Stocks & Equities

Fiat SpA (F) is set to gain the upper hand in negotiations to buy a health-care trust’s holding in Chrysler Group LLC if the final value for the American carmaker remains around the level currently being discussed.

Bank advisers are considering a valuation of about $10 billion for Chrysler, people with knowledge of the matter said. That would make the 41.5 percent of Chrysler owned by theUnited Auto Workers trust worth $4.15 billion, less than what analysts have expected Fiat to pay.

The trust and Fiat — Chrysler’s majority shareholder — are disputing the company’s value as Sergio Marchionne, chief executive officer of both carmakers, seeks to buy the UAW’s stake. The trust is working to determine whether to sell its holding to Fiat directly or press forward with an initial public offering as soon as next month, said the people, who asked not to be identified because the information is private.

“It’s going in Marchionne’s direction,” said Sascha Gommel, a Frankfurt-based analyst at Commerzbank. “It’s in the interest of both parties to avoid an IPO. In the end, the most likely scenario is that Fiat takes the remaining stake.”

Fiat gained as much as 14 cents, or 2.3 percent, to 6.01 euros and was up 0.7 percent as of 11:45 a.m. in Milan trading today. The stock has climbed 56 percent this year, valuing the Italian automaker at 7.4 billion euros ($10 billion).

Investment banks working on the IPO have considered a range from $9 billion to $16 billion, said one of the people. The advisers are currently focusing on a range of about $10 billion to $11 billion for the IPO, said another person. Talks are fluid and the final number could change.

Valuations

…..more HERE

Dropbox Planning Fresh Funding, Valuing It Worth $8 Billion [Report]

Dropbox Inc, a file-sharing and storage start-up, is planning to raise $250 million in additional funding. The funding would take the value of the fast growing company to over $8 billion, as reported by Bloomberg Businessweek. Dropbox joins the elite list of tech start ups The six-year-old company joins the list of the Silicon Valley…

….full article HERE

as China, Fed concerns sour mood….

Downbeat China manufacturing activity added to gloom in most Asian stock markets on Thursday, while emerging market currencies faltered as the dollar charged ahead after the U.S. Federal Reserve’s latest minutes hinted at stimulus tapering.

European shares fell on Thursday, led by financials, after the Federal Reserve signalled it may start withdrawing its monetary stimulus in the next few months. Weak data from China aggravated the decline.

Minutes of the Fed’s Oct. 29-30 policy meeting showed bank officials felt they could start scaling back the asset-purchase programme at one of its next few meetings if economic conditions warranted it.

“Talk of tapering is coming back into the markets, so the recent consolidation in the markets may be expected to continue at least until the Fed meeting next month,” Jawaid Afsar, sales trader at SecurEquity, said.

The FTSEurofirst 300 was down 8.07 points, or 0.6 percent, at 1289.31, by 0824 GMT, echoing Wall Street, which reversed course after the Fed minutes on Wednesday.

The loose monetary policy adopted by central banks globally has fed the rally in equities — European shares are up around 13 percent in 2013 — and eroded returns from other asset classes such as bonds and cash.

Banks, those most acutely exposed to the benefits of monetary stimulus, fell 0.7 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed about 1.2 percent, at one point touching its lowest point since late last week. The softer China manufacturing and Fed speculation also weighed on emerging market currencies, sending the Indonesian rupiah to its lowest mark in nearly five years.

But Japan’s Nikkei stock average .N225 bucked the region, surging 1.9 percent as the yen weakened to a four-month low against the dollar, and on plans by a major government fund to invest more of its $2 trillion funds in riskier assets.

 

 

 

Charles Schwab: The Stock Market Isn’t Flashing Red

Posted by Liz Ann Sonders - Charles Schwab

on Wednesday, 20 November 2013 21:09

Almost all the indicators of a toppy market haven’t presented themselves, writes a Charles Schwab pro.

One of my themes over the past few years is that the bull market that began in 2009 is of the “secular,” not “cyclical” variety. There are an increasing number of adherents to that perspective and it could help to explain, ironically, why there is also an elevated fear that this bull market is coming to a close. I say ironically because it’s precisely the increased optimism that has brought on fears of a bull market finale. I, too, consistently observe sentiment as a gauge for market behavior, but the growing cries that we’ve reached sentiment or valuation extreme worthy of past tops, or a bubble at its bursting point, seems a bit premature; even with the Dow hitting 16,000 and the S&P 500 hitting 1800 as I write this today.

It’s instructive to observe past market tops and put them on the opposite side of today’s mirror. What you won’t find is a reflection. Our friends at Strategas Research Partners recently put together a brief table highlighting the factors typically in place at major market tops; all of which had kicked in at both the 2000 and 2007 tops. Of the nine factors listed, there is only one flashing red today: rising real interest rates.

Screen Shot 2013-11-20 at 12.51.42 PM

Let’s start with the matter of rising real interest rates Such rising rates (real or nominal) are typically a bear market culprit, but today it’s a little different. Yes, real interest rates are rising; but mostly due to low and still-falling inflation; not sharply rising nominal rates. And, real rates are rising from record-breaking earlier lows. As we’ve argued for much of the past year, there remains a lot of wiggle room for rates to move higher before they begin to bite either the economy or stock market in a significant way.

I am by no means dismissing the possibility of a market correction, especially around the beginning of Fed tapering. Historically, corrections associated with the beginning of a higher rate cycle have been generally in the 5-10% range; and it may not be different this time around. But a normal single-digit correction is something entirely different than the end of a bull market.

Fund flows frothy?

The list above also has mutual fund flow data, which many are now suggesting represents a glaring warning signal. Yes, equity fund flows have picked up sharply this year; but the total barely makes a dent in the hundreds of billions that has come out of equity funds since the financial crisis in 2008. Not only that, but traditional pension funds are under-exposed to equities; hedge funds’ net long exposure remains below 50% (a very defensive position); and foundations’/endowments’ public equity exposure has dropped precipitously over the past decade in favor of alternative asset classes (that in many cases are underperforming traditional equities). So there isn’t really any investing cohort that’s gone hog-wild in equities.

I will point out one item on the list above- shift towards defensive leadership. This is one that bears watching given the pickup in relative outperformance of more defensive sectors recently. At this stage, it likely just represents more short-term defensive positioning around the recent fiscal uncertainty and also some value-hunting into year-end. But if the momentum carries into 2014, it’s one on the list that may have to be checked.

…..read page 2 HERE

U.S. stock index futures signaled a higher open on Wednesday — despite negative trade in both Europe and Asia — after optimistic remarks from outgoingFederal Reserve Chairman Ben Bernanke. 

(Read more: European shares lower ahead of Fed’s ‘main event’)

Speaking in Washington on Tuesday, Bernanke said the central bank would maintain its easy monetary policy for as long as needed, and would only begin to reduce bond-buying once convinced that labor market improvements would continue.

Following this, investors await on Wednesday the release of minutes from the Federal Open Market Committee (FOMC)’s meeting in October.

“While Janet Yellen’s confirmation hearing at the Senate banking committee last week gave few signals about the likely path for near-term policy, the minutes will be watched closely for any clues as to when the Fed is looking to start tapering,” Emily Nicol, an economist at Daiwa Capital, said in a morning note.

(Read more: If Fed minutes reveal taper talk, watch yields)

After mixed earnings on Tuesday, retail stocks will remain in focus on Wednesday with the release of third quarter numbers from JC Penney, Lowe’s and J.M. Smucker. Staples, ADT and Deere will also report before Wall Street opens.

Other stocks worth watching on Wednesday include JPMorgan Chase, which rose on Tuesday after reaching a record $13 billion settlement with federal and state authorities to resolve claims over its sales of mortgage-backed securities during the housing crisis.

—By CNBC’s Katy Barnato