What’s the Story?

by CC July 2, 2012 9:03 am • Commentary


China is expected to step up efforts to stimulate its flagging economy after an official survey showed the manufacturing sector expanded in June at its slowest pace in seven months.

The official purchasing managers’ index (PMI) fell to 50.2 last month, down from 50.4 in May, the government announced on Sunday, with falling orders and weak exports leading a continuing slowdown in the world’s second-largest economy.

The weak PMI reading suggests growth dropped below the symbolic 8 per cent mark in the second quarter after growing at an annual rate of 8.1 per cent in the first. One Chinese government researcher told an academic forum on Sunday that the economy was likely to have grown at about 7.5 or 7.6 per cent in the first half from a year earlier, suggesting a sharp deceleration in the second quarter.


U.S. home prices climbed 1.8% in May compared to April, or a 2% gain compared to May 2011, CoreLogic reported Monday. The May 2012 figures mark the third consecutive increase in home prices nationwide on both a year-over-year and month-over-month basis, CoreLogic said. Excluding distressed sales, home prices nationwide increased on a year-over-year basis by 2.7%. “Home price appreciation in the lower-priced segment of the market is rebounding more quickly than in the upper end,” said Mark Fleming, chief economist for CoreLogic.


The euro rally came to an end during European trading hours amid reports that the Netherlands and Finland plan to block elements of the rescue package agreed last week for euro countries, while data showed manufacturing output in the region continues to decline.

The euro had been supported, alongside equities and government bonds from some under-pressure euro countries, as European trading hours progressed. But it slumped by half a cent from $1.2667 against the dollar after a report by Reuters suggested both Finland and the Netherlands planned to block the European Stability Mechanism’s ability to buy bonds–one strand of the rescue measures announced at last week’s European Union summit.


The three-month average of a national activity index reached the lowest level in May since June 2011, the Chicago Fed said Monday. The Chicago Fed’s CFNAI-MA3 dropped to -0.34 in May from -0.13 in April. The one-month index dropped to -0.45 in May from +0.08 in April.


Unemployment in the eurozone has edged to a record high, highlighting the economic gloom in the region as a key survey of manufacturing prospects pointed to further cuts in output.

The rate of joblessness reached 11.1 per cent in May, the highest in the history of the single currency, according to the EU’s statistics office. The rate climbed in Spain, where almost one in four is now out of a job, and edged higher in France, where President François Hollande’s government is this week to set out key parts of its policies to boost growth and cut the budget deficit .


Bristol-Myers Squibb (BMY 0.00%) is purchasing diabetes drugmaker Amylin Pharmaceuticals (AMLN 0.00%) in a deal valued at about $7 billion. The companies said on Friday that Bristol-Myers would pay $31 a share in cash for San Diego-based Amylin. The deal includes Amylin’s net debt and a payment obligation to Eli Lilly (LLY 0.00%) bringing the total value of the transaction to about $7 billion, the companies said.

The purchase price offers a 9.9% premium of to Amylin’s closing share price Friday of $28.20.

Shares of Amylin rose 8.94% in premarket trading Monday to $30.72.

Barclays PLC (BCS 0.00%) said Monday its chairman has resigned. Marcus Agius departs following the bank’s $453 million settlement of an investigation into alleged interest rate manipulation.

Regulators in the U.S. and the U.K. alleged that Barclays had submitted false data for setting the London interbank offered rate, or Libor, between 2005 and 2009. Agius has been chairman at Barclays since the beginning of 2007. Barclays shares rose 3.79% in premarket trading Monday to $10.69.

Technology distributor Ingram Micro (IM 0.00%) said Monday that it agreed to acquire wireless device distributor BrightPoint (CELL 0.00%) for $840 million, including debt. The offer of $9 a share is a 66% premium to BrightPint’s closing price Friday of $5.41. Shares of BrightPoint jumped 61.18% in premarket trading Monday to $8.72.

Germany’s Linde agreed to buy Lincare Holdings (LNCR 0.00%) for about $3.8 billion. Under the deal, Linde will pay $41.50 a share for Lincare, a leader in the U.S. home respiratory market.

Lincare shares closed Friday at $34.02. Shares of Lincare climbed 19.93% in premarket trading Monday to $40.80.

Apple (AAPL 0.00%) paid $60 million to Shenzhen Proview Technology to settle a dispute in China over ownership of the iPad name, a court announced Monday, according to a report from The Associated Press. The deal removes a potential obstacle to sales of the iPad in China, a key market. Apple shares ticked up $1.25, or 0.21%, in premarket trading Monday to $585.25.

Acuity Brands (AYI 0.00%) is expected by analysts Monday to post third-quarter earnings of 79 cents a share on revenue $492 million.