Half of Bob Janjuah’s Call Has Come True

Janjuah said in November the S&P would spike above 1500 briefly with an eventual retreat over the next few years to the 800s. Let’s hope he stays half right!

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“$DELL has officially announced that it’s going private after weeks of reports and negotiations.

The final price is $13.65 a share. The deal is valued at $24.4 billion.

Company founder Michael Dell is taking the company private in partnership with private equity firm Silver Lake.

According to the release, the buyout will be funded by a big consortium. Dell and Silver Lake are going to finance it along with Microsoft which is kicking in $2 billion as a loan, according to the release. Other financing will come from BofA Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.

Microsoft’s involvement in the process is particularly noteworthy. The reason Dell is going private is that its business of selling Windows-based PCs has not been going well. If, as a private company, Dell wanted to initiate a radical change and break away from its reliance on Microsoft, that would appear less likely with Microsoft’s involvement.

And from Microsoft’s perspective, it is likely to upset its partners. Remember, the entire PC industry is in decline. This isn’t a Dell-only problem. If HP is on the cusp of going to out of business, will Microsoft rush in with billions of dollars to bail it out?

At $13.65 a share, Dell says in the release it’s buying the company for a 25% premium over the stock’s closing price before news leaked of a potential buyout.

We expect there will be multiple shareholder lawsuits over this deal. Just a year ago, the stock was trading at ~$17.66 a share. Today, Dell and Silver Lake want to buy the whole thing for considerably less. Dell has a 45-day “go-shop” period where the board can look for a better deal….”

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“The January reading of the ISM non-manufacturing (services) index fell to 55.2 in January.

But this was a tad higher than the 55.0 expected by economists.

Any number above 50 signals expansion.

From ISM:

…This indicates continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 56.4 percent, which is 4.4 percentage points lower than the seasonally adjusted 60.8 percent reported in December, reflecting growth for the 42nd consecutive month. The New Orders Index decreased by 3.9 percentage points to 54.4 percent, and the Employment Index increased 2.2 percentage points to 57.5 percent, indicating growth in employment for the sixth consecutive month. The Prices Index increased 1.9 percentage points to 58 percent, indicating prices increased at a faster rate in January when compared to December. According to the NMI™, eight non-manufacturing industries reported growth in January. Respondents’ comments are mixed about the economy and business conditions; however, the majority of respondents are optimistic about the overall direction.” “

“(Reuters) – MasterCard Inc doubled its quarterly cash dividend and said it would buy back up to $2 billion of its Class A shares, days after the card payment network reported strong fourth- quarter results helped by its performance in emerging markets.

The new buyback program will become effective after the company completes its existing $1.5 billion repurchase program, which had about $440 million remaining as of January 25.

MasterCard shares were up 1.4 percent before the bell.

The new dividend of 60 cents per share effectively returns $75 million to shareholders every quarter, based on 124 million shares outstanding as of January 31.

“Our strong financial performance allows us to increase the return of cash to shareholders through our dividend and share repurchase programs,” MasterCard Chief Executive Ajay Banga said in a statement.

MasterCard’s fourth-quarter results topped Wall Street estimates, but the company said global economic uncertainty could slow revenue growth in 2013….”

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NYSE

NASDAQ

AMEX 

BIDU, BBVA, BBBY, CIT, CLWR, DHI, HMY, HGG, KBH, M, MRVL, PHM, RYL, SD, SWC, TGT, TOL, UNH, WSM, ZNGA,

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In Play ,

On the Wires 

“Legendary Dow theorist Richard Russell says investors should approach the latest dow theory buy signal with trepidation.

In brief, Dow theory says that when the Dow Jones Industrial Average and the Dow Jones Transportation Average move in tandem, up or down, the rest of the market will move with it. If one is making a new high, while the other is not doing well, you should be skeptical of the durability of the rally….”

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“NEW YORK (AP) — Shares of Dell climbed in premarket trading Tuesday on reports the personal computer maker is nearing a deal to go private worth between $23 billion and $24 billion.

The transaction is said to involve a group including Microsoft Corp., private equity firm Silver Lake and CEO and company founder Michael Dell.

The Wall Street Journal, citing people familiar with the matter, says the price being discussed is between $13.50 and $13.75 per share. This would be better than the $11 per share the stock was hovering at before word of the buyout talks trickled out last month, but a steep markdown from the shares’ price of $26 less than five years ago.

Dell’s stock closed at $13.27 on Monday.

Dell spokesman Jess Blackburn said in an emailed statement Tuesday that the Round Rock, Texas company does not comment on speculation….”

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“LONDON (AP) — Oil and gas giant BP’s profit fell nearly 80 percent in the fourth quarter in results released Tuesday, dragged down by payouts related to the Gulf of Mexico oil spill.

BP said that net profit fell to $1.62 billion in the quarter ending on Dec. 31, down from $7.69 billion in the same period the year before. BP took a loss of $3.85 billion for its settlement of all federal criminal charges with the U.S. government. Underlying replacement cost profit for the period, which strips out the changes in the value of inventories, was down 20 percent on the same period last year at $3.98 billion.

The company’s settlement with the U.S. Justice Department shut the book on the criminal probe of BP’s role in the Deepwater Horizon disaster and Gulf oil spill, but civil claims remain. The London-based oil giant could pay billions more in damages for the 2010 spill.

Nevertheless, the results surpassed analysts’ predictions, and BP said that its downstream activities — refining and sale of petroleum products — earned a record amount for the year. Chief Executive Officer Bob Dudley said in a statement that the result “lays a solid foundation for growth into the long term.” …”

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“WASHINGTON (AP) — U.S. home prices jumped by the most in 6 ½ years in December, spurred by a low supply of available homes and rising demand.

CoreLogic, a real estate data provider, says home prices rose 8.3 percent in December compared with a year earlier. That is the biggest annual gain since May 2006. Prices rose last year in 46 of 50 states.

Home prices also rose 0.4 percent in December from the previous month. That’s a healthy increase given that sales usually slow over the winter months.

Steady increases in prices are helping fuel the housing recovery. They’re encouraging some people to sell homes and enticing some would-be buyers to purchase homes before prices rise further.

Higher prices can also make homeowners feel wealthier. That can encourage more consumer spending.”

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“(Reuters) – Kellogg Co reported a narrower quarterly loss on Tuesday helped by improvements in Latin America and stood by its full-year forecast.

The world’s largest cereal company posted a net loss of $32 million, or 9 cents per share, compared with a loss of $195 million, or 54 cents per share, a year earlier.

Excluding a mark-to-market accounting change, earnings were 65 cents per share, down from 71 cents per share a year earlier.

The company, whose brands include Corn Flakes, Eggo waffles and Keebler cookies, stood by its 2013 outlook, which calls for earnings-per-share growth of 5 percent to 7 percent and sales growth of about 7 percent.

Net sales rose to $3.56 billion from $3.02 billion a year earlier.

Shares were up 0.7 percent at $58.50 in premarket trading.”

“McGraw-Hill Cos. (MHP) and its Standard & Poor’s unit were sued by the U.S. over claims S&P knowingly understated the credit risks of bonds and derivatives that were central to the worst financial crisis since the Great Depression.

The U.S. Justice Department filed a complaint yesterday in in Los Angeles, accusing McGraw-Hill and S&P of three types of fraud, the first federal case against a ratings company for grades related to the credit crisis. McGraw-Hill tumbled the most in 25 years yesterday when it said it expected the lawsuit.

S&P issued credit ratings on more than $2.8 trillion of residential mortgage-backed securities and about $1.2 trillion of collateralized-debt obligations from September 2004 through October 2007, according to the complaint. S&P downplayed the risks on portions of the securities to gain more business from the investment banks that issued them, the U.S. said.

“It’s going to be a tricky time for rating agencies,” Fred Ponzo, a capital markets analyst at Greyspark Partners in London, said in a telephone interview. “S&P is probably just the first to face the music.”

Yields Surge

Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, the U.S. seeks civil penalties of as much as $1.1 million for each violation….”

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“Platinum supplies are falling to a 13-year low as mines in South Africa, the world’s biggest producer, close and automobile sales reach new highs.

Production will drop 2.7 percent to 5.68 million ounces, the least since 2000, according to Barclays Plc, which raised its 2013 shortage estimate sixfold last month after Johannesburg-based Anglo American Platinum Ltd. (AMS) said it plans to idle shafts. At the same time, demand from carmakers, the biggest consumer of the metal, will increase 0.5 percent in 2013, Barclays says. Investors are buying platinum at the fastest pace in three years.

Prices already rose about 10 percent this year, following the same advance for all of 2012, and will average $1,770 an ounce in the fourth quarter, the highest since 2011, according to the median of 15 analyst estimates compiled by Bloomberg. Costs for carmakers will increase because about 53 percent of all metal mined ends up in catalytic converters.

“Supplies are very tight and it’s a serious situation,” said Mihir Worah, who manages $110 billion in real return strategy funds at Pacific Investment Management Co., in Newport Beach,California. “Not only are there issues on the supply side, we could see surprises on the demand side as well.”

Platinum Price

Platinum climbed to $1,699.68 an ounce in London this year. The metal would still have to gain another 35 percent to match the March 2008 record of $2,300. The Standard & Poor’s GSCI gauge of 24 commodities added 4.8 percent since the beginning of January and the MSCI All-Country World Index of equities rose 4 percent. Treasuries gained 0.1 percent, a Bank of America Corp. index (MXWD) shows….”

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“U.K. services unexpectedly grew at the fastest pace in four months in January, indicating the economy may avoid an unprecedented triple-dip recession.

A gauge of activity surged to 51.5, the highest since September, from 48.9 in December, Markit Economics and the Chartered Institute of Purchasing and Supply said in London today. Economists had forecast an increase to 49.5, according to the median of 33 estimates in a Bloomberg News survey. A reading above 50 indicates expansion. Another report showed euro-area services shrank less than initially estimated in January….”

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“Munich Re, the world’s biggest reinsurer, headed for the biggest increase in six months after saying it will pay 12 percent more in dividends and fourth- quarter profit beat analysts’ forecasts.

Munich Re proposed raising the dividend for last year to 7 euros a share from 6.25 euros in 2011, the Munich-based company said in an e-mailed statement today. Net income after minority interests fell to about 480 million euros ($646 million) from 627 million euros a year earlier, according to preliminary earnings. That exceeded the 448.3 million-euro average estimate of 10 analysts surveyed by Bloomberg.

“Our core business in insurance and reinsurance is healthy, while the claims burden from major losses was slightly below average,” Chief Financial Officer Joerg Schneider said in the statement. “We also achieved a good investment result.”

Munich Re rose 2.1 percent to 136.90 euros at 11:37 a.m. in Frankfurt, heading for the biggest advance since Aug. 3. The shares have climbed 29 percent over the past year, beating gains of 15 percent for the Stoxx 600 Insurance Index (SXIP) and valuing the company at 24.6 billion euros.

Reinsurers, who help insurers such as Allianz SE (ALV) and AXA SA (CS) shoulder risks, benefited from decreasing disaster claims, growing life reinsurance premiums and a recovery in capital markets last year, offsetting negative effects from low interest rates….”

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“Italy’s two-year notes advanced, pushing yields down the most in three weeks, amid easing investor concern that budget reforms will be derailed as former Prime Minister Silvio Berlusconi seeks a political comeback.

Italian 10-year yields rose above 4.50 percent for the first time this year. A report showed European services output in January shrank less than initially estimated. German 10-year bonds snapped a three-day advance as European stocks gained, sapping demand for the safest assets. Spanish notes rose, after falling for four days, as Prime Minister Mariano Rajoy battled to rebut corruption allegations.

Italian two-year yields declined 10 basis points, or 0.10 percentage point, to 1.63 percent at 10:28 a.m. London time, the steepest slide since Jan. 10. The 6 percent security due November 2014 rose 0.17 or 1.70 euros per 1,000 euro ($1,354) face amount, to 107.57.

“It is perhaps too soon to conclude that this is the long- awaited reality check by the market,” said Elwin de Groot, a market economist at Rabobank Nederland in Utrecht, the Netherlands. “Political factors such as we are seeing in Spain and Italy at the moment are always extremely difficult to gauge. This could weigh on Spanish and Italian bonds for some time but we should acknowledge the rally in markets since mid-2012.”

Yields on Spanish 10-year bonds were little changed at 5.44 percent while those on securities due in two years declined three basis points to 2.85 percent.

Services Industry…”

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“Germany, the Netherlands and Finland want to speed up European Union plans to force losses on senior bondholders of failing banks, three European government officials said.

The three AAA rated euro-area states last week called for regulators across the EU to gain so-called bail-in powers as soon as 2015, rather than in 2018 as currently proposed, said the officials, who declined to be identified because the talks are private. The European Central Bankhas warned that 2018 is “far too far away” for the new rules, which seek to insulate taxpayers and the euro area’s firewall fund from rescue costs.

The bail-in push from the Germans, Dutch and Finns was made during Jan. 29-30 technical meetings in Brussels, the same week that the Dutch government shielded senior bondholders of nationalized lender SNS Reaal NV. (SR) Dutch Finance Minister Jeroen Dijsselbloem said that step was needed to prevent a spike in funding costs for SNS Reaal and other lenders in the country.

Accelerating the loss-sharing rules would give the euro zone more tools to avoid taxpayer rescues like those provided toGreece, Ireland, Portugal and Spain and sought by Cyprus. It also could ease concerns about financial liability within the euro zone once the ECB takes over financial supervision within the 17-nation currency bloc.

Banking Union..”

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“UBS AG (UBSN), Switzerland’s biggest bank, posted a second straight quarterly loss after booking a fine for trying to rig global interest rates and costs tied to job cuts.

The net loss amounted to 1.89 billion Swiss francs ($2.08 billion) in the fourth quarter, compared with a 323 million- franc profit a year earlier, the Zurich-based bank said today. Analysts surveyed by Bloomberg on average estimated a loss of 2.16 billion francs.

Chief Executive Officer Sergio Ermotti is cutting 10,000 jobs over three years and exiting most debt-trading businesses to concentrate on money management and boost return on equity, a measure of profitability, to at least 15 percent in 2015. The results today presented a mixed picture: While UBS accelerated a plan to slash risk-weighted assets at the securities unit to free capital, revenue from managing money for rich clients fell short of analysts’ estimates….”

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“Russian consumer prices rose more than economists estimated in January, advancing at the fastest rate in 15 months and bolstering the central bank’s case to resist government calls for lower borrowing costs.

The inflation rate was 7.1 percent, jumping from 6.6 percent the previous month, the Federal Statistics Service in Moscow said today in an e-mailed statement. The median estimate of 21 economists in a Bloomberg survey was 6.9 percent. Prices rose 1 percent from the previous month, topping estimates of a 0.8 percent advance.

Russia, the biggest emerging economy to raise interest rates last year, is seeking to cap inflation at 5 percent to 6 percent in 2013. President Vladimir Putin and members of Prime Minister Dmitry Medvedev’s government have said borrowing costs should be lowered to boost an economy that grew last year at the slowest pace since a 2009 recession.

“The January data may support the central bank in its dispute with the government that it’s too soon to ease monetary policy,” Alexander Morozov, chief economist for Russia at HSBC Holdings Plc. (HSBA) in Moscow, said by phone today. “I expect the central bank to lower interest rates only at the beginning of the fourth quarter, when inflation drops within the target range of 6 percent.”

Primary Concern…”

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