Blackstone's GSO not looking at SunEdison -source
Nov 18 Blackstone Group LP's credit investment arm GSO is not looking to invest in solar company SunEdison Inc, a person familiar with the matter said on Wednesday on condition of anonymity.
Shares of SunEdison ended up 7.6 percent on Wednesday on market rumors that Blackstone could backstop SunEdison's debt. SunEdison did not immediately respond to a request for comment, while Blackstone offered no comment.
Closing Market Summary: Biotechnology Leads Stocks Higher
The stock market ended the midweek session on a broadly higher note with the Nasdaq Composite leading the way. The tech-heavy Index spiked 1.8% while the S&P 500 (+1.6%) followed not far behind, charging back above its 200-day moving average (2,065).
Equity indices climbed out of the gate, continuing their steady charge into the afternoon and through the release of FOMC minutes from the October meeting, which left little doubt that the Fed is poised to raise rates at the December meeting. Specifically, the minutes indicated that "it may well become appropriate to initialize the normalization process at the next meeting, provided that unanticipated shocks do not adversely affect the economic outlook."
To be fair, it would be hard to categorize the statement as hawkish if one were to judge solely based on the market's reaction to the commentary as Treasuries charged back to unchanged (10-yr yield 2.27%) while the dollar ticked lower against the euro.
All ten sectors ended the day in positive territory with eight groups adding more than 1.0%. The financial sector (+1.8%) settled near the top of the leaderboard, driven higher by solid gains among the likes of Bank of America (BAC 17.84, +0.41), Citigroup (C 54.98, +1.49), and JPMorgan Chase (JPM 67.45, +1.32). The three names gained between 2.0% and 2.8%, benefiting from rising rate hike expectations.
Elsewhere, the energy sector (+1.6%) also posted a solid gain, but not before seeing some intraday volatility. The commodity-sensitive group led at the start, but made a brief appearance in the red amid a late-morning pullback in crude oil. WTI crude ended higher by 0.4% at $41.95/bbl after sliding from its session high near $41.53/bbl. Interestingly, the pullback developed after the latest storage report from the Energy Information Administration showed a smaller than expected inventory build (252,000 barrels; expected 2.0 million barrels).
Staying on the cyclical side, the top-weighted technology sector (+1.6%) settled in line with the broader market, masking a 3.2% spike in the shares of Apple (AAPL 117.29, +3.60), which was brought on by news that Goldman Sachs added the stock to its Conviction Buy List. Also of note, the PHLX Semiconductor Index gained 1.0%, overshadowing an 8.5% surge in Fairchild Semiconductor (FCS 19.40, +1.52) after the company agreed to be acquired by ON Semiconductor (ON 9.89, -0.85) for $20/share.
Over on the countercyclical side, the health care sector (+2.0%) spent the bulk of the session in a position of relative strength while consumer staples (+1.4%), telecom services (+0.8%), and utilities (+0.7%) underperformed. As for health care, the sector was boosted by biotechnology, evidenced by a 2.9% spike in iShares Nasdaq Biotechnology ETF (IBB 338.74, +9.60), which registered its fourth consecutive advance.
Today's participation was ahead of average as more than 850 million shares changed hands at the NYSE floor.
Economic data reported this morning was limited to Housing Starts and MBA Mortgage Index:
- The October Housing Starts report was a disappointment as starts declined 11.0% to a seasonally adjusted annual rate of 1.060 million units from a downwardly revised 1.191 million in September (from 1.206 million)
- The consensus expected a reading of 1.173 million
- The downturn was driven by a 25.1% decline in multifamily starts, which followed on the heels of an 18.1% increase in September. A natural pullback was expected after the big September increase, yet the drop was more pronounced than many had thought.
- There wasn't a pickup in single-family starts either as they dropped 2.4% to 722,000, led by a 6.9% decline in the South
- The weekly MBA Mortgage Index rose 6.2% to follow last week's 1.3% decline
Tomorrow, weekly Initial Claims (consensus 272,000) and the November Philadelphia Fed Survey (expected -1.0) will be reported at 8:30 ET while the October Leading Indicators report (consensus 0.6%) will be released at 10:00 ET.
- Nasdaq Composite +7.2% YTD
- S&P 500 +1.2% YTD
- Dow Jones Industrial Average -0.5% YTD
- Russell 2000 -2.6% YTD
SunEdison: Stock halted; Hearing some chatter about a potential back stop; Stock saw a small pop before the halt; We would be very cautious as this stock has been the subject of a lot of rumors given liquidity concerns
UK energy secretary raises prospect of National Grid break-up
Amber Rudd has raised the possibility of breaking up the company that runs Britain’s electricity grid, as part of measures designed to “reset” UK energy policy.
The energy secretary on Wednesday gave her first big speech since taking office in May, in which she announced the closure of coal plants by 2025 and the promise of extra subsidies for gas power and offshore wind.
But one less-predicted element of her speech was the announcement that the government would begin consultations on making the various parts of National Grid’s business separate from each other.
The company has three elements of its business: one that owns the electricity network, including the wires and pylons; one that runs the electricity and gas systems; and one that owns interconnectors bringing power from abroad. The network ownership part creates the vast amount of revenue and profit.
Some have argued that this structure creates conflicts of interest. For example, National Grid runs the auction to provide subsidies for back-up power generators and could this year receive support for its interconnectors through that auction.
Ms Rudd appeared to accept that argument, saying: “There is a strong case for greater independence for the system operator . . . to make it more flexible and independent.”
Shares in National Grid dipped more than 1 per cent in the morning before bouncing back to £9.25, where they closed the previous session. Analysts said shareholders might have been relieved by the fact that Ms Rudd said she wanted to work with the company to formulate concrete proposals, which officials said could fall short of complete break-up.
National Grid said: “Our priority as a system operator will always be balancing the system minute by minute and getting the best for consumers, which is what the current system provides.
“We look forward to working alongside the energy department, Ofgem [the regulator] and others to ensure that Britain continues to have the best system in place for managing supply and demand.”
Peter Atherton, an analyst at Jefferies bank, said: “This creates uncertainty. If it is done sensibly, shareholders should not lose value. But it might not be done sensibly.”
The measure was just one of many announcements as Ms Rudd looked to explain what kind of electricity mix she wanted, having spent the past few months slashing green subsidies.
She announced that coal plants would close by 2025 at the latest, to be replaced by gas and offshore wind, the latter of which would be able to bid for three rounds of subsidy by the end of the decade. This deadline would be changed, however, if insufficient new gas power was built in the intervening period , she added.
Department officials are looking at how they can adapt the government’s subsidy schemes to encourage more gas. Ms Rudd said: “In the next 10 years, it’s imperative that we get new gas-fired power stations built.”
The energy secretary will review the rules around the so-called “capacity market auction”, which allocates subsidies to companies to build reserve power, and which this year looks set to hand hundreds of millions of pounds to diesel power. One option would be to increase the amount of money available through that scheme to enable more expensive gas plants to be built.
Despite saying she wanted to encourage more gas and offshore wind, Ms Rudd insisted she did not want to prioritise certain types of power generation, calling her approach a more free-market one than that pursued by Labour.
She said: “We want to see a competitive electricity market, with government out of the way as much as possible, by 2025.”