Morning @ Cantor
Morning @ Cantor 6/4
Today’s Stories From Cantor Fitzgerald
Sal Catrini (908) 517-5067
EARLY US LANDSCAPE****
· US Stock Futures move into neg territory dn 9…..as spec of large derivates losses make rounds – (TTN) and sovereign worries heat up in EU … Crude unched at 7am way off highs , copper now lower….
· Rates move dn in front of Jobs at 830 am … Fed get marginally hawkish???
· EURO get blasted in last hour…
· SWISS FRANC STRENGTHENS THROUGH 1.40 PER EURO FOR FIRST TIME
· 3-month libor: Dollar: 0.537% vs prior 0.538%;
· G-20 Official: Crisis Dominates Talks; No Euro, Yuan Discussion, will discuss the idea of a global bank tax – DJ
· G-20 Official: Busan Meeting Won't Meet Market Expectations (Dow Jones)
o Markets may be disappointed by the statement produced by the Group of 20 industrial and developing powers this weekend, but the statement won't fully reflect all the work the officials are doing, a G-20 government official said Friday.
· EU stocks flat..near lows at 7am et :
o In terms of European economic data, the release of first-quarter GDP in line…will be in focus. Meanwhile, oil and gas majors lead Europe higher but on the downside, Spanish banks are in the red as sovereign debt concerns resurface
· Asian Markets: Nikkei (0.13%); Hang Seng (0.03%); Shanghai Composite +0.04%
o China's shares ended flat Friday as liquidity pressure from the imminent launch of Agricultural Bank's up to $30 billion initial public offering offset hopes China will hold off on further tightening measures following a newspaper report of a slowdown in new loans last month. DJ
· Naoto Kan was elected Japan's prime minister, ushering to power a lawmaker who has stressed the importance of U.S.-Japan ties and fiscal discipline.
o Speculation that the incoming government would increase pressure on the Bank of Japan to ease monetary policy further.
· Geithner: World Economy Gradually Looking Stronger -CNBC
· World Bank Chief Economist Lin: Global economy recover is stronger than expected
o If China economy continues to imrpove, then real yuan foreign exchange will increase - DJ
· G-20 central banks postpone withdrawal of stimulus efforts
o Central banks from the Group of 20 are putting off withdrawing their stimulus measures as they wait to see how the European sovereign-debt crisis affects markets and the global economic recovery. Central banks worldwide have noted that investor sentiment regarding Europe's fiscal woes is an obstacle to increasing interest rates. "Given the increase in uncertainty in the economy, it would be perfectly natural for people to be less eager to tighten," said William White, a former chief economist at the Bank for International Settlements. Bloomberg (04 Jun.)
· Fed get marginally hawkish???
o Reuters) - Three top Federal Reserve officials said on Thursday it may soon be time to begin raising interest rates as the economic recovery in the United States gathers momentum, despite persistently high unemployment.
o Fed speak, US rates: Hoenig the hawk – MW link
§ Drumbeat for a rate hike grows louder with Fed maverick's plan to raise rates by summer's end.
o Fed speak, Federal Reserve Bank of Dallas President Richard Fisher said Thursday the European debt crisis could affect the U.S. but that the domestic economy is in a better position than before to face any possible global economic fallout.
o Fed speak, Fed's Fisher: Fed Needs To Be Opportunistic In Selling Securities
§ Isn't Right Moment To Tighten Monetary Policy
§ The Economy Is Turning The Corner
§ Inflation Is Not An Issue For Economy
§ US Benefiting From Flight To Safety Due To Euro Crisis
· China slowing: Report in the Century Weekly that new loans slowed last month
o The newspaper reported Thursday afternoon that China's banks issued slightly more than CNY600 billion worth of new loans in May, down from CNY774.0 billion in April. The reported slowdown in loan growth suggests Beijing's credit-tightening measures earlier this year have had an impact on curbing credit.
· EU stories:
o France Riskier Than U.K. for First Time Since ’08 – BBG
o HUNGARY WON'T IMPLEMENT AUSTERITY MEASURES, SZIJJARTO SAYS
o FRENCH/GERMAN 10-YEAR GOVERNMENT BOND YIELD SPREAD AT 39 BPS, HIGHEST SINCE MAY 2009 – REUTERS
o SPANISH/GERMAN 10-YEAR GOVERNMENT BOND YIELD SPREAD AT EURO LIFETIME HIGH OF 192 BPS
o RTRS-ITALIAN/GERMAN 10-YEAR GOVERNMENT BOND YIELD SPREAD AT 168 BPS, HIGHEST SINCE JAN 2009
o ECB's balance sheet under scrutiny
§ ECB's balance sheet and noted that the central bank has capital and reserves of €77.3B. The central bank is now supporting lending to Greek banks of €88.4B as of April (Data from Henderson Global Investors). Additionally, the ECB has taken on an added €25B by buying Greece's government bonds. The article says the ECB's exposure to Greece is larger than the central banks own capital and reserves. If there should be any bank run within the EU the article suggested that the ECB might need more capital. London Telegraph
o Alarm sounds as gauges of banking stability deteriorate
§ Three closely monitored gauges of banking stability in Europe deteriorated in the last week of May, causing concern in the financial world and beyond. The London Interbank Offered Rate doubled to more than 0.5%. The spread between Libor and the overnight indexed swap rate widened. Finally, credit default swap spreads on financial institutions, including major banks, surged. Rating downgrades, Spain's seizure of a savings bank and other issues added to the worries. The Economist (03 Jun.)
o German Fin Min Schaeuble commented that Euro currency moves should not be 'dramatized' . He noted that Germany would push for European financial tax if G20 cannot agree on the topic – TTN
o IMF Boutros-Ghali: IMF needs more resources after support for Greece.
o Greece should restructure its public debt “in an orderly way” in the next six to 12 months to avoid greater losses to the global economy - BBG
o BlackRock stars warns of German liquidity crisis
§ http://www.citywire.co.uk/selector/-/news/fund-manager-interviews/content.aspx?ID=404250&re=9659&ea=236111&Page=3&ViewFull=True
· Data
o UK) May Halifax House Prices M/M: -0.4% v 0.3%e
o Euro Zone Q1 Preliminary GDP Q/Q: 0.2% v 0.2%e;
o Korea GDP looks better: Bank of Korea data released before the market opened showed Asia's fourth-largest economy grew a revised 2.1% on-quarter, higher than the 1.8% growth previously estimated by the central bank.
§ the market was particularly focused on the data as they came ahead of the central bank's rate review next week.
· Money Raising:
o Nobao Renewable Energy Postpones IPO Due To Market Conditions - DJ
§ Nobao Renewable Energy Holdings Ltd. postponed its initial public offering Thursday because of market conditions.
§ It previously pushed the offering back from last month.
§ The Chinese renewable-energy company had planned to sell at least 18 million American depositary shares for $8 to 10.
o WLS Welsh Property Trust postpones IPO
§ Welsh Property had been expected to price 20.9M shares in range $16.00-16.50 through UBS and JPMorgan, which had been revised lower from 17.5M shares in range $19-21.
· M&A:
o Private-equity firms teaming up to bid for ResCap - NY Post
o CKXE Irving Azoff to back Allen Shapiro's bid for CKX Inc - NY Post
§ Sources tell the NY Post that the Live Nation Entertainment (LYV) chairman will pay up to $200M for a 25-33% stake in the company if Shapiro wins the battle with a Simon Fuller-led group.
o Valeo (Bloomberg) -- Valeo SA, France’s second-largest auto-parts supplier, rose as much as 7.4 percent in Paris trading after saying it’s working with financial advisers to evaluate strategic options.
o Dell Has Considered Going Private – WSJ
o AIG not decided on Asia unit's future: - Reuters
o Blackstone In Talks To Sell Most Center Parcs Assets -FT
o Shares of RCM Technologies Inc. (RCMT) shot up 40% to $4.90 in after-hours trading after staffing and outsourcing company CDI Corp. (CDI) disclosed its offer to acquire RCM's shares for $5.20 each. But the board of the information-technology services provider rejected the proposal, saying it "would not be in the best interests of the company." DJ
o WSJ: Paulson to Take 9.9% Stake in Harrah's
§ Paulson & Co. continued a streak of Las Vegas investments Thursday
§ More recently, his firm peaked the curiosity of casino investors as it disclosed last month that it had become major shareholders of MGM Mirage and Boyd Gaming Corp. WSJ
· Good news in thurs retail SSS: WSJ(6/4) Retailers See Positives In May
o An apparent increase in consumer spending at the end of May offered U.S. retail chain stores an encouraging sign for June and the back-to-school season, even though sales for the full month were considered tepid.
· Good news Fox leads charge in TV deals Reuters
o U.S. broadcast networks have made significant headway in clinching billions of dollars worth of advertising deals for the upcoming TV season, with Fox said to be leading the charge by nearly completing its dealmaking.
o According to advertising executives, the News Corp unit has locked up contracts with advertisers at prices running 8 percent to 9 percent above those from a year ago, and could complete its negotiations by Friday or early next week.
o The three other major U.S. broadcast networks -- ABC, CBS and NBC -- have made less progress, but all are involved in negotiations over prime-time commercial spots for the 2010-11 season
· Deflation, demand?: Baosteel - China's largest steel company - cut its prices on steel for the month of July on overcapacity. TTN
· solar Germany's upper house (Bundesrat) delayed planned cuts to solar subsidies. The bill was sent to parliamentary mediation committee – TTN
· Hynix (000660.KS) jumped 6% on earnings hopes and a rating upgrade
· BP To Brief Investors Friday On US Oil Spill Cleanup
· BP PLC (BP) has placed a containment device over the ruptured pipe that has been leaking in the Gulf of Mexico for the past six weeks, though it remains unclear how successful the effort will be in capturing the oil.
· BP What BP Is Doing About The Gulf Gusher - Tony Hayward oped in WSJ
· Obama: 'Furious' About Spill, But Yelling Wouldn't Help -CNN
· Shallow-Water Drilling Permits Rescinded WSJ(6/4)
o Federal regulators on Thursday rescinded drilling permits issued a day earlier to companies for new oil and gas wells in the Gulf of Mexico, according to industry officials, prompting market confusion and a spike in oil prices.
o Offshore drilling in water less than 500 feet deep wasn't being banned
· Consumer earnings last night OK
o ZQK +11.6% (earnings)
o KKD +6.2% (earnings)
· Banks: Global Bank-Capital Pact Advances
o International regulators are moving closer to an agreement that would require large multinational banks to raise vast sums to cushion any future losses.
o But in a concession to the banking industry and some governments, the rules are likely to take effect later than expected.
o The overhaul is expected to be a focal point of this weekend's Group of 20 meetings in South Korea. It is also expected to gain momentum at a meeting of the Basel Committee on Banking Supervision
· Banks: Schaeuble Says U.K., ‘Many Others’ Back Financial Tax - BBG
o German Finance Minister Wolfgang Schaeuble said he’s confident the U.K. and “many others” will join Germany in pushing for a European levy on all financial transactions if the Group of 20 fails to adopt the measure.
· Banks: South Korea will use this weekend's G-20 meeting as an opportunity to build support for an international levy on bank transactions. WSJ
· Banks: Rating Firms To Hold Off Downgrades Of Big Banks - WSJ
o Credit-ratings firms say they plan to delay issuing any credit-rating downgrades to the largest U.S. banks as a result of new financial regulation
o Moody's Investors Service analysts on Thursday said that, under the overhaul bill passed by the Senate last month, the government still has some room to bail out the biggest banks, at least in the short term -- an option it will likely choose as long as the economy and markets are unsettled.
o "Consequently, we expect that the senior debt and deposit ratings of systemically important banks in the U.S. will continue to benefit from unusual levels of support,"
· EU banks: WSJE(6/4) Is It A Bailout For Greece Or For Euro-Zone Banks?
o Much less attention has been directed toward a different cast of characters: those governments that have failed to take charge of their banking systems
o Chief among the villains here: Germany, which has been preaching fiscal austerity across the euro zone but has done little to shore up its own weak banks.
· Google will provide European regulators with personal data it said it mistakenly collected through wireless networks, a move the company had previously resisted. WSJ
· Israel Explores Easing Its Blockade of Gaza - WSJ
o Israel's leadership is considering changing its Gaza policy amid mounting international pressure, as it emerged Thursday that an American citizen was among the dead and another was injured in a deadly raid on an aid mission this week.
· Turkey reviews all deals with Israel – BBG
· Iran Set To Test Aircraft, Weapons In Coming Months – DJ
o Iran is preparing to test a new set of advanced air-to-ground weaponry and gunnery equipment in the coming months, Press TV quotes the country's deputy air force commander as saying Friday.
· North Korea helps…Myanmar… Nuclear Arms Drive Under Way – AFP
o Military-ruled Myanmar has begun a nuclear weapons program with the help of North Korea, according to an investigation Friday, citing a senior army defector and years of "top secret material."
o A new documentary shows thousands of photos and defector testimony revealing the junta's nuclear ambitions and a secret network of underground tunnels, allegedly built with help from North Korea, television network Al Jazeera said.
· South Korea to refer North Korea to the UN Security Council today regarding March ship sinking incident - TTN
· South Korean President Lee Myung-bak, in a speech at a security conference in Singapore, will urge Pyongyang on Friday to give up nuclear weapons and encourage other countries not to accept North Korea as a nuclear state. DJ
· North Korea Warns Of Retaliation If Referred To UN (AFP)--North Korea warned Friday of the "toughest retaliation" if South Korea and its allies haul the communist country before the U.N. Security Council over the sinking of one of Seoul's warships.
· South Korean Army General Accused Of Spying For North - (AFP)--South Korean intelligence officials are investigating a two-star army general on suspicion of leaking military secrets to North Korea, a report said Friday.
· Texas Man Charged With Trying To Help Al Qaeda – DJ
· Tiananmen Square Student Leader Wuer Kaixi Nabbed In Tokyo – Kyodo
o Wuer Kaixi, one of the pro-democracy Chinese student leaders during the 1989 Tiananmen Square incident, was arrested Friday on suspicion of trespassing into the premises of the Chinese embassy in central Tokyo, Kyodo
· President Obama will again postpone a planned trip to Australia and Indonesia, the White House announced Friday morning. The trip was put off in February as Obama worked to push health-care legislation through Congress. It was rescheduled for later this month, but now the president is focusing on the Gulf Coast oil disaster
· CNBC reports single stock circuit breaker rules could go into effect as soon as Monday
· BP To Brief Investors Friday On US Oil Spill Cleanup
· President Obama will travel Friday to New Orleans to discuss the Gulf Coast oil spill with Adm. Thad Allen and state and local officials, the White House reported Thursday night
· China issues May's economic data on June 11, including the headline inflation rate and investment figures.
· ECB meets next week: mkt will focus on whether they provide additional liquidity measures (which has weighed on the EUR recently)
· Spanish unions continue to voice their frustrations towards the governemt, as workers syndicates CCOO, UGT and CSI-CSIF intend to implement a general strike within the public sector Tuesday, the 8th of June.
· Ambac auction Friday: Ambac CDS Holders Expected To Get 70 Cents On The Dollar – DJ
o Investors who bought insurance-like contracts against guarantees sold by troubled bond insurer Ambac Assurance Corp. are expected to receive about 70 cents on every dollar they're owed when the contracts are settled Friday at auction.
o Recovery swaps on the company--which are credit derivatives that market participants use to speculate on the final result of such auctions—are being quoted at 28% of face value
o The auction, whose final result will be published at www.creditfixings.com at 2 p.m. EST Friday
· South Korea to refer North Korea to the UN Security Council today regarding March ship sinking incident - TTN
· Bloomberg) -- A ship carrying aid intending to breach Israel’s blockade of the Gaza Strip should reach the coastal Palestinian enclave by Saturday morning, Audrey Bomse, spokeswoman for the Free Gaza movement said in a phone interview from Cyprus
· Economics:
o May Nonfarm Payrolls at 08:30 ET
o Atlanta Fed President Lockhart will speak on US economic outlook and banking environment to the Alabama Bankers Association Annual Convention at 09:30 ET
· Earnings:
o There are no major companies due to report this session
o WMT shareholder meeting today
TODAY’S BIG STORIES
· Equity Wrap:
o We got off to a great start but fell into choppy trading following the earlier retail sales reports and economic data and ahead of tomorrow’s nonfarm payroll number – the tech and energy spaces were the leaders on the day, the financials and materials all fell lower. Volume was on the lighter side and we did see some money being put to work, but not aggressively – I imagine there are also some worries going into the weekend with North Korea talking about going to war again. 1091 support held on the spz and we hit a ceiling at the 1106 moving day avg, we find more resistance @ 1115 - is the gap from 5/19 to 5/20
o Internally buy and sell names were about even, the breadth of the market had about 1 ¾ advancing issues for every 1 declining.
o Overseas markets were stronger overnight, taking their lead from yesterday’s sharp rise in US stocks. European markets were all up about 1.5%, while Japan rallied 3.25%; only China was weak, trading off 0.7%. S&P futures responded by moving up 5 points in the early going. Economic news was mixed at best, particularly on the jobs front (new claims a tad better, continuing claims worse, with nonfarm productivity disappointing). Futures struggled with resistance at the 1105 level, just above their 200 day moving average. Around midmorning stock futures faded as the Euro fell over new concerns that Hungary’s new leader, Lajos Kosa, commented that his nation has “only a slim chance to avoid the Greek situation”. By 12:30, however, selling subsided and the balance of the day was spent rallying back to the session’s highs.
o Cash S&P rose 0.4% to 1102.83. The strongest industry groups were Tech and Energy (each rising 1.1%); the only down groups were Financials (off 0.5%) and Materials (off 1.1%). DELL was the standout tech stock, rising 4.9% to $13.76, as founder Michael Dell commented that he has considered taking the company private. A smaller company, Sonic Wall (SNWL), rose 25.5% as it agreed to be acquired by Thoma Bravo for $11.50 in cash.
o (Billy Clark and team)
· Treasury’s Wrap:
o Treasury market opened up the New York trading session under heavy pressure mainly on the heels of risk adverse unwinds with the Euro attempting to stabilize and European stock indices well bid. The Treasury found its intraday lows early in the session creeping higher after the worse than expected ADP private payrolls coming at 55K, worse than expected continuing claims and worse than expected factory orders (1.2% versus 1.8%). The Treasury market sustained a large pop in the late morning which continued into the afternoon as the risk adverse trade one again took center stage. The main culprit today was on the story about ECB LTRO set to expire at the end of June. The market settled in during the late afternoon coming off its highs into the close. At 3PM benchmarks were lower across the curve with yields ~1-5 higher, the long end was the worst performer.
o The Treasury also announced next weeks auction schedule which will include $36Bln 3 year notes a decrease of $2Bln from May, $21Bln 10 year notes and $13Bln 30 year bonds.
o Primary Dealer
· Investment grade Wrap:
o Industrials/Energy/Utes – Salemo
o IG spreads going out off their tights as equities faded in the afternoon and the euro goes out below $1.22 but still better on the day. Gulf names recouped nearly all of their widening from yesterday with benchmark deals like the BPLN 4.75 19 100bps tight to yesterday’s wides. That said, the front end did not participate and the curves became inverted even more so with BP 19s +240-235 and the 13s +440-430! . Not seeing a real appetite to add risk from real money accounts as the market remains pensive and some are still looking to lessen exposure to the gulf names with plenty of unknown unknowns remaining
o Spreads between the on the runs and the off the run gulf paper continues to widen as well as buyers of the space continue to prefer the bigger more liquid deals.
o Front End – Pezzella
o Front End BPLN not tightening as much as the long end..BPLN 3 1/8 12 traded +403 vs 2yr!
o Hybrids – Schneider
o We had a fragmented market today in the sector. The higher quality bonds like WFC 7.70, 5.80, JPM 7.90, 6.80, CB 6⅜, and TRV 6¼ all caught better bids as the day moved on The lower quality names like XL, GNW and LNC ran out of gas as we drew to the close The on the run bonds like BAC 8, JPM 7.90 and C 8.30 close the day up approx $1 -1½, despite stock finishing close to unchanged. It will be interesting to see if we can sustain this rally with dealer inventories being as heavy are they are. Stay tuned
· CMBS DAILY RECAP
o Strong effort by the CMBS mkt today out performing its corp brethren. After coming in 15bps yday, GG10s were another 20bps tighter today (+395/$94-24). Yes GG10s out performed the broader CMBS mkt with short covering. However, we have seen strong retail demand the past couple days, and a meager $170mm of BWICs today does not cut it. About a third of the selling was from buy and hold accounts
o
· Credit Markets: Lending To Foreign Banks Falls - WSJ
o The volume of loans to foreign banks in the commercial-paper market, where companies get short-term funding, dropped by $5.3 billion in the last week,the steepest fall since early March, according to Federal Reserve data.
o The Fed doesn't offer a geographical breakdown on the foreign banks, but market participants say the drop offers further evidence that investors are shying away from lending to European banks that hold large amounts of bonds from Greece, Spain and other heavily indebted European countries.
· Credit Markets: S&P: Issuers Poised For Upgrade This Month Grew By 38
o Standard & Poor's Ratings Services said the number of issuers poised for upgrades rose by 38 last month, totaling 257 globally
o The ratings agency said it added 80 issuers to its list of potential upgrades in May, while it removed another 42. In March 2009, near the worst of the economic turmoil, there were 136 issuers poised for upgrades.
· Fed Watch:
o Fed reports balance sheet assets of $2.34T on Wednesday, +$2.17B w/w and +$260.4B y/y
o Holdings of US Treasury securities were $776.9B on 2-Jun, +$36M w/w and +$170.7B y/y.
o Holdings of mortgage-backed securities were $1.1T on 2-Jun, +$704M w/w and +$685.9B y/y.
o Holdings of federal agency debt securities were $166.7B on 2-Jun, ($662M) w/w and +$84.7B y/y
· Money flows:
o AMG data reports equity fund inflows of $2.7B in w/e 2-Jun vs outflows of ($16.7B) in w/e 26-May
o High Yield: AMG reports OUT-flows $759mm this week from HY mutual funds and etfs.5th consecutive OUT-flow totaling $4.3bn over that time, biggest sinceearly-Aug'03
· Fast Traders' New Edge
o Investment Firms Grab Stock Data First, and Use It Seconds Before Others
o "latency arbitrage."
· CNBC reports single stock circuit breaker rules could go into effect as soon as Monday
· Crash Probe Exploring Market Links WSJ(6/4)
o U.S. market authorities are scrutinizing the interplay between stocks, futures and options markets as they work to tailor new rules to curb the type of sudden price gyration seen May 6, according to the top U.S. futures regulator.
· Inflation: China Hikes Minimum Wages As Labor Woes Mount - AFP
o China has launched a round of minimum wage hikes to address the nation's widening income gap, following growing labor disputes and a string of worker suicides, state media said Friday
o Beijing said the minimum monthly salary in the capital will be raised 20% to
o CNY960 ($141) from July 1, the Global Times reported.
o The hike is about double the average annual increase of 10.02% since the city introduced a minimum wage system in 1994
· Munis: Fitch Downgrades Connecticut's GO Bonds to 'AA'; Outlook to Stable
· Munis: Warren Buffet: Expects terrible problem for muni debt in years to come. TTN
· WHO Swine Flu Experts Tied To Roche, GlaxoSmithKline -Report
o Scientists who drew up key World Health Organization guidelines advising governments to stockpile drugs in the event of a flu pandemic had previously been paid by drug companies which stood to profit, according to a report out Friday, The Guardian says on its Web site
· The White House admitted discussing jobs with a Colorado politician to keep him from challenging a Democratic senator for re-election. WSJ
· immigration Obama said he would send officials to Arizona for talks on its new immigration law, Gov. Jan Brewer said after a White House meeting WSJ
· cyber war: A top Pentagon official endorsed talks with Russia over limiting cyber weapons, in a shift in U.S. policy. WSJ
· WSJ(6/4) Pollution Is Worsening in China
o Environmental protection authorities in China acknowledged on Thursday that despite tougher measures, pollution is increasing as the country's economy rebounds, quashing hopes that China had turned a corner last year when emissions dropped.
· NY: WSJ(6/4) GOP Sets A Primary Fight In Gillibrand Race
o By endorsing a little-known former Long Island lawmaker to challenge Democratic Sen. Kirsten Gillibrand in this fall's election, delegates to the state Republican convention on Thursday set up a primary that further fragments opposition to the freshman senator
o Bruce Blakeman, 54 years old, was chosen by a majority of delegates at the end of a convention marked by disagreements over leadership.
o Another Republican contender, David Malpass, a former Bear Stearns chief economist, earned enough delegate votes to qualify for a spot on the primary ballot against Mr. Blakeman.
· Controversies weigh on the White House
o At virtually every turn lately, the White House cannot shake the appearance that it is hamstrung and a step behind. From a major crisis such as the oil spill in the Gulf of Mexico to smaller and seemingly avoidable controversies over internal Democratic Party politics
· U.S. 'secret war' expands globally
o Beneath its commitment to soft-spoken diplomacy and beyond the combat zones of Afghanistan and Iraq, the Obama administration has significantly expanded a largely secret U.S. war against al-Qaeda and other radical groups, according to senior military and administration officials.
·
Stephen
Roach is stepping down as Morgan Stanley’s Asia chairman and moving to New York
to take up a teaching post at Yale University. FT
COMPANY NEWS WITH MACRO IMPLICATIONS
· Stocks mentioned on CNBC's Mad Money with Jim Cramer - TheStreet.com
+ WPRT, EMC, VMW, TEVA, MDR and VOD
- BHP and Q
· TRANSPORTS
o Airlines report May passenger Data
o GLABAL AIR TRAFFIC- Freight rose 20.7% and Passenger traffic fell 1.2%
o RJET- reports May passenger traffic up 116% and May capacity rose 100%
o DAL- May traffic increased 2.7% and May capacity fell 3.3%
o AMR- May load factor 82.8%. Traffic increased 4.1% and May capacity increased 4.9%
o Air france-KLM may passenger load factor 80.6% …..cargo load factor 70.6%. Passenger Traffic up 4.3%
o Ryanair load factor 81%. May traffic grew 17%
o WestJet load factor 77.7%. Traffic up 18.9% and capacity up 13.4%
o British Airways load factor 69.7. Traffic fell 11.5% and capacity down 4.7% And capacity increased 4.5%y/y
o 6/2 ALK May load factor 81.4%. Trqaffic increased 10.7%a
o 6/2 AAI may load factor 80.8%. Traffic increased 8.4% and capacity increased 4.6%
o 6/1 CAL may load factor 83.8%. May traffic increased 3.7% capacity up .2%
o SSW Seaspan says it currently has $1.1B available under its credit and lease facilities to fund its $1.3B newbuilding program
Energy:
· Nobao Renewable Energy Postpones IPO Due To Market Conditions - DJ
o Nobao Renewable Energy Holdings Ltd. postponed its initial public offering Thursday because of market conditions.
o It previously pushed the offering back from last month.
o The Chinese renewable-energy company had planned to sell at least 18 million American depositary shares for $8 to 10.
· OMNI OMNI Energy Services agrees to be acquired by Wellspring Capital Management
· solar Germany's upper house (Bundesrat) delayed planned cuts to solar subsidies. The bill was sent to parliamentary mediation committee – TTN
· BP To Brief Investors Friday On US Oil Spill Cleanup
· BP PLC (BP) has placed a containment device over the ruptured pipe that has been leaking in the Gulf of Mexico for the past six weeks, though it remains unclear how successful the effort will be in capturing the oil.
· BP What BP Is Doing About The Gulf Gusher - Tony Hayward oped in WSJ
· BP PLC's Russian oil joint venture, TNK-BP Ltd., said its unit operating the huge Kovykta gas-condensate project in Siberia filed for bankruptcy, as talks to sell the field to a state-owned company drag out. WSJ
· BP BP establishes $360M escrow account to fund Louisiana barrier islands construction
· Shallow-Water Drilling Permits Rescinded WSJ(6/4)
o Federal regulators on Thursday rescinded drilling permits issued a day earlier to companies for new oil and gas wells in the Gulf of Mexico, according to industry officials, prompting market confusion and a spike in oil prices.
o Offshore drilling in water less than 500 feet deep wasn't being banned
· WPRT David Demers, founder, director and CEO of Westport Innovations (WPRT), tells Cramer that one of the big reasons that the company has grown at a 35% compounded rate since 2001 is the enthusiasm in countries such as China, India and Russia for using more natural gas
· SSW Seaspan purchased and accepted delivery of one 4250 TEU newbuilding vessel for approximately $43M constructed by Zhejiang Shipbuilding
· Private Equity Targets Renewable Energy Investment - Survey
o (Dow Jones)--Private equity firms are preparing for a surge of investment in renewable energy, with on-shore wind farms the number-one target, according to research released Friday
o More than three-quarters of private equity executives polled at a recent conference by KPMG said they planned to invest in renewable energy of some sort within the next year, with on-shore wind being the most popular technology, followed by off-shore wind and energy from waste.
o
· CQP Cheniere Energy Partners initiating project to add liquefaction capabilities at Sabine Pass LNG terminal
· SU Suncor Energy reported May oil sands production averaged ~304K bpd
· REXX +4.7% Rex Energy provides operational update
· BIOF BioFuel COO steps down
· NRE Nobao Renewable Energy postpones IPO due to market conditions – wires
Tech/media/ telecom sectors
o CMTL- up 4.1. much better Q3 driven by strong mobile data sales. Guidance will be provided in the call today at 8:30AM. CMTL did say orders have improved in all of its business units. Call # (800) 862-9098. Call Pin Comtech
o Semis: Global chip revenues to grow 27% in 2010- Gartner
o RHT, NOVL: Could Red Hat be Novell's spouse?- The Register
o http://www.theregister.co.uk/2010/06/03/red_hat_novell_acquisition_look_at_anything/
o DELL Has Considered Going Private – WSJ
o Cloud Computing: Niche cloud computing firms in M&A spotlight- Reuters
o http://www.reuters.com/article/idUSTRE6525EQ20100603
o CLWR: Is Clearwire Prepping for a Spectrum Sale?- GigaOm
o http://gigaom.com/2010/06/03/is-clearwire-prepping-for-a-spectrum-sale/
o CDI, RCMT: CDI launches hostile bid for RCM Technologies for about $68m- Reuters
o Telefonica Sells Manx Telecom To HgCapital And CPS Partners for GBP158.8- DJ
o France Telecom, TDC: Drop Blocked Orange Suisse/Sunrise Merger- WSJ
o ZOOED: files $26M secondary offering via Roth and ThinkEquity
o Some All things digital conference highlights- All things Digital
o Demand Media: Richard Rosenblatt Reveals (Some Of) Demand Media's Mysterious Business Plan. http://d8.allthingsd.com/20100604/d8-video-richard-rosenblatt-reveals-some-of-demand-medias-mysterious-business-plan/?mod=ATD_rss
o MSFT, GOOG: Microsoft CEO Steve Ballmer on Google
o http://d8.allthingsd.com/20100603/d8-video-microsoft-ceo-steve-ballmer-on-google/?mod=ATD_rss
o HTC from the All things Digital Conference
o http://d8.allthingsd.com/20100603/peter-chou-session/?mod=ATD_rss
o HTC: Posts a record of NT$18.66 billion in may revs.
o MSFT: hopes to reenter phone market, disputes PC shift- AppleInsider
o MSFT: defends windows future- FT
o http://link.ft.com/r/H60H77/C5QUAO/BXQHQ/26W7X8/KEJ494/GX/h
o AAPL: current iPad software won't allow iPhone tethering- AppleInsider
o AAPL: LG Display was reported to supply LCD panels for 4G iPhone expected to be unveiled on June 7th- TTN
o GOOG: to Give governments Street View Data- NYT
o Hynix: Fitch upgrades credit rating by 1 notch to BB- from B+
o Memory module makers see weak May- Digitimes
o Amtran, Everlight, and LG Display to form LED packaging JV for LCD TV market- Digitimes
o Power management ICs in shortage- iSuppli
o 3G connections to grow in China at CAGR of 160% from 2010-14- Ovum
o DRAM: Speculative trading brings an unexpected DRAM spot price rebound- inSpectrum
o Advertising Positive: Fox, the NWS News Corp unit has locked up contracts with advertisers at prices running 8 percent to 9 percent above those from a year ago
o http://www.reuters.com/article/idUSTRE6525KK20100603
o Gruppo Editorial L'Espresso is open to the possible sale of Le Monde- Il Sole 24
o Online Gambling: EU court says countries can ban online gambling if their aim is to combat fraud
o EPAY Bottomline Technologies announced an offering of common stock of indeterminate size through Needham
o STM STMicroelectronics upgraded to buy from accumulate at Banca Akros
o STM STMicroelectronics upgraded to neutral from sell at UBS
o XLNX Xilinx prices $520M of 2.625% convertible senior notes due 2017
o ALU, ERIC UBS rates Alcatel-Lucent, LM Ericsson short-term
o FLEX Flextronics happy to let Hon Hai Precision Industry raise pay levels - South China Morning Post
o Solar: Germany's upper house (Bundesrat) delayed planned cuts to solar subsidies. The bill was sent to parliamentary mediation committee – TTN
o Infosys to look for small buys, not big ones - Economic Times
Miners/ steel sectors etc
· Deflation, demand?: Baosteel - China's largest steel company - cut its prices on steel for the month of July on overcapacity. TTN
· Prime Minister Rudd downplayed the political implications of Xstrata suspending some A$586M worth of projects in Australia as a result of the mining tax, suggesting the company may have done so because of other existing issues such as rail access and port infrastructure – TTN
· CLF Cliffs Natural Resources announces it acquired 7.8M shares of Spider Resources (SPQ.CN)
· GRS Gammon Gold announces an illegal labor disruption at its El Cubo mine
INDUSTRIALS
· Chemical companies battling weeds again as Monsanto (MON)'s Roundup loses its effectiveness - WSJ
o Superweeds that are immune to Roundup are invading the Farm Belt, the WSJ reports. In response, Dow (DOW), DuPont (DD), Bayer (BAYN.GR), BASF (BAS.GR), and Syngenta (SYNN.VX) are spending lots of money to genetically modify crops that can withstand lots of their herbicides
· SSW Seaspan purchased and accepted delivery of one 4250 TEU newbuilding vessel for approximately $43M constructed by Zhejiang Shipbuilding
· ROK Rockwell Automation increases quarterly dividend by 20.7% to $0.35 from $0.29
· DAC Danaos Corp reports Q1 EPS
Autos sector:
· GM: (Dow Jones)--The German economics ministry has delayed its decision about General Motors Co.'s request for government aid for its Adam Opel GmbH with a meeting of key officials postponed to next week, an economics ministry spokeswoman said Friday.
· WSJ: Chrysler On Pace To Hire 2,700 Workers By Late July
· Toyota (Dow Jones)--Toyota Motor Corp. (7203.TO) reported that its directors' remuneration totaled Y1.64 billion in the last fiscal year, down 11% from the previous year, as the directors returned part of their pay to take responsibility for a loss in the previous year.
· Valeo (Bloomberg) -- Valeo SA, France’s second-largest auto-parts supplier, rose as much as 7.4 percent in Paris trading after saying it’s working with financial advisers to evaluate strategic options.
Financials:
· WL Wilmington Trust Chairman and CEO Ted Cecala retires effective immediately, conference call on Friday, June 4, at 9:30 ET; 877-407-8031
· FPFC First Place Financial files $80M secondary offering through Keefe, Bruyette & Woods
· BK Bank of New York Mellon announces $700M stock offering through Goldman Sachs and Citi
· International bank regulation is coming, with a delay - WSJ
· STM STMicroelectronics upgraded to buy from accumulate at Banca Akros
· NYX NYSE Euronext reports May transaction activity
· JPM JPMorgan Chase fine likely to be first of many for industry - FT
· Banks: Global Bank-Capital Pact Advances
o International regulators are moving closer to an agreement that would require large multinational banks to raise vast sums to cushion any future losses.
o But in a concession to the banking industry and some governments, the rules are likely to take effect later than expected.
o The overhaul is expected to be a focal point of this weekend's Group of 20 meetings in South Korea. It is also expected to gain momentum at a meeting of the Basel Committee on Banking Supervision
· Banks: South Korea will use this weekend's G-20 meeting as an opportunity to build support for an international levy on bank transactions. WSJ
· Banks: Rating Firms To Hold Off Downgrades Of Big Banks - WSJ
o Credit-ratings firms say they plan to delay issuing any credit-rating downgrades to the largest U.S. banks as a result of new financial regulation
o Moody's Investors Service analysts on Thursday said that, under the overhaul bill passed by the Senate last month, the government still has some room to bail out the biggest banks, at least in the short term -- an option it will likely choose as long as the economy and markets are unsettled.
o "Consequently, we expect that the senior debt and deposit ratings of systemically important banks in the U.S. will continue to benefit from unusual levels of support,"
· EU banks: WSJE(6/4) Is It A Bailout For Greece Or For Euro-Zone Banks?
o Much less attention has been directed toward a different cast of characters: those governments that have failed to take charge of their banking systems
o Chief among the villains here: Germany, which has been preaching fiscal austerity across the euro zone but has done little to shore up its own weak banks.
· U.K. is willing to go it alone on bank levy, Cameron says
o U.K. Prime Minister David Cameron said the country would rather be part of a global agreement on a bank levy but is willing to move forward on its own if necessary. "We have always made clear, here in the U.K., that we will press ahead with this measure anyway, partly because of the large support that taxpayers have given to the banks," Cameron said. "Obviously we would like to secure the maximum amount of agreement for this proposal, and we are encouraged there are other countries ... America, Germany, France and others that look like they will push ahead." Reuters (03 Jun.) , Bloomberg Businessweek (03 Jun.)
·
· AIG not decided on Asia unit's future: - Reuters
o CEO Robert Benmosche asked the insurer's board for time to explore options besides a public offering for its Asian life unit after a $35.5 billion deal to sell it to Prudential Plc (PRU.L) fell apart, a source familiar with the matter said.
o Benmosche wanted to explore other options for American International Assurance, including selling parts of the business
o http://www.reuters.com/article/idUSTRE6530NT20100604
· AIG Set for One of the ‘Great Restructurings,’ Bruce Berkowitz Says - BBG
· Pru backs top team over failed Asian bid
o Prudential’s top team has the full support of the board and the majority of big shareholders and there will be no resignations over the collapse of its $35.5bn (£24.3bn) bid for AIA, Harvey McGrath, the UK insurer’s chairman, has told the Financial Times.
o http://www.ft.com/cms/s/0/b5c24268-6f4b-11df-9f43-00144feabdc0.html
· NYX NYSE Euronext reports May transaction activity
o European cash products ADV increased 37.3% y/y to 2.0M transactions.
o US cash products average daily volume decreased (0.36%) y/y to 3.8B shares.
o European derivatives products ADV increased 51.5% y/y to 8.5M futures and options contracts.
o US derivatives products (equity options) ADV increased 90.3% y/y to 4.8M contracts.
· HSBC in discussions on private equity funds MBOs
o HSBC confirms that it is in discussions with the management teams of its private equity fund management businesses in Hong Kong, UK, USA, Canada and the Middle East which are expected to lead to five separate management buy-outs
· Bank of Ireland should get more than 90% support for rights issue - Irish Independent
· MS Stephen Roach, the Hong Kong-based Asia chairman of Morgan Stanley (MS), will be transferred to New York to be the non-executive chairman for Asia at the Wall Street bank, according to a memo seen by Dow Jones Newswires
· SF Stifel Slows Recruiting Efforts In Heated Environment -CEO
o Stifel Financial Corp. (SF) currently has nearly 2,000 financial advisers in its global wealth-management group and believes it can increase that to 6,000 over time, but it has slowed recruiting in a heated environment, Ronald Kruszewski, the company's chairman and chief executive, said Thursday.
· CS German tax authorities have begun issuing warrants and searching some German clients of Credit Suisse Group (CS) after finding their data on a compact disc containing data on alleged tax offenders, Swiss magazine Bilanz writes Friday.
· NAB fell sharply after reports it would consider a sale of Axa Asia North Investment platform for possible acquisition of AXA Asia and was in talks with the company as well as the financial regulators – TTN
Real Estate:
· REITS
o ABR Arbor Realty files $500M mixed shelf
o WRE Washington REIT acquires two Class A office buildings for $68M
o CHSP Chesapeake Lodging Trust closed on the previously announced acquisition of the 188-room Hilton Checkers Los Angeles hotel
o ARE Alexandria Real Estate receives final approval from City of Cambridge to develop its East Cambridge Life Science Community
o SRZ +4.9% (to sell 8 communities in Germany)
· ResCap Private-equity firms teaming up to bid for ResCap - NY Post
o Selling ResCap piecemeal may end up being Ally's best tack.
o Blackstone Group (BX), THL Capital, and the Carlyle Group are in the mix.
o little progress has been made in settling ResCap's obligations with Fannie Mae (FNM), which will probably be necessary for anyone to make a decent offer to Ally for all of ResCap
o http://www.nypost.com/p/news/business/gmac_in_chop_shop_zZKIRd3QMrEkgc93TDzLhP
· WLS Welsh Property Trust postpones IPO
§ Welsh Property had been expected to price 20.9M shares in range $16.00-16.50 through UBS and JPMorgan, which had been revised lower from 17.5M shares in range $19-21.
· Ambac auction Friday: Ambac CDS Holders Expected To Get 70 Cents On The Dollar – DJ
o Investors who bought insurance-like contracts against guarantees sold by troubled bond insurer Ambac Assurance Corp. are expected to receive about 70 cents on every dollar they're owed when the contracts are settled Friday at auction.
o Recovery swaps on the company--which are credit derivatives that market participants use to speculate on the final result of such auctions—are being quoted at 28% of face value
o The auction, whose final result will be published at www.creditfixings.com at 2 p.m. EST Friday
· BX Blackstone Group in exclusive talks to sell most UK property behind Center Parcs holiday business to M&G (PRU.LN) for more than £1B – FT
o M&G will take a majority of a fund that Blackstone is setting up to hold Center Parcs's UK property. Blackstone will keep control of the business that runs the parks and may keep as much as 25% in the property fund.
· Home Loan Banks Seek To Renew Tax-Exempt Authority
o (Dow Jones)--The Federal Home Loan Banks are seeking to renew their authority to guarantee tax-exempt bonds used to finance road repairs, hospital expansions and other local projects.
o The 12 regional banks have backed nearly $4.1 billion in such municipal projects since 2008, when Congress passed a measure to allow them to do so amid the tumult in the credit markets.
o The jobs bill that passed the U.S. House of Representatives last week would extend that authority through 2011. Otherwise, it is set to expire at the end of this year.
· Manhattan Empty Condos May Become Rentals as Leases Beat Sales - BBG
o “Things are going to run out of steam at pretty predictable times,” said Daniel Alpert, managing partner of New York-based Westwood Capital. “In the case of these condos, it’s when the reserve funds run out.”
o Builders can’t afford to cut prices because they borrowed too much at the height of the market, according to Miller. He and his partners are betting that lenders will seek to sell their condo units at a loss rather than foreclose on the building and assume all the developer’s liabilities until the units are sold.
·
Consumer sector:
· WMT shareholder meeting today
· WMT Wal-Mart Canada approved to start bank - WSJ
· Wal-Mart knew sex-discrimination suit was possible six years before it was filed - NYT
o The NYT says that Wal-Mart hired a law firm to examine its practices, and a 1995 report, whose contents have never been made public, advised that the company institute significant changes. Men's salaries were 19% higher than women's, and men were 5.5 times as likely as women to be promoted into management. A WMT spokesman says the report is flawed and so old as to be irrelevant
· Wal-Mart is giving serious consideration to acquiring Japanese firms, Doug McMillon, CEO of Walmart International, said at a press briefing Friday, the Nikkei
· ANF WSJ cautions on Abercrombie & Fitch
· BGP WSJ(6/4) Financier Lebow Named Borders Chief
· Footlocker looking at JJB Sports - Daily Mail
· PM Barron's Weekday Trader is positive on Philip Morris International
· NUS Nu Skin Enterprises 4.5M share secondary priced at $27 per share through JPMorgan and Deutsche -- wires
· PM Barron's Weekday Trader is positive on Philip Morris International
· RCMT, CDI RCM Technologies rejects $5.20 a share takeover offer from CDI Corp.
· BGP Borders Group names Mike Edwards as President
· ULTA Ulta Salon offering 9.76M shares for selling shareholders, including CEO Lyn Kirby, through William Blair and Wells Fargo
· DCP DynCorp reports Q4 EPS
· APOL Apollo Group's University of Phoenix President appointed to National Advisory Committee on Institutional Quality and Integrity
· KKD Krispy Kreme reports Q1 EPS
· RCMT CDI Corp. proposes acquisition of RCM Technologies for $5.20 per Share of common stock
· SAI SAIC reports Q1 EPS
· ULTA Ulta Salon reports Q1 EPS
· ZQK Quiksilver reports Q2 EPS
· GAMING LODGING & LEISURE
o NAVR Navarre reports Q4 EPS
o ZOOED Zoo Entertainment files $26M secondary offering through Roth and ThinkEquity
o ESCA Escalade amends credit agreement
o Paulson & Co. To Take 9.9% Stake In Harrah's – WSJ
o Paulson & Co. continued a streak of Las Vegas investments Thursday, agreeing to take a 9.9% equity stake in Harrah's Entertain
· HEALTHCARE
o AMGN Amgen not expecting Prolia to sell too quickly - WSJ
o WHO Swine Flu Experts Tied To Roche, GlaxoSmithKline -Report
§ Scientists who drew up key World Health Organization guidelines advising governments to stockpile drugs in the event of a flu pandemic had previously been paid by drug companies which stood to profit, according to a report out Friday, The Guardian says on its Web site
o health-insurance companies vs Obama/ government – NYT
§ After a protracted battle, the Obama administration and health-insurance companies say they need to cooperate with each other to get the new law to work. The article is a summary of the situation, and does not contain any real news.
§ http://www.nytimes.com/2010/06/04/health/policy/04health.html?ref=business
o AMPH American Physicians Services increases buyback program by $5M
o YMI YM BioSciences names Nick Glover to newly created role of president and COO
o SRZ Sunrise enters into purchase and sale agreement to sell eight communities in Germany
o WMGI Wright Medical announces commercial launch of the Valor Hindfoot Fusion Nail system
o DVA DaVita inc. announces receipt of OIG subpoena in connection with previously reported investigation
o ALIM Alimera Sciences reports Q1 EPS; co. remains on track to file a New Drug Application for Iluvien with the FDA in Q2.
o COO Cooper Companies reports Q2 non-GAAP EPS
o OCLS Oculus Innovative Sciences reports Q4 EPS
o MATK Martek Biosciences reports Q2 EPS
o DDD Scolr Pharma will not be able to meet its previous revenue forecast with respect to its extended-release nutritional products
- TRBN +7% Trubion Pharmaceuticals says Board of Appeal for EPO has upheld Sep-08 decision regarding anti-CD20 antibody for treatment of rheumatoid arthritis
o STRM Streamline Health reports Q1 EPS
o AZN AstraZeneca upgraded to buy from hold at Danske Bank
o UBS makes changes to European Pharmaceuticals Least Preferred List
o Rules of game changing in relationship between health-insurance companies, government - NYT
o CMED China Medical Technologies reports Q4 EPADS
o AZN AstraZeneca submits MAA in EU for cardiovascular drug Axanum
o SNY Sanofi-Aventis ans Ascenta Therapeutics sign Oncolgy agreement
From our EU/London desk
· Oils
·
· BP (+3.9%). Results as to the success of the containment device placed over the Gulf leak are inconclusive. Investor call begins at 2pm (Local).
·
· Rockhopper, Falkland Oil and Gas, Desire Petroleum (+34%, +11%, +25%). Great results from Rockhoppers exploration wells off the coast of the Falklands push South Atlantic oil exploration companies higher.
·
· Utilities
·
· Scottish and Southern (+0.2%). SSE have bought North Sea assets and Infrastructure from Hess Corp. for $324m.
· AKZO's CEO may be offered job in politics – S&P
· EASYJET: May passenger numbers up 7.9%
· LAURA ASHLEY: 17-week LFL up 5.3%
· LOW & BONAR sees FY ahead of previous estimates
TODAY’S EVENTS
DAILY VIEW
CONFERENCES
Friday June 4:
o American Society of Clinical Oncology 2010 Annual Meeting - Jun 04, 2010 - Jun 08, 2010
· 9AM: ONXX
· 3PM: ARRY
· AVEO , BII.L , BIOC , CELG , CLSN , CTT , CYTR , GETA , IMUC , INFI , LLY , RPC
o AMR Research Supply Chain Executive Conference - Jun 02, 2010 - Jun 04, 2010
o Computex Tapai Information Tech show
o Credit Suisse Future of Energy Conference - Jun 02, 2010 - Jun 04, 2010
· 8:40AM: AONE
· 9:15AM: ALTI , CBAK , LDK
o CRU Events World Wire and Cable Conference - Jun 02, 2010 - Jun 04, 2010
o Goldman Sachs Basic Materials Conference - Jun 02, 2010 - Jun 04, 2010
· 1:10PM: GG
o Nomura Securities Co., Ltd. Pan-Asia Technology Forum - Jun 02, 2010 - Jun 04, 2010
o Platts Geothermal Energy Conference - Jun 03, 2010 - Jun 04, 2010
· 2PM: RZ
o RBC Capital Markets Consumer & Retail Conference - Jun 03, 2010 - Jun 04, 2010
· 10:10AM: CRI
· 11:20AM: UEIC
o Sandler O'Neill & Partners, L.P. Global Exchange and Brokerage Conference - Jun 03, 2010 - Jun 04, 2010
o Sanford C. Bernstein Strategic Decisions Conference - Jun 02, 2010 - Jun 04, 2010
· 8AM: AGCO , CSCO , GD , K , TWC
· 9AM: HUM , MOT , MUR , PCS , PX , SYY
· 10AM: ABT , CPB , EOG , L , LVS
· 11AM: BG , GE , RNR , SWN
COMPANY MEETINGS/OTHER DAILY EVENTS
· Friday June 4:
o Shareholder Meetings
§ DTSI, WMT, CLMS, IRM, PEGA, TSO, WSO, GNRC, ICFI, LNG, SIEB, FSNM, PSUN, IMMR, CAP, CHKE, CTIC, ERII, VHC, WLDN, PETD
o S Sprint Nextel launches its Evo 4G phone.
ECONOMICS
· Friday June 4:
o 0830 Employment Report
EARNINGS
o Materials
· Friday June 4: HWKN, KMGB
o Industrials/Homebuilders
· Friday June 4: MPR, DCP
o Consumer/Retail/Education
· Friday June 4: AMWD, ODC, BTH, PBG
o Financials
· Friday June 4: MVC
o Tech/Telecom
· Friday June 4: PRLS
o Real Estate:
· Friday June 4: UBA
INVESTMENT BANKING WRAP
M&A
· AIG Set for One of the ‘Great Restructurings,’ Berkowitz Says- BBG
o AIG may have become synonymous with recklessness and the global economy’s near-death experience in 2008, but for Berkowitz it’s pure gold, and the company’s luster only grew brighter with the failure to sell AIA
o “AIG’s going to prove to be one of the great restructurings in corporate history and the board is a big part of that,” says Berkowitz. “They’re doing a great job. They’re taking their time.”
o http://www.businessweek.com/magazine/content/10_24/b4182072810728.htm?chan=magazine+channel_features
· AIG not decided on Asia unit's future- Reuters
o American International Group Inc (AIG.N) CEO Robert Benmosche asked the insurer's board for time to explore options besides a public offering for its Asian life unit after a $35.5 billion deal to sell it to Prudential Plc (PRU.L) fell apart, a source familiar with the matter said
o Benmosche wanted to explore other options for American International Assurance, including selling parts of the business
o http://www.reuters.com/article/idUSN0326104220100604
· Pru backs top team over failed Asian bid- FT
o Prudential’s top team has the full support of the board and the majority of big shareholders and there will be no resignations over the collapse of its $35.5bn (£24.3bn) bid for AIA, Harvey McGrath, the UK insurer’s chairman, has told the Financial Times.
o http://www.ft.com/cms/s/0/b5c24268-6f4b-11df-9f43-00144feabdc0.html
· Prudential rival Generali rejects AIA bid speculation- Telegraph
o Italian insurance group Generali has dampened speculation it could make a bid for AIG's Asian business after Prudential pulled out of a $35.5bn (£24.5bn) deal for the unit
o Reports in Italian daily newspaper Corriere della Sera had suggested the Generali was preparing a bid for AIA in the wake of Prudential's failed deal. However, a spokesman for the Italian company insisted this was "totally premature"
· Private Equity Targets Renewable Energy Investment- WSJ
o Private equity firms are preparing for a surge of investment in renewable energy, with on-shore wind farms the number-one target
o More than three-quarters of private equity executives polled at a recent conference by KPMG said they planned to invest in renewable energy of some sort within the next year, with on-shore wind being the most popular technology
o http://online.wsj.com/article/BT-CO-20100603-714841.html?mod=WSJ_latestheadlines
· Rescap: GMAC in chop shop- NYPOST
o Government-owned Ally Bank, anxious to start repaying its $17.3 billion taxpayer bailout, is restarting its stalled sale of its ailing mortgage operation, Residential Capital -- and is getting early interest from private equity firms
o Private-equity titans including Blackstone Group, THL Capital and the Carlyle Group are banding together to make a run at purchasing ResCap, sources tell The Post, though the process is still very early.
o http://www.nypost.com/p/news/business/gmac_in_chop_shop_zZKIRd3QMrEkgc93TDzLhP#ixzz0psNhP588
· WPO Washington Post fields several bids for Newsweek- Reuters
o At least four interested parties appear to have submitted bids for Newsweek, the magazine that The Washington Post Co (WPO.N) put up for sale on May 5.
o Newsmax Media and Thane Ritchie, chief executive of Ritchie Capital Management, said they submitted bids. Private equity firm OpenGate Capital and Sidney Harman, the founder of audio equipment company Harman International Industries (HAR.N), have expressed interest in the weekly news magazine
o http://www.reuters.com/article/idUSN0324027320100603
· FIG Fortress sees wave of asset sales by lenders- Reuters
o As banks and other lenders worldwide sell off their worst assets, Fortress Investment Group plans to invest in the castoffs and views itself as a "financial services industry garbage collector,"
o Peter Briger, co-chairman and principal of the New York-based hedge fund and private equity firm, said he expects a steady increase of assets coming out of the Federal Deposit Insurance Corp over the next three to four years.
o http://www.reuters.com/article/idUSN0323122220100603
· SNY Sanofi, Ascenta agree up to $398 mln cancer R&D deal- Reuters
o Sanofi-Aventis (SASY.PA) boosted its early-stage pipeline on Friday with a deal worth up to $398 million for rights to experimental cancer compounds developed by U.S. biotech firm Ascenta Therapeutics
o http://www.reuters.com/article/idUSLDE65307Y20100604
· RHT, NOVL: Could Red Hat be Novell's spouse?- The Register
o Red Hat's CEO Jim Whitehurst declined to dismiss the possibility of buying out his company's Linux rival Novell in a meeting with reporters in London today
o And as for Red Hat's flirtations around cloud and virtualisation firms, Whitehurst said: "You will likely see us increase our acquisitions. We’re highly cashflow positive
o http://www.theregister.co.uk/2010/06/03/red_hat_novell_acquisition_look_at_anything/
· DELL Has Considered Going Private – WSJ
o Mr. Dell was responding to a question at an investor conference hosted by Sanford C. Bernstein, but the executive declined to comment on what, if anything, would make him consider such a transaction more seriously
· Niche cloud computing firms in M&A spotlight- Reuters
o With sales of web-based business software soaring, companies that focus on cloud computing are slipping into a sweet spot as technology giants look to bolster their presence in this fast-growing segment
o Deep-pocketed technology firms like IBM (IBM.N) or Oracle Corp (ORCL.O) might be looking to snag deals in this area to complement their own traditional, mostly on-premise services
o Human resource management software makers SuccessFactors Inc (SFSF.O) and Taleo Corp (TLEO.O) and retail-focused software firm DemandTec Inc (DMAN.O) could be the early targets
o http://www.reuters.com/article/idUSTRE6525EQ20100603
· WMT Wal-Mart looks at many partners for Russia entry- Reuters
o Wal-Mart Stores (WMT.N) has talked with several potential partners in Russia, but continues to search for the best way to enter the country
o In May, sources said the company was in preliminary talks to acquire Russian retailer Lenta
o http://www.reuters.com/article/idUSN0323495520100603
· WMT Wal-Mart thinking about buying Japanese retailers - Nikkei
· Paulson to Take 9.9% Stake in Harrah's- WSJ
o Paulson & Co. continued a streak of Las Vegas investments Thursday
o More recently, his firm peaked the curiosity of casino investors as it disclosed last month that it had become major shareholders of MGM Mirage and Boyd Gaming Corp. WSJ
· FL Footlocker bid talk boosts JJB- Daily Mail
o Turnover swelled to a well above-average 11million shares as dealers heard whispers that Footlocker Inc, the New York-owned trainer shop, which is looking to expand in Europe and the UK, is running the slide rule over JJB, which narrowly escaped the knackers' yard last year.
o Speculation that Footlocker could bid up to 30p a share for the loss-making 250 store chain comes six months after JJB narrowly avoided administration by selling its fitness clubs for £83million and pushing through a debt restructuring and £100million fundraising.
· GE’s decision to sell its share in Garanti was suspended- HTekonomi
· Is CLWR Clearwire Prepping for a Spectrum Sale?- GigaOm
o Clearwire, the WiMAX operator that owns gobs of wireless spectrum across the country, may put some of those airwaves on the market
o Such a move could potentially change the playing field for wireless, too, if it brought in a new wireless player (albeit one with deep pockets), giving T-Mobile a chance to boost its own spectrum holdings
o http://gigaom.com/2010/06/03/is-clearwire-prepping-for-a-spectrum-sale/
· THC Tenet Likely to Drop Healthscope Bid, Investor Says- BBG
o “I would like them to back down, and I believe they will,” Larry N. Feinberg, president of Oracle Investment Management Inc., of Greenwich, Connecticut, said today in an interview
o Tenet will “have to back out because this deal is dilutive to the stock price,” Sheryl Skolnick, an analyst at CRT Capital Group in Stamford, Connecticut, said yesterday in an interview
· BX Blackstone in talks over Center Parcs assets- FT
o Blackstone, the US private equity group, is in exclusive talks to sell most of the property behind its Center Parcs holiday business in the UK to M&G, the Prudential-owned fund manager, in a deal to raise more than £1bn ($1.46bn).
o In one of the largest deals in the real estate market since the property crash in 2007, Blackstone is in the final stages of creating a fund to hold the holiday company’s £1.4bn of UK property assets. M&G would then acquire the majority stake.
o http://www.ft.com/cms/s/0/06ca2882-6f43-11df-9f43-00144feabdc0.html
· CDI launches hostile bid for RCMT RCM Technologies- Reuters
o Staffing services provider CDI Corp (CDI.N) launched a hostile bid to buy RCM Technologies (RCMT.O) for about $68 million, a fortnight after it had approached RCM board with an offer
o RCM board, however, rejected the offer saying it would not be in the best interests of the company to pursue the transaction "as presently structured" by CDI.
o http://www.reuters.com/article/idUSSGE6520IP20100603
· SSE secures nearly 80 pct of HES Hess North Sea assets- Reuters
o Scottish & Southern Energy (SSE.L) said it would buy almost 80 percent of the North Sea gas and infrastructure assets of Hess (HES.N) for $324 million
o http://www.reuters.com/article/idUSLDE65309S20100604
· Consultancy firms Booz and AT Kearney in talks to merge – FT
o Consultancy firms Booz & Co and AT Kearney are discussing merging their companies to form the world's third largest consultancy
o No decision had yet been made on the merger and discussions could yet fall apart
o Also, any deal would need to win the approval of the partners of the two firms
· Valeo hires BAC BoA Merrill to advise on options- Dealbook
o French car parts maker Valeo has hired Bank of America Merrill Lynch (BAC.N) to advise on its strategic options that may include a sale
o Bank of America Merrill Lynch is to submit a report on possible strategies for French car parts maker Valeo (VLOF.PA) in around a month
o http://www.reuters.com/article/idUSLDE65306P20100604
· MBK Eyeing Lone Star's Majority Stake In KEB- WSJ
o Private-equity firm MBK Partners LP has been in talks to potentially bid for Lone Star Funds' 51% stake in Korea Exchange Bank currently valued at about $3.63 billion (KRW4.39 trillion)
o Talks are still in the early stages, the person told Dow Jones Newswires. Executives at MBK Partners couldn't immediately be reached for comment
o http://online.wsj.com/article/BT-CO-20100604-702304.html?mod=WSJ_Deals_LEFTLatestHeadlines
· Investor-fund alignment "holy grail" says investor- Reuters
o Investors in private equity funds are still searching for the 'holy grail' where their interests are perfectly aligned with the funds investing their capital, an investor said on Thursday.
o Still, some question whether their interests are really aligned with the firms which invest their capital, and whether any gains made on terms will just be lost when the economy and markets improve
o http://www.reuters.com/article/idUSN0325656120100603
· NAB's plan to sell AXA assets may not clinch deal- Reuters
o National Australia Bank is in talks to sell a customer facing asset of AXA Asia Pacific in a bid to win regulatory approval for its $11.5B takeover of the fund manager, but more hurdles loom
o NAB would not name the potential buyers, but The Australian newspaper said they included wealth manager IOOF, Bendigo and Adelaide Bank, and Perpetual
o http://www.reuters.com/article/idUSTRE65305P20100604
· Rothschild's star rises as European M&A languishes- Reuters
o Rothschild, which unveiled a senior hire to boost its North American business, is making the best of a steep downturn in mergers and acquisitions (M&A) on its European home turf
o Ranked just 9th by value on M&A with European targets last year, the family-owned bank's strategy of focusing on a larger number of smaller clients and deals has helped propel it into 2nd place for the year-to-date
o http://www.reuters.com/article/idUSTRE65253A20100603
· Vale to buy out Aquila in Australia coal project- Reuters
o Brazilian mining giant Vale will exercise its option to buy a 24.5 percent stake in an Australian hard coking coal project from mining firm Aquila (AQA.AX), lifting its stake to 100 percent
· Turkish lenders TEB, Fortis sign deal for merger- Reuters
o BNP Paribas and the Colakoglu Group, the majority shareholder in Turkey's TEB, signed a memorandum of understanding for the merger of TEB and Fortis Bank's Turkish unit Fortis Bank AS
o Subject to the approval of Turkish banking regulator BDDK, the merger is expected to be concluded by the beginning of 2011
o http://www.reuters.com/article/idUSLDE65223320100603
· Telefonica Sells Manx Telecom To HgCapital And CPS Partners- DJ
o Telefonica SA (TEF) said Friday it had agreed to sell Isle of Man's Manx Telecom for GBP158.8 million to private equity firm HgCapital and telecoms firm CPS Partners.
o Manx Telecom is Isle of Man's most-important telecommunications and Internet provider
· France Tel, TDC Drop Blocked Orange Suisse/Sunrise Merger- WSJ
o French telecommunication giant France Telecom SA (FTE) Thursday said it is dropping its intended merger of its Orange Suisse mobile telephony unit with Denmark's TDC A/S's (TDC.KO) Sunrise mobile unit in Switzerland following a ruling earlier this year by the Swiss antitrust regulator blocking the transaction.
o http://online.wsj.com/article/BT-CO-20100603-710495.html?mod=WSJ_Deals_LEFTLatestHeadlines
· TNK-BP steps up gas field sale drive- FT
o TNK-BP, BP’s Russian joint oil venture, ratcheted up the pressure for a sale of its vast Kovykta gas field on Thursday, announcing that it was pushing the unit that owns the licence to the field into bankruptcy.
o Negotiations with Rosneftegaz, the state-owned vehicle chaired by Igor Sechin, the powerful energy tsar, have been dragging on since March, while a previous deal in 2007, in which TNK-BP agreed to sell the field to Gazprom for $700-$900m, never got off the ground.
o http://www.ft.com/cms/s/0/b04d878c-6f34-11df-9f43-00144feabdc0.html
· Gruppo Editorial L'Espresso is open to the possible sale of Le Monde- Il Sole 24
· HSBC in Talks About Selling Five Buyout Fund Units- BBG
o HSBC Holdings Plc is in discussions with the management teams of its private equity fund-management businesses that are expected to lead to five separate buyouts
o The talks relate to units in Hong Kong, the U.K., the U.S., Canada and the Middle East, London-based HSBC said today in a statement. The operations have about $8.8 billion of funds under management
$ RAISING
IPOs
· Investors to scour AgBank IPO docs for NPL and book ratios- reuters
o Investors will scour a preliminary prospectus for Agricultural Bank of China's ABC.UL around $30 billion IPO, the world's largest, for updates on its book value and bad loans
o The financial update is expected later on Friday as part of China's fourth-biggest bank's dual listing in Shanghai and Hong Kong, slated for July
o http://www.reuters.com/article/idUSTRE65314R20100604
· ROZ Rodinia Oil IPO takes care of capital needs for now- Reuters
o An initial public offering by Rodinia Oil Corp (ROZ.V), a Canadian oil exploration company active in Australia, will likely take care of financing needs through the start of 2012, its chief executive said on Thursday.
o Rodinia completed an IPO last week. The offering was oversubscribed and raised its target C$52.5 million ($50.4 million), even as the market shied from IPOs.
o http://www.reuters.com/article/idUSN0322998220100603
· Nobao Renewable Energy Postpones IPO Due To Market Conditions - DJ
o Nobao Renewable Energy Holdings Ltd. postponed its initial public offering Thursday because of market conditions.
o It previously pushed the offering back from last month.
o The Chinese renewable-energy company had planned to sell at least 18 million American depositary shares for $8 to 10.
· Europe's IPO Club Accepting Members- WSJ
o The entry criteria are strict, but companies can take encouragement that new members are still being accepted into the European IPO club.
o Brazilian mining group Ferrous Resources decided Wednesday to pull a London listing aimed at raising some $400 million. But Danish ingredient manufacturer Christian Hansen successfully raised $521 million on Thursday. U.K. fund manager Jupiter Investment Management Holdings has said it will press ahead with a June initial public offering, expected to raise GBP 220 million ($322.4 million).
PRICINGS
Initial Offerings
o NRE Nobao Renewable Energy 18m share IPO expected to price 6/03/10 via UBS and Citi: Price Talk $8-10
o POSTPONED
o WLS Welsh Property Trust 17.5m share IPO expected to price 6/03/10 via UBS and JPM: Price Talk $19-21
o POSTPONED
Secondary Offerings
o ART Artio Global Investors- secondary priced Thursday at $17.33/shr via Goldman Sachs.
o TXCC TranSwitch- raised $5.1M vs $12m expected in a 2.1m share offer Thursday
o NUS Nu Skin Enterprises- raised $120m vs $148m expected. Shares prices Thursday at $27/shr via JP Morgan and Deutsche Bank Securities.
o XLNX Xilinx Prices $520 Million Convertible Senior Notes Due 2017
o The initial conversion rate for the notes is 33.0164
NEWS
· WaMu has setback on road out of Chapter 11- Reuters
o Washington Mutual Inc's (WAMUQ.PK) effort to exit bankruptcy encountered a setback on Thursday when the judge in the case ordered the company to talk further with shareholders about their requests for documents
o The bank holding company had sought approval of its disclosure statement, which must be cleared by a bankruptcy court before it can be sent to those voting on the reorganization
o http://www.reuters.com/article/idUSTRE6525YZ20100603
· Daisy Group secures a £75M three year revolving credit facility- BBG
· Bank of Ireland on track to get 90pc support for its €1.7bn rights issue- Independent
o Bank of Ireland is on track to secure over 90pc support for its €1.7bn rights issue, the largest in Irish corporate history, buoyed by the State's commitment to preserve its stake
o “To say it hasn't been the easiest time to sell shares in an Irish bank is an understatement," said one senior trader
· Financials: BK Bank of New York Mellon announces $700M stock offering through Goldman Sachs and Citi
· Tech: EPAY Bottomline Technologies announced an offering of common stock of indeterminate size through Needham
· Consumer: ULTA Ulta Salon offering 9.76M shares for selling shareholders, including CEO Lyn Kirby via William Blair and WFC
· Tech: ZOOED Zoo Entertainment files $26M secondary offering via Roth and ThinkEquity
· Real Estate: ABR Arbor Realty files $500M mixed shelf
· Financials: FPFC First Place Financial files $80M secondary offering via Keefe, Bruyette & Woods
***All eco data from Bloomberg and DJ
Prepared by staff of Cantor Fitzgerald & Co. ("Cantor") and is for information purposes only. It is not intended to form the basis of any investment decision, should not be considered a recommendation by Cantor or any other person and does not constitute an offer or solicitation with respect to the purchase or sale of any investment nor is it a confirmation of terms. Any calculations and valuations presented herein are intended as a basis for discussion. Sources of information are believed to be reliable but Cantor makes no representation and gives no warranty that the information contained herein is accurate or complete. Any opinions or estimates given may change. Cantor undertakes no obligation to provide recipients with any additional information or any update to or correction of the information contained herein. This material is intended solely for institutional investors and investors who Cantor reasonably believes are institutional investors. Cantor, its officers, employees, affiliates and partners shall not be liable to any person in any way whatsoever for any losses, costs or claims howsoever arising from any inaccuracies or omissions in the information contained herein or any reliance on that information. Cantor may have positions in financial instruments mentioned, may have acquired such positions at prices no longer available, and may have interests different or adverse to your interests. No liability is accepted by Cantor for any loss that may arise from any use of the information contained herein or derived here from. This product may not be reproduced or redistributed outside the recipient's organization. Sources: Cantor Fitzgerald & Co., Reuters, Bloomberg, CNBC, Dow Jones, Marketwatch, Trade-Alert, and the Wall Street Journal.