Posts Tagged ‘Dell’
Frontrunning: May 21
Tuesday, 21 May 2013 06:48
No Comments
  • IMF Tells Central Europe to Spend More (WSJ)
  • Tornadoes Blast Oklahoma (WSJ)
  • Frenetic search for survivors as 91 feared dead in tornado-hit Oklahoma (Reuters)
  • JPMorgan investors on edge over vote on Dimon; what if they win? (Reuters)

    • (Read more…)

  • Wealthy bank depositors to suffer losses in EU law (Reuters)
  • Yen Slips as Amari Backtracks (BBG)
  • Japan Ready for More Yen Weakness Despite Recent Comments (WSJ)
  • IRS officials back on Capitol Hill hot seat over targeting (Reuters)
  • Li Keqiang pledges China boost to India trade (FT)
  • Europe’s Recession Sparks Grass-Roots Political Push (WSJ)
  • Obama and Xi to meet in effort to calm growing US-China rivalry (FT)
  • Berlin plans to streamline EU but avoid wholesale treaty change (FT)
  • France must reform or face punitive measures – EU’s Oettinger (Reuters)
  • Tumblr’s 26-Year-Old Founder Celebrates $1.1 Billion Deal (BBG)
  • SocGen Joins UniCredit in Warsaw as Equity Sales Surge (BBG)

 

Overnight Media Digest

WSJ

* JPMorgan Chase & Co is preparing for a shake up of its board even if every director wins re-election at Tuesday’s shareholder meeting and James Dimon keeps his dual job as chairman and chief executive.

* Even in the fast growing realms of the consumer Internet, some businesses are best served by old fashioned consolidation. GrubHub and Seamless, two nationwide startups used for ordering restaurant takeout by smartphone and computer, said they would merge. GrubHub Chief Executive Matt Maloney, who will lead the combined company, declined to discuss valuation.

* Here is a glimpse at the future of finance. When Deutsche Bank AG set out to win a role on Apple Inc’s $17 billion bond, it eschewed Wall Street’s traditional tactics. Instead of flying well-groomed bankers to Cupertino, California, to charm Apple’s top executives with powerpoint presentations, Deutsche relied on iTunes. The German bank has handled the back office work for Apple’s online store in recent years, according to people familiar with the situation.

* Aware that it needs China’s sweet tooth, Hershey Co is rolling out a Chinese brand designed for the world’s fastest growing candy market. In a first launch beyond the U.S. market, Hershey is unveiling on Tuesday a candy known in English as the Lancaster and in Chinese as Yo-man. Hershey will officially open its Shanghai-based Asia Innovation Center on Wednesday. It will be company’s second-largest research and development center world-wide.

 

FT

The U.S. Senate accused Apple Inc of paying little or no taxes to governments around the world by using loopholes and Irish units that are not tax residents of any country.

Actavis said it would by rival Warner Chilcott in a $5 billion deal that would see the combined company become the world’s third-largest generic drug company by sales.

ENRC’s co-founders, who are bidding to take control of the miner, are likely to be able to buy the company for a low price, analysts said.

India’s Essar Oil will sign a loan-for-oil deal with state-run China Development Bank under which the bank will provide the company with a loan in exchange for oil shipments to PetroChina.

The European Commission is seeking new information from trading houses, including Glencore, as part of its probe into the manipulation of energy price benchmarks.

 

NYT

* Yahoo’s $1.1 billion proposed acquisition of Tumblr is a huge coup for the young founder of the even younger start-up and a splashy move by Marissa Mayer to shake up her company. It also heralds a larger shift in social media. Facebook arguably invented modern social networking, and is still the king. But increasingly its approach is seen as passive and outdated as people flock to sites like Tumblr where they can be more actively engaged in creating personal, expressive content to share – and which could potentially translate to advertising dollars.

* Even as Apple became the nation’s most profitable technology company, it avoided billions in taxes in the United States and around the world through a web of subsidiaries so complex it spanned continents and went beyond anything most experts had ever seen, Congressional investigators disclosed on Monday.

* SAC Capital Advisors is bracing for another round of withdrawal requests as fears grow that insider trading investigations could further damage Steven Cohen and his firm.

* Courts are looking to Urban Dictionary, a crowd sourced website, as one way to define words on which a case may turn.

* While companies weigh bids for Hulu and industry heavyweights complain that TV Everywhere isn’t going much of anywhere, another way to watch time-shifted television is quietly gaining traction: video-on-demand, or VOD.

* The Obama administration and the European Union have each decided to negotiate settlements with China in the world’s largest anti-dumping and anti-subsidy trade cases involving China’s roughly $30 billion a year in solar panel shipments to the West, officials and trade advisers in Beijing, Brussels and Washington said.

* Last week’s disclosure by Ronald Machen Jr, the United States attorney for the District of Columbia, that his office had secretly seized telephone records of Associated Press reporters as part of a leak investigation surprised and shocked many people. But to some on Wall Street, Machen’s involvement in a phone records case had a familiar ring. They recalled the case of Allied Capital, a formerly high-flying business development company based in Washington whose shares collapsed in 2009. Two years earlier, Allied had admitted that one of its investigators had stolen the phone records of a prominent hedge fund manager who had been critical of the company’s accounting practices. The chief outside lawyer counseling Allied was Machen, then a partner at WilmerHale.

* Japan’s Prime Minister Shinzo Abe’s economic shock therapy, which combines a flood of cheap cash, fiscal stimulus and deregulation, is getting early results.

 

Canada

THE GLOBE AND MAIL

* When Toronto city council meets Tuesday morning to formally kill the proposal for a downtown casino, it will end for good what was once a pet project for mayor Rob Ford.

The meeting will also be the first time the beleaguered mayor must face his council colleagues since accusations he was videotaped smoking crack cocaine surfaced last week. (http://link.reuters.com/heg38t)

Reports in the business section:

* Alaska proposed a multiyear, multimillion dollar plan aimed at determining the true oil and gas potential in the Arctic National Wildlife Refuge. State officials hope the plan will reinvigorate and reshape the debate over whether to drill on the refuge’s coastal plain. (http://link.reuters.com/peg38t)

NATIONAL POST

* Canadian Prime Minister Stephen Harper will head to South America this week to suss out membership in a new trading bloc he has been working to join for many years.

The Pacific Alliance was formed by Chile, Colombia, Mexico and Peru in 2011 and Canada took a spot on the sidelines the next year, along with several other countries as observers. (http://link.reuters.com/reg38t) (Compiled by Avik Das in Bangalore)

 

China

PEOPLE’S DAILY

- Chinese Premier Li Keqiang’s visit to India, his first foreign trip since taking office in March, has enhanced the strategic partnership of the two countries, the ruling Communist Party’s newspaper said in a report.

CHINA SECURITIES JOURNAL

- China is expected to further increase supervision of local government debt to prevent risk of defaults.

- Chinese wine makers have applied to the Ministry of Commerce to launch an anti-dumping investigation into sales by European counterparts in China.

SHANGHAI SECURITIES NEWS

- Experts believe the Chinese currency yuan has the potential to rise further in the near term as China steps up exchange rate reforms. Driven by strong capital inflows into China, the central bank has guided the yuan to a slew of record highs since early April.

- Bank stocks are still being favoured by Chinese investors and have led a recent rally in China’s stock market, although foreign investors have been withdrawing from the Chinese sector.

CHINA DAILY

- China’s marine economy will account for 13 percent of the country’s GDP by 2020, a government think-tank said on Monday. The China Institute for Marine Affairs said the sector would be worth more than 10 trillion yuan ($1.63 trillion) by then.

- Many of China’s first-tier cities are “barely suitable for living”, according to a report released on Sunday by a top Chinese think-tank. Beijing, Shanghai and Guangdong all failed to make the list of “habitable cities”.

SHANGHAI DAILY

- The number of weddings in Shanghai skyrocketed more than 800 percent to 3,766 on Sunday alone, as happy couples flocked to tie the knot. May 20 is seen as an auspicious date in China.

Corporate Finance

* Charlie Ergen, the chairman of U.S. satellite company Dish Network Corp, has offered to buy bankrupt broadband company LightSquared Inc’s wireless airwaves, a source close to Ergen told Reuters. Bloomberg reported the offer to be valued at $2 billion, citing people familiar with the bid.

* U.S. private equity firm Riverstone Holdings LLC is planning to invest as much as $1 billion in a new commodities venture run by Deutsche Bank AG former head of commodities David Silbert, the Financial Times reported.

* India’s Essar Oil Ltd will sign a $1 billion loan deal with China on Tuesday that sources with knowledge of the matter said would be backed by supply of refined products to top state oil producer PetroChina Co Ltd.

* Specialty chemicals producer Rockwood Holdings Inc’s pigments businesses have attracted offers from buyout firms including Blackstone Group LP and Advent International Corp, several people familiar with the matter said.

* Italian motorway operator Atlantia SpA is close to selling its transmission towers to U.S. investors for almost 100 million euros ($128.56 million), a source close to the matter said on Monday.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

American Tower (AMT) upgraded to Outperform from Neutral at Macquarie
BlackRock (BLK) upgraded to Outperform from Neutral at Macquarie
Con-way (CNW) upgraded to Buy from Hold at Wunderlich
Cubist (CBST) upgraded to Hold from Sell at Cantor
Felcor Lodging (FCH) upgraded to Buy from Neutral at SunTrust
IntercontinentalExchange (ICE) upgraded to Outperform from Neutral at Macquarie
Stifel Financial (SF) upgraded to Market Perform from Underperform at Wells Fargo
T. Rowe Price (TROW) upgraded to Outperform from Market Perform at Bernstein
Wet Seal (WTSL) upgraded to Buy from Hold at KeyBanc

Downgrades

Acquity Group (AQ) downgraded to Neutral from Buy at Roth Capital
Beazer Homes (BZH) downgraded to Neutral from Buy at Sterne Agee
CME Group (CME) downgraded to Neutral from Outperform at Macquarie
Carnival (CCL) downgraded to Neutral from Buy at UBS
Coach (COH) downgraded to Equal Weight from Overweight at Morgan Stanley
Deutsche Bank (DB) downgraded to Neutral from Overweight at JPMorgan
First Republic Bank (FRC) downgraded to Hold from Buy at Jefferies
Franklin Resources (BEN) downgraded to Neutral from Outperform at Macquarie
Life Technologies (LIFE) downgraded to Underperform from Outperform at CLSA
Oil States (OIS) downgraded to Neutral from Buy at Sterne Agee
Raymond James (RJF) downgraded to Market Perform from Outperform at Wells Fargo
VF Corp. (VFC) downgraded to Market Perform from Outperform at Wells Fargo
WellCare (WCG) downgraded to Neutral from Buy at Goldman

Initiations

Aetna (AET) reinstated with a Buy at Goldman
BioScrip (BIOS) initiated with a Buy at Jefferies
Cray (CRAY) initiated with a Buy at Sterne Agee
Harris (HRS) initiated with a Hold at Stifel
Hasbro (HAS) initiated with an Overweight at Piper Jaffray
JAKKS Pacific (JAKK) initiated with a Neutral at Piper Jaffray
LeapFrog (LF) initiated with an Overweight at Piper Jaffray
Mattel (MAT) initiated with an Overweight at Piper Jaffray
Sony (SNE) initiated with a Buy at Jefferies
Summer Infant (SUMR) initiated with an Overweight at Piper Jaffray
Taylor Morrison (TMHC) initiated with a Hold at Deutsche Bank

HOT STOCKS

Dish (DISH), Sprint (S) to engage in talks
Softbank (SFTBF) confirmed waiver, expects Sprint (S) deal to close in six weeks
Cadbury Schweppes (CSG) begins modified $125M “Dutch Auction” tender offer
Apple (AAPL) has used Ireland as a tax-haven for the past five years by creating “No-shore” tax entities, said Senator Carl Levin (D-MI)
S&P lowered Dell (DELL) ratings to ‘BBB’ from ‘A-’, remains on watch negative
Carnival (CCL, CUK) lowered FY13 EPS to $1.45-$1.65 from $1.80-$2.10, consensus $1.97
General Cable (BGC) initiated dividend and extended $125M repurchase authorization
DOJ reached settlement with Cinemark (CNK) in Rave Holdings deal
Wausau Paper (WPP) agreed to divest specialty paper business for about $110M
Regeneron (REGN), Bayer (BAYRY), Genentech (RHHBY) resolved certain patent disputes

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
hhgregg (HGG), TiVo (TIVO), Urban Outfitters (URBN)

NEWSPAPERS/WEBSITES

  • JPMorgan Chase (JPM) plans to shake-up of its board even if every director wins re-election at today’s shareholder meeting and James Dimon keeps his dual job as chairman and CEO, the Wall Street Journal reports
  • Mutual-fund firms are joining activist investors in getting more aggressive over demands for change in how board members are paid at U.S. companies. Activist investors have been experimenting more frequently with incentive pay packages for the board members they nominate in proxy fights, the Wall Street Journal reports
  • Specialty chemicals producer Rockwood Holdings’s (ROC) pigments businesses have attracted offers from buyout firms including Blackstone Group (BX) and Advent International, sources say, Reuters reports
  • The Asian prime brokerage unit of Credit Suisse (CS) replaced Morgan Stanley (MS) as the second largest firm servicing the region’s $148B hedge funds industry, according to a survey by AsiaHedge. Goldman Sachs (GS) remains Asia’s top prime broker with 179 clients and total assets under management of $24.6B, Reuters reports
  • Bank managers in the U.S. are less likely to engage in mergers and acquisitions this year as regulators heighten scrutiny on potential deals and sellers wait for higher valuations, according to a KPMG survey, Bloomberg reports
  • PIMCO’s Bill Gross says the bull market for bonds may have ended last month. But investors are staying put. Four years into the biggest rally in U.S. stocks since 2000, bond mutual funds are attracting more money than their equity counterparts, Bloomberg reports

SYNDICATE

Cimatron (CIMT) files to sell ordinary shares
First Potomac (FPO) files to sell 6M shares of common stock
Ironwood (IRWD) files to sell 10.5M shares of common stock
Laclede Group (LG) files to sell 8.7M shares of common stock
NPS Pharmaceuticals (NPSP) files to sell 6M shares of common stock
Oaktree Capital (OAK) files to sell 6M shares of common stock
TCP Capital (TCPC) files to sell 4M shares of common stock
Wesco Aircraft (WAIR) files to sell 15M shares of common stock

    



 
Frontrunning: May 17
Friday, 17 May 2013 06:31
No Comments
  • Mine union threatens to bring South Africa to ‘standstill’ (Reuters)
  • Russia Raises Stakes in Syria (WSJ) – as reported here yesterday 
  • Japan buys into US shale gas boom (FT)
  • Bill Gates Retakes World’s Richest Title From Carlos Slim (BBG) – so he can afford a Tesla now?

    • (Read more…)

  • China Wages Rose Sharply in 2012 (WSJ)
  • Regulators Target Exchanges As They Ready Record Fine (WSJ)
  • Citi Takes Some Traders Off Bloomberg Chat Tool (WSJ)
  • After Google, Amazon to be grilled on UK tax presence (Reuters)
  • Apple CEO Cook to Propose Tax Reform for Offshore Cash (BBG)
  • French, German politicians to pressure Google on tax (Reuters)
  • Gold Bears Revived as Rout Resumes After Coin Rush (BBG)
  • A stretched Samsung chases rival Apple’s suppliers (Reuters)

 

Overnight Media Digest

WSJ

* Financial regulators are taking a harder line on exchanges amid concerns over their ability to police the markets they operate, as the SEC prepares to hit one with a record penalty. The deeper scrutiny has prompted some exchange officials to push back against a new regulatory stance that they say leaves them more vulnerable to potential penalties and sanctions.

* A so-so first quarter earnings season hasn’t dented investors’ enthusiasm for stocks. Profit at large U.S. companies modestly exceeded Wall Street analysts’ expectations, while revenue was weak and many companies ratcheted down growth projections. However stock prices have been rising, with the Dow Jones industrial average up 16 percent for the year and 4.2 percent since earnings season began April 8.

* The booming market for commercial-mortgage-backed securities (CMBS) is on the verge of passing a dubious milestone – losses on a class of bonds that have been popular with investors for the big returns they promised.

The securities, dubbed “AJ” have found favor with investors because they combine high payouts, or yield, and greater relative protection against losses than some other high-yielding securities. But now, the potential sale of a troubled Atlantic City luxury mall, named the Pier Shops at Caesars, could saddle investors with the first losses on AJ securities created during the U.S. housing boom. The property is on the block after an earlier sale fell through.

* The ousted chief executive of Tuesday Morning Corp , Kathleen Mason, is suing her former employer, alleging she was discriminated against after developing breast cancer.

* Eight members of Congress on Thursday asked Google Inc Chief Executive Larry Page to give assurances about privacy safeguards for the company’s high-profile Google Glass wearable-computing device.

The demands come as Google holds its annual developer conference in San Francisco, where it is coaching hundreds of developers on how to write programs for the device.

* Foreign-exchange traders at Citigroup Inc will soon move from Bloomberg LP’s chat tool to their own internal system, as part of a push to reduce data costs and migrate more people onto its own proprietary technology, people familiar with the bank’s plans said.

FT

George Osborne’s attempts to cut public spending by 11.5 billion pounds in election year has caused tensions in the cabinet as some ministers failed to provide the list of 10 percent departmental cuts he had ordered and another said he was “asking too much”.

Alternative asset manager Blackstone Group LP, is readying to launch a “super” hedge-fund, which will invite the numerous third-party hedge funds it invests with to submit their best trades in return for a fee.

Newly merged commodities group Glencore Xtrata Plc ousted its chairman on Thursday, replacing him with Tony Howard, the former BP Plc chief executive who was once known as the United States’ most hated man for his role in the Gulf of Mexico oil spill.

Dell Inc, which has been the subject of a takeover war between its founder Michael Dell and activist investor Carl Ichan, reported a 79 percent slide in first-quarter profit on Thursday, well below Wall Street expectations.

Citigroup Inc has stopped its foreign exchange traders from using chat rooms on their Bloomberg terminals but said that the decision was not related to the recent complaints regarding the access of private data by Bloomberg’s journalists.

ANA Holdings Inc, the world’s biggest operator of Boeing Co’s 787 Dreamliner, reported a problem with one of its test flights involving damage to an electrical distribution panel but said that it was not related to the newly modified battery system.

 

NYT

* Fred Eckert was once a star at Goldman Sachs, with a mansion and a collection of vintage cars; but by 2011, he was bankrupt, divorced and had spent two months in a coma. Today, he is planning a return to the arena.

* Google announced seven new apps for its Internet connected glasses, including ones from Facebook, Twitter, Tumblr, CNN, Elle and Evernote.

* Vast databases of patient and doctor information being used by drug makers let them know which medications physicians are prescribing and how they compare to colleagues.

* Two separate groups sent letters to Wal-Mart, Target, Sears and Gap, urging them to sign on to the factory safety plan that over 30 European retailers embraced this week.

* Foxconn Technology has made progress toward better safety conditions, but employees are still working longer than Chinese law allows.

* J C Penney’s former Chief Executive Myron Ullman, who is now its new chief executive, is reinstating old pricing and promotion policies to lure alienated customers back through its doors.

* The Bayonne Medical Center charged Medicare the highest amounts for about a quarter of the most common treatments, a Times analysis of 2011 data shows.

 

Canada

THE GLOBE AND MAIL

* Paul Godfrey has been ousted as chairman of Ontario’s lottery corporation, leaving his vision for a downtown Toronto casino in tatters and plans to overhaul the province’s gambling operations in disarray. The entire board of directors at the Ontario Lottery and Gaming Corp resigned in protest on Thursday evening, with six of them penning a letter to the Finance Minister saying they are shocked by Godfrey’s dismissal.

* Senator Mike Duffy is stepping down from the Conservative caucus, saying the ongoing controversy over his expenses has become a significant distraction to his colleagues and the government. Just days after being praised by the Conservative government for his “leadership” in paying back more than C$90,000 ($88,600) in expenses, Duffy will now sit as an independent as he faces various potential ethics probes.

Reports in the business section:

* Telus Corp’s C$380 million ($374.07 million)agreement to buy faltering carrier Mobilicity presents the federal government with a stark choice – admit failure in its years-long push to create more competition in the wireless business or try to salvage the goal of having at least four players in every regional market.

NATIONAL POST

* It is said that the way to a man’s heart is through his stomach, and Parti Québécois Premier Pauline Marois is hoping the same holds true for a nation. The polls have relegated her party’s dream of independence to the distant future, but that did not stop Marois from making a unilateral declaration of “food sovereignty” on Thursday. Fulfilling a promise from last summer’s election campaign, she announced a government policy aimed at achieving a 50 percent increase in the amount of locally produced food Quebecers eat.

* The fallout from Quebec’s corruption scandals has reached the epicentre of Canada’s Parliament, with the federal Opposition leader revealing on Thursday he once spoke to police about someone trying to pass him a suspicious-looking envelope. NDP Leader Tom Mulcair said he spoke to investigators two years ago about a 1994 meeting with the then mayor of Laval, Quebec, who has since resigned in scandal and been slapped with criminal charges.

FINANCIAL POST

* Prime Minister Stephen Harper is seeking to counter opposition to TransCanada Corp’s Keystone XL pipeline, a project crucial for boosting Canada’s economy and Harper’s plans to make the country an energy superpower to rival Saudi Arabia. Harper, at an event on Thursday moderated by former U.S. Treasury Secretary Robert Rubin for the Council on Foreign Relations in New York, said there is a strong case for the U.S. government to approve the pipeline, citing the prospects for job creation and North American energy independence.

China

CHINA SECURITIES JOURNAL

– New loans by China’s Shanghai Pudong Development Bank Co Ltd are expected to hit 190 billion yuan ($30.90 billion), while bad loans will remain above 0.75 percent in 2013, said Liu Xinyi, vice president of the bank.

– China’s government has allocated 58 billion yuan ($9.43 billion) for public rental housing projects in 2013.

SHANGHAI SECURITIES NEWS

– China will remove or reduce requirements for official approval for 117 “items”, according to a list published by the State Council on Thursday. The official China Daily added that 16 further items are pending decision. The items range from foreigners touring in their own vehicles to companies investing in large oil and gas fields.

SHANGHAI DAILY

– Shanghai authorities are considering reopening some of the city’s live poultry markets next month, after they were shut down in April and thousands of birds culled due to an outbreak of a bird flu virus. The move suggests that fears over the deadly outbreak are waning in China.

– Gold demand in China rose 20 percent in the first quarter of 2013 from a year ago to 294.3 tonnes, according to a report from the World Gold Council.

CHINA DAILY

– Sales of consumer goods in China will grow 13 percent in 2013, slower than previous years, according to a report released on Thursday by a department of China’s Ministry of Commerce. Zhao Ping, deputy director of the department, said the slowdown was linked to private spending rather than public funds becoming the main driver of consumption.

CHINANEWS.COM

– Thirty-three people have died and 12 are missing after storms battered southern China, the country’s civil affairs and disaster reduction authorities said on Thursday. Official news agency Xinhua also reported late Thursday night that some areas of Guangdong province had suffered the worst flooding in a century with close to 3,000 homes destroyed and 650,000 people affected in the region.

Corporate Finance

* Dish Network Corp has lined up four banks to finance its $25.5 billion bid for Sprint Nextel Corp, escalating the bidding war against Japanese telecom company SoftBank Corp, according to two people familiar with the matter.

* RP Martin Holdings Ltd, the British interdealer broker that became involved in the Libor fixing investigation when two of its employees were arrested in December, suspended its chief executive and a director on Wednesday, a source familiar with the matter told Reuters.

* The consortium of investors seeking to take over Severn Trent Plc offered just under 20 pounds per share for the British water company, valuing it at around 4.7 billion pounds ($7.16 billion), a source told Reuters on Wednesday.

* The Portuguese government and JPMorgan Chase & Co are attempting to resolve a tussle over potentially costly derivative contracts sold by the U.S. investment bank to state-owned companies, a source familiar with the situation said.

* Swiss drugmaker Roche Holding AG is exploring a sale of its blood glucose meters business, three people familiar with the matter told Reuters on Wednesday, as the industry grapples with increased competition and reimbursement pressure.

* Macquarie Group Ltd -backed Asian Pay Television Trust has priced its Singapore initial public offering at S$0.97 per unit, at the bottom of a narrowed marketing range, people familiar with the matter told Reuters on Thursday, raising $1.14 billion.

* Before Optimer Pharmaceuticals Inc even put itself up for sale earlier this year, Cubist Pharmaceuticals Inc offered to buy the antibiotic maker for $20 per share, or nearly $1 billion, two people familiar with the matter told Reuters on Wednesday.

* Bain Capital LLC has emerged as the last party standing in the race for Yankee Candle Co Inc, three people familiar with the matter said, making it likely that the largest scented candle maker in the United States will stay in private equity hands.

* Singapore’s Changi Airport Group has sold its 8.36 percent stake in Italy’s Generale Mobiliare Interessenze Azionarie SpA at 1.43 euros per share, a source close to the situation said on Wednesday.

* British tour operator Thomas Cook Group Plc will announce plans to raise about 400 million pounds ($609.02 million) through a placing and rights issue on Thursday, according to two travel industry sources.

* Austin Brown, a portfolio manager with a focus on metals at Caxton Associates, has left the London office of the $6 billion U.S. hedge fund, according to a source at the company.

* Publishing company Mecom Group Plc is set to appoint veteran investment banker Rory Macnamara as its chairman as it continues to restructure its business, the Financial Times reported, citing people close to the company

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Capella Education (CPLA) upgraded to Outperform from Market Perform at William Blair
Ctrip.com (CTRP) upgraded to Neutral from Sell at Citigroup
General Motors (GM) upgraded to Buy from Underperform at CLSA
Ruckus Wireless (RKUS) upgraded to Buy from Neutral at Goldman
Standard Pacific (SPF) upgraded to Buy from Fair Value at CRT Capital
Tetra Technologies (TTI) upgraded to Outperform from Sector Perform at RBC Capital
U.S. Silica (SLCA) upgraded to Outperform from Sector Perform at RBC Capital

Downgrades

Actuant (ATU) downgraded to Neutral from Buy at SunTrust
Aruba Networks (ARUN) downgraded to Equal Weight from Overweight at Morgan Stanley
Aruba Networks (ARUN) downgraded to Market Perform from Outperform at Wells Fargo
Aruba Networks (ARUN) downgraded to Neutral from Buy at Janney Capital
Aruba Networks (ARUN) downgraded to Perform from Outperform at Oppenheimer
CAE (CAE) downgraded to Sector Perform from Outperform at RBC Capital
City Holding (CHCO) downgraded to Market Perform from Outperform at Keefe Bruyette
Deere (DE) downgraded to Sell from Neutral at Goldman
Disney (DIS) downgraded to Neutral from Overweight at Atlantic Equities
HSBC (HBC) downgraded to Neutral from Outperform at Exane BNP Paribas
L Brands (ltd) downgraded to Underperform from Hold at Jefferies
Manning & Napier (MN) downgraded to Underperform from Neutral at BofA/Merrill
MeadWestvaco (MWV) downgraded to Underperform from Sector Perform at RBC Capital
National Grid (NGG) downgraded to Neutral from Outperform at Exane BNP Paribas
Savient (SVNT) downgraded to Market Perform from Outperform at William Blair
Stryker (SYK) downgraded to Reduce from Neutral at SunTrust
TRW Automotive (TRW) downgraded to Hold from Buy at Deutsche Bank
Universal Health (UHS) downgraded to Neutral from Positive at Susquehanna
Williams-Sonoma (WSM) downgraded to Neutral from Buy at BofA/Merrill
Zimmer (ZMH) downgraded to Reduce from Neutral at SunTrust

Initiations

Ambac Financial (AMBC) initiated with a Buy at BTIG
Cempra (CEMP) initiated with a Buy at Jefferies
Globus Medical (GMED) initiated with a Buy at WallachBeth
Infoblox (BLOX) initiated with a Buy at Needham
McCormick (MKC) initiated with a Neutral at Citigroup
NuVasive (NUVA) initiated with a Buy at WallachBeth
T-Mobile USA (TMUS) initiated with an Equal Weight at Barclays

HOT STOCKS

Northrop Grumman (NOC) announced additional $4B share repurchase authorization
Caterpillar (CAT), Mining Machinery resolved all outstanding issues
Dell (DELL) continues to expect “relatively weak” demand in end-user PC business
ING Groep (ING) to sell part of its direct stake in SulAmerica to International Finance Corp.
Yum! Brands (YUM) Taco Bell CEO sees doubling revenue to $14B in 10 years
Yahoo! (YHOO) granted favorable ruling in Mexico City superior court
Vascular Solutions (VASC) filed patent infringement complaint against Boston Scientific (BSX)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
SINA (SINA), Bona Film (BONA), ViaSat (VSAT), Xueda Education (XUE), Brocade (BRCD), Envestnet (ENV)

Companies that missed consensus earnings expectations include:
Stage Stores (SSI), J.C. Penney (JCP), SMART Technologies (SMT), 21Vianet (VNET), Nordstrom (JWN), Aruba Networks (ARUN), Autodesk (ADSK), Cosi (COSI), Dell (DELL)

NEWSPAPERS/WEBSITES

  • JPMorgan Chase (JPM), in a last-ditch effort to beat back activist investors, sent a letter to shareholders who have yet to vote on the nonbinding proposal ahead of the May 21 annual meeting, urging them to reject a proposal to split the chairman and CEO roles held by James Dimon, the Wall Street Journal reports
  • Amazon.com (AMZN) will be called back to the British parliament to clarify how its activities in the U.K. justify its low corporate income tax bill, Reuters reports
  • J.C. Penney (JCP) CEO Ullman says that the department store chain is emerging from what he called an abyss but warned he needs time to fix the issues of the retailer, Reuters reports
  • Apple (AAPL), which holds $102B in cash and investments outside the U.S., will suggest changes to corporate-tax laws to encourage companies to bring more cash into the country, Bloomberg reports
  • Fiat’s (FIATY) deliberations over moving its headquarters to the U.S. after a merger with Chrysler Group LLC. raised concern among Italian unions and politicians about the plans of the country’s biggest manufacturer. CEO Marchionne is considering the move because Fiat’s main sources of revenue and profit are shifting to North America, Bloomberg reports

SYNDICATE

Marketo (MKTO) 6.059M share IPO priced at $13.00
Stemline (STML) 4.14M share Secondary priced at $14.50
TC PipeLines (TCP) 7.7M share Secondary priced at $43.85
Tableau Software (DATA) 8.2M share IPO priced at $31.00
Tesla (TSLA) 2.7M share Secondary priced at $92.24
Triple-S (GTS) 5.4M share Secondary priced at $18.25

ACTIVIST/PASSIVE FILINGS

SAC Capital reports 5.0% passive stake in Tessera (TSRA)
Yucaipa wants Morgans Hotel (MHGC) meeting to reflect $7.50 per share offer

    



 
Dull Overnight Session Set To Become Even Duller Day Session
Friday, 17 May 2013 06:01
No Comments

Those hoping for a slew of negative news to push stocks much higher today will be disappointed in this largely catalyst-free day. So far today we have gotten only the ECB’s weekly 3y LTRO announcement whereby seven banks will repay a total of €1.1 billion from both LTRO issues, as repayments slow to a trickle because the last thing the ECB, which was rumored to be inquiring banks if they can handle negative deposit rates earlier in the session, needs is even more balance sheet contraction. The biggest economic European economic data point was the EU construction output which contracted for a fifth consecutive month, dropping -1.7% compared to -0. (Read more…)3% previously, and tumbled 7.9% from a year before.

Elsewhere, Spain announced trade data for March, which printed at yet another surplus of €0.63 billion, prompted not so much by soaring exports which rose a tiny 2% from a year ago to €20.3 billion but due to a collapse in imports of 15% to €19.7 billion – a further sign that the Spanish economy is truly contracting even if the ultimate accounting entry will be GDP positive. More importantly for Spain, the country reported a March bad loan ratio – which has been persistently underreproted – at 10.5% up from 10.4% in February. We will have more to say on why this is the latest and greatest ticking timebomb for the Eurozone shortly.

Perhaps the most amusing news of the day was Japan’s report of a surge in machine orders in March, up 14.2% on estimates of 3.5% – the biggest one month rise since January 2003. We say amusing because preliminary data from a CapIQ run on capex spending by Japanese firms indicates some very, very different. If we have time we will present that after China, Japan appears to be the next major sovereign fabricator of data.

And so we look to the US trading session, where volumes are on par to be absolutely abysmal once again with traders starting to leave early for the Hamptons, and with the only data point later is the UMich confidence print (consensus 78.0).

Other key overnight headlines in bulletin format from Bloomberg:

  • Treasuries rise amid gains for global bond markets; gold fell for 7th straight day in worst slump since 2009
  • San Francisco Fed President John Williams said quickening  economic growth and gains in the job market may prompt the Fed in the next few months to start reducing its $85 billion in monthly bond-buying
  • Abe said he will increase private investment and infrastructure exports as he seeks to overcome deflation and build on an economic expansion fueled by rising consumer spending
  • Investors are more confident in a Japanese leader than any time since at least September 2010, with optimism about Prime Minister Shinzo Abe’s policies exceeding that for counterparts in the U.S., Europe and China
  • China cuts red tape, allowing 117 investment projects, including those for airports, paper pulp factories and gas fields, to go ahead without pre-approval from the  nation’s economic planning agency. Move is part of government’s pledge to reduce role in economy
  • ECB is set to take center stage as the euro area’s chief banking supervisor, after the European Banking Authority ditched this year’s stress test in favor of an ECB-led review of lenders’ asset quality; stress tests to take place next year
  • European car sales rose 1.8% from a year earlier, the first rise in 19 months, led by German and Spanish car registrations; 4-mo. sales -7%
  • Turkey’s bonds rallied, sending yields to all-time lows, after Moody’s Investors Service raised the country to investment grade for the first time in two decades,  fueling expectation of capital inflows. The lira weakened on speculation the central bank will cut rates
  • Sovereign yields lower. Asian stocks higher, with Nikkei +0.6%, Shanghai Composite +1.4%. European stocks and U.S. stock-index futures higher; WTI crude,  copper rise; gold lower

Key daily catalysts from SocGen:

The collapse in base and precious metals stands out, but soft commodities have been pretty badly hit too. Losses were trimmed somewhat late yesterday from the worst levels of the week following a disappointing set of US data, including a very intriguing weekly claims number (up 30k over the past week, no distortions) and  a weak Philly Fed survey. The USD did take a brief knock, but the subsequent bounce back suggests market participants are in no mood to desert the greenback. Having said that, the dollar index failed to close above 84.0 and another failure to do so at the weekly close tonight will have  bears wringing their hands over a potential repeat of July last year. Then, the failure to closeabove 84.0 heralded a 6.5% drop over the next six weeks.

Separately, the drop in US CPI to 1.1% yoy in April came before the USD breakout in May and thus suggests that a further softening in price pressure is possible in the months to come, in particular with petrol prices falling back. The decline in core yields (and swaps) that started on Wednesday accelerated yesterday and occurred independently from stocks, which have done extremely well all week to shrug off a mixed set of macro data. The 9bp collapse in 2y bund yields of the last 48 hours (back into negative territory) is nothing short of spectacular and shows investors’ still conflicting views about stocks and bonds. Technically, the equity market is looking toppy, with for example the divergence between the S&P and the put/call open interest suggesting that a retracement in the major equity indices lies ahead.

The ECB will today publish the weekly LTRO repayment amounts and no less than four members of the governing council are scheduled to speak. We also get Canadian CPI and BoE member Weale may rein in his dovish position following this week’s more upbeat Inflation Report. The correction in metals and talk of central bank/fund switches out of AUD and into CAD saw AUD/CAD drop below 1.0050. This was followed by a break below parity overnight. A break of 0.9942 would bring 0.9683 in play.

Full event recap from DB’s Jim Reid:

An interesting day for the S&P500 which found support at the mid-1650s level for much of the trading session despite a raft of disappointing economic data in the US. Indeed, it wasn’t until the final hour of the session that the index broke out of its tight intra-day range to close near the day’s lows of -0.5%. The weak close coincided with some hawkish sounding comments from the San Francisco Fed President John Williams who said that the Fed could reduce somewhat the pace of securities purchases perhaps as early as this summer. He added that the Fed “could end the purchase program sometime late this year”. What was less reported was that Williams qualified his statement with a “if all goes as hoped” caveat. He also added that it will take further (labour market) gains to convince him that the “substantial improvement” test for ending asset purchases had been met.

There were also hawkish comments from the Fed’s Fisher, Plosser and Lacker earlier in the session who advocated for a slowing of MBS purchases.

More on the data flow, yesterday’s batch of US data showed weakness in jobs, housing and inflation. Initial jobless claims came in at 360k (vs 330k expected) which took the 4week average on claims to 339k. Housing starts printed at 853k (vs 970k expected) but building permits of 1017k beat expectations of 941k. In terms of the business outlook, the Philly Fed index disappointed at -5.2 (vs 2.0 expected) which was consistent with a soft Empire manufacturing survey earlier this week. The US CPI was also below forecasts across the headline (-0.4% vs – 0.3%) and core (0.1% vs 0.2%).

Fedspeak and data aside, below-consensus earnings from consumer companies such as Walmart, Dell and JC Penney also weighed on equities. Nine out of 10 S&P500 industry sectors finished in the red led by declines in consumer services (-1.2%), health (-1.1%) and utilities (-0.8%). Only the technology sector finished
higher – helped by a 13% gain in Cisco after they reported consensus-beating quarterly earnings. The USD index finished the day 0.3% lower, but the comments from Williams saw the USD retrace much of its losses towards the end of the day.

In the fixed income space it also was interesting to see the outperformance of the CDX IG index relative to equities, which helped unwind some of credit’s recent underperformance. The investment grade index finished basically unchanged at 71.5bp despite the negative day for US equities. In the govvies space, core bond yields were around 5-6bp firmer across the board reflecting weaker risk sentiment. Moving to the overnight markets, Asian equities are trading with a stronger tone even with the negative lead-in from the US. Most indices are up a quarter to half a percent including the Nikkei, ASX200 and Shanghai Composite. Volumes are subdued with Korean and Hong Kong markets shut for Buddha’s Birthday holidays.

The Australian dollar slipped below US98c in the Asian session to reach a near 12-month low, and gold continues to lose ground (-0.5%) as it inches lower to the recent lows seen in April.

JGBs remains in focus amid reports that the Bank of Japan will discuss the related risks and potential effects of its 2% inflation target and a surge in long-term  rates at its two-day policy meeting next week (Nikkei). Prime Minister Shinzo Abe acknowledged that sharp increases in long-term interest rates could increase the national debt burden. He declined to comment on the recent rise in JGB yields saying that doing so “could risk causing the markets unnecessary confusion” (Dow Jones). 10yr JGB yields are unchanged overnight at 0.81%. In the EM space, Moody’s upgraded Turkey’s ratings to investment grade (Baa3 from Ba1) overnight, in a decision that was somewhat long-awaited. The rating is equivalent to that of Fitch who upgraded Turkey to investment grade last November. Moodys last rated Turkey investment grade in 1992. In its commentary, Moody’s said that progress on structural and institutional reforms that Moody’s expects will reduce existing vulnerabilities to shocks and improving financial metrics.

Turning to the day ahead, the University of Michigan’s consumer confidence survey is the main data point on the calendar. In terms of central bank speakers, The Fed’s Kocherlakota and the the ECB’s Coeure and Asmussen are scheduled to speak today. On Saturday, Bernanke will deliver a commencement speech at Bard College in Massachusetts titled “Economic Prospects for the Long Run”.