U.S. stocks fall as Fed ends 6-year effort to stimulate economy, Facebook down by 6.1%

The unemployment rate is now 5.9%, its lowest mark since QE began. There are over 8.5 million more people employed now than in November 2008, according to the Bureau of Labor Statistics

Federal Reserve confirmed that it will end it's asset-purchase program due to stable growth path of U.S. economy. It caused stocks decline in U.S.  The decision provides a strong base on how much the economy has improved since the recession. This decision ignited a down rate in U.S. stock market.

Facebook dropped 6.1 percent to $75.86, the most since March. 

Facebook Inc. predicted the slowest revenue growth since the first quarter of 2013 and it lost 6.1 percent after that prediction. Facebook dropped 6.1 percent to $75.86, the most since March. The owner of the largest social-media website projected fourth-quarter sales that missed the highest of analyst estimates. Facebook also said spending would increase 50 percent to 70 percent next year as the company hires more and invests in newer products.

The Standard & Poor’s 500 Index (SPX) slipped 0.1 percent to 1,982.30 at 4 p.m. in New York, trimming an earlier slide of 0.8 percent. The Dow Jones Industrial Average lost 31.44 points, or about 0.2 percent, to 16,974.31. About 7.3 million shares traded hands on U.S. exchanges.

"It's in response to the Fed acknowledging the improvement in the economy, the improvement in the labor market and the diminished risks on the inflation side of things," says Greenhaus. Dan Greenhaus is a chief strategist at market research firm BTIG in New York.

S&P 500 down 7.4 percent from an all-time high of 2,011.36 in mid-September through Oct. 15 because of huge concerns that Europe will be going into recession just as Fed bond buying ends. But there is still positive part as well.

60 percent of the S&P 500 companies have surpassed revenue projections and 80% have beaten the estimated earnings.

GlaxoSmithKline's shares rose 4% after its third-quarter results slides it's way beyond expectation and announces to return an additional £4billion to shareholders by a special share scheme. GSK is one of the world's biggest drug manufacturer and now it is on rise. The UK pharmaceuticals giant published a pre-tax profit of £548m till the end of September for three months. It is way more below than £1.4 billion a year ago. Even then,the results beat analyst forecasts.

U.S. Steel (X) advanced 5.1 percent to $40.08. Company reported more than estimated earning with the help of the quadrupling of flat-rolled steel sales.earnings.

GlaxoSmithKline on rises after profits beat forecasts

The firm is expecting it's core earning to be "broadly similar to 2013".

GlaxoSmithKline's shares rose 4% after its third-quarter results slides it's way beyond expectation and announces to return an additional £4billion to shareholders by a special share scheme. GSK is one of the world's biggest drug manufacturer and now it is on rise. The UK pharmaceuticals giant published a pre-tax profit of £548m till the end of September for three months. It is way more below than £1.4 billion a year ago. Even then,the results beat analyst forecasts.

Richard Hunter from Hargreaves Lansdown,said the results can be "a turning point". Hargreaves Lansdown plc is a financial service company based in Bristol that sells funds and shares and related products via its website and through the post to retail investors in the United Kingdom.He added,"The drive towards containing costs is also in evidence, whilst the company anticipates significant savings as a result of the restructure. In the medium to long term, Glaxo is also predicting a potentially lucrative pipeline, which should underpin prospects."

GlaxoSmithKline's shares have fallen by 14% over the past three months. It has been accused of allegations of bribery in China and it is even obliged to pay a fine of nearly $500m. GSK's US business was down due to price issues on it's key asthma drug Advair. There is even impact due to high strength of pound.

Now, the manufacturer is up with cost saving strategy. GSK is targeting £1bn of annual cost savings over the next three years and it's  "refocusing" the business. It also said it would consider a possible flotation of ViiV Healthcare. It is a division focusing on treatment for HIV.

The firm is expecting it's core earning to be "broadly similar to 2013".

Andrew Witty, Chief executive of GSK said,"We have continued to make strategic choices to create value from assets held in the group and to respond to the pressures we are facing in our operating environment."

Warren Buffett loses $2 billion in two days

IBM and Coke may be losing money, but Buffett's largest position, Wells Fargo, has raised 11% this year. 

Warren Buffett has lost $2 billion this week. Mr Buffett is known for making most likely estimation about established companies rather than investing in riskier stocks. Buffett is known for focusing on the long-term performance of his investments.

Berkshire Hathaway investment house portfolio includes huge parts of  Coke and IBM, both of which have decline in profits in the past two days. The investment firm took a $1 billion hit on Coke (KO), which fizzled 6% on Tuesday after the company reported earnings that didn't live up to expectations of investors. Worsening the situation, Coke said it doesn't expect a much better 2015.

Berkshire Hathaway's one of the lasgest investment is Coke. It holds 400 million shares and his son Howard sits on the beverage company's board.

On Monday,IBM (IBM, Tech30), another top holding, caused Warren Buffett a loss of $1.3 billion as the stock plunged. The company is looking for a revitalization after reporting disappointing earnings and shedding its chip unit at a major loss. The stock dropped 7% on Monday after then news was made public and slid again on Tuesday. It is off nearly 13% so far this year, and Buffett's company, Berkshire Hathaway holds over 70 million shares.

Buffet has been actively quoted a lot this year for his misses. Berkshire Hathaway's investment on British grocery chain Tesco (TSCDY) has also been a loss, with maximum drop: nearly 47% this year.

On the other hand, there's silver lining and it's more vivid, investors are supporting the company. Berkshire stock climbed slightly on Monday and Tuesday, and is up more than 17% this year.

IBM and Coke may be losing money, but Buffett's largest position, Wells Fargo, has raised 11% this year. And eventhough the market goes down, Buffett is adding more stocks to his portfolio.He said in an interview  "the more stocks go down, the more I like to buy."

Saudi Arabia’s National Commercial Bank (NCB) set to be the world’s second-largest share sale this year with $6 billion initial public offering

With $6.7 million in fees for Banks and advisers Saudi Arabia’s National Commercial Bank (NCB) set to be the world’s second-largest share sale this year with $6 billion initial public offering. Its about 0.1% of the 22.5 billion riyal offering. HSBC Holdings Plc (HSBA) and Gulf International Bank Bsc are financial advisers to the lender and it will share fee with eight other banks, three accountancy firms, and a media agency.

The Chinese e-commerce company was provided with $300 million as fee for being adviser of Alibaba Group Holding Ltd. (BABA) for it's IPO and it last month raised $25 billion in this year’s biggest offering. Credit Suisse Group AG and Morgan Stanley took about 1.2 percent of proceeds.

Asim Bukhtiar, vice president and head of research at Riyad Capital, said that the fee percentage was low and further added that  HSBC and Gulf International will each earn between $1 million and $1.5 million for their work on the NCB deal.

He added, “It seems like prestige overtook fee consideration as this single transaction will catapult both banks to the top of the league tables.”

There is no response from Gulf International Bank and HSBC's spokesman has declined to comment.
Lower Fees

NCB has been paid lower fee than HSBC and Morgan Stanley on the $1.58 billion Emaar Malls Group PJSC (EMAARMLS) IPO in September. NCB received 130 million dirhams ($35 million) as underwriting fees and other expenses related to that offering.

The NCB offering will run until Nov 2. During that time the bank will sell 500 million shares at 45 riyals each, according to a statement on the Saudi Stock Exchange’s website earlier this month. Only Saudi investors can subscribe those offerings and 300 million shares is allocated to individuals and remaining share is allocated to kingdom’s Public Pension Agency.

Surpassing the $5 billion raised by Dubai’s DP World Ltd. in 2007,the deal will be the Middle East’s largest.
NCB is not listed yet but still it's most profitable bank in Saudi Arab.

Adidas on Rise after Reebok purchase

Adidas announced plans to return as much as 1.5bn euros (£1.2bn) to shareholders over the next three year

Everything was fine after Adidas purchased US-based Reebok in 2006. But things has changed in few years. It's struggling to boost sales. Reebok even lost a contract to supply the US National Football League. This has lowered it's market shared. And now things seem promising for Adidas and Reebok.Speculations are being made on Adidas and it's  series of profit warnings.

"Reebok is one of the few brands enjoying some success for Adidas lately," Jon Copestake, retail analyst at The Economist Intelligence Unit told the Reuters news agency.

Adidas's share rose 6% in early trading after a report explained a group of investors was considering a bid for the company's Reebok brand. Hong Kong's Jynwel Capital and investment funds in Abu Dhabi were considering an offer worth $2.2bn (£1.36bn) according to The Wall Street Journal. The news provided investors a support for rationalizing Adidas' share purchase and initiated boost for the German company's flagging share price which was down about 40% this year.

"From the Adidas perspective, that would be a great price. Whether management would accept it is another matter as it would be an admission of defeat,"  Joerg Philipp Frey ,Warburg Research analyst said.

Adidas carried on Reebok acquisition to challenge Nike on it's home The Reebok acquisition was designed to help Adidas challenge Nike and eventually influence it's status as German company's own brand.

Many investors are targeting Reebok now. German media reported last month that hedge funds including Knight Vinke, Third Point and TCI were doing internal works to  buy stakes in Adidas to force management to make sweeping change and it even included the sale of Reebok,

At beginning of October, Adidas announced plans to return as much as 1.5bn euros (£1.2bn) to shareholders over the next three year.

In May it said that it was considering offers for its Rockport shoe brand, which it acquired when it bought Reebok. But Adidas has not yet announced any notice about accepting offers regarding Reebok.

Morgan Stanley's total revenue for the quarter rose 12% to $8.91bn.

Morgan Stanley's total revenue for the quarter rose 12% to $8.91bn.

Morgan Stanley has reported an 87% jump in profits to $1.65bn (£1bn) in the three months to the end of September. Morgan Stanley is a US investment bank.Since it is a investment bank, it is different from other commercial banks. It handles trading of currencies, commodities and bonds was a big driver of profits, wealth management and even,advising high earners on their finances.

It's bond trading activities have reportedly benefited inspite of  obstacles at bond giant Pimco.

This September, Bill Gross,trading superstar  made a surprise exit from the world's biggest bond firm.
The departure of the superstar,Mr Gross from Pimco induces investors to withdraw billions of dolklars from the company and remaing could be used to learn other trading business.

Morgan Stanley's total revenue for the quarter rose 12% to $8.91bn.

19.4% to $997m were from bond trading and in addition to that wealth management revenue rose 9% to $3.79bn.

Similar to it, Goldman Sachs reported a 50% rise in profits.

As of September 30, 2014, the Firm’s Common Equity Tier 1 risk-based capital ratio was approximately 14.3% and its Tier 1 risk-based capital ratio was approximately 16.1%. The Firm is subject to a “capital floor” such that these regulatory capital ratios currently reflect the U.S. Basel III Advanced Approaches (“Advanced Approach”) transitional rules, which represent the lower of the Firm’s capital ratios calculated under the Advanced Approach and U.S. Basel I and Basel 2.5 capital rules, taking into consideration applicable transitional provisions under U.S. Basel III.1

Compensation expense of $4.2 billion increased from $4.0 billion a year ago primarily driven by higher revenues. Non-compensation expenses of $2.4 billion decreased from $2.6 billion a year ago primarily reflecting lower litigation costs.

Chairman  James Gorman said,"We are well positioned to create superior returns for our shareholders, particularly as the US economy continues to strengthen."

IMFC Sees Growing Risks in Weaker-Than Expected Recover

The International Monetary Fund's steering committee said,Risks to an “uneven and weaker-than-expected” global economic recovery have increased.

At a meeting in Washington, the International Monetary and Financial Committee also said in a statement that “exchange rates should be allowed to respond to changing fundamentals.” It also said it is committed to “lifting potential growth and to creating a more robust, sustainable, balanced, and job-rich global economy.” It promised to “pursue bold and ambitious measures” to spur economic demand. The recovery is "modest in Japan, and tentative in the euro area.”

It said,“A number of countries face the prospect of low or slowing growth, with unemployment remaining unacceptably high.”

 “A revival in economic activity is underway in some advanced economies, notably in the United States and United Kingdom.”

Being deeply concerned about the human and socioeconomic impact of Ebola, it said it was deeply disappointed with the continued delay in enacting a 2010 pact by all IMF member countries that would increase emerging markets’ shares, or quotas, in the fund and boost its permanent lending capacity. The committee urged the U.S., the largest IMF shareholder, to “ratify these reforms at the earliest opportunity.”

Goldman Sachs posts earnings, revenue that beat

Goldman Sachs stunned analysts working on Wall Street when it reported third-quarter earnings of $4.57 a share on revenue of $8.39 billion. 

Goldman Sachs stunned analysts working on Wall Street when it reported third-quarter earnings of $4.57 a share on revenue of $8.39 billion. The report tells more earnings per share and more revenue than expected by the analysts.

Goldman was expected to deliver third-quarter earnings of $3.21 a share on $7.85 billion in revenue. This was from Wall Street.

Even though Goldman is the latest bank to report earnings this week. So far, it's been a mixed bag for banks with JPMorgan Chase missing earnings estimates, Wells Fargo reporting in line and Citigroup topping earnings estimates.

During the quarter, Goldman announced it would repurchase residential mortgage-backed securities bought by Fannie Mae and Freddie Mac from 2005 to 2007.  It would pay $3.15 billion for repurchase.

Warren Buffett-Selling 245 million Tesco shares

245 million shares of Tesco is sold by Berkshire Hathaway investment company.

245 million shares of Tesco is sold by Berkshire Hathaway investment company. Berkshire's holding is below 3% after the sale.Berkshire Hathaway firm owned a 3.7% stake in Tesco at the end of 2013, a stake worth about £1bn. Berkshire Hathaway is Warren Buffett's investment company. He is also known as the "the Sage of Omaha."

Earlier this month he told on CNBC,"I made a mistake on Tesco. That was a huge mistake by me."

The supermarket's sales are declining and in addition to that share price has fallen to an 11-year low this year.The supermarket's share price has plunged more than 50% over the last 52 weeks after falling sales and there was unrest among investors because of  accounts mis-reporting.

Similar to Berkshire Hathaway, Blackrock, also began selling down its 5% Tesco stake in September.

Mr Buffett is known for making most likely estimation about established companies rather than investing in riskier stocks.Berkshire Hathaway's portfolio consist names like Coca-Cola, IBM and American Express and it started to include Tesco in 2006 and by 2012 owned more than 5% of the business.

Tesco has seen declining sales amid increased competition. The discount retailers like Aldi and Lidl are in the in the market and Marks & Spencer and Waitrose are providing high end offerings to attract customers.

Tesco says  Financial Conduct Authority (FCA) has been notified it that it is under investigation following its admission last week that it overstated its half-year profit guidance by £250m.
The supermarket giant will co-operate fully with the FCA and other relevant authorities.

10% market drop is likely-JPMorgan’s executive officer for assets management

"U.S. stocks are likely to fall by a little or tumble a lot. Just nothing in between," Mary Callahan Erdoes of JPMorgan Chase & Co. (JPM), said at an event of Institute of International Finance in Washington.
Erdoes adds,“It would be very healthy, but we’re not going to get a 10 percent correction.”
“We’re going to get a 2 percent correction with a lot of cash coming in on the way down, or we’re going to get a real correction, and it’s going to be a lot worse than 10 percent.”

The Standard & Poor’s 500 (SPX) Index fell 3.1 percent for the week, the most since May 2012, and has declined 5.6 percent from September.

“It’s such a psychological game that long-term investors don’t play,” Erdoes said.

With $1.71 trillion in assets under management and being a leader of it, she is concerned that as more companies shift to defined-contribution programs from defined-benefit pension plans, business units- individual people will make investment decisions based on emotion and that will cause decline.

CSX-Union Pacific stock trading, which one will outperform other?

CSX has risen 16 percent since March 23,2011

New investors are attracted to CSX as CSX’s coal shipments show signs of stabilizing.The number of coal carloads CSX transports was up 3 percent for the week ended Oct. 4 from same period a year ago after years of contraction.

Since March 23, 2011,CSX has risen 16 percent, compared to Union Pacific’s 119 percent gain. Even though the  stock-price ratio is close to the lowest since 1981, it’s up 0.8 percentage points this month, the biggest increase in a month. The point is whether investors will start putting more capital into this trade now that it’s at a multidecade low.

“Fewer coal-related headwinds have been the overarching driver”said Ben Hartford, an analyst with Robert W. Baird & Co. in Milwaukee.

Based on Jacksonville, Florida,CSX is generating 24 percent of total 2013 revenue transporting coal and is more dependent on this commodity while Nebraska-based Union Pacific generates 19 percent.
CSX stock lagged behind Union Pacific because of declining the price of natural gas which made it cheaper alternative for utilities.

Union Pacific hauls primarily Powder River Basin type coal, which is cheaper than CSX’s Appalachian variety, so it's volumes declined less.

 CSX stock could “narrow the gap” with Union Pacific as coal becomes a “less significant headwind” for CSX, Hartford said.

Jim Stellakis, founder and director of research at Technical Alpha Inc. in Greenwich, Connecticut, said that the pair-trade ratio could “move sideways” for a few months before there’s a clear sign that a possible downtrend in place since 2011 has broken. If ratio goes up overcoming a recent high in January 2014 -- “that’s a good sign there’s a switch under way, as investors are starting to see more value in CSX relative to Union Pacific.”

Investors like Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in New York, does not follow the bet because his company currently hols Union Pacific. CSX has been plagued by congestion on its East Coast rail network, Ghriskey said. The company increased hiring and capital spending to alleviate this. Also that it relies more on the export market for coal, specifically China, where demand has been weak.
Still, the performance gap between these two stocks could reverse, as it has in the past, said Hartford, who maintains a neutral recommendation on Union Pacific and an outperform on CSX.

Driven largely by it's higher margin, CSX outpaced Union Pacific, between 2002 and 2008.
CSX is scheduled to report third-quarter results Oct. 14, followed by Union Pacific on Oct. 23. The implied one-day stock-price move after the announcement is about 3.5 percent for CSX.
Ghriskey said “pair trade is certainly something to watch,” even for investors with a position in only one of these stocks,

S&P 500 index for Asian stock rises.

The dollar held losses and  with the regional index is up from its lowest level since May,Asian stocks has climbed, and bonds rallied with oil and copper on bets monetary policies in the three largest economies will be accommodating.

Chinese shares in Hong Kong raised 1.1 percent following Premier Li Keqiang's announcement to lower financing costs. The MSCI Asia Pacific Index (MXAP) rose 0.8 percent till the morning in Tokyo.  With addition of 0.2 percent in futures in  Standard & Poor’s 500 Index, the gauge jumped the most this year on speculation that low rates will be set and global growth will be slowed by Federal Reserve. When Oil in New York rebounded 0.5 percent and copper climbed 0.7 percent, Japan's five-year bond yield fell to the lowest after the central bank's unprecedented easing.

Tesco's share price has fallen nearly 50%, a huge mistake by the Sage of Omaha, Warren Buffett

Tesco's share price has fallen nearly by 50% reducing the value of investment by 50%.

The Sage of Omaha has said that his decision to invest in Tesco is a "huge mistake."
Berkshire Hathaway firm owns a 3.7% stake in Tesco, worth hundreds of millions of dollars and now  the supermarket's sales are declining and in addition to that share price has fallen to an 11-year low this year.
Tesco shocked investors last week by issuing a string of profit warnings. It revealed it had overstated its expected half-year profits by £250m.

The chairman of the Parliamentary Business Committee, Adrian Bailey, has described Tesco's error as "stratospheric".

He told on CNBC,"I made a mistake on Tesco. That was a huge mistake by me."

Mr Buffett is famous for comprehensive ability to understand the performance of a business for long period of time but now it does not seem so. The risk this time in Tesco are high.

Berkshire Hathaway's portfolio consist names like Coca-Cola, IBM and American Express and it started to include Tesco in 2006 and by 2012 owned more than 5% of the business.

What happened next?
The stake had fallen to 3.7% by the end of 2013 , with investment capital of  $1.7bn and continuing the fall since then Tesco's share price has fallen nearly 50%. It has now made the value to investment half of it's original value.

In addition to that Tesco has seen declining sales amid increased competition. The discount retailers like Aldi and Lidl are in the in the market and Marks & Spencer and Waitrose are providing high end offerings to attract customers.

Tesco says  Financial Conduct Authority (FCA) has been notified it that it is under investigation following its admission last week that it overstated its half-year profit guidance by £250m.
The supermarket giant will co-operate fully with the FCA and other relevant authorities.

The news induced a new fall in Tesco's share price, its lowest for more than 10 years. leaving it down 3% at 180p.

Tesco has itself has  launched its own investigation into the issue.  Deloitte, together with Freshfields, the group's external legal advisers will do the investigation.

Four executives were suspended in connection with accounting problem and there was change in high level management. Chief executive Dave Lewis has only been in the job a month, while chief financial officer Alan Stewart, who was originally due to join the company on 1 December, had his start date brought forward and took up the post last week.

JPMorgan shares rose 1.5 percent to $59.72, but got a massive cyber attack.

JP Morgan is the US's biggest bank and it got a massive cyber attack on 76 million private and seven million business customers in the US. An employee password was used to crack a JPMorgan Chase & Co. (JPM) server and ultimately pull off one of the largest cyber-attacks ever, accessing data on 76 million households and 7 million small businesses. Even though the hacker collected  information and addresses of the account holders, the collected information were not critical.
For Securities and Exchange Commission (SEC), it had not seen any "unusual customer fraud related to this incident". Home Depot and Target have been the subject of similar wide scale attacks. JP Morgan says customers are not required to take any action, such as changing their passwords or account information.

Its company spokeswoman, Patricia Wexler, said that the bank is not offering credit monitoring to customers either because it does not believe any financial information, account data or personally identifiable information was taken. He added, some of those affected by the incursion were outside the U.S.,  In addition to contact information, hackers tapped into internal data identifying customers by category, such as whether they are clients of the private-bank, mortgage, auto or credit-card divisions.

She further added that all details has not been exposed, so there's no need to take actions by customers.Information on both current and former customers was exposed, as well as on some non-customers, including people who may have logged on to JPMorgan websites to conduct transactions with bank clients. Data were compromised through Chase.com and JPMorganOnline.com, and the mobile apps that support those websites.

JPMorgan shares rose 1.5 percent to $59.72 at 9:56 a.m.(October 3,2014) in New York and have gained about 2.2 percent this year, trailing the 6.1 percent advance for the 85-company Standard & Poor’s 500 Financials Index.

The U.S. total household is 115 million and  76 million households were affected. Earlier this year, 145 million personal records were taken in a breach of EBay Inc. An attack on retailer Target Corp. during last year’s holiday season affected as many as 110 million shoppers. An attack at Home Depot Inc. disclosed last month compromised 56 million payment cards.

According to the people familiar with the bank’s review the attack at JPMorgan started in June. The hackers entered a web-development server with an employee’s user name and password, then got their access into lender’s network, the people said.

Government officials and security specialists have long warned of the possibility of cyber disruptions in the financial system and other services and utilities. Those concerns are heightened in times of conflict.

Having said that people should themselves be aware about the possible threat and must take actions to stay away from trouble. Changing password often and signing off from devices when you leave the desk will help to increase security.