Cantor Morning News | Overnight Stocks

Rubber Futures + Rubber futures in Tokyo rallied as much as 2.3% as crude oil advanced. The July-delivery contract reached 301.4 yen per kilogram before trading at 301.1 yen at 9:03 a.m. local time on the Tokyo Commodity Exchange. http://www.businessweek.com/news/2010-02-21/rubber-for-july-delivery-rises-2-3-as-crude-oil-advances.html

RSG + According to Buffett's most recent filings with the SEC, he just added millions of shares to his holdings in waste behemoth Republic Services Group, a co. that Bill Gates is now the largest shareholder of. Is RSG the new Microsoft? http://www.nypost.com/p/news/business/buffett_gates_JTD3qusa6ggPrgYqxCpXJL

Heard on the Street +/- Discusses while Activision Blizzard ATVI gets about 30% of revenue and a higher portion of profit from recurring subscription fees on online multiplayer games, Electronic Arts ERTS is more reliant on traditional packaged games, a market that shrank in 2009.

BP, RDS - BP Plc and Royal Dutch Shell Plc may falter in their campaigns to save billions in oil and gas project costs as a resurgence in drilling and demand for engineers threaten to revive inflation in the industry. Crude prices doubled in the past year, prompting producers to resume projects put on hold during the recession. Oil and gas industry spending will rise 11% this year to $439B, according to Barclays Capital.

http://www.businessweek.com/news/2010-02-21/bp-shell-cost-cuts-may-falter-as-drilling-stirs-oil-inflation.html

Education Layoffs - Many teachers and educators across the U.S. are at risk of losing their jobs in the next few months, the nation's education secretary told a meeting of the National Governors Association on Sunday. "I am very, very concerned about layoffs going into the next school year starting in September. Good superintendents are going to start sending out pink slips in March and April, like a month from now, as they start to plan for their budgets," said Arne Duncan, referring to the slips of paper included in some paychecks to notify a person of being fired.

http://www.reuters.com/article/idUSN2117085120100222?type=marketsNews

SKLKF, AOZOF + The planned merger of two midsize Japanese banks Shinsei Bank Ltd. and Aozora Bank Ltd., is faltering, in part because the owners and regulators no longer feel the urgency of the financial crisis that forced the proposed marriage in the first place.

Short-Sale Restrictions +/- U.S. SECURITIES regulators will consider new short-sale restrictions on Wed., more than a year after the financial crisis provoked cries to rein in investors who bet on a stock's decline. The SEC is expected to vote on rules that would restrict short selling in a co.'s stock if that stock fell precipitously, a person familiar with the SEC plan said. The rule being considered is seen as a compromise for traders who opposed further curbs and lawmakers and some companies who had been pushing the SEC to reinstate the so-called 'uptick rule' which dates from the Depression. http://www.straitstimes.com/BreakingNews/Money/Story/STIStory_492688.html

CIGX +/- Star Scientific Inc. said it filed the first application with the U.S. FDA to have a tobacco product certified as being less harmful than traditional forms of tobacco. CIGX requested that Ariva-BDL, a dissolvable tobacco lozenge with wintergreen flavoring, be approved as a "modified risk" product under the Family Smoking Prevention and Tobacco Control Act. The landmark law, enacted last year, gave the FDA broad authority to regulate the industry.

U.S. Stocks +/- After a two-week advance, stocks are just shy of crossing into positive territory for 2010, but the week ahead brings hurdles that could challenge the momentum. "The economy is in recovery mode, but it doesn't feel like it for most people," said John Canally, economist at LPL. "Add to that the issues being debated in Washington, ongoing questions about China and Greece and when the Fed might start to raise rates, and you're bound to see a volatile market."

http://money.cnn.com/2010/02/19/markets/sunday_lookahead/index.htm

BAC +/- Sam Chapin and Todd Kaplan, two former Merrill Lynch investment bankers, will return to the firm as executive vice chairmen of global banking, the Wall Street Journal said citing sources.

Chapin will be based in New York, while Kaplan will be based in Chicago, the paper said.

The executives will return to Merrill as they are "impressed with how the business is performing", but its not clear what their compensation structure would be, the report said.

TM - Toyota Motor Corp. officials hailed as a "win" their success in lobbying federal safety officials last year to limit a recall tied to sudden acceleration complaints to just 55K vehicles, saving the company $100M, according to an internal document obtained by a Congressional committee. The presentation, dated July 6, 2009, lists among "Wins for Toyota Safety Group" the decision by the National Highway Traffic Safety Administration to allow TM to recall 55K Lexus ES and Toyota Camry vehicles in response to complaints about sudden acceleration.

GSK - A Senate report that revives concerns about a GlaxoSmithKline PLC diabetes drug's link to heart attacks is putting pressure on the FDA to make changes to its drug-safety program. People familiar with the situation say agency leaders held calls over the weekend to discuss how to address complaints from Sens. Max Baucus (D., Mont.) and Chuck Grassley (R., Iowa), who released a new report Sat. on the GSK drug, called Avandia. The FDA is trying to assemble a timeline of what the FDA knew of risks associated with Avandia, these people say, and plans to call a meeting of an outside advisory committee in the next few months to look at recent information on the drug, which GSK reported as having global sales of �771M ($1.2B) in 2009.

WAG + Shares in Walgreen Co. could reach $50 as the drugstore benefits from its acquisition of Duane Reade, a privately-held drugstore in the New York metropolitan area, Barron's reported on Sunday. WAG may be underestimating savings it can realize from the Duane Reade deal, Andrew Wolf, an analyst at BB&T Capital Markets, told Barron's. Wolf said WAG's shares could trade for at least 16.3 times forward earnings, which would imply a stock price of $48. Shares in WAG closed at $34.86 on Fri. http://www.reuters.com/article/idUSN2116980920100221?type=marketsNews

Bernanke +/- Investors are eager to hear more on the thinking behind the Fed's surprise move to raise its discount rate, especially because the Fed's loose monetary policy has provided a crucial spur to equities' advance since their March 2009 bottom. While the rate rise suggested that the Fed now considers the financial sector to have healed sufficiently to warrant taking back extraordinary liquidity, the increase also sparked unease about a possible broader removal of economic stimuli. Mr. Bernanke's semiannual testimony on monetary policy before congressional panels this week takes on an even more important dimension as investors look for clarity on the Fed's intentions and how Bernanke sees the recovery progressing. http://www.straitstimes.com/BreakingNews/Money/Story/STIStory_493285.html

Gas Prices +/- The average price of regular gasoline at U.S. filling stations declined to $2.63 a gallon as the recession reduced demand. Gasoline lost 3.29 cents in the two weeks ended Feb. 19, according to a survey ended on the same day of 5000 filling stations nationwide by Trilby Lundberg, an independent gasoline analyst. It has dropped 10.5 cents since Jan. 8, she said. �The weak economy is the dominant force in the gasoline market today,� Lundberg said in an interview. �It�s why most of the headline events in the gasoline sector are taking place. It�s why capacity use is less than 80 percent. It�s why plants are being converted to storage and permanently closed.� http://www.businessweek.com/news/2010-02-21/u-s-gasoline-falls-to-2-63-a-gallon-lundberg-survey-shows.html

RBS + Royal Bank of Scotland Group PLC's CEO Stephen Hester will become the latest top U.K. bank executive to turn down a bonus for 2009, a person familiar with the matter said. Mr. Hester will forgo his bonus, seeking to deflect public outcry from the bank's payouts to other staff and executives, which Mr. Hester wants to make sure remain competitive, this person said. Mr. Hester had been set to receive an award of around GBP 1.6M ($2.5M), this person said. The overall 2009 bonus pool at the bank is set to be GBP 1.3B.

SLB, SII +/- Schlumberger Ltd. plans to acquire Smith International Inc. for $11B in an all-stock deal that would be the largest acquisition in the U.S. so far this year and broaden SLB's lead as the world's biggest oilfield-services co. Under the terms of the deal, SII shareholders would receive 0.6966 SLB share for each SII share they own, a 37.5% premium over SII's share price on Thurs., when news of the deal was first reported. SLB also would assume SII's $1.2B debt load.

Greece +/- Greece�s Prime Minister George Papandreou said his country does not want financial aid from the European Union. �Give us the time, give us the support -- and I�m not talking about financial, but political support -- in order to show you that what we�re saying is being implemented and we are credible again,� Papandreou said in an interview on the British Broadcasting Corp.�s Marr program today. http://www.businessweek.com/news/2010-02-21/papandreou-says-greece-does-not-want-financial-support-from-eu.html

China's FDI + FOREIGN direct investment into China rose for the sixth consecutive month in Jan., up 7.79% year on year to US$8.13B, China's Ministry of Commerce said over the weekend. http://www.shanghaidaily.com/article/?id=429063&type=Business

RLNOF +/- Reliance Industries Ltd. has again sweetened its offer to take control of Lyondell-Basell Industries when it exits bankruptcy, boosting its valuation of the chemical maker to $14.5B, according to a person familiar with the matter. The offer, made over the weekend, would give RLNOF a minority stake in Lyondell, but would give the Indian co. super-voting power to control Lyondell's board, this person said.

Orange/T-Mobile Merger + The U.K.'s largest mobile operator will be created as early as this week when the combined Orange/T-Mobile merger is given the green light by the European Commission. http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/telecoms/7280926/Europe-gives-green-light-to-UK-phone-giant.html

The New York Times

GSK - Hundreds of people taking Avandia, a controversial diabetes medicine, needlessly suffer heart attacks and heart failure each month, according to confidential government reports that recommend the drug be removed from the market. The reports, obtained by Times, say that if every diabetic now taking Avandia were instead given a similar pill named Actos, about 500 heart attacks and 300 cases of heart failure would be averted every month because Avandia can hurt the heart. Avandia, intended to treat Type 2 diabetes, is known as rosiglitazone and was linked to 304 deaths during the 3Q of '09.

http://www.nytimes.com/2010/02/20/health/policy/20avandia.html?pagewanted=print

Reuters

Gold Futures +/- Gold hit a one-month high on Monday as the dollar came under pressure from easing fears over potential U.S. rate hikes, and as talk of a bailout for debt-ridden Greece underpinned the euro.

Investors have in recent weeks poured money into gold as a hedge against currency volatility, while the metal's steady rebound since falling below $1,100 has also ignited technical buying and boosted sentiment. Spot gold hit an intraday high of $1,130.65 an ounce and was quoted around $1,121 an ounce, up from $1,117.50 at NY's notional close on Friday. U.S. gold futures also struck a 1-month high, silver gained more than 1%, while platinum and palladium tracked bullion higher.

http://www.cnbc.com/id/35512070

Speculative Trading +/- Five former Treasury secretaries urged Congress on Sun. to bar banks that receive federal support from engaging in speculative activity unrelated to basic bank services. The Treasury secretaries said, however, that hedge funds, private-equity firms and other organizations engaged in speculative trading should be "free to compete and innovate" but should not expect taxpayers to back up their endeavors.

Oil Futures +/- Oil held just under $80 a barrel on Monday, paring much of an earlier gain to a 6-week high, with the dollar down as investors reassessed the prospect of an earlier U.S. interest rate rise than previously expected. An extended oil refinery strike in France, a report of rising crude oil processing in China in Jan. and tensions over Iran's nuclear program also supported prices. U.S. light, sweet crude for March delivery rose. It earlier reached $80.51 -- the highest since Jan. 13. London Brent crude rose. The dollar was weaker on Monday as investors reassessed the Fed's broader interest rate intentions after last week's surprise discount rate hike, prompting a degree of recovery in risk appetite.

http://www.cnbc.com/id/35512072

PRNewswire

HOLX +/- Hologic Inc., a leading developer, manufacturer and supplier of premium diagnostics, medical imaging systems and surgical products dedicated to serving the healthcare needs of women, today announced it has entered into a settlement agreement with Ethicon Endo-Surgery Inc., a Johnson & Johnson JNJ co.

MarketWatch.com

Credit Markets +/- Leveraged loans are outperforming high-yield, high-risk bonds in the U.S. after lagging behind the last 4yrs as the Fed takes steps to withdraw the unprecedented amount of cash it pumped into the economy. Speculative-grade loans gained 1.91% this yr through Feb. 19, according to S&P. That compares with 1.137% for junk bonds, Bank of America Merrill Lynch�s U.S. High Yield Master II index shows. Higher benchmark borrowing costs tend to increase rates on loans, which are adjustable, boosting returns.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWoz2D_.h6mw&pos=4#

ALU + Alcatel-Lucent shares jumped 4.5% on Monday. Bank of America's Merrill Lynch unit set a 0.44 euro 2012 eps estimate on the co., which it said is 70% above consensus estimates. It said there are positives for the stock that are not understood - capex moving into areas where Alcatel-Lucent has top market share, tax-driven earnings-per-share, the firm's stronger balance sheet and the industry experience of the firm's CEO and of its CFO.

THS +/- TreeHouse Foods Inc. said that it will offer $100M shares of common stock in an underwritten public offering. THS will use the net proceeds of the offering to part-fund its acquisition of Sturm Foods and expects to close the deal on March 2.

CPB + Campbell Soup Co. said its fiscal 2Q profit rose to $259M, or $.74 a/s, from $233M, or $.64 a/s, in the year-ago period. Sales rose 1% to $2.2B. FactSet was looking for EPS of $.73 a/s on sales of $2.2B. For the full fiscal yr, qCPBl lowered its sales growth forecast to 2.5% to 3.5%, from a prior range of 4% to 5%. Adjusted net earnings are predicted to grow 9% to 11% from a fiscal 2009 profit of $2.21 a/s. Analysts forecast 2010 earnings of $2.46 a/s, on average. Shares of Campbell closed Friday at $33.93.

LOW + Lowe's Cos. said that its fiscal 4Q profit rose to $205M, or $.14 a/s, from $162M, or $.11 a/s, a yr earlier. Sales in the Q ended Jan. 29 rose to $10.2B from $9.98B. The co. forecast profit of $.27 to $.29 a/s in the 1Q and $1.30 to $1.42 a/s for this fiscal yr. Analysts estimated profit of $.13 a/s in the 4Q, $.33 in the 1Q and $1.36 for the year. Our results "suggest the worst of the economic cycle is likely behind us," said CEO Robert Niblock, adding sales of bigger-ticket items have showed some improvement.

CEG +/- Constellation Energy Group said it swung to a 4Q net profit of $4.42B, or $21.96 a/s, from a loss of $1.4B, or $7.75 a/s, recorded in the yr-earlier period. Results in the latest Q were distorted by an exceptional gain of $7.4B from the sale of a stake in Constellation Energy Nuclear Group to EDF. Stripping out one-off items, adjusted earnings in the latest Q came in at $.30 a/s. The forecast by FactSet was for EPS of $.31. CEG reaffirmed its '10 guidance for EPS of $3.05 to $3.45 and announced guidance for 2011 earnings of $3.45 to $3.85 a/s.

REP + Repsol was upgraded to neutral from sell by Goldman Sachs, which said shares have underperformed the integrated oil sector by 10% yr-to-date. Goldman said the market is now discounting a more bearish scenario for refining margins and taking a conservative view on the upside from further exploration success in Brazil, Gulf of Mexico and West Africa. A fall in the oil price or refining margins, potential exploration disappointments or a weakening U.S. dollar are downside risks to Goldman's view.

Marco Community Bank - Marco Community Bank of Marco Island, Fla., became the 17th bank shut down in 2010, the FDIC said in a press release. The FDIC entered into a purchase and assumption agreement with privately held Mutual of Omaha Bank. Mutual of Omaha will assume all the deposits of Marco. Marco Community had $119.6M in assets and $117.1M in deposits as of Dec. 31. Mutual of Omaha entered into a loss-share agreement on $104.8M of Marco's assets, the FDIC said.

PWR - Quanta Services said that its 4Q net income declined to $43.9M, or $.21 a/s, from $46.5M, or $.24 a/s, a yr ago. FactSet had expected EPS of $.20. Revenue at the contracting services firm rose to $985.4M, from $921.5M at the same point last yr. "Our customers and demand for our services continue to be negatively impacted by slow economic conditions. During these difficult times, however, we have continued our strategy of not pursuing low-margin work," the firm said. It expects 1Q revenue of between $700M and $750M and EPS of $.07.

Europe + European shares rose in early trading, up for the sixth straight session, with investors buying up commodity-sector stocks such as mining group Rio Tinto, up 1.2%. Of companies reporting results, shares of property developer Hammerson climbed 1.8% after it posted a narrowed loss. The U.K. FTSE 100 index climbed 0.3% to 5,374.28, the German DAX index advanced 0.3% to 5,736.80 and the French CAC-40 index rose 0.1% to 3,774.22.

Japan + Japanese shares rallied Mon. morning in Tokyo, sending the Nikkei 225 up 2.7% to 10,397.11 and the broader Topix up 2.4% to 910.76. The dollar continued to strengthen against the yen, providing a lift to shares of major exporters. Nikon Corp. qNINOF added 4%, Sony Corp. qSNE climbed 3.2% and Mazda Motor Corp. qMZDAF was up 3.6%. Shipping cos. also climbed with Mitsui O.S.K. Lines Ltd. qMSLOF up 3.5% and Nippon Yusen K.K. qNYUKF rising 4.9% after the Nikkei business daily reported on Sat. that shippers were close to seeing their earnings bottom out amid a pickup in exports. Elsewhere, South Korea's Kospi added 1.5% and Australia's S&P/ASX 200 was 1.6% higher.

RBS + Royal Bank of Scotland CEO Stephen Hester will refuse a 1.6M pound bonus for 2009, according to press reports. Hester joined RBS after the bank was bailed out by the government, replacing Fred Goodwin as CEO. His reported decision comes after Barclays qBCS CEO John Varley and President Bob Diamond last week turned down their '09 bonuses. Hester, who has a salary of 1.2M pounds a yr, reportedly believes that turning down his bonus will help defuse public anger over the bank's pay and bonuses.

NVS + Swiss drug firm Novartis said that Menveo, a quadrivalent meningococcal conjugate vaccine, was approved by the U.S. FDA. The medicine was approved for active immunization.

China + China received $8.13B in foreign direct investment in Jan., up about 7.8% from the yr-earlier month, on a surge in investment in the services sectors, according to recent data. The total was, however, lower than the $12.1B of inflows received in Dec. Foreign investment in agriculture, forestry, animal husbandry and fisheries spiked 88.9% during the month, according to a Ministry of Commerce statement, released over the weekend. FDI into the services sector jumped 26.5%, but foreign investment inflows in the manufacturing and real-estate sectors declined 11.6% and 6%, respectively.

Bloomberg.com

Treasuries + Treasury yields were near a six-week high as a stock rally cut demand for the relative safety of government debt as the U.S. prepared to sell a record $126B of securities.

http://www.bloomberg.com/apps/news?pid=20601009&sid=aCMdPT2VFwIg#

The Dollar - The dollar declined against the New Zealand dollar and South Korean won as a stock-market rally damped demand for lower-yielding assets. The dollar also dropped against the yen on speculation a stagnant U.S. job market will keep Fed Chairman Ben S. Bernanke from raising the central bank�s key interest rate. The MSCI World Index of shares climbed 0.6%, while the MSCI Asia Pacific Index gained 2.4%.

http://www.bloomberg.com/apps/news?pid=20601083&sid=aZBagcx8K2.E

Greece + Greek 2yr notes rose for a second day on speculation the government will find investors at a sale of bonds as early as this week as it struggles to tackle its ballooning budget deficit. The gain drove the yield 4bps lower as investors waited for details of how the nation plans to cover its immediate financing needs. Spyros Papanicolaou, the former head of the Greece�s debt agency, said on Jan. 26 the government will probably sell 10yr bonds in Feb. through banks. Greek central bank Governor George Provopoulos said last week markets are �overshooting� on the crisis and he�s confident the government will meet its deficit-reduction goals.

http://www.businessweek.com/news/2010-02-22/greek-two-year-notes-rise-on-optimism-nation-will-find-funding.html

BARRON's

DELL - Dell just might be the most exasperting co. in the tech sector. For several years, the PC giant has been struggling to find a new persona in a rapidly changing hardware market. The co. abandoned its Web-only approach and dived headlong into the retail market; the old made-to-order approach has been junked, as it seeks to cut costs by reducing customer choice. And, in the past few years, Dell has chopped 20K jobs, effectively trading them in for that many people and then some via the acquisition of Perot Systems.

http://online.barrons.com/article/SB126662283204448647.html?mod=BOLFeed

Stock Mentioned +/- qAltra, qChart Industries, qDell, qHeineken, qWalgreen.

Topics Covered +/- Cover Story: Need proof that our 1,000 top U.S. financial advisors are truly the best? Just look at their 97% client retention rate. We profile the brightest star in each state -- plus D.C; Plugged In: Greece makes the outlook for wireless slippery; The Trader: Stocks edge higher for a second straight week; Interview: Roger Vogel, Managing Director, Silvercrest Asset Management Group.

Up and Down Wall Street +/- Why Washington and Wall Street are living on a planet all their own. Is the Fed really starting to tighten?

SPLS + We continue to like Staples as it outperforms competition and remains a good play on a labor recovery. We see upside to the 4Q, but we suspect Street numbers for fiscal 2011 could be at the very high end of where management would be willing to guide this early in the year.

We are maintaining our Buy rating and raising our 4Q EPS estimate to $.40 ahead of SPLS' 4Q earnings release on March 2. This reflects an above-consensus sales forecast, modest gross-margin improvement and modest selling, general and administrative (SGA)-expense leverage.

http://online.barrons.com/article/SB126660899215048479.html?mod=BOLFeed

MS - A top Morgan Stanley insider sold shares in the investment bank this week, decreasing his direct holdings by about 15%. Thomas Colm Kelleher, the co-head of institutional securities, sold 50,000 shares on Wed. for $1.4M, or about $27.61 p/s. Kelleher continues to own 313,808 shares directly, as well as more than 200K stock options and stock-unit awards. He owns less than 1% of the co.'s outstanding shares. MS declined to comment on the sale.

http://online.barrons.com/article/SB126653957316348079.html?mod=BOLFeed

WAG + Walgreen is taking a bite out of the Big Apple, with plans to buy Duane Reade, a fabled NY chain, for nearly $1.1B, including debt. The deal, announced Wed., gives Walgreen 257 valuable urban stores, and tasty opportunities in marketing, customer loyalty programs and store design. WAG shareholders greeted the news with moderate applause, and the clapping could grow louder in coming years as the co., with more than 7,100 units, integrates Duane Reade. "It would have taken us 20yrs to get this footprint in NY, with a lower rate of return," says Wade Miquelon, WAG's CFO.

http://online.barrons.com/article/SB126663059572748849.html?mod=BOLFeed