Morning Market Update
Michael Mauboussin: Challenges and Opportunities in Active Management And Using BAIT #MICUS
Michael Mauboussin's notes from his presentation at the 2020 Morningstar Investment Conference, held on September 16th and 17th. Q2 2020 hedge fund letters, conferences and more Michael Mauboussin: Challenges and Opportunities in Active Management Michael Mauboussin is Head of Consilient Research at Counterpoint Global in New York. Previously, he was Director of Research BlueMountain Capital, Read More
• US: Dow: 13088.00 (-0.86%), S&P 500: 1412.80 (-0.87%), NASDAQ: 2650.50 (-0.94%)
• Europe: CAC: 3454.18 (-0.71%), DAX: 7327.39 (-0.69%), FTSE: 5868.83 (-0.27%).
• Asia-Pacific: Australia: 4516.50 (0.71%), China: 2105.73 (-0.01%), Hong Kong: 22099.85 (0.70%), India: 5760.10 (0.62%), Japan: 8972.89 (-0.03%).
• Metals: Gold: 1722.40 (0.43%), Silver: 32.00 (-0.11%), Copper: 3.47 (-0.94%)
• Energy: Crude Oil: 87.48 (-1.39%), Natural Gas: 3.59 (-0.80%)
• Commodities: Corn: 7.41 (0.65%), Soya Bean: 15.08 (0.77%), Wheat: 8.82 (1.04%)
• Currency: EUR/USD: 1.2758 (-0.44%), GBP/USD: 1.5964 (-0.21%), USD/JPY: 80.0700 (-0.35%)
• 10 year US Treasury: 1.639% (-0.114)
Financial and Economic News Update
U.S. stock-index futures decline: U.S. stock-index futures are pointing to a lower open on Wednesday as investors turned their focus to how President Obama plans to avoid the looming “fiscal cliff” after he won re-election Tuesday night.
European markets trading lower: European markets are down in trade today, with the German DAX (INDEXDB:DAX) losing 0.7 percent to 7327.39, the FTSE 100 (INDEXFTSE:UKX) edging 0.3 percent lower to 5868.83 and the CAC 40 (INDEXEURO:PX1) sliding 0.7 percent to 3454.18.
Asian markets end mostly higher: Asian markets closed higher on Wednesday with the HANG SENG INDEX (INDEXHANGSENG:HIS) up 0.7 percent at 22099.85, while the SSE Composite Index (SHA:000001) (Shanghai Composite Index) closed largely unchanged at 2105.73. Japan’s NIKKEI 225 (INDEXNIKKEI:NI225) was also flat at 8972.89. The S&P/ASX 200 (INDEXASX:XJO) index gained 0.7 percent to 4516.50. The benchmark Indian 30-share BSE SENSITIVE (INDEXBOM:SENSEX) index rose 0.4 percent.
Company News Update
• Time Warner Inc. (NYSE:TWX) said third-quarter profit came in at $838 million, or 86 cents a share, up from $822 million, or 78 cents a share, in the year-ago period. Adjusted profit for the period stood at 86 cents a share. Revenue fell to $6.84 billion from $7.07 billion a year earlier. Analysts had expected the media company to earn 82 cents a share on sales of $6.89 billion.
• Kraft Foods Group Inc (NASDAQ:KRFT) reported third quarter profit of $470 million, or 79 cents a share, up from $417 million, or 70 cents, in the same period last year. Revenue rose 3 percent to $4.61 billion. Analysts had projected earnings of 69 cents a share on revenue of $4.56 billion.
• WellPoint, Inc. (NYSE:WLP) reported third quarter earnings excluding items of $2.09 a share, on revenue of $15.35 billion. Analysts had projected earnings of $1.84 a share on revenue of $15.31 billion.
• Macy’s, Inc. (NYSE:M) posted third-quarter profit of $145 million, or 36 cents a share, up from $139 million, or 32 cents a share, in the year-ago period. Sales gained 3.8% percent to $6.08 billion. Analysts were expecting Macy’s to earn 29 cents a share on sales of $6.08 billion.
• Molson Coors Brewing Company (NYSE:TAP) reported third quarter adjusted profit of $1.37 a share, up from $1.14 a share, in the year-ago period. Sales increased 25 percent to $1.2 billion. Analysts were expecting the beer maker to earn $1.34 a share on sales of $1.25 billion.
• Pfizer Inc. (NYSE:PFE) said the U.S. Food and Drug Administration has approved its rheumatoid arthritis pill Xeljanz, two weeks ahead of the date the agency was expected to complete its review.
• PacWest Bancorp (NASDAQ:PACW) has agreed to acquire First California Financial Group, Inc. (NASDAQ:FCAL) for $8 a share, or $231 million.
• Private equity firm Apollo Global Management LLC (NYSE:APO) is in exclusive talks to buy the education unit of The McGraw-Hill Companies, Inc. (NYSE:MHP), according to a Reuters report.
• Biopharmaceutical company Arena Pharmaceutical, Inc. (NASDAQ:ARNA) said it lost 7 cents per share on revenue of $1.5 million in the third quarter. Analysts were looking for a loss of 9 cents per share on revenue of $3.51 million.
• Cloud-computing company Rackspace Hosting, Inc. (NYSE:RAX) reported a 36 percent jump in third-quarter profit to $27.2 million, or 19 cents a share, from $20 million, or 14 cents a share, a year earlier. Revenue increased 27 percent to $336 million.
• MetLife Inc (NYSE:MET) is close to buying the 1.4 million-square-foot Constitution Center in Washington D.C. from David Nassif Associates for $750 million, according to a report in The Wall Street Journal.
• ImmunoGen, Inc. (NASDAQ:IMGN) said the U.S. Food and Drug administration had granted priority review status to its breast cancer drug, trastuzumab emtansine.
• Medical device maker Becton Dickinson and Co. (NYSE:BDX) reported third quarter earnings excluding one-time items of $1.42 a share, 2 cents above the average analysts’ estimate. Revenue fell 1.1 percent to $1.97 billion, in line with expectations.
• BNP Paribas SA (EPA:BNP) gained 4 percent after reporting third-quarter profit that beat analysts’ expectations. Net income more than doubled to 1.32 billion euros ($1.7 billion) from 541 million euros a year earlier, topping the average analysts’ estimate of 1.06 billion euros.
• Activist investor Nelson Peltz’s Trian Fund Management LP has acquired a 1 percent stake in French food major Groupe Danone SA (EPA:BN), worth around 300 million euros ($386 million).
• French insurer AXA (EPA:CS) said it expects per-share underlying earnings growth to remain in a 5 to 10 percent range between 2010 and 2015, compared to an earlier forecast of 10 percent growth.
• Luxury goods maker Burberry Group plc (LON:BRBY) said first-half net profit fell 27 percent amid a slowdown in its key Asian markets, but revenue and margins were better than expected.
• London-listed Randgold Resources Limited (LON:RRS) fell the most in five months after forecasting that its full-year output will be at the bottom of its target range of 825,000 ounces to 865,000 ounces.
• Dutch financial-services group ING Groep N.V. (ADR) (NYSE:ING) (AMS:INGA) reported a 64 percent decline in third-quarter net profit to 609 million euros, from 1.69 billion euros in the year-ago period. The company also said it will scrap 1,350 jobs at its European insurance business, and a further 1,000 jobs at its investment banking division.
• Danish wind turbine company Vestas fell percent after reporting disappointing third quarter earnings and said it will step up its cost-cutting efforts, including job cuts.
• French power-engineering firm Alstom SA (EPA:ALO) gained 5 percent after reporting first-half earnings that topped analysts’ estimates, and reaffirming its sales target for the full-fiscal year
• ArcelorMittal (ADR) (NYSE:MT) (AMS:MT) was lifted to “buy” from “hold” by analysts at Societe Generale. Bank of America also raised the steelmaker to “buy” from “neutral.”
• Commonwealth Bank of Australia (ASX:CBA), the country’s largest lender, said its first-quarter cash profit rose 6 percent, as an improvement in trading income helped offset weak credit demand.
• Morgan Stanley (NYSE:MS) is looking at a sale of its India private wealth management unit as part of a plan to withdraw from subscale wealth management operations globally, Reuters reported.
• Evergrande Real Estate Group Limited (HKG:3333), one of China’s largest property developers, jumped 9 percent in Hong Kong trading after reporting strong October contract sales numbers.
• Indian telecom operator Bharti Airtel Limited (NSE:BHARTIARTL) (BOM:532454) reported lower than expected second quarter net profit as increasing competition hit profit margins. Revenue and operating profit were slightly above analyst estimates.
• Macquarie Group Limited (ASX:MQG) jumped 1.7 percent in Sydney after entering into a home loan distribution deal with Mark Bouris’ financial services company, Yellow Brick Road Holdings Ltd (ASX:YBR).
• Hong Kong Exchanges and Clearing Limited (HKG:0388), the world’s second-biggest exchange operator by market value, gained 1.9 percent after reporting third-quarter profit that beat analysts’ estimates.
• Indian lubricants lubricant and explosives maker Gulf Oil Corporation Limited (NSE:GULFOILCOR) (BOM:506480) agreed to acquire U.S.-based specialty chemicals company Houghton International from a private equity fund for $1.05 billion.
• Harvey Norman Holdings Limited (ASX:HVN), Australia’s largest electrical-goods retailer, fell 2.2 percent after it said same-store sales fell 7.8 percent in the three months ended September 30.
Economic Calendar for Wednesday, November 07, 2012:
07:00 A.M. ET: MBA Purchase Applications (Week ending Friday, November 02)
08:55 A.M. ET: EIA Petroleum Status Report (Week ending Friday, November 02)
01:00 P.M. ET: 10-Year Note Auction
03:00 P.M. ET: Consumer Credit Change (September)