Seth Klarman Tells His Investors: Central Banks Are Treating Investors Like “Foolish Children”
"Surreal doesn't even begin to describe this moment," Seth Klarman noted in his second-quarter letter to the Baupost Group investors. Commenting on the market developments over the past six months, the value investor stated that events, which would typically occur over an extended time frame, had been compressed into just a few months. He noted Read More
- US: Dow Futures: 13274.00 (0.28%), S&P 500 Futures: 1430.90 (0.32%), NASDAQ Futures: 2792.00 (0.27%)
- Europe: CAC: 3491.91 (-0.40%), DAX: 7221.05 (0.10%), FTSE: 5776.09 (-0.30%).
- Asia-Pacific: Australia: 4325.80 (-0.18%), China: 2120.55 (-0.68%), Hong Kong: 19857.88 (0.15%), India: 5390.00 (0.50%), Japan: 8807.38 (-0.70%).
- Metals: Gold: 1733.70 (0.11%), Silver: 32.58 (-0.16%), Copper: 3.69 (0.08%)
- Energy: Crude Oil: 96.64 (0.10%), Natural Gas: 2.83 (0.75%)
- Commodities: Corn: 7.84 (-1.88%), Soya Bean: 17.16 (-0.84%), Wheat: 8.88 (-1.71%)
- Currency: EUR/USD: 1.2809 (0.39%), GBP/USD: 1.6035 (0.29%), USD/JPY: 77.8500 (-0.56%)
- 10 year US Treasury: 1.749% (0.016)
Financial and Economic News Update
U.S. stock-index futures gain: U.S. stock-index futures are pointing to a higher open on Tuesday as investors hoped the Federal Reserve will launch further stimulus measures later this week. On the economic front, U.S. trade deficit increased to $42 billion in July, from $41.9 billion in June. Analysts were expecting a shortfall of around $44 billion. The Dow Jones industrial average, the S&P 500 and the NASDAQ were all trading marginally in the green.
European markets trading mostly lower: European markets are down in trade today amid big declines in the region’s major luxury retailing stocks. Investors were also cautious ahead of a German court’s decision on the region’s permanent bailout fund. The German DAX (INDEXDB:DAX) is trading 0.1 percent higher at 7221.05, the FTSE 100 (INDEXFTSE:UKX) fell 0.3 percent to 5776.09 and the CAC 40 (INDEXEURO:PX1) slumped 0.4 percent to 3491.91. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) was trading 0.2 percent lower.
Asian markets end mixed: Asian markets closed mixed on Tuesday, with Japan’s NIKKEI 225 (INDEXNIKKEI:NI225) closing 0.7 percent lower at 8807.38 points. The HANG SENG INDEX (INDEXHANGSENG:HSI) rebounded from losses made earlier in the day to end up 0.2 percent at 19,857.9, while the SSE Composite Index (SHA:000001) (Shanghai Composite Index) fell0.7 percent. The S&P/ASX 200 (INDEXASX:XJO) index closed 8 points lower at 4,325.8. The benchmark Indian 30-share BSE SENSITIVE (INDEXBOM:SENSEX) index ended up 0.2 percent.
Company News Update
- McDonald’s Corporation (NYSE:MCD) reported a 3.7 percent rise in same-store sales in August. Analysts were expecting a gain of 3.9 percent.
- Apple Inc. (NASDAQ:AAPL) was up close to a percent higher in pre-market trading after a JPMorgan report said the new iPhone 5, expected to be released at an event tomorrow, could add 0.33 percent or more to the U.S. gross domestic product in the fourth quarter.
- The U.S. Treasury Department sold nearly 554 million shares of insurer American International Group, Inc. (NYSE:AIG), at $32.50 each, making the government a minority investor for the first time since the $182 billion bailout.
- Security software maker Palo Alto Networks Inc (NYSE:PANW) reported fourth quarter earnings excluding certain items of 3 cents per share, against analysts’ expectations of a breakeven performance. Revenue for the quarter jumped 88 percent at $75.6 million that easily beat the average analysts’ estimate of $71.3 million.
- Pittsburgh–based investment manager Federated Investors Inc (NYSE:FII) has acquired about $4.4 billion in assets from a subsidiary of Fifth Third Bancorp (NASDAQ:FITB).
- Toyota Motor Corporation (ADR) (NYSE:TM) (TYO:7203)’s Camry has overtaken Ford Motor Company (NYSE:F)’s F-150 pick-up trucks to become the top selling vehicle in the U.S., according to report by Phil LeBeau in CNBC.
- Asset manager Legg Mason, Inc. (NYSE:LM) said Chairman and Chief Executive Mark Fetting will step down on October 1, and has named Joseph Sullivan as interim CEO.
- Navidea Biopharmaceuticals Inc (NYSEAMEX:NAVB) said the U.S. Food and Drug Administration has rejected its radioactive tracing agent Lymphoseek that helps to locate lymph nodes that have the highest probability of being cancerous.
- Packaging materials maker Sonoco Products Company (NYSE:SON) lowered its third-quarter profit outlook, citing operating problems at several of the company’s North American uncoated recycled paperboard mills.
- The board of recreational vehicles manufacturer Thor Industries, Inc. (NYSE:THO) has raised its quarterly dividend by 20 percent to 18 cents a share.
- Drugmaker Bristol Myers Squibb Co. (NYSE:BMY) is up 1.6 percent after analysts at Goldman Sachs upgraded the stock to “Conviction Buy” from “buy.”
- Pharmacy services company AmerisourceBergen Corp. (NYSE:ABC) has been downgraded by analysts at Goldman Sachs to “neutral” from “Conviction Buy” on a valuation basis.
- Video game maker Majesco Entertainment Co. (NASDAQ:COOL) plunged close to 11 percent after slipping to a third quarter loss, compared to a profit in the same period last year.
- Deutsche Bank AG (USA) (NYSE:DB) (ETR:DBK) (FRA:DBK) unveiled a new plan to cut costs by 4.5 billion euros ($5.8 billion), and offload risky investments, as it tries to boost profitability amid the higher capital requirements in Europe.
- British luxury clothing and accessories maker Burberry Group plc (LON:BRBY) plunged 19 percent after it warned that full-year profit would be at the lower end of market expectations. Following the announcement, luxury goods stocks across Europe sold-off. Hugo Boss AG (ETR:BOSS) (FRA:BOSS) slid 6 percent, Christian Dior SA (EPA:CDI) fell 5.3 percent, while LVMH Moet Hennessy Louis Vuitton SA (EPA:MC) dropped 4.4 percent.
- Dutch consumer electronics and health-care products giant Koninklijke Philips Electronics NV (ADR) (NYSE:PHG) (AMS:PHIA) said it would axe a further 2,200 jobs by 2014 as part of a cost-cutting drive to save an additional 300 million euros ($384 million).
- Mining stocks were the biggest losers in London as Macquarie Group Ltd. cut its outlook for Chinese growth. Kazakhmys plc (LON:KAZ) dropped 2 percent and Vedanta Resources plc (LON:VED) fell 3.3 percent. Eurasian Natural Resources Corporation (LON:ENRC) slumped 1.8 percent, while Anglo American plc (LON:AAL) declined 3.6 percent. Antofagasta plc (LON:ANTO) slid 2.8 percent, as Rio Tinto plc (ADR) (NYSE:RIO) (LON:RIO) (ASX:RIO) lost 1.3 percent. BHP Billiton Limited (ADR) (NYSE:BHP) (ASX:BHP) (LON:BLT) gave up 1 percent.
- BlackRock Investment Management (UK) Ltd., a unit of New York-based money manager, BlackRock, Inc. (NYSE:BLK) was fined 9.5 million pounds ($15.2 million) by the U.K. Financial Services Authority for failing to protect some of its clients’ money over a three-and-a-half-year period.
- HeidelbergCement AG (ETR:HEI) (FRA:HEI), the world’s third-largest maker of cement, slid 2.2 percent after Bank of America Corp. said the German company will not reach its 3 billion-euro ($3.8 billion) profit target in the next three years.
- Italian coffee roaster Luigi Lavazza SpA raised its stake in Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), and currently holds a stake of 6.8 percent in the U.S. company, according to a Reuters report.
- London-listed platinum miner Lonmin Plc (LON:LMI) fell 3 percent after analysts at RBC Capital Markets downgraded the stock to “underperform.”
- Toshiba Corp (TYO:6502) slid 0.8 percent after it agreed to pay $30 million to settle charges of alleged antitrust violations in the LCD business in a U.S. antitrust case.
- Japanese electronics giant Panasonic Corporation (ADR) (NYSE:PC) (TYO:6752) dropped 1.7 percent in Tokyo after Moody’s Investors Service downgraded its credit rating by two notches to Baa1, citing weak earnings and rising debt.
- Qantas Airways Limited (ASX:QAN) slumped 2.3 percent in Sydney as it awaits approval from the Australian Competition and Consumer Commission for its 10-year alliance with Dubai’s Emirates Airline.
- Japanese automakers Toyota Motor Corporation (ADR) (NYSE:TM) (TYO:7203) and Nissan Motor Co., Ltd. (TYO:7201) closed deep in the red after Japanese car sales in China slowed amid the recent escalation in political tensions between the two countries.
- Asian life insurer AIA Group Ltd (HKG:1299) has emerged as the front-runner to buy Dutch group ING Groep N.V. (ADR) (NYSE:ING) (AMS:INGA)’s Malaysia and Thailand insurance operations, in a deal that could be worth about $2 billion, Reuters reported.
- Hong Kong-based export and logistics company Li & Fung Limited (HKG:0494) ended 1.1 percent lower after analysts at Deutsche Bank downgraded the firm to “hold” from “buy.”
- Gas utility company GAIL (India) Limited (NSE:GAIL) (BOM:532155) confirmed media reports that it is looking to buy the liquefied natural gas assets in Canada, Peru, and Trinidad that Repsol SA (MCE:REP) was putting up for sale.
- Investment bank Lazard Australia, a unit of Lazard Ltd (NYSE:LAZ), has acquired Sydney-based independent advisory firm O’Sullivan Partners for an undisclosed sum.
Economic Calendar for Tuesday, September 11, 2012:
07:30 A.M. ET: NFIB Small Business Optimism Index (August)
07:45 A.M. ET: ICSC-Goldman Store Sales (Week ending Saturday, September 08)
08:30 A.M. ET: International Trade (July)
08:30 A.M. ET: Redbook (Week ending Saturday, September 08, 2012)
11:30 A.M. ET: 4-Week Bill Auction
01:00 P.M. ET: 3-Yr Note Auction