21/01/2014
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Top Stories
Fed could cut bond-buying even further - WSJ. The Fed could reduce its monthly bond purchases to $65B from $75B at a FOMC meeting next week, the WSJ's well-connected Jon Hilsenrath reports. The move would come after the Fed cut $10B from the program in December and despite a weak jobs report last month, with policy makers still bullish about the U.S.'s economic prospects. The report has helped the yen weaken against the dollar, which has in turn contributed to a rise in Japanese stocks.
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Unilever jumps following earnings. Unilever's (UL) shares were +4.5% premarket after 2013 core EPS of €1.58 topped forecasts of €1.53, while a rise of 4.3% in underlying sales beat consensus of +4.2%. Net profit rose 9% to €5.3B, although sales dropped 3% to €49.78B, and the company warned that it expects "ongoing volatility in the external environment." In Q4, emerging-market sales climbed 8.4% vs +5.9% in Q3, which makes the following statement a bit puzzling: "Growth continued to slow in emerging markets as a result of the impact of economic uncertainty."
PBOC moves to avert credit crunch. Having surged 153 bps yesterday, China's seven-day repurchase rate fell 88 bps to 5.44% today after the People's Bank of China injected over 255B yuan ($42B) into the financial system and expanded a loan facility in order to meet demand for cash ahead of the Lunar New Year. The PBOC's action helped Asian and European shares rise.
Top Stock News
SAP expects operating profit to remain flat. SAP (SAP) expects 2014 adjusted operating profit of €5.8-6B vs €5.9B in 2013 and consensus of €6.06B. The company also forecasts that revenue from software and software-related services will slow to +6-8% after four years of double-digit growth. In addition, SAP has put back its profitability goals by two years as part of its transition to cloud-based services from its traditional licensing model. The corporate-software giant expects cloud revenue of €3-3.5B by 2017.
Intel to sell online TV ops to Verizon. Intel (INTC) has agreed to sell its online TV unit - which never got off the ground - to Verizon (VZ). The terms were undisclosed, although past media reports have mentioned a sum of $500M. Verizon will obtain the unit's intellectual property rights and it will offer jobs to around 350 staff.
AB InBev to buy back Oriental Brewery in deal worth $5.8B. Anheuser-Busch InBev NV (BUD) has agreed to repurchase South Korea's Oriental Brewery from KKR (KKR) and Affinity Equity Partners for $5.8B including debt. AB InBev sold Oriental to KKR in 2009 for $1.8B in an effort to reduce debt following InBev NV's $52B acquisition of Anheuser-Busch. As part of the deal, AB InBev had the right to buy back the operations within five years.
Lenovo reportedly in talks to buy IBM server ops - Bloomberg. Lenovo (OTCPK:LNVGY, OTCPK:LNVGF) is in talks to acquire IBM's (IBM) low-end x86 server business and a deal could be signed within weeks, Bloomberg reports. The companies tried to negotiate a deal for the division last year, but no agreement was reached on a price. Lenovo said yesterday that it's in preliminary discussions on some kind of possible acquisition, but it did not identify the target or seller.
IBM, Texas Instruments revenue seen stagnating. IBM (IBM) and Texas Instruments (TXN) are among the companies due to report Q4 earnings after the bell today. Analysts expect that IBM's EPS rose to $5.99 from $5.39 a year earlier but that revenue fell 3.6% to $28.25B. TI's EPS is seen increasing to $0.46 from $0.36, with revenue edging up 0.3% to $2.99B.
Peugeot looking to raise €3B. PSA Peugeot Citroen (OTC:PEUGF) is in talks with Chinese partner Dongfeng Motor and the French state over raising €3B ($4.1B) so it can invest in new models and growth markets, the struggling carmaker said yesterday. Dongfeng and France would provide at least €750M each in exchange for 14% apiece, Bloomberg reports. Peugeot's controlling family would invest €100M and the company would hold a rights issue of €1.4B.
China IPO demand continues to froth. Shares of eight small companies jumped on their trading debuts today, prompting the Shenzhen Stock Exchange to warn about "blindly" speculating in IPOs. The stock moves highlight the demand for new listings following the end of a year-long moratorium on IPOs, although that has dragged on the wider market since the start of the New Year.
Top Economic & Other News
Chinese economy slows in Q4. Chinese GDP slowed to +7.7% on year in Q4 from +7.8% in Q3 but topped consensus of +7.6%. For 2013, GDP was +7.7%, as in 2012. Growth has been "fairly resilient," says SocGen economist Yao Wei. "It is more of the outlook that we worry about, especially with the financial risk in the system."
German investor confidence remains strong. The German ZEW survey of investor confidence has slipped to 61.7 in January from a seven-year high of 62 in December and missed consensus of 64. However, the current situation print has surged to 41.2 from 32.4, while sentiment for the eurozone has also climbed. "For months...financial-market experts have expected an economic upswing," says ZEW President Clemens Fuest. "In this month's survey, the clearly improved assessment of the current economic situation seems to confirm these expectations."
Top Ideas Movers and Great Calls
1) On December 30, Buddy Lyons, CFA said that a sharp plunge in shares of Tesaro (TSRO) was an overreaction to disappointing Phase III trial results and that it was a buying opportunity for patient investors. The stock has indeed rebounded and is +17.2% since Buddy Lyons' call. Read article »
2) Money Trees predicted triple-digit upside for micro-cap security solutions provider Costar Technologies (OTCPK:CSTI) in September, as its valuation was far too cheap by nearly any metric. Four months later, shares are +109%. Read article »
Top Ideas To Watch
1) Buysider Ted Barac says AMC Networks' (AMCX) entrenched position should keep the hits coming, while a reasonable valuation and potential takeover interest should keep investors happy. Read article »
2) Diversified REIT Winthrop Realty (FUR) should generate above-expected growth, while its risks are more than priced in, writes real-estate expert Dane Bowler. Read article »
Top Idea articles are the best long and short ideas on Seeking Alpha. SA PRO subscribers receive early access to these Top Idea articles, which often move markets. For more information about SA PRO and becoming a subscriber, click here.
Today's Markets:
In Asia, Japan +1% to 15796. Hong Kong +0.5% to 23033. China +0.9% to 2008. India +0.2% to 21251.
In Europe, at midday, London +0.1%. Paris +0.4%. Frankfurt +0.3%.
Futures at 6:20: Dow +0.3%. S&P +0.2%. Nasdaq +0.4%. Crude +0.8% to $94.67. Gold -0.3% to $1247.90.
Ten-year Treasury Yield +4 bps to 2.86%.
Today's economic calendar:
No major events scheduled.
Notable earnings before today's open: AMTD, BHI, COL, DAL, EDU, FRX, HAL, IRWD, JNJ, PETS, RF, SAP, SNV, TRV, VZ
Notable earnings after today's close: ADTN, AMD, CA, CREE, FNB, FULT, IBKR, IBM, TXN, XLNX
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