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Hot Stock Minute: Cyprus Surprise, Coffee Commodity Jitters

Dan Berman
Hot Stock Minute

Proof today that no country is an island. A surprise plan to bail out Cyprus by taxing bank accounts is rattling markets everywhere. So far the Nikkei has suffered the steepest losses, falling roughly 2.7%. But there's red all around, including in other Euro nations. Here are some fast facts on the plan which is still in flux: Bank depositors would be taxed to help fund the bailout. Under the initial plan, accounts under 100,000 euros would be levied 6.75%. Over 100,000 euros, the tax would be 9.9%. The plan is in fact unprecedented, and affects money that was insured.

More massive job cuts are coming to HSBC (HBC). Sources say the bank could be eliminating another 10,000 jobs. The goal is to trim payrolls by $1 billion dollars annually. HSBC previously said it wanted to cut yearly costs between $2.5 billion and $3.5 billion. It has already exceeded that, slashing them $3.6 billion.

An overabundance of coffee beans is causing jitters in the commodity. Prices are now at their lowest in nearly 3 years. That's because of mounting stockpiles in Colombia and a bumper crop in Brazil. Right now the global supply of coffee for the year is set to exceed demand by nearly 300 million pounds. In Colombia the supply is up 6.7% since the beginning of the year. In Brazil the latest figures show 71% of the crop sold, down from 87% a year ago.


It's time now to look at four stocks to watch today. First up, we have JPMorgan (JPM) which posted its first weekly loss since December after falling almost 2% on Friday. The stock has climbed about 60% since the summer, and looked pretty unstoppable until the end of last week. That's when the Fed said JPM showed weaknesses in the second round of a stress test. There were also Senate hearings on the London Whale trading scandal and accusations that CEO Jamie Dimon tried to cover it up.

Aeropostale (ARO) may catch the eye of private-equity firms. The stock fell 5% last Friday, leaving it valued at just .46 times its revenue over the last year. Bloomberg says that makes Aeropostale the cheapest among similar-sized clothing chains. Aeropostale has no debt. It currently earns less in profits for each dollar of sales than its peers, so an outside investor might think there's room for improvement. Aeropostale is off its yearly lows which it hit back in the summer, but has not been a part of the recent rally.

We don't have any big companies reporting earnings today. So we thought we'd look at two smaller ones which have been on the move. First is UTStarcom (UTSI). Shares dropped more than 7% on Friday ahead of the report. UTStarcom integrates things like cable and internet services. The company is based in Beijing and focused on China.

Also reporting today is Horizon Pharmaceuticals (HZNP). Shares were up 5% on Friday, but they're still at just 1/3 of their 52-week high reached back in June. Horizon is focused on finding and marketing medications for arthritis and similar conditions. Regulators in the UK recently gave marketing approval for its arthritis drug Duexis.