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Monthly Archives: December 2012

A Compilation of 2013 Targets for the S&P, Up to 20% Upside Expected

“We are entering the closing stretch of 2013, and Wall St. is starting to make its adjustments for 2013 S&P 500 price targets. As 2013 gets closer we will make adjustments to new firms making 2013 predictions. As you would expect, there is still a month until 2012 comes to an end, so there could easily be some adjustments to any and all of these expectations. Here are the preliminary expectations for the stock market in 2013. ”

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Home Prices Rise 6.3% for the Month of October

 

“Home prices rose 6.3% in October from a year earlier, marking the biggest increase since June 2006, CoreLogic reports.

The gain is the eighth consecutive year-over-year jump in home prices nationally, the company says.

Prices dipped 0.2% from September. But such decreases are expected as the home buying market enters the off-season, CoreLogic says.

The housing recovery “continues to gain momentum,” says Mark Fleming, CoreLogic chief economist. The recovery is “broad-based” with almost all markets experiencing some appreciation, he says…”

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Fannie, Freddie Halt Foreclosures for the Holidays

“(MoneyWatch) Fannie Mae (FNMA) and Freddie Mac (FMCC), along with some of the nation’s biggest lenders, said Monday that they will suspend some foreclosures during the holidays.

From December 19 through Jan. 2, 2013, Fannie will halt evictions of homeowners in a single-family property and in apartments with up to four units that are financed by a mortgage from the government-sponsored enterprise. Freddie, the nation’s other main provider of government-backed housing loans, will stop foreclosures for the same the type of homes from December 17 through Jan. 2, 2013.

JPMorgan Chase (JPM) and Citigroup (C) said in statements that they also are temporarily ceasing foreclosures. JPMorgan said it would suspend all evictions beginning December 19 through Jan. 1; Citi did not specify dates for its suspension….”

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$FB Introduces New Plans to Ramp Up Revenues

 

Facebook has a new plan to grow its user base—and mobile revenue—by expanding the reach of its mobile messenger app. Starting Tuesday, anyone with a mobile phone can sign up for Facebook Messenger, using just a name and phone number.

With Facebook’s growth in developed markets slowing as it nears market saturation, this streamlined sign-up process aims to draw users in countries where email or computer access is harder to come by.

“People will message more on Facebook as a result of this feature,” said Facebook’s director of product Peter Deng. “Over time we are building a large ecosystem, and there are ways for us to bring value to a lot of different parties in this ecosystem.”

Facebook clearly hopes to use messenger to draw more people to sign up for the social network, where new user activity translates into higher profits. (Read More:Facebook Revenue Jumps 32% Amid Gains in Mobile.)

The service is first launching in five key emerging markets on Tuesday: India, Venezuela, South Africa, Indonesia, and Australia. The company then plans to quickly roll it out to the rest of the world.

Facebook doesn’t currently make money from its messenger app, which includes free texting, group chat, and photo-sharing. Facebook has always offered it ad-free as an extra service to keep people connected with their Facebook friends, and within the social network’s eco-system...”

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Why Aren’t Big Banks Issuing More Long-Term Debt?

“Many banks are thinking more about maximizing short-term profits than about building a stable base of funding that will protect them when interest rates inevitably rise again.

By Sheila Bair

FORTUNE — During the financial crisis, several large financial institutions heavily relied on short-term borrowings to support their operations. This became a major problem. As credit markets froze, the banks were unable to renew their expiring short-term loans and thus were in danger of failing because they couldn’t borrow enough to operate. This was one of the reasons why the government had to step in with temporary debt guarantees and lending programs.

Recently, the Wall Street Journal ran an interesting piece by writer David Wessel about the “hidden benefits” of the Fed’s quantitative easing. Wessel rightly points out that a benefit of quantitative easing is the ability of corporations to fund themselves cheaply with stable long-term debt.

Regrettably, while non-financial institutions seem to understand the wisdom of funding “long” in the current interest rate environment, financial institutions apparently do not. Instead, they are reducing reliance on long-term debt in favor of deposits, most of which are backed by the FDIC, and short-term loans known as “repos.” Indeed, the percentage of banks’ liabilities funded with long-term debt has declined from a peak of 21.3% in 2009 to 15.7% at the end of the third quarter of 2012. Deposits, meanwhile, have increased from 40.6% to 44.5% during the same time period. Repos have increased as well from 13.6% to 14.1%. As the WSJ’s David Reilly has pointed out, among the biggest U.S. banks, repo financing is now almost as large as long-term debt outstanding.

MORE: The Fed is backing foreign banks into a corner “

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Baxter Says It Agrees to Buy Dialysis Firm Gambro for $4 Billion

 

Baxter International Inc. BAX -1.29% agreed to buy Swedish medical-equipment maker Gambro for 26.5 billion Swedish kronor ($4 billion), in what would be the biggest acquisition in the U.S. company’s history, as it aims to bolster its position in the growing market for kidney-dialysis products.

The deal, if completed, would combine Deerfield, Ill.-based Baxter, the world’s second-largest maker of dialysis equipment by revenue, with Gambro, the third largest.

Buying Gambro, which has been owned by two Nordic private-equity firms since 2006, would enable Baxter to round out a kidney-dialysis business that is focused on a form of dialysis called peritoneal, which can be performed at home. Gambro, meanwhile, is one of the largest makers of equipment for hemodialysis, which is generally performed in a hospital or clinic.

More than 2 million patients around the world receive some form of dialysis, with treatment rates growing by more than 5% a year, partly because of increased rates of diabetes and hypertension, Baxter said in a statement issued jointly with Gambro Tuesday announcing the deal. Baxter added that the deal will enable it to expand Gambro’s business in high-growth parts of Latin America and Asia, where the U.S. company has steadily widened its peritoneal-dialysis footprint.”

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$DRI Warns They Will Miss Q2 Estimates, Stock Off 10%

“(Reuters) – Darden Restaurants Inc (DRI.N) warned on Tuesday that earnings for the latest quarter would miss expectations after unsuccessful promotions led to a decline in sales at its Olive Garden, Red Lobster and LongHorn Steakhouse chains.

Shares in Orlando, Florida-based Darden fell almost 9 percent in premarket trading.

The company now expects earnings from continuing operations of 25 cents to 26 cents per share for the second quarter ended November 25. Costs associated with its purchase of Yard House USA Inc would cut earnings by 5 cents per share, while Hurricane Sandy would reduce EPS by about 1 cent.//”

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Gapping Up and Down This Morning

Gapping up

ESIO +11.8%, PETS +6.5%, MT +2%, RIO +1.8%, KCG +1.2%, FRAN +2.8%,  RENN +2.5%,

GLW +1.2%, AMD +3%,  ZNGA +3.1%,  ALU +5.5%, AN +3.5%,  GALE +22.5%,

KBH +2.1%, PHM +1.8%, RYL +1.3%,  BIG +7.3%, TOL +3.4%, KCG +1.2%,

Gapping down 

GERN -18.9%, PBY -5.6%, PKY -5.3%, CWST -4.9%, PCS -4.4%, NMFC -3.7%, PDLI -2.8%,

SIR -2.7%, APL -2.6%, FSC -1.9%, SLV -1%, CAJ -1.3%, ORCL -0.7%,  PDLI -2.8%,

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Reagan’s “Welfare Queen” FOUND!

“Good news everyone, after more than thirty years of searching by the news media, Ronald Reagan’s infamous “Welfare Queen” has finally been found. She lives in Bentonville, Arkansas.

“She has eighty names, thirty addresses,” Reagan warned during his 1976 run for President about a nameless, Cadillac-driving woman who’s conning the social safety net. He added: “She’s got Medicaid, getting food stamps, and she is collecting welfare under each of her names.” In total, Reagan said, “Her tax-free cash income is over $150,000.”

For more than thirty years, Republicans have used the existence of this “Welfare Queen” to justify their attacks on public spending and prove that the “welfare state” has run amok. Yet, her identity has never been revealed. After decades of searching, the best and brightest minds in the field of journalism were never able to discover who’s behind the wheel of the “Welfare Queen’s” Cadillac, or if she even existed.

That is until now.

We now realize our mistake. In our search for this “Welfare Queen,” we were looking for actual people when we should have been looking for corporate people. We should have been looking at Wal-Mart.

Wal-Mart is the largest private employer and brought in more revenue in 2011 than any other company in the nation. Wal-Mart pocketed a not-too-shabby $16.4 billion in profits that same year and the six Wal-Mart heirs, the Walton family, own roughly $100 billion in wealth, which is more than 40% of Americans combined.

But, despite making all of this money, Wal-Mart’s business model hinges on mooching from the government. It hinges on being the biggest “Welfare Queen” in the United States.

Because of the “everyday low wages” that the retail giant pays its employees, our government has to step in and provide public assistance to Wal-Mart workers just so they can survive…which is why the Wal-Mart workforce represents the largest recipient of federal aid in the nation.”

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$TOL Post Higher Profits on Ramping Revenues and Tax Benefits

Toll Brothers Inc. (TOL), the largest U.S. luxury-home builder, said fiscal fourth-quarter earnings jumped as the company profited from an increase in revenue and a net tax benefit of $350.7 million.

Net income was $411.4 million, or $2.35 a share, in the three months ended Oct. 31, compared with $15 million, or 9 cents, a year earlier, Horsham, Pennsylvania-based Toll said today in a statement. The average estimate of 19 analysts in a Bloomberg survey was for earnings of 24 cents a share.

The U.S. housing market has begun to recover after a six- year slump as low interest rates and rising consumer confidence spur demand for new homes. Construction spending climbed more than economists estimated in October as work on homes jumped to the highest level since November 2008, the Commerce Department reported yesterday.

“Pent-up demand, rising home prices, low interest rates, and improving consumer confidencemotivated buyers to return to the housing market,” Toll Brothers Chief Executive Officer Douglas Yearley Jr. said in the statement.

Revenue totaled $632.8 million, an increase of 48 percent over a year ago, the company said. Net contracts signed climbed 75 percent to $684.1 million. The company’s backlog of properties under contract increased 70 percent to $1.67 billion.”

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$AZO Beats by a Penny, Misses on Revenues

“S&P 500 (NYSE:SPY) component AutoZone Inc (NYSE:AZO) reported its results for the first quarter. AutoZone is a specialty retailer of automotive replacement parts and accessories, offering an extensive line for cars, sport utility vehicles, vans, and light trucks.

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Results: Net income for AutoZone Inc rose to $203.5 million ($5.41 per share) vs. $191.1 million ($4.68 per share) in the same quarter a year earlier. This marks a rise of 6.4% from the year-earlier quarter.

Revenue: Rose 3.5% to $1.99 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: AutoZone Inc was about in line with expectations as the mean analyst estimate of $5.40 per share. It fell short of the average revenue estimate of $2.13 billion.”

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$PCS Ticks Lower as Reuters Reports that $S is Unlikely to Make a Counter Offer

“(Reuters) – Sprint Nextel Corp (S.N) is unlikely to make a counteroffer for MetroPCS Communications Inc <PCS.N, as it focuses on closing its $20.1 billion deal with Japan’s Softbank Corp (9984.T), three people familiar with the matter said on Monday.

Sprint, the third-largest U.S. wireless service provider, and Softbank, a mobile operator, announced in mid-October that the Japanese company would buy up to a 70 percent stake in Sprint.

Sprint thinks that making a bid for MetroPCS, which agreed to a takeover by Deutsche Telekom AG’s (DTEGn.DE) T-Mobile U.S.A., would complicate the ongoing regulatory review of its deal with Softbank, the people said.

Sprint, however, remains interested in U.S. consolidation and may revisit a potential deal after it secures approval for the proposed investment by Softbank, the people said. The people asked not to be named because the matter is not public.”

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