Warren Buffett made play for NYSE. Berkshire’s bid for the stock exchange – while rejected in favor of ICE‘s offer – is seen as Buffett showing confidence trading activity will rebound from a 4-year low. NYSE Euronoext’s (NYX) share of U.S. equity trading has slumped to about 20% from 82% a decade ago. "It (NYSE Euronext) is a company that just benefits from transactions, and we all know the challenges of stock volume moving away from the exchanges" said E. William Stone of PNC Wealth Management.
Fed asset purchases seen topping out at $1.14T. Ben Bernanke’s latest QE program is expected to end in Q1 of 2014, according to the median estimate of a Bloomberg survey. By then, say the respondents, asset purchases – a mix of Treasurys and MBS – will have reached $1.14T. The FOMC begins a 2-day meeting today, with economists expecting little more than a renewed commitment to current policy.
Chinese Stocks enter bull market. The Shanghai Composite rose 0.5% overnight, bringing its gains since December 3 to 20%, a threshold signaling bull market to some. Helping stocks has been not just the idea that the slide in economic growth has bottomed, but Beijing’s efforts to funnel investment dollars – both domestic and overseas – into common stocks. The latest is a Taiwan media report suggesting individual Taiwanese will be allowed to invest in Chinese shares.
Media firms probed on data release. Bloomberg, Dow Jones, and Reuters were among firms investigated for facilitating insider trading by prematurely releasing key government data, reports the WSJ. Investigators have decided not to file any criminal charges, say sources, after being unable to link suspicious trading patterns to the specific actions by media companies. Also at issue is the challenge of proving in court that a time advantage measured in tiny fractions of a second could be profitable. Still, investigators continue to have concerns about the handling of the government’s economic data.
Top Stock News
Yahoo shares boosted by climbing revenue. Yahoo (YHOO) rose 2.5% in premarket trading after the company beat expectations by posting a 2% revenue increase in Q4. The results aren’t as robust as Google – which reported a 22% jump in revenue – but they do signal a business at least holding steady instead of deteriorating. "While the road to growth is certain, it will not be immediate," says CEO Marissa Mayer.
Nelson Peltz backs away from State Street. The activist investor’s Trian Fund Management has exited part of the stake it bought in October 2011, reports the WSJ. It’s a profitable trade as the shares were in the mid-30s when he got in and the mid-50s now, but Peltz had mentioned $99/share as a target price back in 2011 if State Street (STT) management executed on his "value creation" ideas. "It is dangerous for any investor to anticipate future price moves based on hedge-fund managers talking their book," says Scott Clemons of Brown Brothers.
Caterpillar hopeful on second half of 2013. Management sung a familiar tune in the company’s earnings report, expecting the immediate future to show weakness, but optimistic about faster growth in H2. Shares rose 2% yesterday as earnings beat lowered expectations and the company executed on its promise to slash dealer inventories. CAT management said it is aggressively looking into recovering losses from the $580M accounting fiasco at recently-acquired Siwei.
Top Economic & Other News
India cuts rates. Mostly expected, the Reserve Bank of India lowered its benchmark lending rate by 0.25% to 7.75% while also cutting its forecasts for growth and inflation. "It is critical now to arrest the loss of growth momentum without endangering external stability," says the bank’s statement. On a big run higher of late, the Sensex eased 0.6%.
Iceland wins landmark case over deposits. In a surprising decision, an EU court ruled Iceland acted within its rights by refusing to make whole foreign depositors after the failure of one of its banks during the financial crisis. The U.K. and Dutch governments had sued after 350K of their citizens had lost $5.4B in deposits. Iceland went its own way during the crisis, letting creditors of failed banks take their losses, and allowing a short, sharp contraction in the economy. Since then, the recovery has been far faster than that of the EU.
Toyota back on top. Selling 9.75M vehicles in 2012, Toyota (TM) reclaimed the title of world’s largest automaker from General Motors, which sold 9.29M. It’s a bounce back from the 2011 earthquake and a number of recalls which "dinged" Toyota’s reputation. Key were U.S. sales which climbed nearly 500K to 2.1M cars, the highest level since 2008. Going forward, sales in China could be a challenge thanks to the ongoing political tensions due to the island dispute.
In Asia, Japan +0.4% to 10867. Hong Kong -0.1% to 23655. China +0.5% to 2359. India -0.6% to 19991.
In Europe, at midday, London -0.1%. Paris -0.3%. Frankfurt -0.3%.
Futures at 7:00: Dow -0.2%. S&P -0.3%. Nasdaq -0.3%. Crude -0.1% to $96.31. Gold +0.5% to $1663.85.
Today’s economic calendar:
FOMC meeting begins
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
1:00 PM Results of $35B, 5-Year Note Auction
Notable earnings before today’s open: AKS, ARLP, ASH, BSX, BTU, CIT, CP, DHI, EDU, EMC, F, GLW, GNTX, HOG, HRS, HW, IP, ITW, JBLU, KLIC, LLY, LXK, NEE, NUE, PFE, PHG, PII, PNR, TROW, TUP, TYC, VLO, WRB, X
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