Hum's Market Musings
- Stocks lower on last day of month
- Dow, S&P snap 4-day win streaks; Nasdaq ends 3-day win streak
- Dow trades in 53-point range, its narrowest in 13 months
- Another new 3.5-year high for the Dow Utilities
Market Musings (Bonus End-of-April Edition)
- Dow extends monthly winning streak to 7 months with a small gain
- S&P 500, Nasdaq Composite post first monthly drop in 2012
- S&P has worst month since September
- First April drops for S&P since 2005 and for Nasdaq, Russell 2000 since 2006
The Talk of the Street Tonight
U.S. CONSIDERS NOTES THAT FLOAT/WSJ - Matt Phillips: “As borrowers around the U.S. rush to lock in near-record-low interest rates on everything from mortgages to corporate bonds, the Treasury Department soon might embark on a program that seemingly does just the opposite. After a series of meetings early this week, Treasury officials will decide whether to start issuing floating-rate debt for the first time ever. Instead of the interest rate being fixed throughout the life of the notes, the rate would move up and down as overall rates move higher and lower. The change would be the first new addition to the Treasury's arsenal of debt products in 15 years. Analysts are widely expecting Treasury officials to sign off on the program.”
COKE CONSIDERS LEAP INTO ENERGY DRINKS/WSJ – Gina Chon, Mike Esterl & Anupreeta Das: “Worried about growth in its core soft-drink business, Coca-Cola has in recent weeks explored a deal for energy-drink company Monster Beverage Corp., according to people familiar with the matter, a combination that would have been Coca-Cola's largest brand acquisition to date. Coca-Cola has been looking for "bolt-on" acquisitions, in the words of Coke Chairman and Chief Executive Muhtar Kent. But the company said Monday afternoon that "at this time," it is not in talks to buy Monster. Coca-Cola had been in talks to acquire Monster, but decided to walk away after the jump in Monster Beverage's share price on Monday, which was a reaction to a Wall Street Journal report that the two parties were in discussions, according to people familiar with the matter said. Monster gained about $2 billion in market capitalization to more than $13 billion in Monday trading, although it later slid back to about $11 billion. Coke's own shares held steady.”
GROUPON REPLACES SCHULTZ, EFRUSY ON BOARD/Reuters: “Groupon Inc appointed two new directors on Monday and said Starbucks Corp Chief Executive Howard Schultz and venture capitalist Kevin Efrusy were leaving the board as the company tries to address criticism of its accounting practices. Groupon said Robert Bass, a Deloitte LLP vice chairman, and Daniel Henry, chief financial officer of the American Express Co, will join its board and serve on the audit committee. Henry joined last Friday. Bass needs to be elected at the June shareholders' meeting.”
HEARD ON THE STREET: Microsoft Finds Nook in Tablet Market/WSJ - Rolfe Winkler: “Microsoft isn't just behind in mobile, it is also behind in content. For a negligible amount of money, it is buying progress on both fronts, though not nearly enough to catch up to Apple or Google. For $605 million including future guarantees, the software maker is getting a 17.6% stake in Barnes & Noble's Nook digital-reader business as well as its college-bookstore business. That is a small price to pay, relative to its $60 billion cash pile, for a potential foothold in markets where Microsoft trails badly.”
BARNES & NOBLE’S NOOK UNIT IS WORTH MORE THAN ITS PARENT COMPANY/NY Times – Michael J De La Merced: Of all the details that stand out from Microsoft’s deal for an 18 percent stake in Barnes & Noble’s e-reader unit, perhaps the biggest one is this: the Nook division is now worth $1.7 billion. That is nearly double what Barnes & Noble’s entire market capitalization was on Friday. Indeed, it’s worth more than what the parent company has been valued at any time since mid-2008. What is behind Microsoft’s valuation of the unit is a bit of a mystery, since Barnes & Noble doesn’t break out the Nook’s financial results in its earnings statements.
MICROSOFT ENTERS THE E-BOOK WARS/Reuters – Felix Salmon: You think markets are efficient? Check this out: Barnes & Noble stock opened 2012 at $14.75 per share and falling fast; by January 5, the opening price was just $9.50. At that price, the entire company was worth just $550 million, and there was a very real fear that the entire company could go to zero, following in the footsteps of Blockbuster and other real-world retailers selling content more easily bought online. Today, of course, all that has changed.
GOOGLE SWITCHES EXECUTIVE'S PAYOUT FROM STOCK TO CASH/Reuters – Alexei Oreskovic: “Google Inc canceled thousands of stock options and stock units awarded to its chief business officer earlier this month and said it would instead pay him $8 million in cash. Nikesh Arora, who oversees Google's revenue operations as well as marketing and partnerships, will receive the payment on May 11, according to a filing Google provided to the U.S. Securities and Exchange Commission on Monday. The change means Arora will not have to wait for the payout until 2015, when the stock units and options vested. Arora will also get a $3.3 million "discretionary" bonus, Google said in the filing.”
SUSPICIOUS ENVELOPES CLOSE 3 WELLS FARGO BRANCHES/Reuters: “Wells Fargo & Co has closed three bank branches in New York City after they received suspicious envelopes containing white powder, a company spokesman said on Monday. New York City Police told Reuters they are investigating six separate incidents of white powder reported at locations around Manhattan.”
AS FIRST REPORTED BY CNBC’S KATE KELLY: DELTA TO BUY REFINERY IN EFFORT TO LOWER JET-FUEL COSTS/WSJ - Susan Carey & Angel Gonzalez: “Delta Air Lines Inc. said Monday that it reached an agreement to buy a refinery complex near Philadelphia in a bid to cut the carrier's yearly jet-fuel costs by $300 million. The nation's second-largest airline by traffic, after United Continental Holdings Inc., said it will purchase the Trainer, Pa., complex from Phillips 66, a refining and marketing business that will be spun off from ConocoPhillips on Tuesday. Under the deal, Atlanta-based Delta would become the first U.S. carrier to buy a refinery.”
GAS REFINERIES WILL WANT SUBSIDIES AFTER DELTA DEAL: Pickens/CNBC – Margo Beller: “Texas oil and gas investor T. Boone Pickens has a warning for Pennsylvania now that it is subsidizing Delta Air Lines's purchase of a gas refinery: Keep your wallet handy. Delta Air Lines is getting a $30 million subsidy from the Keystone State as part of a $180 million deal to buy a Phillips 66 refinery south of Philadelphia. The state better get ready because other refineries are going to want subsidies for them, too," he told CNBC's Closing Bell. "How they gonna handle that one?"
CONGRESS ETHICS OFFICE CLEARS BACHUS OF INSIDER TRADING/Washington Post – Scott Higham: “Congress ethics office clears Bachus of insider trading/Washington Post – Scott Higham: The Office of Congressional Ethics has found no evidence of violations of insider trading rules involving the chairman of the House Financial Services Committee and will recommend that the case against him be closed. Rep. Spencer Bachus, one of the most powerful politicians on Capitol Hill, has been a frequent trader, purchasing stock options while supervising the nation’s banking and financial services industries.
FROM CNBC’S PHIL LEBEAU: Tonight Hyundai announced it's adding a 3rd shift and 877 jobs to its plant in Alabama. That will increase the plants annual production this year by 20,000 vehicles and mean the plant builds 345,000 vehicles this year. This comes on the same day Chrysler said it will keep its Jefferson North plant in Detroit open during its tradional summer break. Why? To keep up with demand for the Jeep Grand Cherokee and Dodge Durango. These two moves show automakers expect U.S. demand for new vehicles to stay strong through the end of this year.
1000 Apr ISM manufacturing
1000 Mar Construction spending
N/A Apr Vehicle Sales
Before the bell:
BP, Pfizer, Archer Daniels Midland, Avon Products, Biogen Idec, Legg Mason, Marsh & McLennan, Sirius XM Radio, Thomson Reuters
After the bell:
Broadcom, CBS, Caesars Entertainment, Chesapeake Energy
Follow Tom Rotunno on Twitter: @tomrotunno
Questions? Comments? Email us atNetNet@cnbc.com
Follow NetNet on Twitter @ twitter.com/CNBCnetnet
Facebook us @ www.facebook.com/NetNetCNBC