“It’s been a relatively decent year for financial stocks: they’ve had their best performance since 2003. It’s truly been a boom year, though, in investigations, lawsuits, fines, and settlements at the world’s biggest and most important banks. There are 28 banks on the FSB’s list of systemically important financial institutions, and as Felix writes, “pretty much the whole financial sector is still trading at less than book value”…”
Comments »Monthly Archives: December 2012
$DFS Falls After Posting Earnings Miss
“Discover Financial Services (NYSE: DFS) reported fourth-quarter fiscal 2012 results before markets opened this morning. The financial services company posted diluted earnings per share (EPS) of $1.07 on revenues of $2 billion, net of interest expense. In the same period a year ago, Discover reported EPS of $0.95 on revenue of $1.96 billion. Today’s results also compare to the Thomson Reuters consensus estimates for EPS of $1.13 and $1.97 billion in revenue….”
Comments »Freddie Mac and Fannie Mae May Have Taken a $3b Hit in Libor Scandal
“U.S. mortgage finance giants Fannie Mae and Freddie Mac may have suffered more than $3 billion in losses due to manipulation of the benchmark interest rate known as Libor, according to an internal memo by a federal watchdog.
The estimate was provided in a memo that was sent to Freddie and Fannie’s regulator, the Federal Housing Finance Agency, by its inspector general. Reuters obtained a copy of the memo. The watchdog urged the regulator to consider whether the losses warranted a lawsuit against the banks that set Libor.
“We conducted a preliminary analysis of potential Libor-related losses at Fannie and Freddie and shared that with FHFA, recommending that they conduct a thorough review of the issue,” a spokeswoman for the inspector general’s office said when asked about the memo. “FHFA agreed to study the matter further.”
A FHFA spokeswoman said the regulator “has not substantiated any particular Libor-related losses for Fannie Mae and Freddie Mac,” and the regulator “has not made any determination regarding legal action.”
“We continue to evaluate issues associated with Libor and monitor Libor-related developments, recognizing that other Federal agencies are also involved in related matters,” she added…”
Comments »Ericsson to Take a $1.2 Billion Write Down, No Purchase of STM Micro Stake in ST Ericsson
“Earlier this week European Commissioner Neelie Kroes spoke in platitudes about how the EU would be putting more effort into kick-starting the region’s hardware industry — to create the ‘Airbus of chips.’ Her words seem particularly ironic (and possibly more empty) today, as the world’s largest telecoms company, Ericsson,admitted it would have to take a writedown of $1.2 billion (8 billion Swedish crowns) related to the decline of its European chip JV ST-Ericsson, as it tries to figure out what to do next with the loss-making business.
In a statement, Ericsson also said that it would not acquire the 50% of ST-Ericsson that it does not already own. “To acquire the full majority of ST-Ericsson is…not an option,” it said. That will, however, mean some $458 million more to keep propping up the company anyway in the next year. “Ericsson’s current best estimate is that the implementation of the strategic options at hand will require approximately SEK 3 b. of Ericsson funding, of which the majority in 2013,” it said.
Ericsson and STMicroelectronics first entered into their JV in 2009 with the aim of using their combined size to lead the market in wireless equipment chips. The aim was to be “fabless” — that is, designing the chips but outsourcing the making to other foundry companies — to beat down some capex and opex. But earlier this month, STMicro said that it would divest itself of its stake after ST-Ericsson failed to achieve break-even….”
Comments »The IRS is Reminding You to Take IRA Distributions
“The top of the year-end checklist typically includes making certain to send a donation to a favorite charity by Dec. 31.
This year, though, some accountants say you don’t want to make those donations until January — if you’re betting on higher tax rates in 2013.
But what about grabbing some money from an IRA? Will you or an older family member withdraw the entire required minimum distribution from your IRA by Dec. 31? This is one where you don’t want to drag your feet.
Every year, many investors simply miss the deadline for taking the required withdrawals from their IRAs, said Ken Hevert, vice president of personal retirement products for Fidelity.
“It can really get complicated,” Hevert said.
The issue isn’t just that you’re missing out on getting extra money to cover bills. You could be creating a very costly tax headache, too.
Retirees age 70 1/2 and older must follow required distribution rules when it comes to IRAs. The same can apply to a 401(k) if you’re retired and no longer working at that company.
Typically, investors who must take required minimum distributions have until Dec. 31 each year to withdraw the full amount….”
Comments »NYSE Being Bought For $8.2B By Atlanta-based IntercontinentalExchange
“The New York Stock Exchange will be acquired by IntercontinentalExchange of Atlanta in a deal valued at about $8.2 billion, the two rivals confirmed Thursday morning.
In matching press releases, they say the sale “combines two leading exchange groups to create a premier global exchange operator diversified across markets including agricultural and energy commodities, credit derivatives, equities and equity derivatives, foreign exchange and interest rates.”
The Wall Street Journal notes that the deal “would end more than two centuries of independence for the New York Stock Exchange, one of Wall Street’s most enduring symbols of American capitalism.”
And, it adds: ”
Comments »The Bow Tie Remains a Gold Bull, Feels Prices Could Weaken Short Term
“With gold prices being hammered in recent weeks, and trading near four-month lows on Wednesday, longtime gold bull Jim Rogers is sounding a word of caution, saying it’s possible the correction in bullion may continue into the new year.
“Just be careful, there’re too many bulls, including me, but I’m very cautious,” Rogers told CNBC. “Gold is having a correction— it’s been correcting for 15-16 months now— which is normal in my view, and it’s possible that [the] correction is going to continue for a while longer.”
Gold prices have been gaining for over 12 straight years now, Rogers noted, adding that the safe haven asset has only seen a major correction once in that time period, during the global financial crisis back in 2008 when bullion fell 32 percent.
“Most things correct 30 percent every year or two, even in big bull markets – 30 percent corrections are normal and yet gold has only done that once in the past 12 years,” Rogers said. “Gold on any kind of historic market basis is overdue for a nice correction…..”
Comments »Live Blog Roll on Bill Ackman’s Presentation on Herbalife Being the Best Short Opportunity
“Hedge fund titan Bill Ackman, the founder of Pershing Square Capital Management, is giving a huge presentation right now on his new short position — Herbalife.
The activist investor considers Herbalife, a multi-level marketing company that sells weight management and nutritional supplements, to be a “pyramid scheme.” …”
Live blog roll
Bond Outflows Seen For the First Time in 30 Weeks, Largest Outflow in 70
” “Did The Fed Just Tighten?”
This is the hot new question more and more people are asking.
The reason people are asking that is this: Last week, the Fed announced that it was getting rid of its guidance that it would hold rates low until 2015, and that it would instead aim for low rates until unemployment was around 6.5% or inflation expectations were around 2.5%.
The growing chatter is that we could start seeing these thresholds before 2015, particularly if the economy gets out of the liquidity trap, and returns to trend or above-trend growth, as today’s GDP report suggests is beginning to happen.
That specific question ‘Did the Fed just tighten?’ is asked by BofA/ML’s Chief Investment Strategist Michael Hartnett, in his new note on “Contrarian thoughts” for the year 2012.
He notes:
We find the change in the Fed’s “exit strategy” from its zero interest rate policy from late-2015 to an economic threshold of unemployment below 6.5% (and manageable inflation) to be very interesting. In our view, this brings into question the expectation that high liquidity is here to stay, and is perhaps a reason why gold prices have struggled this year….”
Comments »Philly Fed, Existing Home Sales, & Leading Indicators
Philly Fed: Prior -10.7, Market Expects -1.3, Actual +0.8.1% More on the Business Outlook
Existing Home Sales: Prior 4.79m, Market Expects 4.9 m, Actual 5.04m
Leading Indicators: Prior 0.2%, Market expects 0.2%, Actual -0.2%
Comments »Gapping Up and Down This Morning
Upgrades and Downgrades This Morning
In Play and On the Wires
Gold Takes a Nose Dive as Final Q3 GDP Surprises to the Upside
“Fiscal Cliff” Talks Turn Sour, Obama Threatens Veto
“WASHINGTON (Reuters) – Talks to avoid a U.S. fiscal crisis stalled on Wednesday as President Barack Obama accused opponents of holding a personal grudge against him while the top Republican negotiator called the president “irrational.”
As a year-end deadline nears, Obama and House of Representatives Speaker John Boehner are locked in intense bargaining over a possible deal to avoid the so-called fiscal cliff of harsh tax hikes and automatic spending cuts that could badly damage an already weak economy.
Obama said he was puzzled over what was holding up the talks and told Boehner’s Republicans to stop worrying about scoring “a point against the president” or forcing him into concessions “just for the heck of it.”
“It is very hard for them to say yes to me,” he told a news conference in the White House. “At some point, you know, they’ve got to take me out of it.”
The rise in tensions threatens to unravel significant progress made over the last week…”
Comments »$ORCL to Buy $ELOQ for $817m
“REDWOOD SHORES, CA–(Marketwire – Dec 20, 2012) – Oracle ( NASDAQ : ORCL ) today announced that it has entered into an agreement to acquire Eloqua, Inc. ( NASDAQ : ELOQ ), a leading provider of cloud-based marketing automation and revenue performance management software for $23.50 per share or approximately $871 million, net of Eloqua’s cash. Eloqua’s modern marketing cloud delivers best-in-class capabilities to ensure every component of marketing works harder and more efficiently to drive revenue.
The combination of Oracle and Eloqua is expected to create a comprehensive Customer Experience Cloud offering to help companies transform the way they market, sell, support and serve their customers. The combined offering is expected to enable organizations to provide a highly personalized and unified experience across channels, create brand loyalty through social and online interactions, grow revenue by driving more qualified leads to sales teams, and provide superior service at every touchpoint.
The Board of Directors of Eloqua has unanimously approved the transaction. The transaction is expected to close in the first half of 2013, subject to Eloqua stockholder approval, certain regulatory approvals and other customary closing conditions….”
Comments »BofA’s Moynihan Said to Kill Proposal to Cut Pay for Brokers
“Bank of America Corp. Chief Executive Officer Brian T. Moynihan blocked a proposal to cut the main component of most brokers’ pay for 2013, said a person with direct knowledge of the matter.
The plan would have reduced the so-called grid payout for Merrill Lynch financial advisers by two percentage points, the person said, requesting anonymity because it wasn’t made public. The changes, which would have affected advisers generating less than $1 million in commissions, were seen as a way to cushion the costs of new bonuses, the person said…”
Comments »U.S. Home Values Rise 6% in 2012
“Homes values gained an estimated 6 percent in the U.S. this year, the first increase since 2006, as the housing market began to recover from its worst slump since the 1930s, Zillow Inc. (Z)said today.
Values have climbed more than $1.3 trillion to $23.7 trillion since the end of last year and probably will continue to rise in 2013, the Seattle-based home-listing service said in a statement. Residential values had declined each year since 2007, with the biggest drop in 2008, when homes lost more than $3.2 trillion in value, Zillow said…”
Comments »Black Gold Falls From Two Week Highs
“Brent futures traded near the highest closing price in two weeks on plans for a drop in North Sea crude exports to the lowest in three months and before House Republicans vote on a U.S. tax proposal.
Brent was little changed after two days of gains. Daily exports of the 12 main grades of North Sea crude for shipment in January will drop 7 percent to the lowest since October, loading programs obtained by Bloomberg News showed. Republicans in Congress will vote today on House Speaker John Boehner’s plan to raise taxes on incomes over $1 million. The proposal is aimed at preventing more than $600 billion of automatic tax increases and spending cuts from coming into effect next year.
The North Sea grade for February settlement was at $110.43 a barrel, 7 cents higher on the London-based ICE Futures Europe exchange as of 12:35 p.m. local time. The volume traded for all futures today was about 23 percent below the 100-day average. The European benchmark was at a premium of $20.35 to West Texas Intermediate, compared with $20.38 yesterday.
WTI crude for February delivery was at $90.09 in electronic trading on the New York Mercantile Exchange, up 11 cents. The volume was 35 percent less than the 100-day average. The January contract, which expired yesterday, rose $1.58 to $89.51, the highest settlement since Oct. 19.”
Comments »FLASH: NYSE & ICE Merge
developing….
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