MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Friday, May 25
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8:25 AM Tsakos Energy Navigation Ltd (TNP): Q1 EPS of -$0.19 beats by $0.05. Revenue of $66.2M (-7.6% Y/Y) misses by $3M. Shares +3.1% premarket. (PR) [Earnings, On the Move] Comment!
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8:19 AM Christopher Matthews is the latest to sound the death knell on Best Buy (BBY) and RadioShack (RSH) with a take that delves right into the Death-by-Amazon thesis on the big-box retailers. Though he notes the well-documented competitive pressures the Internet brings down on the companies, it's also the seismic shift in consumer buying trends as integrated devices reduce electronics buying needs that sits as a tough overhang on sales to overcome. [Consumer] Comment!
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8:17 AM MIT's Billion Prices Project, which spent much of 2010 and 2011 showing inflation at a higher rate than official numbers - is now showing inflation falling faster than the CPI data. It's annualized pace has fallen below 2% while the government pegs it closer to 3%. [U.S. Economy] Comment!
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8:15 AM Rosetta Genomics (ROSG) -10.4% premarket to $14.59 after saying it will sell 570,755 shares to investors at $11.50/share, a 29% discount to its Thursday closing price. The molecular diagnostics firm's stock has skyrocketed tenfold since May 16 and more than doubled in just the past two days. [Healthcare, On the Move] Comment!
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8:05 AM "Monti couldn't reform (his) own country, now he will deliver substantial changes in (the) EU treaty that requires loss of sovereignty for 17 nations," asks Uldis Zelminis, responding to the Italian PM's confidence he can persuade the EU to go for common eurobonds. [Global & FX] Comment!
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8:00 AM Wal-Mart (WMT) says it's seeing good results with a pilot program of small-sized stores called Walmart Express. Execs say the stores are showing profits and the company could roll out hundreds more in the near future. Designed to catch spur-of-the-moment shoppers and small enough to tuck into tight spaces, Walmart Express stores could pose a threat to Walgreen (WAG), CVS Caremark (CVS), and Rite Aid (RAD) in the future. [Consumer] Comment!
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8:00 AM On the hour: S&P +0.02%. 10-yr +0.13%. Euro +0.27% vs. dollar. Crude +0.34% to $90.97. Gold +0.27% to $1561.75. Comment!
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7:56 AM Mario Monti's insistence he can bring Germany around to acting in the EU's "common good" may rest on support from Merkel's domestic opposition parties, which are far more disposed to liability sharing. They believe they have the blueprint for such with a so-called European redemption fund floated back in November. [Global & FX] 2 Comments
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7:51 AM Are regional carriers on the way out? The Cranky Flier blog dissects Delta Air Lines' (DAL) deal to buy 88 717s from Southwest Airlines to draw the conclusion that the carrier will "slash and burn" regional 50-seater flights that it runs under the Chautauqua, Comair, ExpressJet, Pinnacle, and Skywest banners. Not only are the routes to small cities money-losers, but a new union contract with pilots limits the number of small aircraft they will fly. [Consumer] Comment!
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7:37 AM The real nightmare scenario for the EU power elite is what if Greece exits EMU and thrives, says BNY's Simon Derrick. If Greece leaves, devalues, collapses, and then quickly rebounds (a la Iceland, though it was never part of the eurozone), the other struggling states (and their electorates) are sure to take notice. [Global & FX] 10 Comments
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7:25 AM The three board members who oversaw risk at JPMorgan (JPM) were notable for their lack of experience at managing risk at financial institutions. The Bank of Dimon is the only one of the TBTF crowd that doesn't have someone a bit closer to the industry on its risk committee. [Financials] 3 Comments
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7:20 AM KeyBanc downgrades Lululemon (LULU) to Hold from Buy. Concerns from analysts focus on valuation seen as too pricey in light of a more cautious view on high-end U.S. consumers - bolstered by earnings reports from Ralph Lauren and Tiffany. Shares +55.7% YTD. [Consumer] 1 Comment
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7:14 AM More on Comcast's (CMCSA) bid for MSNBC.com (previous): An exec with NBC News confirms that discussions and due diligence are ongoing in the deal for Comcast to buy out Microsoft's 50% stake in the website. A key point for negotiations centers on MSNBC.com securing strategic placement on the MSN.com website. [Consumer] Comment!
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7:14 AM Vietnam cuts its benchmark interest rate 100 bps to 12% on the heels of a report showing inflation has slowed to 8.34%. The central bank had been on cycle of rate hikes as inflation printed more than 20% last summer. Shares rose 1.6% last night. VNM +24% YTD. [Global & FX] Comment!
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7:05 AM European shares can't hang on to a sizable early rally and turn lower midday. Stoxx 50 -0.4% after being up more than 1%. Leading to the downside is Spain, -0.9%, as Bankia again heads to the well. Germany is the best performer, flat. The euro +0.4% to $1.2580. Comment!
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7:01 AM Heinz (HNZ) sees a pair of analyst downgrades after reporting Q1 results and scaling back its outlook for growth rates, with Jefferies downgrading to Hold and JPMorgan taking its rating down to Neutral. [Consumer] 1 Comment
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7:00 AM On the hour: S&P +0.01%. 10-yr +0.13%. Euro +0.33% vs. dollar. Crude +0.36% to $90.99. Gold +0.29% to $1562.05. Comment!
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6:56 AM The CME cuts margin requirements for trading gold contracts by 10%, the 2nd reduction this year as volatility in the metal's price declines. The margin required for one contract will drop to $9,113 to $10,125, effective May 29. GLD +0.2% premarket. [Commodities] 1 Comment
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6:55 AM Toyota (TM) wants to sell more than 1M subcompact cars in emerging markets by 2015 as it makes a push to boost profits by utilizing local production. The company plans to come out with 8 new low-priced subcompact models to sell in more than 100 countries in order to help it achieve sales goals. [Consumer] Comment!
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6:54 AM Lehman Brothers (LEHMQ.PK) confirms a report that it has agreed to buy the 26.5% stake it doesn't own in Archstone from Bank of America (BAC) and Barclays (BCS) for $1.58B. As expected, Sam Zell's Equity Residential (EQR), which was also battling for the apartment giant, will receive a $150M break-up fee from Lehman and the two banks. [M&A, Top Stories] Comment!
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6:47 AM Royal Caribbean (RCL) plans to increase its cruises out of China to last all year long and bring another ship to the region amid rising demand. Analysts forecast Chinese tourism revenue will jump 14% annually for the next nine years. [Consumer] Comment!
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6:34 AM U.S. stock futures point up on improved signals from Europe. S&P +0.3%, Dow +0.2%. [U.S. Economy] Comment!
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6:00 AM Overseas: Japan +0.2%. Hong Kong +0.3%. China -0.7%. India +0.1%. London -0.1%. Paris +0.3%. Frankfurt +0.8%. Comment!
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5:37 AM Total (TOT) and Inpex Japan's (IPXHF.PK) are seeking $20B in loans for Ichthys, their Australian LNG project, Reuters reports. It would be the largest set of project finance loans in the world, although it's made more attractive by Inpex already having secured sales contracts with Japanese utilities who need a replacement of nuclear power. [Energy] Comment!
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5:27 AM While some top execs take huge payments despite failing, Apple (AAPL) CEO Tim Cook is giving up $75M in dividend income by excluding himself from a program that enables staff to accumulate dividends on their restricted stock units that are still vesting. Cook has 1.125M such units that are due to vest over the next 10 years. (8-K) [Financials, M&A] Comment!
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5:13 AM Citigroup (C) sells a 10.1% stake in Turkey's Akbank (AKBTY.PK) for $1.15B as part of the U.S. bank's program to sell assets in order to meet Tier 1 capital requirements. Citigroup will hold a remaining 9.9% stake for 3 years. The bank will take a post-tax $243M loss on the sale, having bought the 20% holding in 2007 for $3.1B. (PR) [Financials, M&A] Comment!
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5:02 AM After 2 days of talks, the most that Iran and the P5+1 could agree to yesterday was to meet again in Moscow in June. Teheran wants the right to enrich uranium and the sanctions scrapped, particularly the looming oil embargo, before it stops its march to nuclear weapons. The West says Iran must first shut down its enrichment program. [Energy] 1 Comment
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4:44 AM Dell (DELL) is in talks to buy Quest Software (QSFT), Bloomberg reports, as the PC maker continues its strategy of shifting its focus to higher-end business customers. In March, Quest agreed to sell itself to P-E firm Insight for $2B, or $23-a-share, although it then received other offers during a "go-shop" period. [Tech, M&A, Top Stories] Comment!
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4:31 AM EU shares are higher for a second day as bargain hunters step into a market that was beaten down by fears over Greece earlier this week, and on hopes of another injection of ECB liquidity. Euro STOXX 50 +1%, London +0.6%, Paris +0.9%, Frankfurt +1.2%, Milan +1.25%, Madrid +1%. [Top Stories, On the Move] Comment!
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4:04 AM The slow-motion train wreck continues in Greece, with police urging citizens to keep their money in the banks rather than sowing the seeds for a wave of home thefts. Greek banks have seen almost 25% of their deposits drained out over the last two years, and are likely to be shored up today or Monday with €18B of bailout funds that are weeks overdue. [Global & FX, Financials] 1 Comment
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3:51 AM The euro hit a 22-month low against the dollar yesterday, and has lost 5% in the last 3 weeks after barely moving against the dollar for most of the year. There's no end of reasons, though a notable downward driver is confirmation from some of Europe's biggest fund managers that they've been dumping euro assets on Grexit concerns. [Global & FX] 1 Comment
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3:41 AM Bankia shares are suspended in Madrid amid reports the Spanish lender plans to ask for a government bailout of over €15B following a board meeting later today. [Global & FX, Financials] Comment!
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3:22 AM Syngenta (SYT) and several community water systems agree to settle U.S. litigation related to the herbicide atrazine in order to end the business uncertainty and expense of a long legal battle. The settlement will cost Syngenta $105M. The charge is partly covered by provisions and the impact on earnings will be ~$0.5/share. Comment!
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2:36 AM Fannie Mae (FNMA.OB) has narrowed its search for a chief executive down to two candidates, sources say, with Fannie's general counsel Timothy Mayopoulos in the lead. To get Mayopoulos, Fannie Mae may have to renege on its promise to cap exec pay at ~$500K. The other candidate is Radian (RDN) CEO S.A. Ibrahim. Comment!
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1:40 AM With the focus so strongly on Europe, it has been easy to miss the data pointing to economic trouble in China, India, South Africa, Brazil and elsewhere. The specter of renewed crisis looms large if activity is slowing in sync around the globe and not just in isolated regions. [Global & FX, U.S. Economy] 2 Comments
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12:49 AM Yuanta Financial says it has pulled out of talks to buy Taiwanese Ta Chong Bank, dealing a blow to Carlyle's (CG) plans to exit the underperforming investment in a sale that could have been worth ~$1.25B. (previously) [Financials, M&A] Comment!
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12:43 AM Express Scripts Holding (ESRX) is less than two months into digesting its massive Medco purchase but is already seeing some early benefits. From the large (lower-priced deals from manufacturers) to the small (adopting Medco's postage-rate strategy), chief medical officer Steven Miller says "there's much more of their stuff coming over than in a typical integration." [Healthcare] Comment!
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12:00 AM Friday's economic calendar:
5:30 Fed's Plosser: Monetary Policy
9:55 Reuters/UofM Consumer Sentiment Comment!
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