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Monthly Archives: October 2012

Wall Street Rumors & Comments -$BP, $S, $BAC, $GM

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“BP (NYSE:BP) and the Justice Department are nearing a deal to resolve the company’s civil and criminal liabilities from the 2010 Deepwater Horizon spill, reported the Wall Street Journal. The two sides remain about $6 billion apart for a final number with BP worried that if the figure is too large, it could suggest negligence and encourage plaintiffs with lawsuits to ask for greater damages.

Sprint’s (NYSE:Sshares jumped 23 percent in pre-market trading on a report that Japan’s Softbank is considering a two-thirds stake in the company for approximately $13 billion. Softbank responded it is “checking the facts of the Nikkei report.”

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PC shipments dropped 8.3 percent in the third quarter vs. the second quarter’s -0.1 percent, according to Gartner, Inc. From tablet sales, the firm sees weak back-to-school sales and cautious retailer orders. It also said that Lenovo (LNVGY.PK) surpassed Hewlett-Packard(NYSE:HPQ) to sit as the world’s leading PC OEM. Gartner also estimated that industry shipments dropped 8.6 percent.

Bank of America (NYSE:BAC) CEO Brian Moynihan has repeated there will be large headcount cuts at the company, reported Bloomberg, and said, “It’s really based on demand.” After citing the bank’s flat revenues with the flat yield curve and flat economy, he said, “When Italk to our clients…they don’t expect to hire a lot more people.”

General Motors (NYSE:GM) will introduce 13 new Chevrolet brand models in 2013, including updated versions of its Silverado pickup, Tahoe SUV and Spark electric vehicle. After years of no interest, the company said younger buyers are now considering buying Chevrolet vehicles.”

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$JPM’s CFO Said to Be Stepping Down Soon

 

“(Reuters) – JPMorgan Chase and Co’s chief financial officer, Doug Braunstein, may step down and take another position with the bank, a person familiar with the matter told Reuters.

The move would be the latest management change at the bank, which has been roiled by $6 billion of losses from bad bets on derivatives.

The person familiar with the matter said Wednesday that any shift would be Braunstein’s decision, and would be unrelated to the trades.”

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Black Gold Jumps Again on Mid-East Tensions

“Oil advanced in New York amid concern that escalating tensions between Syria and Turkey may disrupt supplies from the Middle East. Brent’s premium to West Texas Intermediate crude widened to the most in almost a year.

Futures rose as much as 1.2 percent after Turkey seized cargo on a Syrian passenger plane and on unconfirmed reports of the discovery of weapons parts and military communications gear. The Middle East accounts for about 33 percent of world oil supplies, according to BP Plc. The American Petroleum Institute said yesterday that U.S. crude inventories rose 1.6 million barrels last week, and the Energy Department is forecast to report a 1.5 million barrel gain for the period today.

“The unrest between Syria and Turkey is a lit powder keg,” said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark, who predicts Brent crude may advance to $120 a barrel this month. “The general supply-demand situation is balanced, walking a tightrope between weaker growth projections and the risk of supply disruptions.”

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Borrowing Costs Rise in Italy as Spain Drags Their Feet on Asking for a Bailout

Italy’s borrowing costs rose at an auction of three-year debt today on concern that Spain’s reluctance to request a bailout will weigh on Italian bonds.

The Rome-based Treasury sold 3.75 billion euros ($4.8 billion) of its benchmark three-year bond to yield 2.86 percent, more than the 2.75 percent at the last auction of the same securities on Sept. 13. Investors bid for 1.67 times the amount offered, up from 1.49 times last month.”

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IMF’s Lagarde Says Greece Needs More Time to Meet Targets

“Oct. 11 (Bloomberg) –International Monetary Fund Managing Director Christine Lagarde said Greece should get two years to meet fiscal targets and suggested debt reductions are needed before a 130 billion-euro ($167 billion) bailout can proceed.

“It’s sometimes better to have a bit more time,” Lagarde said today at a press conference in Tokyo marking the start of the fund’s annual meeting. “This is what we advocated for Portugal, this is what we advocated for Spain and this is what we are advocating for Greece.’ ”

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S&P Downgrades Spain on ECB Backtracking on Sovereign Debt Resolutions

Spain’s debt rating was cut to one level above junk by Standard & Poor’s, which cited euro-region peers’ backtracking on a pledge to severe the link between the sovereign and its banks as it considers a second bailout.

The downgrade comes after Spain announced a fifth austerity package in less than a year and published details about stress tests of its banks. Creditworthiness concerns have grown since the government requested as much as 100 billion euros ($129 billion) in European Union aid in June to shore up its lenders and amid signals that the deficit target is in jeopardy.”

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South Korea and Brazil Cut Interest Rates to Spur Growth

South Korea cut interest rates hours after Brazil as economies around the world shield themselves from the risk of a deeper slowdown driven by weakness in China and austerity measures in Europe.”

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Brazil’s central bank signaled it will keep borrowing costs at a record low for an extended period as President Dilma Rousseff’s administration struggles to revive the economy amid slowing global growth.

In a split decision yesterday, the bank’s eight-member board cut the Selic rate by a quarter point to 7.25 percent, as forecast by 35 of 73 economists surveyed by Bloomberg. The bank said keeping monetary conditions stable for a “sufficiently prolonged period” was the best strategy for balancing inflation risks stemming from a recovery in domestic activity with continued “complexity” in the global economy. Three dissenting members favored leaving borrowing costs unchanged.”

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Economic Data

Import Prices: Prior -0.2%, Actual 1.1%

Initial Claims: Prior 367k, Market expects 370k, Actual 339k,

Trade Balance: Prior -$42.bn, Market Expects -$43bn, Actual -$44.2bn

Futures move higher on the data….

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$WMT Retail Workers Strike in 12 Cities

“The workers are protesting company attempts to “silence and retaliate against workers for speaking out for improvements on the job,” according to a United Food and Commercial Workers news release. Walmart workers, who are not unionized, have long complained of low pay and a lack of benefits.”

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Consumers Feel the Pain of Inflation

Further extrapolation of inflation data shows that the average run rate has risen significantly over the past 10 years. Headline numbers mean nothing tho the middle class family.

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Jim Paulsen: S&P 500 Can Reach 1,500 on Economic Rebound in US

“The Standard & Poor’s 500 Index has a strong chance to reach 1,500 soon, says Jim Paulsen, chief investment strategist at Wells Capital Management.

That would represent a 4 percent increase from Tuesday’s close of 1,441.

“I look at two big catalysts here going into next year,” he tells CNBC. “One of them is, we’ve got to get the emerging-world economic recovery going again.”

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