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Monthly Archives: May 2013
In Play and On the Wires
An Infographic on Hedge Fund Investments
Silver Bulls Get Castrated, Gold Looses “Its Brand Status”
For all intensive purposes it seems that sliver and gold bulls are about to write themselves out of history. As you already know, gold and silver have been in bearish mode for quite some time. With stocks rising everyday it is time to turn in the towel.
Comments »$ACT to Buy $WRCX for $5 Billion in Stock
“(Reuters) – Generic drugmaker Actavis Inc, which has been the subject of takeover speculation, plans to buy specialty pharmaceutical company Warner Chilcott Plc for $5 billion in stock.
The companies said the deal had an enterprise value, including debt, of $8.5 billion.
The move comes as Actavis has spurned approaches from Canadian pharmaceutical companyValeant Pharmaceuticals International Inc and Mylan Inc. Analysts have said that if Actavis were to buy Warner Chilcott, it would kill the chances of its being taken over.
Warner Chilcott shareholders will receive 0.16 share of the combined company. The companies said that would equate to $20.08 per share, based on Actavis’ closing share price of $125.50 on Friday….”
Comments »$CPB Beats Expectations and Raises Guidance
“Stronger-than-expected fiscal third-quarter growth helps Campbell Soup CPB -0.46% boost its EPS view and project other metrics being at the high end of prior forecasts.
Leading the way is a nearly 5% volume increase amid higher promotional spending helping US condensed, ready-to-serve and broth sales post double-digit sales gains.
That as the early part of 2013 was much-more conducive weather-wise to soup eating that a year earlier, which saw record late-winter/early-spring warmth in America.
But the company also saw roughly 5% volume growth in its global baking-and-snacks business and 4% gains in international simple meals and beverages….”
Comments »$YHOO Plans to Purchase Tumblr for $1.1 Billion
“SAN FRANCISCO (AP) — Yahoo is buying online blogging forum Tumblr for $1.1 billion as CEO Marissa Mayer tries to rejuvenate an Internet icon that had fallen behind the times.
The deal announced Monday represents Mayer’s boldest move yet since she left Google 10 months ago to lead Yahoo’s latest comeback attempt. It marks Yahoo’s most expensive acquisition since the Sunnyvale, Calif., company bought online search engine Overture a decade ago for $1.3 billion in cash and stock.
Yahoo is paying all cash for Tumblr, dipping into some of its remaining stash from a $7.6 billion windfall reaped last year from selling about half of its stake in Chinese Internet company Alibaba Holdings Group. Taking over Tumblr will devour about one-fifth of the $5.4 billion in cash that Yahoo had in its accounts at the end of March.
Yahoo also says that “per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business” with David Karp staying on as CEO.
Tumblr, a service started six years by Karp, a high school dropout, now figures to play a pivotal role in Mayer’s attempt to reshape Yahoo. To take on the challenge, Mayer ended a highly successful 13-year career at Google, which she helped surpass Yahoo as the Internet’s most influential company. Since coming to Yahoo, Mayer has concentrated on improving employee morale, redesigning services and bringing in more engineering talent through a series of small acquisitions that have collectively cost less than $50 million….”
Comments »$GE Capital to Return $6.5 Billion to Parent Company
“General Electric Co. (GE)’s finance unit plans to return $6.5 billion in dividends to the parent company in 2013 as Chief Executive Officer Jeffrey Immelt pursues his plan to shrink the size of the business.
The payments from GE Capital will consist of $2 billion in earnings dividends and a $4.5 billion special dividend, GE said today in a statement. GE Capital paid a first-quarter earnings dividend of $447 million on April 19, it said.
“This announcement is consistent with our goal to reduce the overall size of GE Capital and for it to return significant cash to GE,” Immelt said in the statement.
Transportation and other manufacturing businesses such as health care and energy have been a focus of Immelt’s growth strategy….”
Comments »Jamie Dimon Awaits Shareholder Vote on His Dual Role at $JPM
“As JPMorgan Chase & Co. (JPM)’s Jamie Dimon prepares for a vote tomorrow on whether he should keep his chairman and chief executive officer titles, he may take comfort knowing most of his biggest shareholders are led by men with the same dual role.
Seven of JPMorgan’s 10 largest owners — including top five BlackRock Inc. (BLK), Vanguard Group Inc., State Street Corp. (STT), Wellington Management Co. and FMR LLC — are run by CEOs who are also chairmen. The top 10 hold a combined 29.5 percent of New York-based JPMorgan’s stock, data compiled by Bloomberg show.
“People just like him are going to vote on this,” said Erik Gordon, a business and law professor at the University of Michigan in Ann Arbor. “If you’ve told your own board that the best structure for the sake of the company is to combine the roles, then how do you turn around and say, ‘But that’s not true for JPMorgan?’”
Of JPMorgan’s top 10 shareholders, only Baltimore-based T. Rowe Price, the seventh-biggest with a 2.15 percent stake, has commented publicly on Dimon’s role. Brian Rogers — T. Rowe Price’s chairman and chief investment officer, and not the CEO – – said in a May 16 statement that “I fully support the combined chairman and CEO role at JPMorgan under the superb leadership of Jamie Dimon.”
No Formula….”
Comments »Geo Politics Regarding Syria Halt a Three Day Advance in Black Gold
“West Texas Intermediate crude snapped a three-day gain. Syrian government forces started an offensive against rebels, renewing concern that conflict may destabilize the Middle East.
Futures declined in New York after rising for a third day on May 17. Government forces retook most of the strategic city of Al-Qusair in central Syria, state-run SANA news agency said. Iraq resumed crude exports via Turkey after a bomb attack targeted an oil pipeline on May 17. Hedge funds and other money managers raised bullish bets on Brent to their highest level in six weeks, according to data from ICE Futures Europe.
“Syria is a microcosm of the unrest across the Middle East and could spread to other countries,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London.
WTI for June delivery dropped as much as 69 cents, or 0.7 percent, to $95.33 a barrel in electronic trading on the New York Mercantile Exchange, and was at $95.50 at 12:42 p.m. London time. The more-active July future slid 53 cents to $95.47. Front-month prices increased 86 cents to $96.02 on May 17, the highest close since May 10.
Brent for July settlement dropped 53 cents to $104.13 a barrel on the London-based ICE exchange. The front-month European benchmark was at a premium of $8.37 to WTI, up from $8.35 on May 17.
‘Civilian Massacre’…”
Comments »The U.K. Turns Up the Heat on Offshore Tax Evasion
“Prime Minister David Cameron wrote to the Cayman Islands and nine other U.K. territories to request action to tackle company tax evasion as Britain prepares to host the Group of Eight summit next month.
“We need to know who really owns and controls each and every company,” according to the letter, released today by Cameron’s Downing Street office. “This goes right to the heart of the ambition of Britain’s G8 to knock down the walls of company secrecy.”
Cameron asked the countries to set up central registries that contain information on the owners and controllers of every company, and for this information to be made available to law enforcement and tax collectors. He asked the nations to attend an event on June 15 to indicate progress on tax, trade and transparency.
He said that while countries have the right to set low taxes, they’re sustainable only if “what is owed is actually paid — and if the rules to achieve this are set and enforced fairly to create a level playing field right across the world,” he wrote….”
Comments »Enron May Hold No Lessons for Traders as EU Investigates Price Manipulation
“Enron Corp.’s 2001 collapse revealed the extent of its manipulation of spot gas prices. Twelve years later, European Union regulators may discover energy traders never learned the lessons of the scandal.
BP Plc (BP/), Royal Dutch Shell Plc (RDSA) and Platts were visited by EU inspectors last week over allegations they “colluded in reporting distorted prices” to manipulate the published prices of oil and biofuel products, the European Commission in Brussels said after the raids.
Shell, London-based BP and Statoil ASA (STL), three ofEurope’s biggest oil explorers, are under investigation for potential manipulation of prices in the $3.4 trillion-a-year global crude market. The involvement of McGraw Hill Financial Inc. (MHFI)’s Platts, which publishes pricing data, hearkens back to other pricing scandals including Enron, and more recently, Libor.
“We’re making exactly the same mistakes we did with Enron, just with a different commodity,” Robert McCullough, an energy consultant, said by telephone from Portland, Oregon. “The same manipulation we saw in electricity and gas pricing is what we’re seeing in oil.”
The Enron scandal started in 2001 as traders used trading strategies called “Fat Boy” and “Get Shorty” to create phantom congestion in the California energy markets. Electricity prices rose 10-fold on average and California consumers endured days of rolling blackouts.
Rapid Fire…”
Comments »Small Caps in China Rise 43%, Growing Bubble Concerns
“Chen Li, the UBS AG (UBSN) strategist who predicted the tumble in China’s smallest sharestwo years ago, says the companies are poised to retreat again after valuations rose to the biggest premium over larger stocks since 2010.
The ChiNext index of Shenzhen-listed companies with a median market value of $765 million climbed 43 percent this year through last week, while the CSI 300 Index, which has a median capitalization of $3.5 billion, rose 2.7 percent. The smaller-company gauge traded for 4.6 times net assets versus 1.7 for the CSI index, the widest gap since June 2010, data compiled by Bloomberg show.
Small-cap stocks have surged on speculation President Xi Jinping’s plan to boost the consumer, technology and alternative energy industries will benefit companies from Huayi Brothers Media Corp. (300027) to Leshi Internet Information & Technology Co. (300104) The rally may get derailed by tighter monetary policy, which helped spur the last slump, according to Chen.
“The bubble may burst” within two months, Chen said in a May 9 phone interview. The Shanghai-based strategist predicted in January 2011 that small-cap stocks would drop as much as 20 percent. The ChiNext gauge fell 21 percent in nine months.
Investors will rotate out of smaller companies and into larger stocks as liquidity tightens, Chen said.
Tightening Liquidity…”
Comments »Japan’s Economy Minister Signals Further Decline in the Yen Would Be Negative
“Japan’s Economy Minister Akira Amari said a further slide in the yen would have negative effects after the currency’s 21 percent drop in the past six months, and signaled concern at the prospect of higher bond yields.
The yen was the biggest loser among 16 major currencies in the past six months, as Prime Minister Shinzo Abe pledged to beat deflation and the Bank of Japan doubled monthly bond purchases. Amari declined to comment on an appropriate exchange rate for the yen or say if it has declined so much that its negative effects need to be contained. The currency touched 103.31 per greenback on May 17, the weakest since October 2008, and rose 0.4 percent to 102.80 as of 8:30 a.m. in Tokyo.
“It’s being said excessive yen gains have been corrected a lot,” Amari said on the public broadcaster NHK yesterday. “If the yen extends losses a lot, people’s lives will be negatively affected. It’s our job to minimize that.”
Import prices for Japan rose 9.5 percent in April from a year earlier, while Japan’s Nikkei 225 Stock Average surged 66 percent since November, the most among developed markets. The government must demonstrate a commitment to fiscal rehabilitation to boost the credibility of government bonds, Amari said. Benchmark yields advanced last week to the highest levels in more than a year.
“As stocks have rallied this much, it’s a common economic phenomenon and principle that capital shifts from bonds to stocks,” Amari said. “We need to enhance the credibility of government bonds to prevent a rise in long-term yields.”
Bond Yields….”
Comments »Japan’s Markets Continue to Pierce Through 4.5 Year Highs
“Japanese shares gained for a second day, with the Topix Index (TPX) extending a 4 1/2-year high, as utilities climbed on optimism nuclear power plants may be restarted and Nippon Yusen KK and Osaka Gas (9532) Co. advanced on prospects for U.S. shale gas imports……
The Topix has risen 48 percent this year, outperforming all major equity indexes amid unprecedented easing from the Bank of Japan. The gauge traded at 1.3 times book value, compared with about 2.5 for the Standard & Poor’s 500 Index and 1.7 for the Stoxx Europe 600 Index……”
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Abenomics Increases Speculative Investment in Biotech
“Japanese biotech ventures promising to make jet fuel from algae and to produce synthetic cartilage are soaring in Tokyo trading as cash pumped into the economy by the central bank cascades into speculative investments.
Five of the 10 best-performing stocks this year traded on JASDAQ, which has lower minimum profit requirements than Japan’s main bourse, are biotech firms.
The companies have surged as the Bank of Japan last month voted to double debt-buying to more than 7 trillion yen ($68 billion) a month to achieve 2 percent inflation in two years. Prime Minister Shinzo Abe’s proposal this month to provide 110 billion yen in support to stem cell research over the next 10 years is also helping the shares.
“The market expects quantitative and qualitative easing to continue long term, boosting liquidity and drawing investors to speculative shares like biotech,” said Kazuyuki Terao, chief investment officer at Allianz Global Investors Japan, in an interview. “Abe raised health-care reform as a part of his growth plan and that’s also supporting the buy.”
Japan’s regenerative medicine market will probably increase by 62 times to 1.6 trillion yen by 2030 from 26 billion yen in 2012, the economy ministry estimates.
D. Western Therapeutics Institute Inc., a maker of medicines for glaucoma and blood clots, surged 23 percent today as of the close of Tokyo trading, making it the best performer on the JASDAQ Index this year, soaring 19-fold. The company has formed a partnership with Tokyo-based Wakamoto Pharmaceutical Co. to develop eye treatments.
Algae Fuel….”
Comments »Thailand’s GDP Misses Estimates, Easing Expected
“Thailand’s government lowered its full-year growth forecast after the economy expanded less than analysts estimated last quarter, boosting the case for the central bank to cut interest rates.
Gross domestic product increased 5.3 percent in the three months through March from a year earlier, after expanding a revised 19.1 percent in the previous quarter, the National Economic and Social Development Board said in Bangkok today. The median of 13 estimates in a Bloomberg News survey was 6 percent.
The growth slowdown may give the Bank of Thailand scope to join a global wave of monetary easing, after resisting pressure from the government in recent months to lower borrowing costs and curb inflows that last month drove the baht to a 16-year high. Finance Minister Kittiratt Na-Ranong, who has led calls for lower rates, has said the central bank must cut by more than a quarter of a percentage point or implement capital controls.
“The recovery in external demand that will be positive for Thai exports is not happening,” and weaker growth justifies an interest-rate cut, said Enrico Tanuwidjaja, a Singapore-based economist at Royal Bank of Scotland Group Plc. “The baht’s strength is an additional factor to motivate a rate cut.”….”
Comments »Asia Rallies, Europe Hovers Above The Unch Mark, and U.S. Futures are Down a Smidgen
Yields for Italy, Spain, France, and Germany …
Comments »Documentary: The Tax Free Tour
Remember all gaps get filled….
Cheers on your weekend!
[youtube://http://www.youtube.com/watch?v=d4o13isDdfY 450 300] [youtube://http://www.youtube.com/watch?v=Jt8T-Dl1tIo 450 300]
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Andy Haldane Praises Brown-Vitter Bill To End ‘Too Big To Fail’
“A senior Bank of England official influential in global policy debates has praised proposed U.S. legislation that would forever end the perception that the biggest banks are too big to fail, providing support for a bipartisan bill that forces the biggest American banks to either make themselves safer or shrink.
Andy Haldane, Bank of England executive director for financial stability, said legislation introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.)“has attractions” that may have long-term appeal. The bill, dubbed the “Terminating Bailouts for Taxpayer Fairness Act” and introduced April 24, would force banks with more than $500 billion in assets to fund at least 15 percent of their balance sheets with equity capital. If implemented, the largest U.S. banks would have to raise more than $1 trillion in fresh capital, on top of the tens of billions of dollars in capital they’ve raised over the past year to meet impending requirements.
The proposed legislation and Haldane’s cautious support comes as policymakers in Washington and around the world target the phenomenon known as “too big to fail,” or the perception that some banks are either so large or so important that government officials would never allow them to default on their obligations.
Three years after President Barack Obama heralded the Dodd-Frank overhaul of U.S. financial regulation as ending “too big to fail,” policymakers ranging from Ben Bernanke, Federal Reserve chairman, to Tom Hoenig, Federal Deposit Insurance Corp. vice chairman, have conceded that “too big to fail” remains and that the largest banks continue to benefit from the perception.
“Despite enormous progress in developing policy proposals, too big to fail is an itch that remains unscratched,” Haldane said in a paper dated April 9 that was made public on Thursday.
Community banks, represented by the Independent Community Bankers of America, have supported the Brown-Vitter bill as a way to end “too big to fail.” Former regulators have publicly backed it, while some current U.S. regulators privately support it as well.
The level of support for the bill has alarmed the biggest U.S. banks, which vehemently oppose the legislation….”
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