Morning market news for December 11th 2012. Stocks in focus include, American International Group, Inc. (NYSE:AIG), Morgan Stanley (NYSE:MS), HSBC Holdings plc (LON:HSBA) (NYSE:HBC), Teavana Holdings, Inc. (NYSE:TEA) and Gilead Sciences, Inc. (NASDAQ:GILD).
Morning Market Update
Relying On Old-Fashioned Stock Picking, Lee Ainslie Reports His “Strongest Quarter” Ever
Lee Ainslie's Maverick Fund USA enjoyed its "strongest quarter in the fund's history" during the three months to the end of June. According to a copy of the firm's second-quarter letter to investors, which ValueWalk has been able to review, Maverick Fund USA gained 18% in the second quarter. Following this performance, the fund was Read More
• US: Dow Futures: 13215.00 (0.21%), S&P 500 Futures: 1424.00 (0.27%), NASDAQ Futures: 2662.00 (0.43%)
• Europe: CAC: 3640.78 (0.79%), DAX: 7574.96 (0.58%), FTSE: 5928.89 (0.12%).
• Asia-Pacific: Australia: 4576.00 (0.40%), China: 2074.70 (-0.44%), Hong Kong: 22323.94 (0.21%), India: 5898.80 (-0.17%), Japan: 9525.32 (-0.09%).
• Metals: Gold: 1713.20 (-0.07%), Silver: 33.17 (-0.62%), Copper: 3.70 (-0.30%)
• Energy: Crude Oil: 86.11 (0.64%), Natural Gas: 3.48 (0.52%)
• Commodities: Corn: 7.28 (-0.85%), Soya Bean: 14.74 (0.22%), Wheat: 8.37 (-1.34%)
• Currency: EUR/USD: 1.2993 (0.40%), GBP/USD: 1.6095 (0.12%), USD/JPY: 82.3300 (-0.04%)
• 10 year US Treasury: 1.646% (0.029)
Market and Economic News Update
U.S. stock-index futures rise: U.S. stock-index futures are pointing to a higher open on Tuesday as investors shift their focus to the Federal Reserve’s two-day policy meeting that gets under way on Tuesday. Federal Reserve will provide updated projections on economic growth, unemployment, inflation and interest rates on Wednesday, December 12, and economists are expecting the central bank to launch a new round of Treasury securities purchases. On the economic front, the U.S. trade gap rose 4.9 percent in October to $42.24 billion, the Commerce Department said today. The September trade gap was revised lower to $40.28 billion. Economists had projected the trade deficit to rise to a seasonally adjusted $42.5 billion in October.
European markets gain: European markets are up in trade today after Germany’s ZEW Economic Sentiment Index for the month came in at 6.9 points compared to -15.7 in November. This was the first time since May that the index ventured into positive territory. Investors are also looking forward to hear the results of Greece’s bond buyback offer which was extended for an extra day until noon London time on Tuesday. The German DAX (INDEXDB:DAX) was trading 0.6 percent higher at 7574.96, the FTSE 100 (INDEXFTSE:UKX) added 0.1 percent to 5928.89 and the CAC 40 (INDEXEURO:PX1) jumped 0.8 percent to 3640.78. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) was up 0.7 percent.
Asian markets close mixed: Asian markets ended mixed ahead of U.S. Federal Reserve’s policy decision this week. The NIKKEI 225 (INDEXNIKKEI:NI225) ended 0.1 percent lower at 9,525.32 points but managed to hold above the key psychological level of 9500. The HANG SENG INDEX (INDEXHANGSENG:HIS) closed up 0.2 percent at 22,323.9, while the SSE Composite Index (SHA:000001) (Shanghai Composite Index) lost 0.4 percent to close at 2,074.7. The S&P/ASX 200 (INDEXASX:XJO) index added 0.4 percent to 3,576 points, ending at its highest level in more than 16 months. The benchmark Indian 30-share BSE SENSITIVE (INDEXBOM:SENSEX) index ended down 0.15 percent.
Stocks to Watch
American International Group, Inc. (NYSE:AIG)
American International Group, Inc. (NYSE:AIG) jumped in early morning trade after the U.S. Treasury launched an underwritten public offering to sell all of its remaining 234 million shares, or 15.9 percent of the insurance giant, at $32.50 per share. Once the offering is completed, the Treasury Department would continue to hold an undisclosed number of warrants in American International Group, Inc. (NYSE:AIG). The latest offering is the Treasury’s sixth sale of American International Group, Inc. (NYSE:AIG) stock since early last year. The U.S. took over American International Group, Inc. (NYSE:AIG) in 2008 to save it from an imminent collapse and committed as much as $182 billion of aid.
Morgan Stanley (NYSE:MS)
Morgan Stanley (NYSE:MS) might seek approval from U.S. regulators to repurchase shares for the first time in more than four years, the Wall Street Journal reported late yesterday. Morgan Stanley (NYSE:MS) could make the request to the U.S. Federal Reserve when it submits plans for its annual stress test in January. According to a filing with the U.S. Securities and Exchange Commission, Morgan Stanley (NYSE:MS) had about $1.6 billion remaining under its existing share-buyback program as of September 30, 2012. Morgan Stanley (NYSE:MS)’s shares rose 1 percent in early morning trade.
HSBC Holdings plc (LON:HSBA) (NYSE:HBC)
HSBC Holdings plc (LON:HSBA) (NYSE:HBC) has agreed to pay a record $1.9 billion fine to settle U.S. money laundering charges. The settlement includes a deferred prosecution and a civil fine of more than $650 million. HSBC Holdings plc (LON:HSBA) (NYSE:HBC) had been in talks with U.S. regulators over allegations that it laundered funds of countries that were on the U.S. sanctions list including Iran and Sudan. The London-based bank expects to sign an agreement with the U.K. Financial Services Authority shortly. HSBC Holdings plc (LON:HSBA) (NYSE:HBC) acknowledged that its anti-money laundering measures were inadequate in the past and steps taken since then should help prevent a repeat occurrence.
Teavana Holdings, Inc. (NYSE:TEA)
Atlanta-based tea retailer Teavana Holdings, Inc. (NYSE:TEA) reported fiscal third-quarter loss of $1.42 million, or four cents a share, compared with a profit of $936,000, or two cents a share, a year earlier. Sales jumped 38 percent to $46 million. Teavana Holdings, Inc. (NYSE:TEA) said one-time costs related to its acquisition of Teaopia stores in June outweighed stronger sales. Same-store sales edged 0.4 percent higher, and the company said it opened 17 new outlets during the period. Starbucks Corporation (NASDAQ:SBUX) had agreed to buy Teavana Holdings, Inc. (NYSE:TEA) last month in a $620 million all-cash deal. Teavana Holdings, Inc. (NYSE:TEA) did not provide guidance for the year on account of its pending acquisition.
United Continental Holdings Inc (NYSE:UAL)
United Continental Holdings Inc (NYSE:UAL) said traffic fell 2.3 percent in November from a year earlier amid disruptions tied to Superstorm Sandy. The world’s largest airline by traffic said capacity was down 2.6 percent last month to 18.66 billion available seat miles from 19.16 billion available seat miles in the year-ago period. Passenger load factor, a measure of plane fullness, improved to 81.5 percent from 81.2 percent a year earlier. United Continental Holdings Inc (NYSE:UAL) said Sandy reduced revenue by approximately $50 million in November. The storm prompted shutdowns at major New York airports, and United Continental Holdings Inc (NYSE:UAL) has a big hub at the Newark Liberty International Airport in New Jersey. Shares of United Continental Holdings Inc (NYSE:UAL) were inactive in pre-market trading.
Dollar General Corp. (NYSE:DG)
Discount retailer Dollar General Corp. (NYSE:DG) said fiscal third-quarter earnings rose 21 percent to $208 million, or 62 cents a share, from $171 million, or 50 cents a share, in the same period last year. Excluding certain items, adjusted earnings stood at 63 cents a share. Sales increased 10 percent to $3.96 billion, while same-store sales gained 4 percent. Analysts had expected Dollar General Corp. (NYSE:DG) to earn 60 cents a share on revenue of $3.96 billion. Dollar General Corp. (NYSE:DG) raised the lower end of its per-share earnings estimate and reiterated its outlook for same-store-sales growth. Shares of Dollar General Corp. (NYSE:DG) fell 2 percent in pre-market trading.
Gilead Sciences, Inc. (NASDAQ:GILD)
Gilead Sciences, Inc. (NASDAQ:GILD)’s board approved a two-for-one stock split in the HIV drug maker that will take effect in January. Gilead Sciences, Inc. (NASDAQ:GILD) said the stock-split is set for January 7 and the stock will begin trading at the post-split price on January 28. The split is expected to increase the number of Gilead Sciences, Inc. (NASDAQ:GILD) shares to about 1.52 billion from about 759.3 million. Gilead Sciences, Inc. (NASDAQ:GILD)’s shares have surged this year after the company acquired hepatitis C drug maker Pharmasset, Inc. (NASDAQ:VRUS). Investors have also pinned high hopes on its new four-in-one HIV treatment Stribild. Gilead Sciences, Inc. (NASDAQ:GILD) was up 1.4 percent at $74.25.
SPX Corporation (NYSE:SPW)
SPX Corporation (NYSE:SPW) is in exclusive talks to acquire Gardner Denver, Inc. (NYSE:GDI), and a deal is likely to be finalized by the end of the year, according to a Reuters report. Private-equity firms, KKR & Co. L.P. (NYSE:KKR), Advent International and a consortium of TPG Capital LP and Onex Corporation (TSE:OCX) that had also put in offers for Gardner Denver, Inc. (NYSE:GDI) have been told to wait until next month as the two companies negotiate. Gardner Denver, Inc. (NYSE:GDI) said on October 25 that it would explore strategic options including a sale or merger, following pressure from activist investor ValueAct Capital Master Fund LP, which owns more than 5 percent of its shares. SPX Corporation (NYSE:SPW) and Gardner Denver, Inc. (NYSE:GDI) have identical market capitalizations of around $3.4 billion. Gardner Denver, Inc. (NYSE:GDI) shares rose 4 percent in early morning trade, while SPX Corporation (NYSE:SPW) tumbled 6 percent.
Flextronics International Ltd. (NASDAQ:FLEX)
Singapore-based contract manufacturer Flextronics International Ltd. (NASDAQ:FLEX) has agreed to take over Motorola Mobility’s manufacturing operations in Tianjin, China and Jaguariuna, Brazil. The transaction is expected to close by the first half of 2013 and financial terms were not disclosed. Motorola said the agreement covers the bulk of its manufacturing capacity and will help streamline supply chain operations between the two companies. Flextronics International Ltd. (NASDAQ:FLEX), which boasts operations in 30 countries across four continents, has been partnering Motorola for over a decade. Shares of Flextronics International Ltd. (NASDAQ:FLEX) were inactive in pre-market trading.
Economic Calendar for Tuesday, December 11, 2012:
07:30 A.M. ET: NFIB Business Optimism Index (November)
07:45 A.M. ET: ICSC-Goldman Store Sales (Week ending Saturday, December 08)
08:30 A.M. ET: Trade Balance (October)
08:55 A.M. ET: Redbook Index (MoM) (December 2)
08:55 A.M. ET: Redbook index (YoY) (December 2)
10:00 A.M. ET: IBD/TIPP Economic Optimism (MoM) (December)
10:00 A.M. ET: Wholesale Inventories (October)
11:30 A.M. ET: 4-Week Bill Auction
11:30 A.M. ET: 52-Week Bill Auction
01:00 P.M. ET: 3-Year Note Auction