in a phase II probe for treating metastatic head and neck squamous cell carcinoma The candidate is also being evaluated in combination with nab paclitaxel and gemcitabine for treating pancreatic cancer
We believe the timely approval of Fotivda in the United States would have provided a huge boost to AVEO as the RCC market holds great potential However the string of setbacks the company is facing of late is a woe
Moreover the company is heavily dependent on its partners for the development and commercialization of its pipeline candidates Failure to receive regulatory approvals or the termination of a deal from any of the partners would severely dent the company s future prospects
AVEO Pharmaceuticals Inc Price
Zacks Rank
AVEO currently carries a Zacks Rank 4 Sell You can see
Looking for Stocks with Skyrocketing Upside
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana Ignited by new referendums and legislation this industry is expected to blast from an already robust 6 7 billion to 20 2 billion in 2021 Early investors stand to make a killing but you have to be ready to act and know just where to look |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.