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Reuters Insider - Trading at Noon: Global market slide, Teva up on pharma deal

Tue 28th July, 2015 5:01am
Click the following link to watch video:                              
 Source:             Thomson Reuters                                   
 Description:        Weakness in China hurts U.S. markets. Teva reaches 
                     $40.5 billion deal with Allergan.                 
(To access all exclusive Reuters Insider programming visit: http://insider.thomsonreuters.com) 
 Short Link:  http://reut.rs/1fA7A00  
Transcript (May be auto-generated)

                 Wall Street starting off the week in the red, in what is a very big week for 
earnings. David Gaffen, our US Markets Editor here at Reuters, is here. Let's 
take a look. Red arrows, David. Red again. Red again. It's five days in a row- 
not looking so great right now, are we? No, not looking so great. No. This is an
interesting stat that you had in your note today. Stocks that are missing on 
earnings are really being taken to- companies that are missing on earnings are 
really being taken to the woodshed in terms of their stocks, right? That's 
right. The ones that are missing on both earnings and revenue getting 

really tagged. And so we see it here, they've been down about 6% - it comes from
RBC - and then the ones that beat are up about 2%. So you've had the number, 
these very high profile names that we've seen, oh, up 17% and whatever. And it's
only been really a few of those. Okay. It's just that they've been Amazon and 
Google and a few names that people really like, and they've been really, really 
sort of the big gigantic- Netflix, right? Yeah, exactly. And so then you have 
these that are- the majority of those that are getting really hit hard are the 
ones that are missing on everything. And so it's just gotten into a point where 
we've heard the story before- there's a lot 

of cost cutting, people worried about China, worried about the Dollar strength. 
There's a lot of different things going on. Overall this earnings season so far 
just not looking all that fantastic. Alright, so speaking of China, getting 
whacked again. It is. The government has been trying to prop the market. The 
Shanghai Index closed, what, over 8% or so, right? Down at about 8%, and so that
entire market got hit hard, again. And then just in the last hour or so, the 
state regulators come out and said they're going to continue supporting shares 
in China, and that caused like a brief little bump up in some names, and then 
they've sort of faded away from those. This is a chart- Here's one. 

Yeah, this is Baidu. And so they reported after the bell, so people are going to
be watching that. But the news came out right around here, and as you can see, 
it caused a nice little blip right here. Jumps up and then sort of immediately 
fades out of that. I mean, it's come back a little bit now. They're still down 
about 3.5%, 4% kind of range. But you saw a little bit of buying coming there. 
It was interesting to see that all happen. At that same time when this news came
out, the S&P slipped another 5 points or so. It took over a period of several 

But it just sort of shows that investors kind of see state buying in China as 
not really a good sign because it just suggests that this selloff- they're not 
really getting control of it. And really, if you're less buyer of resort is your
government you just don't know that you've got a real handle on the issue. 
You're treating a symptom and not that the cause of a disease here. And so 
there's some real issues people have with the economy there. And this is kind of
emblematic of it. Alright, and as you mentioned, Baidu reporting after the close
today. Yes, after the bell, among others. So we'll be watching that. 

Alright, David Gaffen, thank you as always. Thanks a lot. Alright, we're going 
to turn to two stocks that are performing very well today- both hitting a 
52-week high, yet another deal in pharma. Always a great excuse to have you back
on the show, Caroline Humer, who covers pharmaceutical companies here and 
healthcare in general at Reuters. So Teva, Israeli-based company that we've 
talked about many times, buying Allergan's generic business, right? Right. So 
with both stocks soaring, investors liking this, yeah? Investors do like this 
deal. Teva had been trying to fight to buy Mylan. They didn't really like that 
so much. 

And that was a real hostile battle. They had been looking for Allergan. They 
have a huge generics business, Actavis. If you remember there's a $66 billion a 
year, earlier this. Right. So this was Actavis took over Allergan, changed their
name. And then changed its name to Allergan, right. And so now taking the 
business that was this sort of a whole part of Actavis and the moving that over-
they're selling that to Teva. And investors- they like that combination. Mylan 
sort of left out on its own now. Okay. Still says it's going to go after 
Perrigo. That's where we are today. So you and I were kind of emailing before 
the show and you're pointing out how 

now Allergan's CEO is kind of looking like a rock star, right, because he's 
going to take this cash and do, what? More transformational M&A deals. He sort 
of coined this term when he started talking last year about these deals he did. 
He came with Forest and then he did this huge Allergan deal. Actavis grew from a
little tiny company Barr into Watson into Actavis. But- the list goes on and on.
For now he says he has a $36 billion that he'll net from this deal and he's 
looking to go out and buy more companies. He was asked by investors, "In 18 
months, will you still have any cash left", then he said, "As long as I can keep
my investment rating, no." So- Because Allergan now is- it's about branded 
drugs, and so to get rid of the generic stuff and move that aside. Yeah, 
Allergan, Botox, so biggest business- aesthetics and that will stay- Here in New
York City in particular, yeah. That will stay there biggest business. I mean, if
you look at the numbers, they only have seven businesses- branded basically that
fall into those areas. And they said that is one of the businesses that they'll 
look to continue to do deals in. 

Alright, good stuff as always, Caroline Humer, thank you. Thank you. Alright, 
let's get to big- the big three movers. I'm just hungry. The big three more 
movers today. Let's go. Restaurant Brands International up 3%. This is the 
company that was created when Burger King merged with the Canadian coffee chain 
Tim Hortons- they're managed separately however. That stock up 3% as I 
mentioned. But reporting adjusted profit of $0.30 a share, that beats the 
Thomson Reuters average analysts' estimate of $0.25 a share. Comparable sales at

both of these restaurants are up between 5.5% and 6.5%. Why? Because people are 
eating lots of junk food on the menu. Let's check it out. Burger King says new 
menu offerings including the mozzarella bacon cheese burger, the extra long 
pulled pork sandwich, and the chicken fries. They're doing really well. Let's 
check Pfizer stock. Sales of Lipitor through the roof? I don't know. Anyway, 
over at Tim Hortons, it's the creamy chocolate chilled beverage. That actually 
sounds pretty good. 

Alright, moving onto Fiat Chrysler. That stock is getting hit today, down 5%. 
I'm sure you've read all about this. It's a messy situation over there. 
Recalling cars, being fined for cars that it didn't recall, NHTSA slapping $105 
million fine on Fiat Chrysler. They're also introducing as part of that deal a 
car trade-in or buyback plan. I have a Jeep Cherokee. I'm hoping it doesn't get 
hacked. I'm hoping everybody is safe in their Jeeps and other vehicles. The fine
is actually - according to analysts out there - much lower 

than the $700 million figure that was discussed. But it still represents 6.4% of
North American earnings last year for Fiat Chrysler. Alright, finally GrubHub 
getting whacked, down 10%. Shares cut to market perform from outperform by Cowen
& Company. The price target moves down to $30 from $39. Basically, in the note, 
Cowen says they're worried about competition. Really interesting stat: it says 
US food delivery startups received an unprecedented amount of startup cash in 
2015. So far - and the year is still not that young - but halfway through, about
$500 million year-to-date, so much competition: Postmates, DoorDash, Caviar- 
whether it's delivering food from restaurants or ready-to-made food- Uber 
getting into the action with Uber Eats. That coming. Yelp buying a company 
called Eat24- so lots of companies out there and Cowen & Company is worried 
about GrubHub. Alright, that does it for us at Trading at Noon. I'm Lisa 
Bernhard. This is Reuters
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