Mid-Day Market Update

Eagle River, WI 10/21/2011 (PennyPayDay) – After seeing considerable volatility in the previous session, stocks moved sharply higher at the start of trading on Friday. The major averages all showed notable moves to the upside after ending the previous session on opposite sides of the unchanged line.

In the past few minutes, the major averages have seen some further upside, reaching new highs for the young session. The Dow is up 158.48 points or 1.4 percent at 11,700.26, the Nasdaq is up 31.21 points or 1.2 percent at 2,629.83 and the S&P 500 is up 16.60 points or 1.4 percent at 1,231.99.

The early strength on Wall Street is partly due to renewed optimism about the financial situation in Europe, where leaders are trying to reach an agreement on a plan that could potentially resolve the region's ongoing debt crisis.

While a statement from France and Germany indicated that the European leaders are not likely to reach an agreement on the debt crisis at a summit on Sunday, a second summit has been scheduled for Wednesday.

Peter Boockvar, equity strategist at Miller Tabak, said, "While we won't get a definitive response from the Europeans this weekend on how best to deal next with their debt crisis, officials are still holding out hope that just a few extra days will complete the job."

"With the S&P 500 above 1,200, the DAX near 6,000 and the euro closer to 1.40 than 1.30, markets are assuming something," he added. "Whether what is put in place actually works or not is a different discussion, markets just want satisfaction now."

In corporate news, Microsoft (MSFT) reported first quarter earnings of $0.68 per share, in line with analyst estimates. The software giant said its revenues rose 7 percent to $17.37 billion, ahead of the consensus estimate.

General Electric (GE) reported third quarter adjusted earnings of $0.31 per share, matching Wall Street expectations. The diversified conglomerate reported revenues that were flat at $35.4 billion compared to estimates for $34.9 billion.

McDonald's (MCD), Verizon (VZ), and Honeywell (HON) are among the other major companies that have released their quarterly results before the start of trading.

Computer hardware stocks are seeing significant strength in early trading, driving the NYSE Arca Computer Hardware Index up by 3.8 percent. Seagate Technology (STX) is helping to lead the sector higher after reporting better than expected first quarter earnings.

Early strength has also emerged among gold stocks, which are moving back to the upside along with the price of the precious metal. Semiconductor, housing, and biotech stocks are also posting notable gains, moving higher along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a lackluster performance on Friday before ending the day mixed. While Japan's Nikkei 225 Index ended the day just below the unchanged line, Hong Kong's Hang Seng Index edged up by 0.2 percent.

Meanwhile, the major European markets have shown notable moves to the upside over the course of the trading day. The U.K.'s FTSE 100 Index is up by 1.4 percent, while the French CAC 40 Index and the German DAX Index are jumping by 2.2 percent and 2.7 percent, respectively.

In the bond market, treasuries are seeing modest weakness amid the early strength on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.7 basis points at 2.207 percent.

PennyPayDay Disclaimer

Distributed by Viestly

Groupon Expects $500M from IPO

Tomahawk, WI 10/21/2011 (PennyPayDay) – Online coupon seller Groupon Inc. is discounting its expectations for its first stock offering.

The company, which offers consumers daily deals targeted to their city and preferences, now expects net proceeds of about $478.8 million from its initial public offering of 30 million shares.

Groupon said that it expects to sell the IPO shares for between $16 and $18 per share. That implies a valuation for the entire company of $10.1 billion to $11.4 billion. The stock offered in the IPO represents only about 5 percent of Groupon.

The expected terms, unveiled in a regulatory filing Friday, scale back initial plans for an IPO worth $750 million. The company also disclosed third-quarter financial figures that showed it is getting closer to profitability.

Longtime IPO analyst Scott Sweet, the owner of IPO Boutique, said Groupon is now expected to go public the first week of November.

The company's IPO, one of the most anticipated offerings of the year, has been beset with questions about how it accounts for revenue and its business model, as well as a weak market for stock offerings.

Groupon has also seen some top-level departures recently, announcing last month that its chief operating officer, Margo Georgiadis, had gone back to Google, where she worked before joining Groupon in May. This came about six months after Groupon's previous COO, Rob Solomon, left the company.

Early last month a report in The Wall Street Journal said Groupon was reconsidering when to go through with its IPO "on a week by week basis." The source said Groupon had previously expected to price its IPO in the middle of September. Setting expected terms means the offering itself could take place in the next several weeks.

Groupon, which rejected a $6 billion takeover offer from Google Inc. last year, disclosed in the filing that its revenue has grown from $1.2 million in 2009's second quarter to $430.2 million in the third quarter of this year.

The Chicago company also said its subscriber count jumped from 152,203 as of June 30, 2009, to 142.9 million as of Sept. 30. It added that 29.5 million of those members, about 20 percent, had actually purchased Groupons through the third quarter's end. About 16 million of those had purchased more than one Groupon.

In a letter addressed to potential shareholders, CEO Andrew Mason said Groupon spends a lot acquiring new subscribers and that it is constantly reinventing itself to keep up with merchant demand. But Mason was blunt that there were potential risks for investors.

"We have yet to reach sustained profitability and we have no shortage of competition. Our path will include some moments of brilliance and others of sheer stupidity. Knowing that this will at times be a bumpy ride, we thank you for considering joining us," Mason wrote.

Groupon has made some foolish errors, analyst Sweet said, ranging from its accounting difficulties to Mason sending a memo to employees during a quiet period.

"You are watching a company that at one time had a lot of demand. All of that luster is gone," he said.

Sweet said Groupon's roadshow, which is expected to start next week, will likely be contentious.

"This will not be like an earnings report where people are high-fiving each other. This will be balkers and stalkers. They will face serious questions," he said.

For the three months ended Sept. 30, Groupon narrowed its net loss of $10.6 million on revenue of $430.2 million on lower marketing spending. That compares with a loss of $49 million on revenue of $81.8 million in the same period last year.

The company said in the filing that it does not plan to pay dividends for "the foreseeable future." Instead, Groupon plans to keep all of its earnings to finance operations and expand.

Groupon was founded about 2 1/2 years ago by Mason and Eric Lefkofsky. It started as a side project to another website called The Point that helped raise funds for various causes. Mason is one of Groupon's largest stockholders with more than 23 million shares.

Both Mason and Lefkofsky have faced their share of scrutiny, whether it be for the memo Mason sent or when the company privately raised $950 million in a pre-IPO back in January, according to a filing at that time. Sweet said that approximately $800 million of that went to the company's employees and investors, with Lefkofsky getting about $319 million.

Groupon said that after the offering it will have Class A and Class B shares, with Class A stockholders entitled to one vote per share. Class B stock will get 150 votes per share. Outstanding Class B shares will represent about 36.3 percent of the voting power of Groupon's outstanding stock following the offering.

The structure will give the company's principal shareholders, a group of 13 people including Mason and Lefkofsky, 58.4 percent of the voting power.

The company is giving the underwriters the right to buy up to 4.5 million more shares of Class A stock to cover any excess demand. The expected proceeds from the offering are based on the midpoint of the expected price range.

Groupon expects to list its Class A stock on the Nasdaq under the ticker symbol "GRPN." Groupon plans to use the proceeds for working capital and other purposes, including potential acquisitions. It has made 19 acquisitions since May 2010.

Groupon also has a large employee base, with more than 10,400 workers. In comparison, Facebook -- which started in 2004 -- has approximately 2,500.

PennyPayDay Disclaimer

Distributed by Viestly

Cumulus Media (CMLS) Technical Stock Chart Video

The CMLS chart is making an inverted head and shoulders pattern. Support from the neckline is at $2.60 that needs to hold with resistance initially at $2.85. Static resistance doesn't enter beyond that until approximately $3.25.

Distributed by Viestly

Foreign Growth Fuels General Electric (NYSE:GE)

Tomahawk, WI 10/21/2011 (PennyPayDay) – General Electric Co. (NYSE:GE) reported an 18 percent profit rise that met Wall Street's expectations, helped by strong revenue growth in key foreign markets including Brazil, Russia and China.

The largest U.S. conglomerate said on Friday it expects earnings to rise at a double-digit percentage rate next year, following peer United Technologies Corp in trying to assuage investors' fears about Europe's brewing debt crisis.

"We continue to successfully navigate a volatile global economy," Chief Executive Jeff Immelt said in a statement.

Investors took heart in the company's 16 percent growth in industrial equipment orders -- an important indicator of future revenue, and in the 25 percent rise in international sales. GE has been counting on strong demand in rapidly developing economies to offset weak U.S. and European demand.

"The revenue number was strong and the organic growth rate in industrial was strong," said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire. "Those are telling and they give us a little bit of a look into next quarter and beyond."

But GE shares declined 1.4 percent to $16.40 in premarket trading as some raised concerns that its profit margins were weaker than expected in the quarter, with a low tax rate helping the company to meet expectations.

"Margins missed our forecast and were down year on year in the four big industrial businesses," said Jeffrey Sprague, managing partner at Vertical Research Partners. "There is little or no operating leverage in GE's portfolio due to low priced equipment in backlog and R&D headwinds."

PennyPayDay Disclaimer

Distributed by Viestly

Good Deal for Both Ford (NYSE:F) and UAW

Shawshank, VA 10/20/2011 (PennyPayDay) – Ford Motor Co (NYSE:F) said its new four-year contract with the United Auto Workers union will increase its costs less than 1 percent annually, with higher bonuses offset by newly won flexibility in work rules.

Now that the contract has been ratified, Ford will consider reinstating a dividend for shareholders, even before ratings agencies return the automaker to "investment grade" status, said Lewis Booth, the company's chief financial officer.

Analysts have said the contract boosts Ford's chances for a return to an investment grade credit rating for the first time since 2005, which would reduce its borrowing costs.

"There is an opportunity to think going forward about a dividend not directly related to the achievement of investment grade," Booth said.

But he also said it was too early to talk publicly about the timing of a dividend

Ford said the new pact would mean lump-sum payments of $280 million in 2011 -- bonuses and severance payments -- and about $80 million annually, on average, in the remaining years of the deal.

The No. 2 U.S. automaker said it expects to reduce the number of higher-paid skilled trades workers in its U.S. factories by about 1,000 through buyouts. At the same time, it expects lower-paid, entry-level employees to make up about 8 percent of its factory work force by 2015, up from fewer than 100 workers when negotiations with the UAW began this summer.

The UAW-Ford contract was ratified on Wednesday.

Ford's hourly workers voted by a nearly 2-to-1 margin to approve the pact, clearing the way for the creation of almost 6,000 jobs and investment of more than $6 billion in the automaker's U.S. plants.

The new jobs will reverse a decline in workers in the past decade. Ford now has about 41,000 UAW-represented workers in the United States, down from about 77,500 before the 2007 contract and about 102,500 in 2000.

Workers did not grant as many concessions in the new contract as they did in the 2007 pact that helped Ford and its Detroit rivals General Motors Co (GM - News) and Chrysler Group LLC narrow the gap in labor costs with Japanese, Korean and German automakers with U.S. plants.

That gap narrowed to about $8 per hour in 2010 from $27 per hour before the 2007 contract.

John Fleming, Ford's global manufacturing chief, said more flexible work rules in the new contract would allow the company to "flex up or flex down" output at its factories more efficiently and at lower cost.

"This is all about us driving utilization at our facilities," Fleming told analysts and reporters on a conference call Thursday as he detailed how the contract would affect Ford's profitability and finances.

He also said workers who take buyouts would leave the company around the middle of next year. The median age of production employees at Ford is 47, he said.

While the contract was approved by a wide margin, many workers say they are not being rewarded for making sacrifices in 2007 when the company was in a weaker financial position.

In an interview with Reuters, Fleming said he is aware that many plant workers are upset.

"We've got some work to do together, but the overall tenet of what we need to do as a company is to continue to be fair to our employees while continuing the drive to be competitive," he said. "Our competitiveness is really what is going to give us job security."

PennyPayDay Disclaimer

Distributed by Viestly

Factory and Jobs Data Offer Some Hope for Ecomomy

Shawshank, VA 10/20/2011 (PennyPayDay) – Factory activity in the U.S. Mid-Atlantic region rebounded in October and the number of Americans claiming new jobless benefits fell last week, fresh signs that the economy was likely to duck a new recession.

Optimism over the economy was, however, tempered by other data on Thursday showing a drop in sales of previously owned homes last month and only a small rise in a gauge of future growth.

Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 403,000, the Labor Department said. Economists had forecast claims falling to 400,000.

Separately, the Philadelphia Federal Reserve Bank said its business activity index rebounded to 8.7 in October, the highest reading in six months, from minus 17.5 in September.

Any reading above zero indicates expansion in the region's manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.

"This is yet another number consistent with a slow-growing economy, but no recession," said Cary Leahey, a senior economist at Decision Economics in New York.

Reports ranging from retail sales to trade have suggested a pick-up in economic activity after a weak first half.

That view was also bolstered on Thursday, with the four-week moving average of jobless claims, considered a better measure of labor market trends, hitting a six-month low last week.

Michael Woolfolk, senior currency strategist at BNY Mellon in New York, said recent data on payrolls and retail sales had "effectively removed the double-dip scenario for the U.S."

"The weekly fall in jobless claims adds to this, and the four-week moving average continues to drift lower. But we are still a long distance from the 200,000 new jobs a month we need for a sustainable improvement in the unemployment rate," he said.

The claims data covered the survey week for the government's closely watched nonfarm payrolls count for October.

First-time applications for jobless aid fell 25,000 between the September and October survey periods, suggesting a step-up in nonfarm employment after payrolls increased 103,000 last month.

U.S. stocks were trading up slightly, while prices for Treasury debt fell. The dollar was up broadly.

An anemic economic recovery has left job growth frustratingly slow and the unemployment rate stuck above 9 percent. The claims report implied employers were not rapidly dismissing workers, despite an uncertain economic outlook.

While most parts of the economy show improvement, the housing market remains a sore spot.

Sales of existing homes dropped 3.0 percent to an annual rate of 4.91 million units, the National Association of Realtors said in another report.

"Housing is still struggling and continues to be one of the biggest drags on the economy. Mortgage rates are low, but unemployment is high so I do not see where the growth can come in housing," said Jessica Hoversen, an analyst at MF Global in New York.

The Conference Board warned that the economy faced a 50 percent chance of recession despite modest gains in its leading index of activity last month.

But there is reason to be cautiously optimistic. After spiking in mid-September, jobless claims appear to have settled near the 400,000 mark that is usually associated with some improvement in the jobs market.

PennyPayDay Disclaimer

Distributed by Viestly

European Stocks Off Days Lows

Eagle River, WI 10/20/2011 (PennyPayDay) – European stocks are trading off their day's lows on Thursday, with a rise in U.S. stock futures buoying sentiment to some extent after a guideline document presented by German officials suggested that the EFSF would be able to purchase bonds from the secondary market.

Stocks fell sharply early in the session, as splits emerged among European leaders on a plan to beef up the bailout fund to tackle the euro zone debt crisis. European leaders are due to hold a summit this weekend to make significant progress on expanding the EU bailout fund and recapitalizing banks.

Also, the U.S. economy continued to expand in September, although the pace of growth remains "modest" or "slight" in a number of regions, the Federal Reserve's Book survey released yesterday said, denting hopes of a recovery in the global economy. September's existing home sales numbers and data on initial jobless claims slated for release later in the day could offer further clues about the world's largest economy.

The Euro Stoxx 50 index of euro zone blue chippers and the Stoxx Europe 50 index, which includes some major U.K. companies, are declining around half a percent each, while around Europe, the German DAX is moving down 0.4 percent, France's CAC 40 is declining 0.7 percent and the U.K.'s FTSE 100 is losing 0.4 percent. Switzerland's SMI is posting a modest 0.1 percent gain.

In stock-specific action, Deutsche Boerse AG is rising 1.1 percent after the Frankfurt Stock Exchange owner said its profit nearly doubled in the third quarter on a one-time gain as well as on a 20 percent growth in revenues.

EADS is down half a percent on a FT report that Germany plans to slash the number of military aircraft it will buy from the company. Hochtief is declining 1.7 percent despite a broker upgrading its rating on the stock.

Schneider Electric is tumbling 7.4 percent in Paris after the French energy management company said its sales for the third quarter increased 4.6 percent on a current structure and exchange rate basis and organic growth was 7.7 percent. The company also confirmed its 2011 organic top line growth target of 6 to 9 percent, while lowering its EBITA margin outlook.

Shares of Actelion plunged around 12 percent in Zurich after the Swiss biopharmaceutical company reported a decline in third-quarter earnings, hurt by lower product sales mainly of its pulmonary arterial hypertension drug Tracleer. Nestle shares edged down 0.3 percent after the Swiss food giant reported sales of 60.89 billion francs for the 9-month period ended September, slightly shy of some estimates.

In economic releases, retail sales figures in the U.K. were a bit stronger than expected in September, but economists sounded less optimistic if the coming months will see a similar upturn as global economic jitters and tight fiscal policy at home continue to weigh on consumer spending.

The Office for National Statistics said Thursday that sales volume, including automotive fuel, rose 0.6 percent month-on-month, compared to economists' forecast for a flat reading. The previous month's result was revised to a 0.4 percent decline.

Crude prices reversed early declines, while copper prices are down nearly 3 percent on the London Metal Exchange on concerns over slowing economic growth.


The Swiss stock market was slightly lower in mid-day trading Thursday, but major pharmaceutical stocks were providing a measure of support.

The general mood of the market was cautious amid fresh concerns that European leaders will not be able to come to agreement on a plan to for an expanded sovereign debt rescue fund in Brussels on Sunday.

The Swiss Market Index (SMI) rose 0.04 percent to 5,597.61. The Swiss Leader Index (SLI) decreased by 0.24 percent to 853.01 and the broader Swiss Performance Index by 0.19 percent to 5,158.34 meters.

Actelion Pharmaceuticals Ltd. posted third-quarter earnings per share of CHF 0.68, lower than CHF 0.87 per share reported a year ago. Shares were down 4 percent.

However, Roche Holdings and Novartis are getting a boost as defensive plays. Shares of both drug makers were up more than 1 percent.

Food giant Nestlé S.A. reported a 7.3 percent rise in organic sales for the first nine months, and said for the full year, it expects to slightly over-perform against its long-term organic sales growth target of 5 to 6 percent, despite input cost pressures.

Roche had positive study results for the drug candidate ocrelizumab in the treatment of multiple sclerosis.

Banks were lower amid anxiety over the EU summit. Credit Suisse was down 1.8 percent, and UBS lost 0.4 percent.

Richemont and Swatch shares were fractionally lower despite new data showing strong watch exports from Switzerland.

PennyPayDay Disclaimer

Distributed by Viestly