Good morning. In comments that hark back to former Federal Reserve Chairman Alan Greenspan's 1996 warning about "irrational exuberance," Chairwoman Janet Yellen suggested that the yearslong stock rally may have pushed stock valuations to dangerous levels, the WSJ reports. "Not so high when you compare returns on equity to returns on safe assets like bonds, which are also very low, but there are potential dangers there," she said during a conversation with International Monetary Fund Managing Director Christine Lagarde.
Ms. Yellen's warning over valuations is the latest cause for hand-wringing by investors, following a raft of data suggesting the U.S. has entered an economic rough patch. Last week the Commerce Department said gross domestic product grew at a paltry 0.2% pace during the first quarter, while the country's trade deficit widened.
The chairwoman's opinions are closely watched by investors even when they aren't directly tied to monetary policy. For financial chiefs, they may be cause to reevaluate current plans for returning cash to shareholders. Would your firm consider delaying a buyback program, or choose to go with a dividend instead, based on Ms. Yellen's declarations? Let us know.
CFO JOURNAL TODAY
Small company stocks face liquidity test. Small U.S. companies may soon find out whether trading stocks in pennies hurts their ability to raise capital, CFO Journal's Emily Chasan reports. The Securities and Exchange Commission on Tuesday approved a two-year pilot program that will test whether stocks traded in larger-than-a-penny increments will improve trading and liquidity for small companies.
THE DAY AHEAD
Jobless claims for the week of May 2 release at 8:30 a.m., and analysts are forecasting 280,000, up from the prior week's 262,000. Consumer credit for March is available at 3 p.m., and the consensus is for a strong increase at $15.9 billion. The gains, however, have been inflated by the government's acquisition of student loans from private lenders. The revolving component, which includes credit cards, has been flat.
Priceline can't name its own share price. Priceline Group Inc. looks pricey and may get clipped by dollar strength and decelerating growth. Its dependence on foreign revenue may have stung the company during its first quarter. Results are due Thursday.
CORPORATE NEWS
DuPont's swing voter: the small investor. The proxy battle between DuPont Co. and Trian Fund Management LP involves financial institutions that manage billions, but the outcome may depend on individual investors. Such investors are typically wallflowers in big corporate-governance debates, but at DuPont they account for a third of total shares.
Alexion-Synageva deal shows lure of rare-disease drugs. The huge premium drug maker Alexion Pharmaceuticals Inc. is paying for Synageva BioPharma Corp.--$8.4 billion, or more than double Synageva's market value--shows how hot the market has become for rare-disease drugs. Meanwhile, under pressure to expand access to experimental medicines, Johnson & Johnson arranged for an independent panel to review requests from seriously ill patients who want to try an unapproved drug.
Big oil firms find gains in trading. Some of the world's biggest energy companies are finding healthy profits amid the oil-price collapse in a little-publicized corner of their business empires: their trading divisions. Firms including BP PLC and Royal Dutch Shell PLC got a lift from their vast operations focused on buying and selling oil and its financial derivatives.
Whole Foods plans lower-cost chain. Whole Foods Market Inc. said it plans to start a sister chain of smaller, lower-cost stores, a move designed to fend off growing competition but that fueled investor concern about the natural-foods grocer's outlook. Whole Foods remains the ultimate gatekeeper for specialty food companies. As a result, small companies are willing to change recipes and tweak packaging to get on the retailer's shelf.
Dow Chemical defends CEO over spending. Dow Chemical Co. defended its chief executive against allegations that he misspent company funds, saying Wednesday that his expenses had been investigated and any issues resolved several years ago. The allegations were initially raised in whistleblowing lawsuits brought by a former employee who said the company had retaliated against her for raising questions about spending by CEO Andrew Liveris. She settled with Dow in February on terms that haven't been disclosed.
J.P. Morgan's barista-turned-banker sees good things brewing. Ivette Agosto's years of serving coffee to J.P. Morgan Chase & Co. bankers got the Starbucks Corp. worker noticed--and hired. Since November, Ms. Agosto has been working as a personal banker at the Chase retail branch about 50 yards from the ground-floor Starbucks within the bank's headquarters.
Cablevision CEO pushes for consolidation. Cablevision Systems Corp. CEO James Dolan publicly lobbed the idea of a deal with Time Warner Cable Inc. to consolidate the New York market, a proposal that adds a new dimension to the rampant talk of deals in the wake of Comcast Corp.'s failed deal for Time Warner Cable.
Al Jazeera America replaces CEO. Al Jazeera installed a new chief executive for its American news channel, Al Jazeera America, as it battles through business woes and internal controversies that have led key senior executives to leave. Longtime executive Al Anstey will succeed Ehab Al Shihabi, who was responsible for launching the U.S. channel in 2013 and was serving as interim CEO.
Bank of America shareholders re-elect all directors. Bank of America Corp. shareholders gave Chairman and CEO Brian Moynihan a vote of confidence Wednesday by re-electing all of the bank's directors.
Zynga to cut 18% of workforce. Videogame company Zynga Inc. is slashing nearly a fifth of its workforce to focus on making fewer, higher-quality games. The job cuts are one of the first strategic moves from CEO Mark Pincus since he returned in early April to take the reins of the company he founded.
Chinese drone maker valued at about $8 billion. Chinese drone maker SZ DJI Technology Co. secured a $75 million investment this week that values the company at roughly $8 billion. The deal flows out of broader DJI fundraising talks that could ultimately value the drone maker around $10 billion.
Virtu Financial aims to break into China. Virtu Financial Inc., one of the world's biggest high-frequency trading firms whose first-quarter earnings rose 49%, is trying to break into China. With a longtime aversion to foreign traders playing a bigger role in its markets, China has been seen by many in the proprietary trading world as a hitherto insurmountable challenge. But China's exchanges have cautiously been testing the waters for allowing greater involvement in trading from foreign firms.
AMD to sharpen focus. CEO Lisa Su of Advanced Micro Devices Inc. says the company plans to do fewer things better, hoping to grab greater market share in selected businesses where it can make a profit. The company has tried to diversify its business, developing custom chips for buyers such as Microsoft Corp. and Sony Corp. for their latest gaming systems. But PC chips remain AMD's largest business, and its revenue there has suffered as PC growth has ebbed and Intel Corp. has expanded its market share.
Zenefits valuation balloons. Startup Zenefits said it raised $500 million from a group of investors. The round of funding values the provider of free employee-benefits tools for small businesses at $4.5 billion. After only two years, Zenefits is now valued at more than many publicly traded business-software makers, including Box Inc. and Zendesk Inc.
Bill Gross's fund takes hit amid bond selloff. Bill Gross's fledgling bond fund at Janus Capital Group Inc. suffered large losses over the past week, undercutting a nascent comeback. The cause of the fund's troubles hasn't been disclosed.
Business schools are fighting over top women. Business schools worry that not enough women see an M.B.A. in their future. That trend has schools fighting over top woman applicants and anxious about their ability to graduate enough female talent to satisfy employer demand as well as make progress toward gender parity in the upper ranks of corporate management.
REGULATION
SEC wins with in-house judges. The Securities and Exchange Commission prevails against around 90% of defendants when it sends enforcement cases to its administrative law judges rather than to federal courts. Defendants, and some former judges, say the system is stacked in favor of the agency.
"Flash crash" case shows problem of "spoofing" in complex markets. In his first comments since being arrested for allegedly contributing to the 2010 "flash crash," trader Navinder Sarao said he had "not done anything wrong apart from being good at my job."
Banks expected to settle FX probes for billions. Citigroup Inc., Barclays PLC, J.P. Morgan Chase and Royal Bank of Scotland Group PLC are expected to plead guilty to rigging foreign-currency exchange rates and pay billions in combined penalties as part of settlement agreements expected to be announced as early as next week.
EU makes play for leverage over e-commerce. The European Union unveiled a plan to unite the region's online markets and crack down on possible abuses by U.S. Internet firms. Many European policy makers say the region has thus far failed to produce its own Google Inc. or Facebook Inc. because of the patchwork of tax, copyright and e-commerce rules that have stunted their growth.
LPL financial to pay $11.7 million to settle Finra charges. LPL Financial Holdings Inc. will pay $11.7 million to settle charges that a unit failed to properly supervise complicated products. Over multiple years LPL Financial LLC had lax supervision of nontraditional exchange-traded funds, variable annuity contracts and nontraded real-estate investment trusts, according to Finra. It also failed to monitor and report trades and deliver more than 14 million trade confirmations to customers.
EARNINGS
(MORE TO FOLLOW) Dow Jones Newswires
May 07, 2015 06:40 ET (10:40 GMT)
Tesla's first quarter loss widens. Luxury electric-car maker Tesla Motors Inc.'s first-quarter loss widened to $154 million even as it boosted shipments of its $75,000-and-up Model S car by 55% to a record 10,045 vehicles. The results underscore the challenge facing one of the auto industry's most scrutinized companies. Tesla is posting record volume and says it is on track to deliver 55,000 vehicles this year, but investments in its network of fast-charging stations, and the development of its forthcoming Model X sport-utility vehicle and other future products widened losses and reduced its liquidity.
Occidental Petroleum narrows loss. Occidental Petroleum Corp. narrowed its loss in the first quarter, while production continued to increase despite slumping gas prices. The results come a day after Houston-based Occidental named company insider Vicki Hollub as its next chief executive and raised its quarterly dividend.
Transocean swings to a loss. Transocean Ltd. swung to a loss in the first quarter as the offshore oil driller logged more than $800 million in charges related to the downsizing of its fleet in response to lower crude prices.
Caesars revenue rises at continuing operations. Caesars Entertainment Corp. said its first-quarter revenue from continuing operations rose 21% while the bottom-line benefited from a big one-time gain.
Anheuser-Busch profit jumps. Anheuser-Busch InBev NV said on Wednesday a derivatives gain pushed its net profit sharply up in the first quarter, helping offset weak U.S. results and the impact of a strong dollar.
MetLife, Prudential post higher operating profit. Rivals MetLife Inc. and Prudential Financial Inc. posted increases in first-quarter operating profit, even as the life-insurance industry continues to wrestle with ultralow interest rates.
ECONOMY
U.S. productivity falls 1.9% in first quarter. U.S. worker productivity fell in the opening months of 2015, the latest sign of sluggish economic growth at the start of the year. The productivity of nonfarm workers, measured as the output of goods and services per hour worked, decreased at a 1.9% seasonally adjusted annual rate in the first quarter from the previous period.
Mortgage delinquency rate falls to 5.54% in first quarter. The percentage of homeowners falling behind on their mortgages in the first quarter fell to its lowest level since mid-2007, while some states continue to struggle to work through a large inventory of loans in foreclosure.
In U.K. election, it's jobs boom vs. stagnant wages. As the U.K. goes to the polls, the state of its economy has become a central issue in the campaign for David Cameron and Ed Miliband--and a puzzle.
IMF says China, Japan weakness threatens Asia. Rising debts, a stronger dollar and weaker-than-expected performances from China and Japan pose increasing risks to the broader Asia-Pacific region, the International Monetary Fund warned in its annual economic survey.
Treasury plans more short-term debt. The U.S. Treasury Department said it plans to increase the supply of short-term debt, in a bid to ease investors' concerns about difficulty trading in global bond markets.
CFO MOVES
Zulily Inc., a Seattle online retailer, named Brian Swartz chief financial officer, effective June 1, according to a regulatory filing. Mr. Swartz is CFO at Apollo Education Group Inc., according to a regulatory filing. He will succeed Marc Stolzman, whose tenure as CFO ended in February, according to a regulatory filing. Vice President of Accounting Tad Larsen became interim principal financial officer and interim principal accounting officer in connection with Mr. Stolzman's departure. Mr. Swartz will receive a salary of $450,000 and may receive a bonus of "up to 50% of his eligible earnings," according to a regulatory filing. He is eligible to receive a signing bonus of $400,000 and relocation expenses of $120,000. He will receive 100,000 restricted-stock shares, vesting over three years, and an option to buy 350,000 common-stock shares, vesting over four years. Mr. Stolzman received compensation valued at $336,819, including a salary of $299,219, in the company's 2014 fiscal year, according to a proxy filing.
Youku Tudou Inc., a Beijing-based Internet television and online advertising services company, named Hugh Wu CFO. Mr. Wu was previously CFO for Lenovo China and Asia Pacific Emerging Markets, excluding Australia, New Zealand and Japan. Youku Tudou in November said then-CFO Michael Ge Xu would leave, effective when it filed its 2014 annual report with the Securities and Exchange Commission, according to a news release. The company filed that report on April 28, according to a page on the SEC website.
Erin Energy Corp., a Houston-based oil and gas company, named Christopher Hearne CFO, effective June 1. Mr. Hearne has been finance director at Serica Energy PLC, according to a page on that company's website. At Erin Energy, he will succeed Earl McNiel, who will resign, effective May 31. Mr. McNiel received compensation valued at $646,025, including a salary of $295,000, in 2014, according to a proxy filing.
Chatham Lodging Trust, a Palm Beach, Fla., real-estate investment trust, named Jeremy Wegner CFO, effective June 1, according to a regulatory filing. Mr. Wegner has been a vice president of mergers and acquisitions at Starwood Hotels & Resorts Worldwide Inc. He succeeds Dennis Craven, whom Chatham Lodging Trust named chief operating officer, according to a news release. Mr. Wegner will receive a salary of $260,000 and may receive a cash bonus. Additionally, he will receive restricted stock valued at $250,000, vesting over three years from the shares' grant date. Mr. Craven received compensation valued at $1.2 million, including a salary of $335,000, in 2014, according to a proxy filing.
The Morning Ledger from CFO Journal cues up the most important news in corporate finance every weekday morning. Send us tips, suggestions and complaints: james.willhite@wsj.com. Get The Morning Ledger emailed to you each weekday morning by clicking here: http://on.wsj.com/TheMorningLedgerSignup. Follow us on Twitter @CFOJournal.
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(END) Dow Jones Newswires
May 07, 2015 06:40 ET (10:40 GMT)
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