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$MSFT Pink Slips 18k Jobs

“Microsoft CEO Satya Nadella announced plans to cut 18,000 jobs, the largest in history.

In a memo to employees Nadella, said the majority of the cuts — 12,500 — will come from newly acquired Nokia.

As for the timing of the cuts, he says, “We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months.”

Microsoft’s highest ever jobs prior to this were 5,800 in early 2009 during the low point of the recession….”

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Is $C’s Settlement Charge a Way to Hide Declining Revenues ?


“Earlier today, moments after hearing that Citi would incur a near-record $3.8 billion Q2 charge as part of a $7 billion settlement for the US investigation into its fraudulent MBS sales in the pre-Lehman period, an announcement which came literally minutes before its Q2 earnings announcement, we knew precisely what was about to happen:


Sure enough, moments after we sent this out we learned that Citi magically beats consensus EPS of $1.05, reporting a non-GAAP number of $1.24. The only problem: reported GAAP EPS was a laughable $0.03. Where did the bulk of the company’s net income come from? Why the “one-time, non-recurring charge” of course: $1.21 of the $1.24 in Citi EPS was thanks to the “punishment” the government just served it with.

And since Wall Street, all of it in the same boat as well, does not care about actual numbers based in reality, but merely pro forma adjustments, such as this one which was a kitchen sink addback for Citi, allowing it to generate $3.8 billion in pro forma “Net Income” when in reality none of this is an actual cash flow item, and certainly does not benefit the balance sheet, Citi stock is now a solid 3% higher on, well, magic!

In reality what happened: Citi’s revenues dipped 4%, and 5% for Citicorp excluding Citi Holdings….”

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Large Banks Warn Trading Profits May Continue to Dwindle

“Executives from some of the biggest U.S. financial firms said a slump in trading that has hammered bank results for more than a year is likely to continue to weigh on profits.

Large investors are retreating from the market, big trades are rare and price swings are shrinking, executives told investors at an industry conference in New York on Tuesday. Those factors have combined to reduce trading revenue, particularly in fixed-income, currencies and commodities trading, traditionally a profit engine for large banks.

Citigroup Inc. C +0.59% Chief Financial Officer John Gerspach told investors the bank expects the slide it has reported in markets revenue to deepen in the second quarter. “People lack direction,” Mr. Gerspach said, speaking about investor behavior at the conference sponsored by Deutsche Bank AG. “People are uncertain. There just isn’t a lot of movement.”

His words echoed the comments of J.P. Morgan Chase JPM +1.12% & Co.’s head of investment banking, Daniel Pinto, who said volatility levels were at 10- to 15-year lows. He said that even if trading volumes rise, it is hard to make money if volatility is low. “If the market doesn’t move, it’s really difficult,” he said.

The comments follow several quarters of disappointing results in trading. Aside from Citigroup and J.P. Morgan, Goldman Sachs Group Inc. GS +1.01% and Bank of AmericaCorp. BAC +0.72% also have struggled as trading slowed. Some investors have begun to worry that the slowdown may be more than a temporary phenomenon. Some have expressed concern that the decline could be more permanent as regulators limit banks’ own trading and risk-taking in general.

“Until you see volatility increase, trading revenues in general will be challenged,” said Barclays analyst Jason Goldberg. He said the second quarter is shaping up to be tough in part because commodities-trading revenue likely won’t be as high as in the first quarter.

J.P. Morgan’s Mr. Pinto said he believed the decline likely would be temporary, or cyclical, rather than part of a long-term trend.

Stocks of big banks rallied Tuesday after Bank of America said it would press ahead with scaled back plans for a dividend, despite an error in calculating its capital disclosed last month…..”

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$HPQ Pink Slips 16k Jobs, Recovery is Near

Hewlett-Packard Co. HPQ -2.28% is cutting thousands more jobs, as efforts to revitalize the company have sputtered amid a rapidly changing technology landscape.


The Silicon Valley giant said Thursday it would cut an additional 11,000 to 16,000 jobs on top of 34,000 positions it previously said would be eliminated as part of a multiyear restructuring plan. At the midpoint of that range, the new cuts would trim an additional 4% from H-P’s workforce of about 317,500 employees.

News of the job cuts came as H-P announced results for its fiscal second quarter, revealing a drop in revenue that overshadowed higher profit. The results follow two quarters that had generally pleased investors, as the company appeared to stabilize itself under Chief ExecutiveMeg Whitman after several years of turmoil.

H-P, known largely for personal computers, server systems and printers, has been grappling with stiff competition and big shifts in the technology industry. Challenges across its array of businesses, along with the new job cuts, may complicate efforts to revive growth and innovation.

Ms. Whitman sought to portray the unexpected job cuts as an opportunity to further streamline a company that had grown bloated over the years through multiple acquisitions.

“I’m not at all disappointed, I think it’s the natural course of what makes sense in a turnaround of this size and scale,” she said. The restructuring, along with continued investments in growth areas such as cloud computing, analytics software and networking technology, would set up the beleaguered Silicon Valley icon “as a force to be reckoned with,” she said.

But some analysts wondered if Ms. Whitman was trying to get ahead of potentially weakening demand by announcing the new job cuts.

The quarterly numbers were accidentally posted on H-P’s website ahead of schedule and before the close of regular trading Thursday…”

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Alibaba Files For IPO, Is the Valuation Reasonable or the Epitome of a Bubble ?

“(Reuters) – Alibaba gave investors a closer look at the scale and growth of the Chinese e-commerce juggernaut in an initial public offering (IPO) prospectus filed on Tuesday, the first step in what could be the largest technology debut in history.

Alibaba Group Holding Ltd, which powers 80 percent of all online commerce in the world’s second-largest economy, is expected to raise more than $15 billion, and could top the $16 billion pulled in by Facebook Inc when it listed in 2012.

The bulk of the proceeds will go to Yahoo Inc – which bought a 40 percent stake in Alibaba in 2005 for $1 billion and which must sell more than a third of its current 22.6 percent stake through the IPO. Alibaba also plans to sell new shares, people familiar with the plans have said, to bulk up a cash war chest depleted by a rash of recent acquisitions.

While the Alibaba brand is less well known in the United States than Internet companies such as Amazon.com and Facebook, the Chinese company’s listing has stirred the most excitement in Silicon Valley and Wall Street since Facebook’s record IPO. Alibaba will become the largest Chinese corporation to list in the U.S. – on either the New York Stock Exchange or the Nasdaq.

Alibaba will debut later this year in a market where high-flying tech stocks like Twitter and Amazon have fallen in recent weeks in a sell-off that has divided analysts and investors, reviving doubts about soaring tech valuations.

Still, estimates of Alibaba’s market value have soared in recent months, to even beyond $200 billion, underscoring Wall Street’s eagerness to take a crack at a massive Chinese company with robust growth.

Alibaba handled more than 1.5 trillion yuan – about $248 billion – of transactions for 231 million active users across its three main Chinese online marketplaces in 2013, more than Amazon and eBay Inc combined. It did so with 20,884 full-time workers, fewer than eBay….”

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IPO filing raises more questions



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Large U.S. Banks Move Swaps Offshore to Hide From Regulators

“Updated April 27, 2014 4:52 p.m. ET


As regulators tighten rules on the U.S. swaps market, large American banks are maneuvering to take some of the business overseas.

Banks including Bank of America Corp. BAC -2.51% , Citigroup Inc., C -1.20% Goldman Sachs Group Inc., GS -1.62% J.P. Morgan Chase JPM -0.87% & Co. and Morgan Stanley MS -1.16% are changing the terms of some swap agreements made by their offshore units so they don’t get caught by U.S. regulations, according to people with knowledge of the situation.

The changes have generally focused on new trades between the London affiliates of U.S. banks, or between those units and non-U.S. banks, which combined constitute a large portion of swaps trading, the people said.

The moves mean the U.S. parent bank is no longer the guarantor of some swaps issued by its foreign affiliate. Instead, any liability for those swaps lies solely with the offshore operation.

Without that tie to the U.S. parent, those contracts won’t fall under U.S. jurisdiction and so won’t be subject to new, stricter rules that include reporting and a requirement that the historically telephone-traded contracts be traded on U.S. electronic platforms.

Having swaps come under European oversight is more attractive because derivatives trading rules on the Continent aren’t likely to be implemented until 2016 at the earliest, allowing the swaps mostly sold in London to be conducted in relative secrecy. Even then, some bankers anticipate the European rules won’t be as strict.

While a seemingly arcane shift, the unusual step of removing the parent guarantees could shift more of the $700 trillion swaps market to London, Europe’s financial hub.

U.S. regulators are aware that banks are making these changes and so far haven’t raised objections, according to the people. The moves are legal, and some officials have argued that the severing of guarantees could even help reduce the risk to the U.S. parent bank should a counterparty to an offshore contract renege on their agreement, some people said.

The Commodity Futures Trading Commission would become concerned if banks moved a substantial portion of their swaps business offshore, a more blatant attempt the skirt the rules, one official said.

Still, detractors say that the U.S. parent bank may still ultimately choose to bear responsibility for any losses, as some did during the financial crisis.

The changes could “come back to haunt the American taxpayer,” said Dennis Kelleher, president of Better Markets, which describes itself as an advocate for public interest in financial markets. Mr. Kelleher said he and others had warned lawmakers that banks may stop guaranteeing swaps sold by their offshore affiliates…..”

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S&P 500 Profit Outlook is Looking Up

“Corporate America is letting the sun shine in on second-quarter profit outlooks, raising hope that the first quarter’s storms are past.

Second-quarter outlooks for S&P 500 companies so far are much more optimistic than the past two quarters. Fewer companies are cutting estimates and those that are reducing forecasts haven’t done so as aggressively as in the past.

As a result, the market has rebounded from its recent selloff. The Standard & Poor’s 500 Index has climbed 3.5 percent in the last eight trading sessions, leaving it less than 1 percent from its all-time closing high.

“The downward revisions for the second quarter right now are very, very mild,” said Nick Raich, chief executive officer of The Earnings Scout, an independent research firm specializing in earnings trends, in Cleveland.

“That’s the positive for this earnings season.”

Negative outlooks still outnumber positive ones for the second quarter, but at a ratio of 2.9 to 1, they are well below the 4.7-to-1 ratio at a similar point in the previous earnings period and the 7.8-to-1 ratio for the one before that, Thomson Reuters data showed.

Surprisingly strong results have come from many high-profile names, including Apple, Caterpillar, Netflix and United Technologies.

That’s offset what Wall Street had expected to be a lackluster first quarter. Estimates were slashed, heading into this earnings period as the unusually harsh winter hampered transportation, kept people out of stores and raised heating costs….”

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Good News for the Global Economy as $CAT Crushes Earnings, Company Raises Guidance

“Global machinery giant Caterpillar earned $1.61 per share on an adjusted basis, which was much stronger than the $1.23 expected by analysts.

Management also raised earnings guidance. It now expects to earn $6.10 per share for the year, up from previous guidance of $5.85.

The stock is up 3.5% in pre-market trading.

“Given the business and economic uncertainties around the world and continuing decline in our mining sales, I am pleased with our performance in the first quarter,” said CEO Doug Oberhelman. “We understand we don’t control the economy and have instead focused on what we can improve.  We’re lowering costs, improving cash flow and driving value for our customers through the continued deployment of our lean manufacturing initiatives.  We see the benefits of these actions in our first-quarter results and in improving market position for many of our products.”

Caterpillar sells mining and construction equipment around the world, making it one of the better bellwethers of the global economy.

Here are some comments Oberhelman made about the global landscape in the context of the company’s guidance….”

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$C Warns Profits May Not Meet Expectations

Citigroup Inc. is warning investors it may miss a key profitability target after the Federal Reserve rejected the bank’s capital plan last month, people familiar with the matter say.

The Fed on March 26 shot down the New York bank’s proposal to boost its dividend and ramp up stock buybacks, saying it had failed to measure potential risks to its operations during a severe economic recession.

The rejection makes it unlikely Citigroup can hit its 2015 goal for return on tangible common equity….”

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$TSLA: How Do You Like Me Now ?

:Perhaps the biggest hurdle Tesla faces in its goal to build an affordable electric car is the cost of batteries that eliminate the need for gasoline. To deal with the problem, Elon Musk’s upstart automaker is planning to build a “Gigafactory” — a huge factory that by 2020 would exceed 2013 global production of battery packs.

In a release today, Tesla explained the goal of the new factory:

The Gigafactory is designed to reduce cell costs much faster than the status quo and, by 2020, produce more lithium ion batteries annually than were produced worldwide in 2013. By the end of the first year of volume production of our mass market vehicle, we expect the Gigafactory will have driven down the per kWh cost of our battery pack by more than 30 percent.

In 2013, the first full year of Model S production, Tesla accounted for more than a third of the industry’s battery usage. The company now works with Panasonic to produce the batteries that power the Model S, but Musk said in an earnings call earlier this month that he expects to have more than one partner on the Gigafactory.

The automaker will directly invest $2 billion into the project, and partners will provide another $2-3 billion….”

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Of the Companies That Have Reported This Q, 59% Have Guided Lower

“While earnings reports have been strong for the fourth quarter, with about 70 percent of Standard & Poor’s 500 Index companies beating analysts’ estimates, the outlook going forward isn’t so hot.

A total of 59 percent of those companies have lowered their outlook for 2014, according to The Earnings Scout research firm.

“Fourth-quarter numbers are actually stellar,” Nick Raich, the firm’s CEO, told CNBC. “But that doesn’t matter. The fourth quarter was priced in six months ago. It’s all about the revisions to the first quarter and beyond.”

And it’s not that companies are simply trying to manipulate expectations for their earnings by lowballing their forecasts, Raich says.

“We saw improvement in underlying earnings expectations for the past two years,” he said. “We’re seeing a deterioration in those trends. The magnitude in downward revisions has worsened. That’s a big reason stocks are under pressure.”

The Standard & Poor’s 500 Index has slipped 3 percent so far this year.

As for the Federal Reserve, Raich doesn’t think it’s going to exit quantitative easing completely, because that would put the economic recovery at risk…..”

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Corporations Find Themselves Flush With Cash, Will They Spend It or Hoard It ?

“When the corporate cash dam bursts, everything will be ok, right? Well, maybe.

Investors betting that the past year of more than 20 percent gains in western stock markets can be echoed, or at least sustained, through 2014 have long assumed that a corporate spending revival will nurture a building economic recovery.

The argument is simple. Years of banking crises, credit droughts and economic uncertainty have prevented businesses investing for the future. Instead, they have clipped costs, wages and jobs and built up huge stockpiles of cash rather than investing in new plants, staff, updated technology, equipment or acquisitions.

As the economic fog lifts, this idle, near zero-yielding cash will surely be put back to work eventually, they argue, creating a potentially virtuous circle of greater demand, higher growth, earnings and employment all round.

The problem, however, is that assumes cash stockpiling has all been due simply to a hiatus in the economic cycle. Many argue the hoarding is instead driven by more durable demographic trends and political reforms that are stirring corporate anxiety about exposure to soaring pension and healthcare costs as workforces age and government coffers shrink.

If that’s true, then this brewing economic recovery may not release pent-up business cash on any scale close to that suggested by the eye-popping cashpiles…..”

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FLASH: $NUS Halted, Down 30% for Investigation of China Unit… Update: Circuit Breakers Hit, $NUS Down 40%

“Trading in NuSkin stock has been halted after cratering 21.6% during today’s trading day.

Earlier this week, the multi-level marketing firm was the subject of a negative article in The People’s Daily” in China.

The article claimed that the company lies to its distributors, was sold without proper regulatory approvals, and made inaccurate scientific claims.

NuSkin fire back with a press release that said the article itself was inaccurate:

“We are dedicated to operating in full compliance with applicable regulations as interpreted and enforced by the government of China,” it continued. “Nu Skin has an 11-year history of doing business in China under these regulations. Our business activities are regularly monitored by the government in this rapidly growing marketplace. As is our practice, we will communicate openly with regulators to address questions arising from this article….”

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Is it Time to Dump Banks Stocks Like Some Billionaires Have Been Doing?

“Jan. 6, 2014 7:52 p.m. ET


The trading boom that helped reshape global investment banks over the past decade is sputtering, raising fears that one of Wall Street’s biggest profit engines is in peril.

Executives have warned that lackluster markets could lead to year-over-year declines in fixed-income, commodities and currency trading revenue when banks begin reporting fourth-quarter results next week. That would mark the fourth consecutive drop and the 11th in the past 16 quarters.

Few corners of banks’ trading operations have escaped the slump. A 10-year commodities rally has fizzled, while foreign-exchange trading volume has fallen sharply from its 2008 peak. Since the financial crisis, investors have eschewed exotic fixed-income securities in favor of low-risk government bonds, which are less profitable for banks, and overall trading volumes have dipped.

A rash of new regulations, meanwhile, have prompted Wall Street firms to exit from once-lucrative businesses such as energy trading and storing and transporting physical commodities.

The slump has gone on so long that some observers are beginning to question whether it is part of an ordinary down cycle or a more permanent shift.

“I think it is worrying,” said Oppenheimer analyst Chris Kotowski, who expected trading revenue to have hit bottom and stabilized by now. “You can’t turn around a fundamental trend…if that’s what this is.”

Mr. Kotowski cited the big transformations that have rocked global markets in the past few years, such as new technologies. Those advances have helped level the playing field by allowing institutions to make some trades on their own, reducing the amount banks bring in for matching up orders.

For Goldman Sachs Group Inc., fixed-income, currency and commodities trading historically has been a crucial profit engine. Yet the New York investment bank is expected to post a 21% decline in trading revenue….”

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Share Buybacks Hit an All Time High

“U.S. companies are buying back huge amounts of their own stock, and the ones executing the biggest buybacks are seeing their share prices rewarded handsomely.

Companies in the Standard & Poor’s 500 Index purchased $128.2 billion of their own stock in the third quarter, according to S&P Dow Jones Indices, The Wall Street Journal reports. That represents the highest level since the fourth quarter of 2007.

As for stock performance, the S&P 500 Buyback Index, which includes the 100 stocks with the highest buyback ratios, has soared 45 percent so far this year, outperforming the S&P 500’s 28 percent gain.

The buyback ratio consists of the total cash paid for common stock during the past year divided by the market capitalization of the common stock.

To be sure, not all investors view the buybacks as positive. Cash devoted to buybacks is cash that isn’t devoted to research, development and other corporate operations…..”

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$TSLA to Join NASDAQ 100

“The latest rebalancing of the Nasdaq 100 index NDX  will see Tesla Motors TSLA  join the index to replace Oracle ORCL , which is moving to the New York Stock Exchange and will no longer be eligible for inclusion.

The move is a testament to Tesla’s rapidly advancing shares, and another feather in the cap of CEO Elon Musk. But it may also signal a slowdown for the stock, judging by what happens when stocks join the Nasdaq 100.

Ryan Detrick of Schaeffer’s Investment Research found that stocks added to the Nasdaq 100 over the years have tended to underperform those that are removed.

“When you are added it means things are going great. Now things can continue to go great, but it does set up a higher bar,” Detrick said in e-mailed comments.

The stocks removed from the Nasdaq 100 going back to 1995 have averaged a return of 22% in the year following their removal, while those added to the index have only averaged a return of 11.6% over the subsequent year.

Detrick said as far as Tesla goes, “this isn’t a sell signal. Still, buying this stock three months ago when it was 40 and very few believed in it was a far better entry. Now it is a popular stock with a very devoted fan base. Just remember the bar is set higher now and any disappointment could lead to a larger than expected sell off.”…”

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Gapping Up and Down This Morning



Symb Last Change Chg %
GIMO.N 30.82 +3.62 +13.31
NRZ.N 6.78 +0.32 +4.95
DATA.N 62.86 +2.76 +4.59
SUNE.N 8.50 +0.37 +4.55
SSNI.N 25.61 +1.04 +4.23


Symb Last Change Chg %
EARN.N 15.34 -1.48 -8.80
WLH.N 22.24 -2.01 -8.29
AGI.N 12.01 -0.67 -5.28
TRMR.N 7.12 -0.38 -5.07
DMB.N 12.00 -0.64 -5.06



Symb Last Change Chg %
ORMP.OQ 9.35 +2.07 +28.43
AFOP.OQ 28.51 +4.01 +16.37
PBMD.OQ 2.58 +0.36 +16.22
CLDX.OQ 21.27 +2.62 +14.05
FFBH.OQ 9.79 +1.19 +13.84


Symb Last Change Chg %
MEAD.OQ 3.79 -0.51 -11.86
WRLD.OQ 78.20 -10.51 -11.85
HGSH.OQ 7.27 -0.86 -10.58
PNRG.OQ 38.20 -3.76 -8.96
USMD.OQ 22.89 -2.17 -8.66



Symb Last Change Chg %
FU.A 3.55 +0.11 +3.20
TXMD.A 2.62 +0.05 +1.95
REED.A 5.44 +0.09 +1.68
ORM.A 9.25 +0.14 +1.54
ALTV.A 9.50 +0.10 +1.06


Symb Last Change Chg %
OGEN.A 2.81 -0.19 -6.33
SAND.A 5.72 -0.25 -4.19
CTF.A 19.01 -0.39 -2.01
FCSC.A 6.00 -0.11 -1.80
NSPR.A 2.20 -0.04 -1.79

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$WFM Recalls Cheese Due to Listeria Breakout

Whole Foods is recalling Crave Brothers Les Freres cheese in response to an outbreak of a bacterial infection that has sickened people in several states and killed at least one person.

Whole Foods says the cheese may be contaminated with Listeria monocytogenes. It was sold in 30 states and Washington DC under names including Les Freres and Crave Brothers Les Freres. The cheese was cut and packaged in clear plastic wrap and sold with Whole Foods Market scale labels. The company is posting signs in its stores to inform customers about the recall.

Officials said cases have been identified in at least three states…”

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