N AMERICAN MORNING BRIEFING: Kraft Sweetens Cadbury Bid

5th Jan 2010 11:30

DJIA Futures 10526.5 +10.5 +0.1% S&P 500 Futures 1129.2 +0.4 +0.0% Nasdaq Futures 1886.7 +26.4 +1.4% Above are as of 0610 ET FTSE 100 5520.6 +20.2 +0.4% Xetra DAX 6049.8 +1.5 +0.0% CAC40 4016.8 +2.9 +0.1% Above are as of 0613 ET Nikkei 225 10681.8 +27.4 +0.3% Hang Seng 22279.6 +456.3 +2.1% Above are closing prices SNAPSHOT: -Stocks seen up; dollar down against yen, euro, higher against the pound; Treasurys higher; Nymex crude higher at $81.54; gold higher at $1125.65. -Watch for: ICSC/Goldman Sachs chain store sales at 0745 ET; redbook index at 0855 ET; factory orders at 1000 ET; pending home sales at 1000 ET; ABC/Washington Post consumer confidence index at 1700 ET. OPENING CALL: Stock futures are advancing slightly Tuesday with investors looking ahead to more data releases for further confirmation of the economic recovery. Philip Gillett from IG Index in London said U.S. investors are feeling cautiously optimistic after positive data from U.K. retailers, but added that factory orders out later in the session will be closely eyed. "The focus is on economic data, with markets looking to see that the fundamentals are strong enough to sustain and continue the recovery." Gillett added that while the technology sector is heating up with the release of Google's new smart-phone, gains are likely to be short lived due to Apple's dominance of the market. EQUITIES: In M&A news, Kraft Foods (KFT) Tuesday sweetened its cash and stock bid for U.K. confectioner Cadbury PLC (CBRY.LN) with a bigger cash element after it sold its U.S. and Canadian frozen pizza business to Swiss rival Nestle (NESN.VX) for $3.7 billion in cash. Kraft said it would use the net proceeds from the sale to offer Cadbury shareholders an additional cash element of 60 pence per Cadbury share, bringing the cash part of the deal to 360 pence a share. It did not say how much the stock element of the cash-and-shares bid would reduce by. Nestle earlier confirmed that it has no plans to make its own bid for Cadbury. However, Cadbury dismissed Kraft's offer, saying: "Despite this tinkering the Kraft offer remains unchanged and derisory with less than half the consideration in cash." At 0613 ET, Kraft stock up 0.3% in Frankfurt. Elsewhere, Aviva (AV.LN) said it has bought U.S. stock fund manager River Road Asset Management, as the U.K. insurer continues a strategic push into North America and puts to work the proceeds of its recently spun-off Dutch insurance unit. An Aviva spokeswoman declined to say how much it paid for the company but similar transactions suggest a price tag of roughly $30 million. In the technology sector, Apple (AAPL) plans to unveil a multimedia tablet device later this month but doesn't plan on shipping the product until March, people briefed by the company told The Wall Street Journal. Apple is also set to announce that it has acquired Quattro Wireless for $275 million, All Things Digital reported. Google (GOOG) recently forked over an astonishing $750 million for AdMob, a Quattro competitor, which Apple had also made a bid to acquire. Both startups are aimed squarely at the fast-growing market to advertise on smartphones, such as Apple's iPhone and Google's Android devices. At 0615 ET, shares in Apple were up 0.6% in Frankfurt. Elsewhere, Google is expected to step into the mobile arena Tuesday with its own Nexus One smartphone in a direct challenge to Apple's iPhone handsets. At 0615 ET, Google was up 0.4% in Frankfurt. General Electric (GE) is realigning the industrial business formerly part of the division that makes appliances and light bulbs. The company confirmed Monday that its Consumer & Industrial division will lose authority over products such as electrical substations and circuit breakers, which will be placed under Atlanta-based GE Energy in a new division called Industrial Solutions. At 0615 ET, GE shares were down 0.1% in Frankfurt. FOREX: The dollar recovered a little in Europe after being hit by a fall in Treasury yields and a rise in risk appetite. By 0520 ET, the dollar was down in Europe at Y91.88, while the euro was up at $1.4425 and the pound had fallen to $1.6029. BONDS: Treasurys are up slightly, just off earlier highs after Monday's rally in the wake of weekend comments by Ben Bernanke and Fed Vice Chairman Kohn. Federal Reserve Board Governor Elizabeth Duke has reiterated the need for low rates for an extended period and said she expected only a moderate pace of recovery. The Treasury yield curve flattened, with the two-year/10-year benchmark spread narrowing to +275.1 basis points from Monday's +276.3 basis points. The two-year note is unchanged at 99 28+/32, yielding 1.056%, the 10-year up 3+/32 at 96 14+/32, yielding 3.81%, with the 30-year bond up 3/32 at 95 23+/32, yielding 4.64%. Corporate bonds: The positive tone in European credit default swap indexes continued in early trading, with spreads tightening ahead of factory orders and pending home sales data in the U.S. COMMODITIES: Crude oil futures are broadly higher, bolstered by a cold snap in U.S. and Europe and supportive economic data. Peter Beutel at Cameron Hanover said: "The $82/bbl (Nymex) level is acting as a magnet, pulling prices higher to break above that level. Economic recovery and cold temperatures were the focal points of discussion in Asia early this morning." At 0545 ET, ICE February Brent traded up 7 cents at $80.19 a barrel, while Nymex February WTI traded up 3 cents at $81.54 a barrel. Spot gold rose to a two-and-a-half week high as the dollar continued to ease. Gold's strong start in 2010 has reinvigorated the metal after its steep plunge in December, though analysts said it's unlikely to last past this week. At 0531 ET, spot gold traded at $1125.65 an ounce, up 0.4% from late Monday in New York, while silver was at $17.61 an ounce, up 0.3% from Monday's close. =======TODAY'S CALENDAR======= ET COUNTRY/PERIOD 0745 Jan 2 ICSC/Goldman Sachs Chain Store Sales 0800 Kansas City Fed Pres Hoenig participates in a panel discussion in Atlanta 0855 Jan 2 Redbook Index 1000 Nov Factory Orders 1000 Nov Pending Home Sales 1630 Jan 1 API Oil Industry Report 1700 Jan 3 ABC/Washington Post Consumer Confidence Index N/A Dec Auto Sales ============================== OTHER TOP STORIES OF THE DAY: US PUBLIC PENSIONS FACE $2 TRILLION SHORTFALL - FT The U.S. public pension system faces a shortfall of more than $2 trillion, the Financial Times reported Monday, citing an estimate by New Jersey pension fund chairman Orin Kramer. HOUSE, SENATE MOVING TO EXPEDITE HEALTH-CARE BILL The House and Senate plan to skip the formal conference process so they can deliver a final health-care bill to President Barack Obama more quickly, a Senate aide said Monday, The Wall Street Journal reports. TREASURY RAISES COST ESTIMATE FOR AID TO TROUBLED MORTGAGES The U.S. Treasury Department on Monday said it could spend up to $35.5 billion to entice the 80 or so participants of its foreclosure prevention effort to modify troubled home loans. CIA BOMBER WORKED WITH JORDAN INTELLIGENCE -AFGHAN OFFICIAL The suicide bomber who killed seven Central Intelligence Agency employees and one Jordanian intelligence officer in Afghanistan was an Arab who was likely a Jordanian doctor affiliated with al Qaeda, former U.S. officials and an Afghan security official told The Wall Street Journal. INSURERS MAY HAVE TO SET ASIDE $8.75B FOR MORTGAGE BONDS Life insurers will need to set aside about $8.75 billion to back up souring home-mortgage bonds based on preliminary numbers from a unit of Pacific Investment Management Co., New York officials told The Wall Street Journal. US EMBASSY IN YEMEN REOPENS AS SECURITY ADDRESSED The U.S. embassy in Yemen reopened Tuesday after a two-day closure prompted by Al-Qaeda threats against Western targets in the country, the embassy said, highlighting "successful" Yemeni security measures. SEC TAPS PWC'S DI FLORIO TO LEAD COMPLIANCE OFFICE U.S. Securities and Exchange Commission Chairman Mary Schapiro has appointed Carlo V. di Florio as director of the agency's Office of Compliance Inspections and Examinations, or OCIE, the SEC said Monday. UK TOLD US ABOUT ALLEGED PLANE BOMBER IN 2008 - REPORT The U.S. was made aware more than a year ago of the suspected airline bomber Umar Farouk Abdulmutallab's links with extremism, The Daily Telegraph reports Tuesday citing the U.K. prime minister's spokesman. JAPAN FUJII VAGUE ON FUTURE, AWAITS HEALTH CHECK RESULTS Japan's finance minister attended the first cabinet meeting of the year Tuesday despite concerns over his health, but left it unclear whether he would continue in the post if the results of a recent medical check are not good. JAPAN BUSINESS LOBBY HEAD: EXPECT DOLLAR TO TRADE Y85-Y100 THIS YEAR The head of the influential Japan Business Federation, or Nippon Keidanren, said Tuesday he expects the dollar to trade in a range of Y85 to Y100 this year. CHINA TO EXTEND PROPERTY TAX SIMULATION - REPORT China will extend a simulation of a new property tax system nationwide this year, signaling the introduction of the new tax is approaching, the state-run Shanghai Securities News reported Tuesday. -By Caroline Henshaw, Dow Jones Newswires; 4420-7842-9478; [email protected] (MORE TO FOLLOW) Dow Jones Newswires January 05, 2010 06:30 ET (11:30 GMT)