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Daily Scan: CVS dumps Valeant's Philidor pharmacy; 2-year Treasury yields rise sharply

By NexChange
Capital Markets

Updated throughout the day

October 29

The U.S. Treasury market shrugged off the weak GDP for the third quarter, and turned tail at the very real threat of a December interest rate hike. The yield on the two-year note -- often viewed as a proxy for where the federal funds rate is heading -- rose to 0.728%, up from 0.707% on Wednesday, its biggest one-day move since February. Tuesday, the yield stood at 0.61%. (Yields rise when prices fall.) On Wednesday, the Federal Reserve dropped its concern about global weakness and strongly hinted that they may the economy is robust enough to raise rates. Economists were divided over whether the weaker-than-expected report on third quarter GDP would move the Fed. Growth fell to 1.5%  short of the 1.7% expectation. In the economy-is-fine column: Initial jobless claims came in at 260,000 for the week ending October 24 -- the 34th week in a row that the jobless claims remained below 300,000. Stocks edged down Thursday, with the Dow Jones Industrials off 0.1%. The Nasdaq fell 0.4%, and the S&P 500 dropped 0.04%. Oil closed just over $46/barrel.

Here’s what else you need to know:

CVS terminates Philidor from Caremark program. CVS says that it found "noncompliance" in an audit of Philidor, a pharmacy associated with the embattled Valeant. Last week activist investor Andrew Left alleged that Valeant was using Philidor as a front for fraudulent activity. MarketWatch

LinkedIn beat earnings expectations. The social media site reported earnings of 78 cents per share on $780 million in revenue, compared to the expected 46 cents per share on $756 million in revenue. Sales were up 37% from the previous year. Shares rose 10% in after hours trading with the news. CNBC

A Boeing 767 caught fire in Florida. The plane was taxing for departure from Fort Lauderdale-Hollywood International Airport for Venezuela. The Dynamic International Airways Flight 405 suffered a fuel leak before catching fire on the runway around 12:30 p.m. Passengers were evacuated from the aircraft, and 14 were injured. CNN

Paul Ryan elected 62nd speaker of the House. The Wisconsin representative takes over from Representative John Boehner. The 45-year-old Ryan is the youngest speaker since 1869, and is also the first speaker since 1989 to be elected in the middle of a congressional term. New York Times (paywall)

Pfizer, Allergan may merge in biggest deal of year.  The combo would elbow aside the Anheuser-Busch InBev $104 billion pact to buy SAB Miller. 2015 is shaping up to be the hottest year for mergers. Pfizer has a market cap of $216 billion while Allergan is $112.5. The bankers win, whichever way you look at it. Wall Street Journal (paywall)

Deutsche Bank to lay off 35,000, scotch dividend. Deutsche Bank CEO John Cryan told the press that he plans to reduce his firm’s full-time workforce by 9,000 and shut down the bank’s operations in 10 countries. The massive overhaul, once finished, will result the job losses. 

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