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Monthly Archives: August 2012

Commentator Winnifrith: Facebook Will Fall to $5 a Share

“Shares in the emblematic social network Facebook will fall to $5 a share soon, well below the $38 price set prior to the company’s May initial price offering, libertarian commentator Tom Winnifrith wrote in The Christian Science Monitor.

Today, shares are hovering just over $19 a share.

Winnifrith blames the expiration of lock-up periods — which require shareholders to hang on to their stocks for a set period after going public — for the coming plunge.”

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New Euro Bailout Fund Could Fall Short

 

“The new fund set up to bail out struggling euro zone economies may face a 150 billion euro ($189 billion) shortfall if Spain and Italy need a full bailout program before the end of 2014, according to analysts at Credit Suisse.

Yagi Studio | Digital Vision | Getty Images

However, its firepower could be significantly improved if the European Central Bank (ECB) intervenes in secondary bond markets – an outcome which has been rumored in recent weeks. (CNBC Explains: How Does the European Central Bank Work?)

The European Stability Mechanism (ESM) is one of the key pillars of euro zone leaders’ attempts to deal with the debt crisis which threatens to spread its tentacles ever further. It’s expected to come into force later this year, as a replacement for the European Financial Stability Facility (EFSF), if the German Constitutional Court rules positively on it on September 12th.”

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Market Update

Markets chop around in true waiting mode fashion. Markets are waiting for September 6th when the ECB will release bond buying details.

Oil has reversed upside gains while equities have pared losses as Europe closes on a positive note.

Gold and other metals are flat also awaiting on info from Jackson Hole.

Market update

3 D heat map

European markets

[youtube://http://www.youtube.com/watch?v=_bwHK1xkgJA 450 300]

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Samnsung Doubles Down on Chip Maker $ASML

” Samsung Electronics has been knocked hard on mobile phone design innovation in the last few days, but in what might be a spectacular display of diversionary tactics, it is also doubling down on another significant part of its business — chipmaking. Today, the Dutch semiconductor machine maker ASML announced that Samsung would be investing close to $1 billion — yes, more or less the same amount for which the jury in California held it liable over Apple patent violations on Friday — towards R&D and an equity stake in the business. In doing so, Samsung will be joining Intel, which took a 10% stake in ASML in July for $2.1 billion.”

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Is $VMW Losing its Luster ?

 

VMware will spend this week seeking to convince us that it will take the mantle as the cloud leader. But the reality is something far different as we head into VMworld, the company’s annual event. This is a space seeing deep disruption as new categories emerge in the change to more easy to use, commodity type services.

The lack of leadership is apparent when you spend some time talking with the team fromManageIQ,which is clearly articulating the unique requirements companies need to consider when integrating their data centers to any number of service providers. Their story is about how they abstract the complex management issues that come with orchestrating cloud infrastructures.”

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Libor Liabilities Estimated to Top $176 Billion

“Forget the few hundred million dollars in wrist-slap fines the banks face from regulatory discipline over the Libor rate manipulation ‘conspiracy fact’. As the WSJ reports this morning, the number of suits and potential liabilities are rising rapidly as cities, insurers, investors, and lenders all jump on the cabal-beating band-wagon. From individual investors claiming lost returns due to low rates to hedge funds squeezed in derivatives trades, liabilities could exceed $176bn as the blood-suckers lawyers note “this is just the beginning” as “scores of interested potential clients” have called. While, obviously, it won’t be easy to win in court, the ongoing costs of litigation and potential liability (which will be largely ignored by Messrs. Bove et al. we are sure) range from Macquarie’s $176bn estimate to Morgan Stanley’s $7.8bn ”

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$IBM to Acquire $KNXA for $1.3Billion

” Kenexa Corporation (KNXA) has entered into a definitive agreement to be acquired by IBM (IBM) for $46.00 per share in cash in a transaction valued at approximately $1.3B. The transaction has been approved unanimously by the Kenexa Board of Directors and the Kenexa Board of Directors recommends that Kenexa shareholders approve the transaction. Pending shareholder approval and satisfaction of regulatory and closing conditions, the transaction is expected to be completed during the fourth calendar quarter.”

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Chinese Manufacturing Is Crashing

“The HSBC Flash Purchasing Managers’ Index for August crashed, falling to 47.8, well under the final July reading of 49.3.  The dismal result, the first indication of China’s economy for this month, was far below 50, which divides expansion from contraction.  The final PMI will be released September 3, but it is now clear that August will be the 10th-straight month of decline for the vitally important manufacturing sector in China.”

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$AOL Pops on Announcing a Special Dividend and a $600 Million Buyback Program

AOL Inc. (AOL) announced a $600 million accelerated stock buyback agreement and a special cash dividend of $5.15 a share, the final steps in returning about $1.1 billion to shareholders.

The Internet company will purchase $600 million worth of common stock under an agreement with Barclays Plc, according to a statement today. The one-time dividend will be payable Dec. 14, New York-based AOL said.

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Gapping Up and Down This Morning

Gapping up

IMGN +22.8%, NOK +12.3%, DTG +7.4%, RIMM +4%, DB +2.7%, AOL +2.6%,

AAPL +2.5%, SDRL +2.1%, KEG +2.9%, MSG +0.8%, BBBY +0.5%,  SRPT +7.9%,

HTZ +14.1%, DTG +7.2% , TIF +6.7%, DCI +3.2%,

Gapping down 

SAN -0.9%, NVS -0.9%,

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MORGAN STANLEY: There Are Only Two Things Left That Could Send Stocks Higher

” The U.S. stock market has undergone a major shift over the past few weeks. Previously, defensive stocks led a cautious rally, and everyone was waiting to see whether investors would start pouring money into the riskier cyclical stocks as well to confirm that the rally was on.

That finally happened in August, but with the market weakening a bit last week, investors are wondering whether the rally in cyclicals can continue.

Morgan Stanley chief U.S. equity strategist Adam Parker said in a note to clients this morning that there are two catalysts left that he thinks can extend the rally:”

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The Bundesbank is Becoming a Thorn in Merkel’s Side

“Bundesbank president Jens Weidmann is really starting to lose friends over his stance on ECB policy. He’s long been opposed to the central bank buying government bonds on the open market, which in the last few days has become the action plan of choice among commentators, analysts, and reportedly the ECB itself.

Over the weekend, German chancellor Angela Merkel said publicly, “I support Jens Weidmann, and that as the head of the German Bundesbank he has much influence as possible in the ECB.”

However, the German news magazine Der Spiegel reports today that behind the scenes, even Merkel and her cabinet are getting tired of Weidmann’s obstruction of ECB plans to stabilize peripheral countries’ bond markets.

Der Spiegel”

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M&T To Buy Hudson City In Deal Valued At $3.7 Billion

 

M&T Bank Corp. (MTB), which counts Warren Buffett’s Berkshire Hathaway Inc. among its largest investors, agreed to buy Hudson City Bancorp to expand in New Jersey in a deal valued at about $3.7 billion.

Under terms of the agreement, each Hudson City shareholder will receive 0.08403 of an M&T share in the form of either M&T stock or cash.”

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Gold Expected to Climb to $1800 on Stimulus Bets

 

“Gold is poised to climb the most in two years as prospects for additional economic stimulus by governments from the U.S. to China stoke demand for the precious metal as a bet against inflation, a survey showed.

Bullion for immediate delivery may reach $1,800 an ounce by the year-end, extending gains this year to 15 percent, according to the median forecast in the Bloomberg survey of 15 traders and analysts at a conference in Hyderabad in South India on Aug. 25. That would be the most since a 30 percent surge in 2010, data compiled by Bloomberg show.”

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Dollar Bulls Race for the Exit as Confidence Grows in Global Growth and the ECB Bond Buying Plan

 

Hedge funds and large speculators are abandoning bets on a stronger dollar at the fastest pace ever amid growing confidence in the global economy.

Futures contracts favoring gains in the U.S. currency surged to the most on record in June as growth faltered and investors retreated from risky assets. Now, hedge funds are reversing those bets as central banks from China to the U.S. vow to stimulate their economies, prompting money managers to seek higher returns from Sweden to Australia.”

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Hertz Strikes a Deal to Buy Dollar Thrifty for $2.6 Billion

 

Hertz Global Holdings Inc. (HTZ), after more than half a decade of trying, struck a deal to buyDollar Thrifty Automotive Group Inc. for about $2.6 billion in cash and secure its place as the No. 2 player in the U.S. market.

The $87.50-a-share offer represents an 8 percent premium to Dollar Thrifty’s closing price of $81 on Aug. 24. It’s more than double what Hertz offered a little more than two years ago.”

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Gasoline and Crude Oil Jump on Supply Chain Issues

“Gasoline climbed to the highest in almost four months and oil gained the most in a week after a refinery explosion in Venezuela killed 39 people and Tropical Storm Isaac shut rigs in the Gulf of Mexico. U.S. stock futures rose as shares of Apple Inc. rallied.

Gasoline futures jumped 3.3 percent to $3.18 a gallon at 8:21 a.m. in New York and oil advanced 1.3 percent. Nasdaq 100 Index futures rose 0.7 percent as Apple increased 3 percent after its $1 billion court victory over Samsung Electronics Co., which plunged the most in almost four years. The Stoxx Europe 600 Index (SXXP) added 0.4 percent and the euro rose versus 13 of 16 major peers. Spain’s 10-year bonds halted a three-day drop.”

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