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Comments »Monthly Archives: February 2013
Foreclosures in CA Hit a Seven Year Low
“For the first time since January 2007, California did not have the properties with the most foreclosure filings, according to RealtyTrac’s latest foreclosure report.
California received a total of 18,093 foreclosure filings, and Florida had the most with 29,800.
Moreover, California had 4,386 foreclosure starts – the pace at which mortgages enter the foreclosure process – in January, down 62 percent from last month, and 75 percent from a year ago, hitting a seven-year low. The decline was largely due to a fall in notices of default (NOD).
The huge improvement in the state’s foreclosure market has been attributed to the California Homeowner Bill of Rights which became a law on January 1, 2013….”
Comments »Initial Claims: Prior 366k, Market Expects 365k, Actual 341k
Old Man Buffet Buys $HNZ With 3G for $28 Billion
“Another classic Warren Buffett purchase.
Berkshire Hathaway (along with investment firm 3G) are buying ketchup maker Heinz for $28 billion.
This is a 20% premium from yesterday’s closing price.
The full press release is below
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PITTSBURGH & OMAHA, Neb. & NEW YORK–(BUSINESS WIRE)–
H.J. Heinz Company (HNZ) (“Heinz”) today announced that it has entered into a definitive merger agreement to be acquired by an investment consortium comprised of Berkshire Hathaway and 3G Capital.
Under the terms of the agreement, which has been unanimously approved by Heinz’s Board of Directors, Heinz shareholders will receive $72.50 in cash for each share of common stock they own, in a transaction valued at $28 billion, including the assumption of Heinz’s outstanding debt. The per share price represents a 20% premium to Heinz’s closing share price of $60.48 on February 13, 2013, a 19% premium to Heinz’s all-time high share price, a 23% premium to the 90-day average Heinz share price and a 30% premium to the one-year average share price….”
Comments »$AMR and $LCC Tie the Knot in a $11b Merger
“(Reuters) – American Airlines and US Airways Group said they plan to merge in a deal that will form the world’s biggest air carrier with a combined equity value of $11 billion.
The merger caps a wave of consolidation that has helped put U.S. airlines on more solid financial footing.
The widely expected deal has been more than a year in the making. American, a unit of AMR Corp , filed for Chapter 11 bankruptcy in November 2011, and US Airways began its pursuit of a merger in early 2012.
The new carrier — which would carry the American Airlines name — would be 2 percent larger than current No. 1 United Continental Holdings in traffic, as measured by the number of miles flown by paying passengers worldwide.
The new American will be based in Dallas-Fort Worth and will be headed by US Airways Chief Executive Doug Parker, who has long advocated industry consolidation.
US Airways stockholders will receive one share of common stock of the combined airline for each US Airways share, the companies said in a statement….”
Comments »$CAH Announce Plans to Buy Assuramed for $2.07b
“(Reuters) – U.S. drug wholesaler Cardinal Health Inc said it plans to acquire AssuraMed, a privately held direct-to-home medical supply distributor, for about $2.07 billion.
The acquisition will be financed with $1.3 billion in new senior unsecured notes and cash, and is expected to close by early April.
Cardinal Health said the deal would add 2 cents to 3 cents per share to adjusted fiscal 2013 earnings if the deal closes in early April. It would add at least 18 cents per share to adjusted earnings in fiscal 2014.
The deal will give Cardinal access to the growing number of Americans who are treated in home settings….”
Comments »GM Quarterly Profit Misses Estimates
“DETROIT (Reuters) – General Motors Co on Thursday posted a weaker-than-expected fourth-quarter profit as its loss in Europewidened and the U.S. automaker was unable to hold vehicle prices in its core North American market.
GM completed its second full year as a public company since its fall 2010 initial public offering, which followed the bankruptcy restructuring and $50 billion U.S.-taxpayer bailout of the prior year.
Net income in the fourth quarter rose to $892 million, or 54 cents a share, compared with $472 million, or 28 cents a share, a year earlier.
Excluding several one-time items, GM earned 48 cents a share, 3 cents shy of what analysts polled byThomson Reuters I/B/E/S had expected….”
Comments »$AAPL Vows to Fight Greenlight Capital
“Apple Inc. said it will fight Greenlight Capital Inc.’s bid to bar the company from adopting a measure restricting its ability to issue preferred stock.
The maker of iPhones and MacBooks filed a response yesterday in U.S. District Court in New York to the request made by Greenlight in its lawsuit.
“The proposed injunction would harm the public interest,” and should be denied, Apple said in the filing. The measure “gives common shareholders greater power — the right to approve issuance of preferred shares,” Apple said.
Greenlight founder David Einhorn has said the tech company should issue high-yielding preferred stock to provide more value to shareholders from a $137 billion stockpile of cash. The measure up for vote would eliminate “Apple’s power to issue preferred stock,” Greenlight said in the company’s complaint.
The hedge fund claimed Cupertino, California-based Apple unfairly grouped the preferred share measure with other matters to be voted on at a meeting Feb. 27, violating the U.S. Securities and Exchange Commission “unbundling rules.”
Apple said in its filing that it’s not violating SEC rules and that the move only eliminates so-called “blank check” preferred stock provisions. Without the provisions, preferred shares could still be offered as long as investors approve the change, according to Apple.
‘No Injury’…”
Comments »$PEP Beats Estimates on New Marketing Efforts
“PepsiCo Inc., the world’s largest snack-food maker, said fourth-quarter profit rose 17 percent after boosting spending to market its 12 biggest brands.
Net income increased to $1.66 billion, or $1.06 a share, from $1.42 billion, or 89 cents, a year earlier, the Purchase, New York-based company said today in a statement. Profit excluding some items totaled $1.09 a share. Analysts had projected $1.05, the average of estimates compiled by Bloomberg.
Chief Executive Officer Indra Nooyi has increased marketing to boost sales of brands such as Lay’s, Mountain Dew and Gatorade. Nooyi has also put renewed focus on U.S. soft drinks, including its flagship Pepsi-Cola, to revive lagging beverage sales and regain market share from Coca-Cola Co.…”
Comments »A New Policy Shift in Europe Turns to ‘What Ever it Takes’ Activists
“Call them the “whatever-it-takes” central bankers.
As the world’s advanced economies grow at half the speed of the pre-crisis years amid persistently high unemployment, governments are turning to a new set of monetary-policy makers who in word — and they hope deed — are more aggressive than their predecessors.
A revolution that began with the arrival in November 2011 ofMario Draghi at the European Central Bank now is gathering speed as Canada’s Mark Carney joins the Bank of England and the Bank of Japan awaits a new governor. The shift could culminate a year from now if Federal Reserve Chairman Ben S. Bernanke is succeeded by someone even bolder.
The changing of the guard reflects both a need for central banks to offset fiscal paralysis and a bet that monetary policy remains a potent force. At the same time, investors are increasingly weighing the costs and benefits of quantitative easing, while suggesting too much is expected of central banks.
The appointments of activists “reflect the case that economies are still struggling to sustain solid recoveries and there’s pressure from political quarters to be more stimulative,” saidNathan Sheets, a former adviser to Bernanke and now global head of international economics at Citigroup Inc. in New York. “Central banks have stuff in the bag, but it’s largely untried and may generate unwelcome side effects.”
Market Effect…”
Comments »The Euro Falls to Three Week Lows on GDP Miss
“The euro slid to a three-week low against the dollar after a report showed Europe’s recession deepened more than economists forecast last quarter, sapping demand for the region’s assets.
The 17-nation currency dropped for a third day versus the yen as separate data showed gross domestic product shrank in both Germany and France. The yen rose against most of its major counterparts as Russia’s finance minister said Group-of-20 nations should take a stronger stance against currency manipulation. New Zealand’s dollar climbed to a 17-month high after manufacturing expanded. The euro has still strengthened 4.6 percent against the dollar in the past three months.
“They’re pretty awful figures” in Europe, said Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon Corp. in London. “It could get a lot worse because the euro has risen a long way since the start of the fourth quarter.”
The euro slumped 0.9 percent to $1.3334 at 7:27 a.m. New York time after falling to $1.3315, the lowest level since Jan. 24. The shared currency slid 1 percent to 124.43 yen. The yen strengthened 0.1 percent to 93.21 per dollar.
The currencies of euro-area neighbors also weakened, with the Hungarian forint, Czech koruna and Polish zloty all sliding at least 0.9 percent versus the dollar.
Gross domestic product in euro area fell 0.6 percent from the previous three months, the European Union’s statistics office said. That’s the worst performance since the first quarter of 2009 and exceeded the 0.4 percent median forecast of economists in a Bloomberg News survey.
Negative Rates…”
Comments »Switzerland Warns of Property Bubble, Considering Further Curbs
“Switzerland’s central bank has a message for lenders: act now to stem surging credit growth or face further restrictions.
The government, at the urging of the Swiss National Bank, yesterday ordered banks to hold additional capital as a buffer against risks posed by the country’s biggest property boom in two decades. The amount, set at 1 percent of banks’ risk- weighted assets tied to domestic residential mortgages, can be increased to as high as 2.5 percent.
“The measure is a warning shot at banks that were overgenerous with their credit lending,” said Janwillem Acket, chief economist at Julius Baer Group Ltd. in Zurich. “The government and the SNB want to tell banks to be more restrictive or we’ll tighten the reins further.”
Governments from Singapore to Dubai are seeking measures to cool overheated property markets after central bankers lowered interest rates to stimulate their economies. While Swiss policy makers in July toughened rules on mortgage lending to avoid a repeat of a housing collapse that crippled the economy in the early 1990s, the SNB requested the buffer after “imbalances intensified further” in the second half.
The measure will be imposed on all Swiss banks as well as subsidiaries of foreign banks operating in the country. Lenders will have to add about 3 billion francs ($3.27 billion) to comply with the new rules, which will be enforced starting Sept. 30, according to the government. Policy makers will “continue to closely monitor developments” and “regularly reassess the need to adjust the level,” the SNB said.
Prices Surging…”
Comments »Nestle Misses Estimates, Guides Lower
“Nestle SA said it expects 2013 to be as challenging as last year, when sales missed analysts’ estimates on a slowdown in emerging markets, where the world’s largest food company makes more than 40 percent of its revenue.
Sales advanced 5.9 percent in 2012 on a so-called organic basis, missing the 6 percent average estimate of 11 analysts surveyed by Bloomberg. The stock fell as much as 2.7 percent, the steepest intraday decline in almost four months, after the Vevey, Switzerland-based maker of Nescafe soluble coffee said revenue growth in emerging markets slowed to 11 percent last year from 13 percent in 2011….”
Comments »Italy Police Detain Monte Paschi’ss Former Finance Chief
“Italian police detained Gianluca Baldassarri, former finance chief at Banca Monte dei Paschi di Siena SpA, as prosecutors investigated possible financial crimes at Italy’s third-largest bank.
Police detained Baldassarri, 51, in Milan today because of evidence and to ensure he doesn’t flee, a police official said by phone. Baldassari was taken into custody on an accusation of obstructing regulatory activity related to derivatives transactions. He was detained after he allegedly sought to sell securities for about 1 million euros ($1.3 million), sparking concern he may leave the country, the official said.
Prosecutors in Siena are investigating whether some former Monte Paschi executives committed crimes of market manipulation, fraud, false accounting and obstruction of regulatory activity tied to derivatives trades during the purchase of Banca Antonveneta SpA, people with knowledge of the probe have said.
Chief Executive Officer Fabrizio Viola and ChairmanAlessandro Profumo are seeking to restore investors’ confidence in the world’s oldest bank and profitability amid allegations former management hid losses from three derivatives transactions, labeled Alexandria, Santorini and Nota Italia….”
Comments »The EU Proposes a Financial Transaction Tax
“The European Union proposed a far- reaching tax on financial transactions which could be collected worldwide as soon as Jan. 1 next year by the 11 nations that have so far signed up to participate.
The EU plan invokes “residence” and “issuance” ties to firms in participating countries, in a bid to prevent traders from escaping the levy by trading outside the tax’s zone, according to the proposal unveiled by EU Tax Commissioner Algirdas Semeta today in Brussels. To escape the proposed tax entirely, firms in other nations would have to entirely cease financial-services business with the 11 nations involved, according to the EU.
The proposal marks a new stage in the EU’s efforts to raise revenue from the financial sector and curb what it sees as a “patchwork” of local levies. Like a prior, failed proposal for all 27 EU nations, today’s plan would set a rate of 0.1 percent for stock and bond trades and 0.01 percent on derivatives trades.
The EU estimates the arrangement could raise 30 billion euros ($40 billion) to 35 billion euros per year. It would need approval by the 11 participants to proceed. All EU nations can sit in on the talks and have the option to join.
The proposals exclude certain types of trading from the scope of the tax: day-to-day transactions by individuals and non-financial firms; primary offerings of stocks and bonds; and trades with central banks, the European Stability Mechanism and other official institutions. It also excludes primary market trades in units of collective investment funds along with certain restructuring operations.
Bond Sales…”
Comments »Recession in Europe Grows More Than Expected
“The euro-area recession deepened more than economists forecast with the worst performance in almost four years as the region’s three biggest economies suffered slumping output.
GDP fell 0.6 percent in the fourth quarter from the previous three months, the European Union’s statistics office in Luxembourg said today. That’s the most since the first quarter of 2009 in the aftermath of the collapse of Lehman Brothers Holdings Inc. and exceeded the 0.4 percent median forecast of economists in a Bloomberg survey.
The data capped a morning of releases showing that the economies of Germany, France and Italy all shrank more than forecast in the fourth quarter. European Central Bank PresidentMario Draghi said last week that confidence in the 17-nation bloc has stabilized and the ECB sees a gradual recovery beginning later this year, though the situation is “fragile.”
“The outlook for 2013 remains subdued,” said Peter Vanden Houte, an economist at ING Group NV in Brussels. “While a gradual improvement of the world economy is likely to support European exports, domestic demand is bound to remain very weak as fiscal tightening and rising unemployment will take their toll on household consumption.”
The euro extended its decline against the dollar after the data were released. It fell 0.9 percent to $1.3328 as of 10:34 a.m. London time. The single currency also weakened versus the pound and the yen. European stocks erased gains, U.S. equity- index futures fell, and German bunds advanced.
Japanese Surprise…”
Comments »Russia Encourages G-20 to Take a Stronger Stance on Currency Manipulation
“Group of 20 nations should take a stronger stance against currency manipulation at their meeting in Moscow, Russian Finance Minister Anton Siluanov said after conflicting statements on the weakening yen roiled markets.
Russia wants more “specific” language opposing exchange- rate interference in the communique that will be issued after talks among finance chiefs this week, Siluanov said in an interview today with Bloomberg Television’s Ryan Chilcote. Russia holds the G-20’s rotating presidency this year.
“The G-20 countries have always held the position that currency policy should be based on market conditions,” Siluanov said. “I think we should take a more specific stance on this.”
Russian central bank First Deputy Chairman Alexey Ulyukayevwarned last month that the world was nearing the brink of a fresh “currency war” as countries weaken their currencies to make their exports more competitive. The yen has tumbled 17 percent in the past three months against the dollar. Financial markets whipsawed two days ago as the Group of Seven major industrialized countries issued a statement viewed by investors as accepting a declining yen, only for officials to then split over whether Japan was being singled out.
Yen Tolerance…”
Comments »China’s Citic to Buy 13% Stake in Alumina for A$452 Million
“Citic Group Corp., China’s largest state-owned investment company, will pay about A$452 million ($468 million) for a stake in Alumina Ltd., partner in the world’s biggest alumina business. Alumina’s shares soared.
Citic, through its Citic Resources Holdings Ltd. and Citic Ltd. units, will take a 13 percent stake by agreeing to purchase about 366 million new shares at A$1.235 each, 3 percent higher than Alumina’s close yesterday, the Melbourne-based company said today in a statement.
Alumina climbed to the highest in almost a year in Sydney trading, signaling some investors expect Citic may seek a takeover. The Australian company’s partner, Alcoa Inc., last month forecast global aluminum demand growth will accelerate to 7 percent this year as China’s economic rebound drives demand for cans, cars and buildings….”
Comments »$KGC Takes an Impairment Charge of $3.1B
“Kinross Gold Corp., Canada’s third- largest producer of the metal, took a $3.09 billion writedown on its Tasiast mine in Mauritania after it revised an expansion plan and industry capital and operating costs increased.
The company reported the impairment charge in its fourth- quarter earnings statement yesterday after the close of trading. Kinross took a $2.49 billion writedown on the same project in the year-earlier period. It acquired the mine as part of its C$8 billion ($7.99 billion) purchase of Red Back Mining Inc. in 2010.
“The impairment is a snapshot in time, it doesn’t necessarily reflect our view of the long-term potential of what this asset can be,” Chief Executive Officer J. Paul Rollinson said in an interview. “We believe this asset will be a core long-term asset for the company going forward.”
The company’s fourth-quarter net loss widened to $2.99 billion, or $2.62 a share, from $2.79 billion, or $2.45, a year earlier. Earnings excluding the Tasiast writedown and other one- time items were 24 cents, beating the 21-cent average of 21 analysts’ estimates compiled by Bloomberg.
Sales rose to $1.19 billion from $919.8 billion, beating the $1.17 billion average of eight estimates. Output increased 16 percent to 724,510 so-called gold-equivalent ounces, which includes silver production. The average of six estimates was for 635,900 equivalent ounces.
Kinross was up 1 cent at $7.90 at 6:23 p.m. in after-hours trading in New York yesterday….”
Comments »$ABX Takes a $3B Writedown
“Barrick Gold Corp., the world’s largest producer of the metal, posted an unexpected fourth- quarter loss after taking a $3 billion writedown on a Zambian copper mine it bought in 2011.
The loss was $3.06 billion, compared with net income of $959 million a year earlier, Toronto-based Barrick said today in a statement. Earnings excluding the writedown and other one-time items were $1.11 a share, beating the $1.05 average of 22 estimates compiled by Bloomberg. Sales rose to $4.19 billion from $3.76 billion….”
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