Morning @ Cantor
Morning @ Cantor 6/28
Today’s Stories From Cantor Fitzgerald
Sal Catrini (908) 517-5067
EARLY US LANDSCAPE****
· US Stock Futures, SPs up 3 – US stocks and Dollar near session highs at 7am et
· WSJ says G20 may be good for EUR short term, but help dollar long term
o budgets and debt levels, while pledging to stick to the 2012 timetable to implement tougher capital and liquidity standards for banks, with standards converging after initial variation. But they appeared to give up on efforts to agree on a coordinated global bank tax, saying countries should be free to examine "a range of policy approaches." WSJ
o G20 steer away from China currency and global bank tax, target 50% fiscal deficit reduction by 201
o G20 Communiqué dropped draft language welcoming Chinese move toward FX flexibility, bowing to Beijing sensitivities not wanting to have its currency singled out - even in a positive light
· US treasuries bid small today … short end in focus…Friday, the two-year yield, which falls when prices rise, was at 0.672%, just above the 0.605% touched in the wake of the Lehman Brothers' collapse
· EU stocks hold near highs up 0.9%... EU Autos up helped by Peugeots sales tgts (per BBG), metals lead EU stocks….RIO up 2%..Chinese headlines helping (per BBG)
o Banks were mixed, benefiting from the G-20 decision to give them more time to increase capital levels, though Standard Chartered's (STAN.LN) trading update disappointed
· Asian Markets mixed to dn on G20: Nikkei (0.45%); Hang Seng +0.17%; Shanghai Composite (0.69%)
· EUR get hit..at session lows at 7am et….dn .0032 at 1.2337
· Libor 3-month: Dollar: 0.533% vs prior 0.535%
· Crude dn 70c, almost back to $78….Oil Falls From Seven-Week High as Tropical Storm Concern Eases
· Copper prices edge higher, on expectations that the global economy is continuing to show signs of recovery
· Tropical Storm Alex moves across Mexico's Yucatan, Spares BP's Oil Cleanup…. Alex Gains Strength, May Be Hurricane Within Two Days – BBG
· BP trading up 4% - relief well optimism helps, ie per BBG BP has detected well bore below surface but storm activity in Gulf worries put aside even as Storm Alex gains steam
· Aussie press rumors mining tax compromise offer (DJ etc..)
· European peripherals mostly better…..auction today don’t cause any new fears.. $12 Billion European Debt Auctions today in focus
o Bonds were pressured ahead of Belgium and Italian supply as well as equity markets snapping their 4-day losing streak
o FT reports Greece is preparing to raise about €4B from the private markets in July
o Italy Debt Agency (Tesoro) sells total €7.0B in three and ten year bonds
§ Sold €3.5B in 2% Jun 2013 BTPs; avg yield 2.33% v 2.35% prior; Bid-to-cover: 1.4x v 1.5x prior
§ Sold €3.5B in 4% Sept 2020 BTPs; avg yield 4.09% v 4.07% prior; Bid-to-cover: 1.3x v 1.4x prior
· FT Deutschland reported that the German Bundesbank and financial regulator BaFin are set to meet German banks on Jun 30th to discuss results of stress tests
· Senator Robert Byrd dies…
o Byrd’s absence could pose a challenge to Senate Democrats as they try to pass the final version of the financial overhaul bill – NYT
o Dems confident they can get to 60 votes (despite Byrd death)– per BBG
· Dollar/Yuan Central Parity Monday Lowest In Modern Era
o Yuan forwards strengthened, extending last week’s gain, after U.S. President Barack Obama said his government predicts further currency appreciation
· Iran fears heat up…Obama starkest assessment to date of Tehran's nuclear work
· Fed watch: RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve - telegraph
· Natl Bank of Greece says has no plans for capital increase (DJ)
· SNB's Danthine commented in a newspaper interview that deflationary pressures in Switzerland had 'practically disappeared'. He commented that the SNB was not under pressure to reduce its Euro portion of reserves from the past currency interventions – TTN
· CHINA ECONOMY IS REBOUNDING, VICE PREMIER LI SAYS
o China Vice Premeir Li Keqiang reiterated belief that China's economy still faced 'complicated situation' - BBG
· Friday's payroll number in focus
· EUR/CHF cross continued to hit fresh life-time lows
· The yen fell for the first time in seven days against the euro
· Chinese yuan likely tracking 15 currencies – MW link
o China is likely tracking more than a dozen currencies in addition to the U.S. dollar in setting the value of the yuan, though the greenback likely retains its dominant status
· Greece set to return to finance markets – FT
o Greece is preparing a make-or-break return to the financial markets next month as it plans to raise about €4bn in its first borrowing attempt since last month’s bail-out by the EU and IMF
o http://link.ft.com/r/0QSDPP/PRGNWJ/MFLZL/YHM5WI/M9NXXB/VU/h
· Data
o JAPAN MAY RETAIL TRADE M/M: -2.0% V -0.1%E (first decline in 5 months; 5-yr low
o German Jun CPI - North Rhine- Westphalia M/M: 0.0% v 0.1% prior;
· Money Raising:
o TSLA Tesla Motors files amended S-1; increases share size of offering to 13.3M through Goldman, Morgan Stanley, JPMorgan, and Deutsche
o Some institutional investors feel they are being squeezed out of Agricultural Bank of China's IPO because of an abundance of cornerstone investors and strong retail demand. WSJ
§ they worry they mightn't be able to secure a large enough allocation to make the investment worthwhile.
§ At as much as US$23.6 billion, the IPO could be the largest ever, eclipsing Industrial & Commercial Bank of China's US$21.9 billion 2006 offering.
o DP World shelves London listing plans - FT
§ Container terminal operator has postponed plans for a dual listing in London until 2011, blaming technical problems arising from the merger of the Dubai and Nasdaq stock exchanges
· M&A:
o Infineon Technologies trading higher on reports Sistema (AFKS.RU) wants 29% stake (FT, DJ)
§ Russian’s Medvedev and Putin are pressuring German Chancellor Angela Merkel to allow Sistema to take a 29%-stake in Infineon
§ Dow Jones reported citing an Infineon Technologies spokesman that the company isn't engaged in participation talks with Sistema
o AIG: China Strategic hopes it will gain Taiwan regulators' approval to buy AIG's Nan Shan unit, by letting a share-swap agreement with Chinatrust expire. WSJ
o WPO… WPO Bids for Newsweek are due in at Allen & Co. by 5 p.m. on Thursday– NYPOST
o
o LGF: Carl Icahn said Friday he wouldn't rule out supporting a merger between Lions Gate Entertainment Inc. (LGF) and Metro-Goldwyn-Mayer Inc., but he was skeptical of whether any deal between the two film studios would make sense for Lions Gate shareholders. DJ
o CLF: Cliffs Natural Resources Raises All-Cash Offer For Spider To Cdn.$0.19 With Support of Spider's Largest Shareholder
o Wattyl Up 27% At A$1.60; Recommends A$1.67/Share Offer By Valspar
§ Wattyl Ltd. (WYL.AU) said Monday it entered a deal with Valspar (VAL), after Valspar raised its initial offer to A$1.67 a share cash for all of the paint maker's shares on issue. In late May, Wattyl received a non-binding offer from Valspar for A$1.30 a share, but since then there has been little news on the deal. DJ
o M&A, protectionism?: Chinese gold producer Zijin ended its offer to buy Australia's Indophil because government approval for the deal in China was taking too long. WSJ
o Hennes & Mauritz AB fell 1.8 percent after Chief Executive Officer Karl-Johan Persson told La Tribune that Europe’s second-largest clothing retailer isn’t for sale
· BP/ oil stories:
o BP updates on GoM oil spill; cost to date approx $2.65B
o BP'S HAYWARD MAY RESIGN TODAY, RUSSIAN DEPUTY PM SECHIN SAYS - BBG
o Delays feared as BP relief bore nears well – FT
§ a review of similar efforts in shallower waters and the opinion of geologists and petroleum engineers point to a discomforting possibility: the relief well might not work on the first try, leaving open the risk of delays
§ http://www.ft.com/cms/s/0/a20fb29a-8202-11df-938f-00144feabdc0.html
o Obama, Cameron say US, UK will both benefit if BP "remains a strong and stable company" – Telegraph
o BP may stem flow of oil by next month - London Times
§ First of two relief wells is close to puncturing the ruptured Macondo well, raising hopes that the oil giant is on the way to ending the Deepwater Horizon crisis in the Gulf of Mexico
§ http://www.thetimes.co.uk/tto/news/
o 'Significant' Oil Hits Mississippi Shores – Officials (DJ)
o Alex Weakens To Tropical Depression, Strengthening Seen –NHC
o Adm. Allen: storm related Evacuation Would Halt Spill Containment For 14 Days
o OPEC Secretary General:No Production Change Before Oct Meeting… Curent Oil Prices 'Comfortable'
o OPEC Secretary General: Sees No Short-Term Price Impact From BP Accident
§ OPEC Secretary General Says BP Too Big To Fail After Accident – DJ
o Adm. Allen: BP Should Reach 53,000 Bbls/Day Oil Recovery This Week
o BP Well Estimated To Be Leaking 35,000-60,000 Barrels A Day - DJ
o Anadarko, BP Bonds Tumble On Concerns Over Oil Spill's Cost Friday… BP bond yields soared to all-time highs
o BP Loses Trading-Floor Swagger in Energy Markets
§ the trading unit’s prospects are uncertain, and the resources the unit once took for granted are threatened
§ unit was as much as a fifth of the company’s total profits
§ http://www.nytimes.com/2010/06/28/business/global/28bptrade.html?ref=business
o RIG BP has given notice it intends to claim GBP470 million against rig owner Transocean (RIG) insurance policy for its part in the Deepwater Horizon rig disaster, the Mail on Sunday
o US States Weigh Large Claims Against BP WSJ
§ Gulf Coast states are gearing up to follow shrimpers and hotel owners in seeking payouts from BP PLC (BP, BP.LN) for lost revenue and other damages stemming from the Gulf of Mexico oil spill. The demands could far exceed the $305 million BP has already given the states of Louisiana, Mississippi, Alabama and Florida Chinese/ US treasury’s
§ BP moved to bolster its cash and available credit, adding $5 billion to its oil-spill war chest as concerns grew about the escalating costs of the Gulf disaster. WSJ
o Boycott BP? That's easier said than done – LAT link
· Pharma BARRON'S Cover: Positive on Big Pharma names, especially MRK, PFE, SNY, NVS and RHHBY. stocks could rally 30%
· Autos sector news busy this week: Telsa IPO expected, GM update, auto sales
o EU Autos up helped by Peugeots sales tgts (per BBG
o PSA Peugeot Citroen climbed 2.2 percent as La Lettre de L’Expansion reported that France’s biggest carmaker has lifted its sales target for the DS3 model.
o Nissan Motor May global vehicle output +42% y/y to 309,287 units
o Toyota Motor May worldwide vehicle output +28% y/y to 568,004 vehicles
o Honda Motor May global vehicle output +43% y/y to 278,543 vehicles
· Rio dn 2% Monday
· Australia PM Gillard To Offer Miners Deal This Week
o The Australian government under new prime minister Julia Gillard plans to announce changes to the proposed resource super profits tax this week, according to a report Monday in the Sydney Morning Herald
o The paper says the government will seek to quickly tackle problems that had led to a dramatic decline in the government's standing in opinion polls leading up to Kevin Rudd's replacement as prime minister last week, including the contentious mining tax, as well as immigration and climate change issues.
· advertising good news: Publicis , WPP tell Cannes Lions advertising festival that advertising market is getting better – FT
o WPP’s Sir Martin Sorrell and Maurice Levy of Publicis both said that the advertising market was improving, although they disagreed over when spending would return to the 2008 high
o “I think clients are being cautious in their thinking about the future. To date, their businesses are doing well.” Sorrell sd
o http://www.ft.com/cms/s/0/72400c3a-8208-11df-938f-00144feabdc0.html
· Housing: KBH KB Home says SEC is investigating its joint ventures and accounting practices – WSJ
· Housing: UK’s Taylor Wimpey dn 3% issues trading update.. to perform in line with expectations in a gradually improving, but still uncertain, trading environment
o North America Housing
§ Pricing in US markets has remained stable in 2010 to date. YTD sales rates for North America are in line with the equivalent period in 2009, albeit from a reduced average number of active outlets of 136 for this ytd.
§ Business in Canada continues to perform strongly.
o Continues to expect volatility in key US market metrics over the next few months as the distorting impact of the cessation of the Homebuyer Tax Credit unwinds
· Boeing (BA): Dubai to renegociate its plane orders to Airbus and Boeing (BA) – Les Echos
· Stan Chart dn small Monday on statements … (stock up 10% in last 3 weeks)… says currently tracking towards a strong performance in H1 of 2010
· Lufthansa confirms outlook sees 2010 operating profit up year-over-year
· EU banks: More banks to face stress tests
o The number of European banks subjected to stress tests is likely to rise, with sources suggesting that as many as 100 institutions will be involved in a broader exercise to shore up market confidence.
o European Union leaders have already agreed to publish stress test results for 26 banks next month – mainly big, cross-border institutions – to address concerns about the eurozone’s exposure to sovereign debt
o http://www.ft.com/cms/s/0/7a844f9e-821e-11df-938f-00144feabdc0.html
· EU banks: Quantifying the ECB overdraft
o Among euro area banks, Spanish, Irish and some Italian banks have retained the most ABS and covered bonds since 2007.
o instead of just a regional breakdown (which we’ve seen ad nauseum) we get a bank-by-bank estimate for who’s tapping European Central Bank, or Bank of England, largesse.
o So far, so expected. But with the ECB’s 12-month Long-Term Refinancing Operation (LTRO) set to expire on July 1, attention has turned to just how reliant these financials are on central bank funding
o http://ftalphaville.ft.com/blog/2010/06/28/272161/quantifying-the-ecb-overdraft/
· Finance reform bill – multiple articles over the weekend, most say banks dodged a bullet – but the uncertainty over the final language keeps them guessing
o An element of doubt about the legislation’s passage emerged on Sunday when the office of Robert Byrd, the 92-year-old Democratic senator from West Virginia, said he was seriously ill. Scott Brown, the Republican from Massachusetts who had supported the measure, signalled his reservations about the proposed $19bn bank levy. “I’ve said repeatedly that I cannot support any bill that raises tax,” he said. FT
o Banks appeared to have dodged some of the harshest provisions of previous versions of U.S. legislation overhauling financial rules. WSJ
§ "There is no way to view this bill as a positive for the financial sector. Yet it could be much worse,"
o US banks face more sweeping overhaul – per FT
§ could face a more draconian overhaul than they expect, according to people involved with drafting financial reform legislation.
§ There’s no doubt that the legislation that is on its way towards enactment in Congress will require some of these firms in a range of ways to raise more capital, better quality capital
§ http://www.ft.com/cms/s/0/df0bb466-820f-11df-938f-00144feabdc0.html
o Byrd's Illness Could Delay Financial-Regulation Vote – DJ: Sen. Robert Byrd (D., W. Va), currently Congress's longest-serving member, has been hospitalized in "serious" condition, diminishing the chances of the Senate putting the financial-overhaul bill to a vote this week.
§ If Byrd isn't present to vote this week, that means Democrats would only have 56 of the 60 votes needed to invoke cloture on the bill
o Scott brown waffles..could derail fin reform?
§ Mr. Brown on Friday said he was concerned about a bank assessment Democrats added to the bill last week, and his vote was now considered more uncertain. WSJ
o Democrats are hoping to have the financial-overhaul package up for a vote in the House of Representatives on Tuesday and possibly up for a vote in the
o Senate as soon as Thursday
o If the measure passes both chambers, President Barack Obama could sign it into law before July 4. If the measure isn't passed by then, it likely won't see votes until at least mid-July. WSJ
o Obama: Bank Bill Is '90% Of What I Proposed' – DJ
o With Reform Battle Over, Obama Turns to Bank Tax
§ on Saturday urged Congress to take up his proposal for a $90 billion, 10-year tax on banks as the next step in reform.
§ Obama wants to slap a 0.15 percent tax on the liabilities of the biggest U.S. financial institutions to recoup the costs to taxpayers of the financial bailout.
§ http://www.cnbc.com/id/37943013
o Why Wall Street Will Love The 3% Solution in Reform Bill – CNBC
§ The new limits on proprietary trading and hedge fund investments may actually benefit big banks more than harm them—especially in the hedge funds they market to clients
§ http://www.cnbc.com/id/37921692
o On Finance Bill, Lobbying Shifts to Regulations
§ Well before Congress reached agreement on the details of its financial overhaul legislation, industry lobbyists and consumer advocates started preparing for the next battle: influencing the creation of several hundred new rules and regulations
§ notably short on specifics, giving regulators significant power to determine its impact — and giving partisans on both sides a second chance to influence the outcome.
§ http://www.nytimes.com/2010/06/27/business/27regulate.html?partner=rss&emc=rss
· Rating agencies: should be banned from rating complicated financial credit vehicles
o Peter Sands, the chief executive of Standard Chartered, in an article for The Sunday Telegraph
o Rating agencies should be banned from rating complicated financial credit vehicles if they are being paid to do so by the institution that has put together the structure, according to one of the world's most senior bankers.
o national leaders are in danger of imposing the wrong solutions to the banking crisis and threatening an economic downturn.
o http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7856535/Bank-chief-calls-for-ban-on-distorting-credit-ratings.html
· 3 more Bank failures…. WSJ(6/26) Three Banks Close; Year's Total At 86
· French seamless tube maker Vallourec SA (VK.FR) is seeing a pickup in business in the U.S. and Brazil, said Philippe Crouzet, head of the company's board, in an advanced copy of Monday's edition of La Tribune. The company's activities in Asia are doing well, he added. The fall of the euro compared to the dollar has been good for the company DJ
· U.S. judge dismisses SEC case over CDS Reuters
o A U.S. judge on Friday dismissed U.S. market regulators' first enforcement effort involving alleged insider trading over credit default swaps.
o The U.S. Securities and Exchange Commission had sued Deutsche Bank bond salesman Jon-Paul Rorech, 39, and former Millennium Partners hedge fund portfolio manager Renato Negrin,46, in 2009.
o http://www.reuters.com/article/idUSN2520091020100625?rpc=6
· Aerospace: New White House Space Policy Seeks More International Ventures
o WSJ: US Space Posture Makes Foreign Cooperation Possible On Some Military Projects
· Bucyrus International (BUCY) said it may lose a $310 million order for mining machinery from a subsidiary of Reliance Power Ltd. (532939.BY) of India because of a decision by the U.S. Export-Import Bank against providing loan guarantees for the project.
· Iran
o CIA Director Says Iran Has Enough Fissile Material For 2 Atomic Bombs
§ in the Obama administration's starkest assessment to date of Tehran's nuclear work. WSJ
o US, Israel Warships in Suez May Be Prelude to Faceoff with Iran
§ Egypt allowed at least one Israeli and 11 American warships to pass through the Suez Canal as an Iranian flotilla approaches Gaza. Egypt closed the canal to protect the ships with thousands of soldiers
§ http://www.israelnationalnews.com/News/News.aspx/138164
o Medvedev: CIA Warning On Iran's Uranium 'Troubling' (AFP)--Russian President Dmitry Medvedev said Sunday that a CIA warning that Iran has enough uranium to build two atomic bombs was "worrying," and he criticized Tehran's secrecy over its nuclear program.
o French energy group Total has halted gasoline sales to Iran, the Financial Times reported
· Israel-US Relations Suffering "Tectonic Rift" – AFP
o Israeli-U.S. relations have undergone a huge shift amounting to what Israel's ambassador to Washington has termed "a genuine tectonic rift," media reports said Sunday. Briefing officials at the foreign ministry last week, ambassador Michael Oren described the state of ties between Israel and its closest ally as worse than a crisis, something akin to that of two continents drifting apart.
· Iran Claims Egypt Barring Gaza Aid Ship From Suez Canal – AFP
· North Korea Attacks U.S. Arms Build-up, Threatens Nuclear Boost
o Bloomberg) -- North Korea accused the U.S. of introducing heavy weapons to an area close to the border in what it said was a “premeditated provocation” that would prompt countermeasures,
· Economics:
o May Chicago Fed National Activity Index, Personal Income & Spending at 08:30 ET
o Jun Dallas Fed Manufacturing Activity at 10:30 ET
· Earnings:
o Reporting after the close: MU
· Worldwide Economic highlights for the week:
o The end of June confidence indicators and PMI's start to come out this week
o confidence indicators: U.S. consumer confidence, New Zealand business confidence, EU economic confidence, U.K. consumer confidence, and the Bloomberg financial conditions index.
o PMI’s: there's the closely watched ISM manufacturing PMI in the U.S., and the CFLP and HSBC PMI's in China, there's also Japan's Tankan survey, and U.K. and EU PMIs.
o On the employment front there's the nonfarm payrolls update from the U.S. (as well as an update on the housing market with the S&P Case Shiller index due out), and official unemployment rates from the EU and Japan. - Seeking alpha
· Republicans are keeping the option of a filibuster on the table as Elena Kagan's Supreme Court confirmation hearings get underway this week. WSJ
· Ex-AIG Chief, Goldman Execs Slated For Crisis Hearing Wednesday
o will appear as witnesses Wednesday before a bipartisan commission investigating the financial crisis
o Chief Executive Martin J. Sullivan and Joseph J. Cassano will be present at a session of the Financial Crisis Inquiry Commission examining AIG and derivatives on Wednesday. They will appear with AIG Chief Risk Officer Robert E. Lewis.
o Two executives of Goldman Sachs (GS) are also slated to appear.Chief Operating Officer Gary D. Cohn will be present at a different session Wednesday, this one examining Goldman and derivatives. Chief Financial Officer David Viniar will be at a session Thursday looking at both AIG and Goldman.
§ UPS, FDX ruling this week??
§ UPS, FedEx worlds apart on labor law from POLITICO
o A brutal labor law battle between the companies could be headed for a showdown this week
o could be headed for a showdown this week as Congress faces a deadline to make a move in the bitter, long-running dispute
· Home Depot (HD) executives meet with Wall Street analysts on Wednesday in New York and could offer the latest indication on the strength of consumer spending following disappointing reports on economic growth and weak new-home sales. WSJ
· British Airways Gains Breathing Space As Strike Ballot Is Postponed (Dow Jones)--The union representing cabin crew at British Airways PLC (BAY.LN) Sunday said it would postpone a ballot on further strike action to consider a new offer from the airline, but union leaders warned BA could still face industrial action starting mid-August.
· FT Deutschland reported that the German Bundesbank and financial regulator BaFin are set to meet German banks on Jun 30th to discuss results of stress tests
· Australia PM Gillard To Offer Miners Deal This Week
o The Australian government under new prime minister Julia Gillard plans to announce changes to the proposed resource super profits tax this week, according to a report Monday in the Sydney Morning Herald
o The paper says the government will seek to quickly tackle problems that had led to a dramatic decline in the government's standing in opinion polls leading up to Kevin Rudd's replacement as prime minister last week, including the contentious mining tax, as well as immigration and climate change issues.
· Real Estate: Manhattan Major brokerage firms are scheduled to release quarterly market reports on price trends next week.
· Greece is readying a return to the financial markets July, hoping to raise about EUR4 billion, The Financial Times
o Greece plans to "roll over three-, six- and 12-month treasury bills maturing in July,"
o http://www.ft.com/cms/s/0/e634e7f2-8210-11df-938f-00144feabdc0.html
· Japan's Upper House election on July 11 started Thursday. This is the first nationwide election since the ruling DPJ took power September, ousting nearly 50 years of uninterrupted rule by its rival, the Liberal Democratic Party of Japan. WSJ
· Banks…trigger in July??
o Regulators reject reports that some Basel III rules were shelved
o The Basel Committee on Banking Supervision acknowledged that reform to the Basel II framework, known as Basel III, will need to be reshaped but said no decision will be made until its meeting in July. Reports indicated that the panel had agreed to scrap parts of Basel III, specifically a proposal for a net stable funding ratio, but insiders said that is not true. Risk.net/Risk magazine (25 Jun.)
· G20 special wrap
§ The markets were reflecting some concern about the divergence of views in the G-20 on the need to deal with fiscal imbalances, WSJ
§ G-20 communique Sunday showed the group's focus was firmly on containing budgets and debt levels, while pledging to stick to the 2012 timetable to implement tougher capital and liquidity standards for banks, with standards converging after initial variation. But they appeared to give up on efforts to agree on a coordinated global bank tax, saying countries should be free to examine "a range of policy approaches." WSJ
§ G-20 backs away from stimulus, presses for deficit reduction
1. The Group of 20 nations gently nudged aside U.S. President Barack Obama's call for continued global economic stimulus and threw its weight behind a firm target for nations to sharply reduce their budget deficit. In its final communique, the G-20 committed to cut budget deficits in half by 2013. The focus on austerity rather than stimulus represented a big policy win for European leaders and Canadian Prime Minister Stephen Harper. Financial Post (Canada) (27 Jun.) , The Hill (27 Jun.) , The Globe and Mail (Toronto) (27 Jun.)
§ Peer review of national budgets is adopted by G-20
1. In a move to bring transparency and credibility to the way nations make tax and spending decisions, the Group of 20 adopted a system for peer review of domestic economic programs. With technical assistance from the International Monetary Fund, G-20 members will evaluate one another's budget to determine whether their fellow members are doing enough to implement the group's policies. The Globe and Mail (Toronto) (28 Jun.)
o China's Hu: World Recovery Nascent; Caution Needed On Stimulus Exit
o China's Hu: Need To Reduce Dependence On Rating Agencies
o Merkel: G-8 Consensus Says Time For Stimulus Is Past .."There are perhaps different opinions on the speeds, but Germany has decided on a course that I consider reasonable," she added.
o Merkel: G-20 Won't Back Bank Levy Or Transaction Tax
o Sarkozy:G-20 Didn't Agree On Specific Deficit-Reduction Targets
o Sarkozy: France Felt 'Isolated' On Financial-Transaction Tax Proposal
o UK Cameron: UK Recovery Depends On International Coordination
o WSJ says G20 may be good for EUR short term, but help dollar long term…some of the language that was likely to be inserted into the leaders' closing statement hints at longer-term benefits for the U.S. dollar. It acknowledges that countries with different priorities will move toward those 2013 and 2016 targets at a different pace, with an aim of preserving global growth prospects. European countries are expected to be more aggressive in reining in budget deficits than will North American countries.
o G-20 Nations Give Up Push For Globally Agreed Bank Tax - DJ
§ Leaders from the Group of 20 largest nations on Sunday appeared to give up on efforts to agree on a coordinated global bank tax, saying countries should be free to examine "a range of policy approaches."
o FSB Urges G-20 To Back Stricter Bank Capital Rules (DJ): The Financial Stability Board on Sunday urged leaders of the world's 20 largest developed and emerging nations to support the introduction of stricter capital rules to help banks withstand possible future crises. The statement, made in a letter to the Group of 20, comes amid a tussle involving governments, banks and regulators on the scope of the new rules and the timing of their implementation.
o IMF's Strauss-Kahn was once again somewhat critical of the G20 resolution, calling the plan of halving budget deficits as "oversimplifying the problem". Instead, IMF chief pushed for a more aggressive reduction of budget deficits in a coordinated manner reflecting country-specific needs - TTN
o Obama at G20 (DJ, WSJ, FT etc…)
§ says to Spend, spend spend…
§ White House: G-20 Agrees To Carry Out Existing Stimulus Plans
§ White House: G-20 Agrees Banks To Help Pay For Bailouts
§ White House: G-20 Plans To Reach Bank Capital Standards Deal By Seoul Summit
§ Strong, durable economic growth is the highest priority for the U.S., President Barack Obama said Sunday at the end of a summit of leaders from the Group of 20 largest economies.
§ While countries needed to assure skittish markets by planning credible deficit- and debt-reduction strategies, Obama warned they also needed to be careful not to harm a fragile global economic recovery by withdrawing stimulus spending all at once.
§ Obama also warned Sunday he would present the U.S. with "very difficult choices" next year in order to meet its commitment to slash budget deficits and public debt.
§ Obama said that while he welcomed China's recent vow to reform it's currency policy, he said the U.S. "would be watching closely in the months ahead."
§ Obama: Expect 'Significant' Yuan Revaluation From China
§ Obama Raises Pressure On 'Belligerent' North Korea - AFP
· Obama demanded on Sunday the U.N. condemn North Korea for its "unacceptable" and "belligerent behavior," and said China must stop turning a blind eye to its neighbor.
§ Reuters) - President Barack Obama on Sunday called for significant changes to the long-delayed Doha round of world trade talks, telling Group of 20 leaders that offers on the table were inadequate.
o Police Arrest More Than 600 In G-20 Protests – DJ
· G20 On banks
· IMF Proposes Two Separate Bank Taxes For G-20 Members
o The International Monetary Fund, as expected, proposed Sunday two separate bank levies as possible tools for Group of 20 countries to recoup the cost of future financial crises from the banking sector.
TODAY’S BIG STORIES
· Fed watch: RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve - telegraph
o As recovery starts to stall in the US and Europe with echoes of mid-1931, bond experts are once again dusting off a speech by Ben Bernanke given eight years ago as a freshman governor at the Federal Reserve.
· The Third Depression – Krugman in NYT
o We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
o http://www.nytimes.com/2010/06/28/opinion/28krugman.html
· Credit Markets: Fresh moves to unlock loan pool – FT
o The biggest European banks are seeking to revive the struggling wholesale finance market with a new kind of enhanced securitised product designed to attract lenders such as pension funds and hedge funds
o http://link.ft.com/r/0QSDPP/PRGNWJ/MFLZL/YHM5WI/OJPDDO/VU/h
· Credit Markets: Bond Distress Rises as Default Forecasts Vary – BBG
o The percentage of corporate bonds considered in distress is at the highest in six months, a sign debt investors expect the economy to slow and defaults to rise
o The number of speculative-grade companies worldwide with yields at least 10 percentage points more than government bonds climbed to 399 this month, or 16.7 percent of the total, the highest share since December, according to Bank of America Merrill Lynch index data. The ratio compares with 9.2 percent on April 30, which was the lowest since November 2007
· Credit Markets: Oil Giants Drill Into Debt Markets - WSJ
o Oil giants are tapping the debt markets, agreeing to pay higher interest rates now in case their borrowing costs go up even more
o Oil companies are facing two pressures: Many need to refinance debt before it comes due this year, and they are concerned that they may get entangled in any legislative or market fallout from BP PLC's oil spill in the Gulf of Mexico
o A unit of Royal Dutch Shell PLC, Total Capital, the finance arm of French oil titan Total SA, and Petroleos de Venezuela SA's Citgo Petroleum Corp. all have raised money from the sale of debt securities in recent days.
o expects more oil companies to market bonds in coming weeks.
· Credit Markets: Volume of European bond sales sees 29% decline
o In Europe, the volume of bonds sold dropped from $1.69 trillion in the first six months of 2009 to $1.2 trillion in the first half of this year because of the sovereign-debt crisis. "The first half of 2010 will be a fraction of what it was in the first half of 2009, but with stable markets it's certainly possible that the second half of 2010 could match the second half of 2009," said Wayne Hiley, head of European corporate syndicate at Barclays Capital. The Wall Street Journal (28 Jun.)
· Jobs: Long-term unemployed Americans give firms cheap, eager workers
o Employers in the U.S. are getting highly productive workers for less than they once paid marginal employees, opening the door to increased efficiency and profit, experts said. Wage pressure has disappeared from the labor market largely because 6.8 million Americans have been jobless for 27 weeks or longer. They account for a record 46% of all unemployment. Bloomberg Businessweek (28 Jun.)
· US states:
o Muni Bonds: Don't Hit the Panic Button Yet – WSJ link
o Municipalities and states are scheduled to sell $6.3 billion this week, with taxable Build America securities comprising $1.8 billion of the issues - BBG
o US state budget crises threaten social fabric Financial Times
§ Crushed by the recession and falling tax revenues, the small southern California city of Maywood is disbanding its police force and firing all public sector employees
§ http://www.ft.com/cms/s/0/403eb4de-8212-11df-938f-00144feabdc0.html?ftcamp=rss
o NY: New York’s Paterson Threatens to Veto Lawmakers’ Spending Bills
§ New York Governor David Paterson said he will veto parts of spending bills proposed by leaders of the Legislature if they don’t add a plan to cope with a possible $1 billion loss of federal funding for Medicaid health carePaterson’s threat came after lawmakers obeyed his call for a special session last night, then adjourned in less than five minutes without voting or debating any bills to close the state’s $9.2 billion deficit. The legislators’ spending plan, which they plan to vote on today, assumes full federal funding of Medicaid.
o Bloomberg) -- Illinois plans to add $900 million in Build America Bonds as soon as this week to the $755 million in securities it has sold in June as the cost of insuring the state’s debt against default reached a record high.
· Will Earnings Surprise The Bears? WSJ(6/28) Abreast Of The Mkt:
o analysts expect total per-share earnings for companies in the S&P 500 to rise about 27% to $19.65 a share, up from $16 a share a year earlier. That is a much slower rate than the first quarter, when earnings leapt 55%
o investors are weighing companies' apparent confidence in their earnings forecasts against the market's recent weakness – a combination that some say could leave room for gains when companies begin announcing earnings in a couple of weeks.
o Standard & Poor's 500-stock index fell even further, declining 3.7% last week. The index is trading at less than 13 times expected earnings for the next 12 months, the lowest ratio this year and below the long-term average multiple of about 18.
o The number of companies that have said their earnings will be worse than expected is only slightly higher than companies that have said they are doing better than investors believe. The current ratio of negative to positive is 1.2, while the long-term average is 2.1, according to Thomson Reuters, meaning in a normal quarter, twice the number of companies deliver bad news than good.
· Less companies to trade… Where have all the companies gone? - WSJ
o The number of U.S. firms with publicly traded stock has dropped by half in the past decade. Ten years ago, around 9,100 companies filed annual proxy statements with the Securities and Exchange Commission.
o Last year, roughly 6,450 did; so far in 2010, only about 4,100 have, estimates Wharton Research Data Services.
o The Dow Jones U.S. Total Stock Market Index tracks 4,136 stocks, down from 4,599 just a year-and-a-half ago and 5,000 at the end of 2005
o Companies take their shares off the market for many reasons: through mergers and takeovers, by going private, by going bankrupt. And the shrinking number of stocks isn't necessarily bad.
· Dividends Are Back - WSJ
o This year through mid-June, there were at least 135 dividend increases or initiations among the companies in the Standard & Poor's 500-stock index, up roughly 55% from the first six months of last year
o And the gains are coming across a broad swath of industries
· US businesses intend to hang on to cash Financial Times
o Most US companies do not expect to spend any of their cash in spite of holding a record amount on their balance sheets, according to a new survey
o found that 80 per cent of groups expected their cash holdings to expand or stay the same over the next six months, contrary to expectations that cash could soon be used to fuel a further growth economic spurt
o http://www.ft.com/cms/s/0/56e5f858-8228-11df-938f-00144feabdc0.html?ftcamp=rss
· IMF: Greece's austerity program is working, and debt will decline
o Greece is on its way to overcoming the sovereign-debt crisis and ultimately will succeed, said Poul Thomsen, head of the International Monetary Fund mission that is helping the country. "The effort has begun vigorously and I firmly believe that Greece will succeed," he told Greek newspaper To Vima. Google/Agence France-Presse (27 Jun.)
· Social safety net begins to disappear across Europe
o Throughout Europe, public-sector employees accepted what they knew would be a low initial salary and high taxes, with the understanding that they would get job security, a generous pension and benefits such as a subsidized mortgage. However, those benefits are being taken away, and pay cuts are on the horizon. In Spain, which has the highest unemployment in Europe, the political fallout could be explosive, according to The New York Times. The New York Times (free registration) (27 Jun.)
· China debt problem? So tell us Mr Chinese official, do you have a debt problem? from FT Alphaville
o China-watchers will be familiar with LGIVs (or, LGFVs) — they are the financial vehicles through which China’s local governments borrow from banks to fund their stimulus/infrastructure projects. And they’ve been a source of China concern for a while now, the worry being that Chinese banks will be left on the hook for these off-balance sheet vehicles if local governments can’t pay up.
o http://ftalphaville.ft.com/blog/2010/06/28/272316/so-tell-us-mr-chinese-official-do-you-have-a-debt-problem/
· China bullish on US?? Chinese Funds Venture Into US - WSJ
o Chinese investment funds are tiptoeing into the U.S. stock market, raising their holdings of U.S. companies as they seek diversification from their volatile home market and see better prospects in the U.S. than elsewhere in the world
o Securities filings show that Chinese funds that cater to individual investors have been allocating a larger share of their investments to the U.S. market in recent months. New entrants are also rolling out U.S.-focused investment products.
· Commodities: UN Cautions On Too Much Regulation - WSJ(6/28)
o As U.S. lawmakers were fine-tuning their financial-regulatory overhaul, the United Nations cautioned against onerous restrictions on speculative investors in commodities markets
o Though the surge in food prices globally two years ago "might have been amplified by speculators in organized futures markets," limiting or banning speculative trading -- undertaken with the goal of profiting from successful anticipation of price moves -- "might do more harm than good," the U.N.'s Food and Agriculture Organization said in a policy brief last week.
· Mutual fund returns go negative in second quarter – LAT link
o Diversified U.S. stock funds posted a average return of negative 7%, according to fund tracker Lipper Inc. The figures reflect trading through Thursday, so they don't include the final four trading days of the quarter
· Private equity valuations diverge - FT
o Blackstone and TPG are providing their investors with dramatically different valuations for one of their biggest common holdings, Freescale Semiconductor, highlighting the latitude that private equity funds enjoy in preparing such estimates. In a first-quarter update for investors, dated June 11 and reviewed by the FT, the Blackstone valued its Freescale holding at 45 cents on the dollar. By contrast, the TPG V fund’s first-quarter update, dated May 28, estimated that its stake was worth 20 cents on the dollar.
· Ex-Amaranth Hedge Fund Chief Getting Back In The Game WSJ
o Nicholas Maounis, former head of Amaranth Advisors LLC, is trying. Four years after Amaranth collapsed on natural-gas trades gone bad, the 46-year-old Mr. Maounis is telling Wall Street financiers, former colleagues and potential investors that it is time to raise money again
· US broadband network to nearly double in next decade – NYT
o The Obama administration is seeking to nearly double the wireless communications spectrum available for commercial use over the next 10 years, an effort that could greatly enhance the ability of consumers to send and receive video and data with smartphones and other hand-held devices.
o President Obama will sign a presidential memorandum on Monday that aims to make available for auction some 500 megahertz of spectrum that is now controlled by the federal government and private companies
o http://www.nytimes.com/2010/06/28/technology/28broadband.html?ref=business&pagewanted=all
· Elena Kagan, wild card for big business – CNN link
o
Members of the Senate judiciary committee have plenty of ground to
cover at this week's confirmation hearing of U.S. Solicitor General Elena
Kagan. But when it comes to what big business should expect from President
Obama's pick to replace U.S. Supreme Court Justice John Paul Stevens, the
talking heads are united in their uncertainty: Who really knows what she'll do?
She's a wild card._files/image001.gif){kind=small}
· US/ South Korea: Obama said the U.S. will postpone a handover to Seoul of wartime control of South Korean forces to 2015 from 2012. He also vowed to lobby the U.S. Congress to ratify a free-trade agreement that the two countries signed three years ago but that has languished in the U.S. WSJ
· Global warming: Carbon Capture, Storage Faces Leak Dilemma – Study - AFP
o Dreams of halting global warming by storing carbon emissions from power plants could be undermined by the risk of leakage, according to a study published Sunday
o Rich countries have earmarked tens of billions of dollars of investment in carbon capture and storage, a technology that is still at an experimental stage
o Under CCS, carbon dioxide would be captured at source from power plants that are big burners of oil, gas and coal.
· Afghanistan AFP)--U.S. General Stanley McChrystal issued a highly critical assessment of the war in Afghanistan just days before he was sacked by President Barack Obama, a U.K. newspaper reported Sunday.
· Afghanistan Afghans bring in PwC to help develop $3T mineral reserves -- London Independent
· Afghanistan: Karzai aides are derailing corruption cases involving elite, U.S. officials say
· washingtonpost.com: http://link.email.washingtonpost.com/r/8VXTM7/BZRKQ/KFT64P/6ETT3L/6Y2S1/36/t
· Afghanista UK Army Chief Says It Is Time To Talk With Taliban (AFP)--The U.K.'s army chief said Sunday that talks with the Taliban should begin "pretty soon" as part of the exit strategy for international forces in Afghanistan, adding that this was his "private view."
· Ship with Chinese crew hijacked in Gulf of Aden (PTI) -- A Singaporean ship with 19 Chinese crew aboard was hijacked today by pirates in the Gulf of Aden, the China Marine Rescue Centre said.
COMPANY NEWS WITH MACRO IMPLICATIONS
Changes in the latest IBD 100 List
http://www.investors.com/StockResearch/ScreenCenter/Default.aspx?start=ibd#
Energy
· BP/ oil stories:
o BP up 4% updates on GoM oil spill; cost to date approx $2.65B
o BP'S HAYWARD MAY RESIGN TODAY, RUSSIAN DEPUTY PM SECHIN SAYS – BBG
o BP SAYS TONY HAYWARD STILL CEO, NO PLANS TO RESIGN
o Delays feared as BP relief bore nears well – FT
§ a review of similar efforts in shallower waters and the opinion of geologists and petroleum engineers point to a discomforting possibility: the relief well might not work on the first try, leaving open the risk of delays
§ http://www.ft.com/cms/s/0/a20fb29a-8202-11df-938f-00144feabdc0.html
o Obama, Cameron say US, UK will both benefit if BP "remains a strong and stable company" – Telegraph
o BP may stem flow of oil by next month - London Times
§ First of two relief wells is close to puncturing the ruptured Macondo well, raising hopes that the oil giant is on the way to ending the Deepwater Horizon crisis in the Gulf of Mexico
§ http://www.thetimes.co.uk/tto/news/
o 'Significant' Oil Hits Mississippi Shores – Officials (DJ)
o Alex Weakens To Tropical Depression, Strengthening Seen –NHC
o Adm. Allen: storm related Evacuation Would Halt Spill Containment For 14 Days
o OPEC Secretary General:No Production Change Before Oct Meeting… Curent Oil Prices 'Comfortable'
o OPEC Secretary General: Sees No Short-Term Price Impact From BP Accident
§ OPEC Secretary General Says BP Too Big To Fail After Accident – DJ
o Adm. Allen: BP Should Reach 53,000 Bbls/Day Oil Recovery This Week
o BP Well Estimated To Be Leaking 35,000-60,000 Barrels A Day - DJ
o Anadarko, BP Bonds Tumble On Concerns Over Oil Spill's Cost Friday… BP bond yields soared to all-time highs
o BP Loses Trading-Floor Swagger in Energy Markets
§ the trading unit’s prospects are uncertain, and the resources the unit once took for granted are threatened
§ unit was as much as a fifth of the company’s total profits
§ http://www.nytimes.com/2010/06/28/business/global/28bptrade.html?ref=business
o RIG BP has given notice it intends to claim GBP470 million against rig owner Transocean (RIG) insurance policy for its part in the Deepwater Horizon rig disaster, the Mail on Sunday
o US States Weigh Large Claims Against BP WSJ
§ Gulf Coast states are gearing up to follow shrimpers and hotel owners in seeking payouts from BP PLC (BP, BP.LN) for lost revenue and other damages stemming from the Gulf of Mexico oil spill. The demands could far exceed the $305 million BP has already given the states of Louisiana, Mississippi, Alabama and Florida Chinese/ US treasury’s
§ BP moved to bolster its cash and available credit, adding $5 billion to its oil-spill war chest as concerns grew about the escalating costs of the Gulf disaster. WSJ
o Boycott BP? That's easier said than done – LAT link
· Oil Giants Drill Into Debt Markets - WSJ
o Oil giants are tapping the debt markets, agreeing to pay higher interest rates now in case their borrowing costs go up even more
o Oil companies are facing two pressures: Many need to refinance debt before it comes due this year, and they are concerned that they may get entangled in any legislative or market fallout from BP PLC's oil spill in the Gulf of Mexico
o A unit of Royal Dutch Shell PLC, Total Capital, the finance arm of French oil titan Total SA, and Petroleos de Venezuela SA's Citgo Petroleum Corp. all have raised money from the sale of debt securities in recent days.
o expects more oil companies to market bonds in coming weeks.
· Shell CEO: Energy Needs To Drive Future Deep-Water Drilling (AFP)--More deep-water drilling is needed to meet growing energy demands despite the Gulf of Mexico spill, but the industry must improve its disaster readiness, Royal Dutch Shell PLC (RDSA) chief executive said Sunday.
o COG Cabot Oil & Gas announces successful start-up of its Lathrop Compressor Station
·
· Dow Jones)--Iran's negotiations to finalize an oil-fields deal with Russia's OAO Gazprom Neft (SIBN.RS) are in final stages, a top Iran government official said Friday.
· Dow Jones)--Iran is leaving the door open to Royal Dutch Shell PLC (RDSA, RDSB, RDSA.LN, RDSB.LN) to participate in a giant gas project but Repsol YPF (REP, REP.MC) has completely pulled out, a top Iran government official said Friday.
· Tropical Storm Alex Not Aimed at Spill Area- WSJ
o http://online.wsj.com/article/SB10001424052748704212804575332082828101578.html
· Total halts petroleum sales to Iran – FT
o http://www.ft.com/cms/s/0/9a90e994-8207-11df-938f-00144feabdc0.html
· Repsol upgraded to buy from neutral at Bank of America Merrill Lynch
· Gazprom to sell Novatek's gas from Yamal for 1% fee – Kommersant
o http://www.kommersant.ru/doc.aspx?DocsID=1394418
· WSJ likes chances for Enel Green Power
o "Heard on the Street" column says that while other renewable-energy shares have been hit due to regulatory risk -- Iberdrola Renovables (IBR.SM), EDF Energies Nouvelles (EEN.FP), and EDP Renovaveis (EDPR.PL) all get mentioned
· TGS Nopec says start date for previously announced new CFO is 1-July 2010
· Premier Oil provided a drilling update for Catcher East Oil discovery
· StatoilHydro signs 3-year drilling rig contract for Stena Don with Stena Drilling worth a total of $437M- PR
INDUSTRIALS/ HOMEBUILDERS
· Seimens pos BBG article on biz trends
· BAE Systems PLC (BA.LN) is planning to cut hundreds of jobs at its U.K. vehicles business, the Sunday Telegraph
· Air China to Buy 20 Boeing Planes for $1.4 Billion – CNBC link
· JEC announced that its subsidiary, Jacobs France SAS, received an unfavorable judgment relating to a waste incineration plant project in France
· KBH KB Home says SEC is investigating its joint ventures and accounting practices – WSJ
· ESLT Elbit Systems shortly to take over Mikal for $100-$150M – Globes
o http://www.globes.co.il/serveen/globes/docview.asp?did=1000569937&fid=1725
· BUCY Bucyrus concerned it might lose $310M order from Reliance Power – WSJ
o http://online.wsj.com/article/SB10001424052748703485304575330834140222818.html
· BAE Systems to cut "hundreds" of jobs in UK vehicles business in next few weeks - Sunday Telegraph
· BA Air China (753.HK) to buy 20 737-800s from Boeing for $1.40B
· Dubai to renegociate its plane orders to Airbus and BA Boeing- Les echos
· URS Corp (URS) makes recommended cash offer of 210 pence per share for Scott Wilson Group
· Fomento de Construcciones y Contratas to sell underground parking structures for more than €100M - Diario Negocio
o http://www.diarionegocio.es/
· Taylor Wimpey expects to complete around 4,650 homes in H1 (said in a trading update)- PR
· Tomkins may rebrand itself as Gates - London Times
o http://www.thetimes.co.uk/tto/business/industries/engineering/article2576767.ece
· Cobham awarded a $17.4M contract from RTN Raytheon Missile Systems
· BWA Barron's says BorgWarner is an excellent way to invest in the demand for fuel efficiency
o http://online.barrons.com/article/SB50001424052970203296004575324713837290990.html
· DSM to announce bioconversion breakthrough this week – FT
o http://www.ft.com/cms/s/0/bd6866b2-8212-11df-938f-00144feabdc0.html
TRANSPORTS
§ Travel industry gets its act together
o from POLITICO Top Stories
o But experts say the cloud hanging over the travel industry is showing signs of lifting — because of, in part, a helping hand from Congress.
o The industry got a lift in March from Washington when President Barack Obama signed the Travel Promotion Act, which formed a national tourism board, among other things
o Read more: http://www.politico.com/news/stories/0610/39075.html#ixzz0s8kLcIsc
§ UPS, FedEx worlds apart on labor law from POLITICO
o A brutal labor law battle between the companies could be headed for a showdown this week
o could be headed for a showdown this week as Congress faces a deadline to make a move in the bitter, long-running dispute
o Read more: http://www.politico.com/news/stories/0610/39079.html#ixzz0s8kXLsfe
§ Will China Sink the Dry Bulk Shippers?: China Watch from TheStreet.com
o TheStreet.com Analyst Peter Navarro breaks down the dry bulk shipping industry and why China has such a big influence on the stock prices of dry bulk shippers.
§ FRENCH AIRPORT FUEL SUPPLY UNIONS CALL FOR STRIKE FROM JULY 2 - BBG
· PCAR PACCAR Renews Bank Credit Agreements
· Lufthansa confirms outlook sees 2010 operating profit up year-over-year
· WSJ: Federal Judge Upholds Airline-Unionizing Rule Change
o A U.S. federal judge in Washington, D.C., Friday upheld a federal agency's rule change that would allow a union to be created by a majority of worker votes cast, instead of a majority of the entire work group casting ballots in favor of collective bargaining. The rule goes into effect July 1.
· Lufthansa confirms outlook sees 2010 operating profit up year-over-year- DJ
· Transport Secretary Philip Hammond says domestic flights in UK will be replaced by high-speed rail – FT
o http://www.nytimes.com/2010/06/28/us/politics/28senator.html?scp=2&sq=byrd&st=Search
· Hamburger Hafen und Logistik upgraded to neutral from underperform at Macquarie Research
· European Commission to determine who owns landing rights at airports - London Times
o http://www.thetimes.co.uk/tto/business/industries/transport/article2576938.ece
· British Airways makes revised offer to cabin crew union -- London Independent
o http://news.bbc.co.uk/2/hi/business/10089341.stm
· Union offers to postpone British Airways strike ballot – BBC
o http://news.bbc.co.uk/2/hi/business/10089341.stm
TECH/MEDIA/TELECOM
· advertising good news: Publicis , WPP tell Cannes Lions advertising festival that advertising market is getting better – FT
o WPP’s Sir Martin Sorrell and Maurice Levy of Publicis both said that the advertising market was improving, although they disagreed over when spending would return to the 2008 high
o “I think clients are being cautious in their thinking about the future. To date, their businesses are doing well.” Sorrell sd
o http://www.ft.com/cms/s/0/72400c3a-8208-11df-938f-00144feabdc0.html
o Infineon trading higher on reports Sistema wants 29% stake- SA
o US broadband network to nearly double in next decade – NYT
§ http://www.nytimes.com/2010/06/28/technology/28broadband.html?ref=business&pagewanted=all
o RCOM all set to sell tower business to GTL Infra for $6 bn- Economic Times
o DISCA, DISCK: Barron’s says Discovery Communications (DISCA) still offers a good value with 10%-30% upside still possible while the C shares (DISCK) an an exceptional value.
o WPO Bids for Newsweek are due in at Allen & Co. by 5 p.m. on Thursday– NYPOST
o LGF Icahn critical of possible Lions Gate, MGM merger- reuters
o PALM, HPQ: Shareholders Approve Deal With Hewlett-Packard- DJ
o CMCSA/NBC Bloomberg says Comcast should have to sell CNBC- Philadelphia Inquirer
o China Mobile Interested in Investing in Africa, Chairman Says- Bloomberg
o Telefónica-Portugal Telecom bid battle goes to the wire- FT
o Le Monde: France Tel drops out of Le Monde's race- Reuters
o Le Monde staff vote in favor of a takeover- FT
o ATML Atmel to sell Smart Card business to INSIDE Contactless- PR
o AAPL: IPhone 4 Components Cost About $188- ISuppli
o AAPL, DT: Deutsche Telekom may lose role as sole German iPhone carrier- DJ
o AAPL: iPhone 4; more than a quarter of users think video calling is a gimmick
o AMZN: adds video and audio to Kindle reader app- telegraph
o Advertising good news: Publicis , WPP tell Cannes Lions advertising festival that advertising market is getting better – FT
§ http://www.ft.com/cms/s/0/72400c3a-8208-11df-938f-00144feabdc0.html
o DIS, TWC: Disney Takes Aim At TWC's Retransmission-Consent Analysis At The FCC- MultiChannel
o GOOG: Gmail to harness HTML5- Macworld
§ http://www.macworld.com/article/152344/2010/06/html5_gmail.html?lsrc=rss_main
o OVTI, CRUS, ARMH: CNBC is positive on AAPL derivative plays. ARMH, CRUS, and OVTI are a few mentioned.
§ http://www.cnbc.com/id/37924203?__source=RSS*blog*&par=RSS
o VZ, MSFT: Verizon already cutting Kin prices in half- electronista.comelectronista.com
o TFT-LCD panels: demand to remain strong until mid-October- Digitimes
o Foxconn looking to partner with Changhong for 8.5G LCD plant in China- Digitimes
o Samsung Galaxy S picked up by US Cellular: Epic 4G goes to S Sprint, vibrant coming to T-Mobile, and the Fascinate comes to VZ Verizon- IntoMobile- Reuters
Miners/ steel sectors etc
· Australia PM Gillard To Offer Miners Deal This Week
o The Australian government under new prime minister Julia Gillard plans to announce changes to the proposed resource super profits tax this week, according to a report Monday in the Sydney Morning Herald
o The paper says the government will seek to quickly tackle problems that had led to a dramatic decline in the government's standing in opinion polls leading up to Kevin Rudd's replacement as prime minister last week, including the contentious mining tax, as well as immigration and climate change issues.
· Baosteel aims to lift capacity
o from Business Spectator
o Chinese steel giant aims to reclaim top local producer status
· Baosteel Group Corp., China’s second-biggest steelmaker, scaled back its 2012 capacity target by 38 percent amid calls by the government to curb overcapacity and focus on improving quality. BBG
· M&A, protectionism?: Chinese gold producer Zijin ended its offer to buy Australia's Indophil because government approval for the deal in China was taking too long. WSJ
· IOH, Rio Tinto sales deal in jeopardy - from Business Spectator
o Rio Tinto says junior miner has failed to meet its deal obligations
· Lihir Gold to de-list from Toronto
o Vallar hopes to raise £750M from listing in London - London Times
o http://www.thetimes.co.uk/tto/business/industries/naturalresources/article2575307.ece
o Afghans bring in PwC to help develop $3T mineral reserves -- London Independent
o http://www.independent.co.uk/news/business/news/afghans-draft-in-pwc-to-open-up-3trn-mineral-reserves-2011325.html
o Tata CEO Kirby Adams to quit Corus -- London Times
o http://www.thesundaytimes.co.uk/sto/business/Industry/article329019.ece
o CLF Cliffs Natural Resources raises offer for Spider Resources to C$0.19/share in cash
o LDSH Ladish Company files 2.5M share common stock shelf
Autos sector:
· EU Autos up helped by Peugeots sales tgts (per BBG
· Ford May Signal Weakness Funding Retiree Health Care With Stock – BBG
o Ford Motor Co. may make part of its required $859 million payment to a union health-care fund this week in stock, a sign of potential weakness in the shares as the U.S. auto sales recovery stalls, analysts said
o Ford must pay the United Auto Workers Retiree Medical Benefits Trust by June 30 to fund benefits for former hourly workers. Ford has the option to pay as much as $610 million in stock under an agreement reached with the union last year, and the second-largest U.S. automaker may choose shares in order to conserve cash
· Nissan Motor May global vehicle output +42% y/y to 309,287 units
· Toyota Motor May worldwide vehicle output +28% y/y to 568,004 vehicles
· Honda Motor May global vehicle output +43% y/y to 278,543 vehicles
· PIRELLI CHAIRMAN COFNRIMS 2010 TARGETS IN LES ECHOS INTERVIEW - BBG
Financials:
· G-20 Calls for Higher Bank Capital to Avert Financial Crisis
o The Group of 20 countries said banks need “significantly higher” capital to avert another financial crisis, while granting member nations more flexibility to meet the new requirements.
· Banks caution – WSJ: Don't Bank on Lenders Just Yet
o Their ascent will face challenges, though. First, there still is an earnings impact from the financial-overhaul bill. Prior to Friday's final version, Citigroup analyst Keith Horowitz estimated the bill could reduce normalized earnings at Goldman Sachs Group by 23% and by 18% at J.P. Morgan Chase.
o http://online.wsj.com/article/SB20001424052748704569204575329321231014834.html#mod=todays_us_money_and_investing
· Three US Banks Close; Year's Total At 86
· EU banks: More banks to face stress tests
o The number of European banks subjected to stress tests is likely to rise, with sources suggesting that as many as 100 institutions will be involved in a broader exercise to shore up market confidence.
o European Union leaders have already agreed to publish stress test results for 26 banks next month – mainly big, cross-border institutions – to address concerns about the eurozone’s exposure to sovereign debt
o http://www.ft.com/cms/s/0/7a844f9e-821e-11df-938f-00144feabdc0.html
· EU banks: Quantifying the ECB overdraft
o Among euro area banks, Spanish, Irish and some Italian banks have retained the most ABS and covered bonds since 2007.
o instead of just a regional breakdown (which we’ve seen ad nauseum) we get a bank-by-bank estimate for who’s tapping European Central Bank, or Bank of England, largesse.
o So far, so expected. But with the ECB’s 12-month Long-Term Refinancing Operation (LTRO) set to expire on July 1, attention has turned to just how reliant these financials are on central bank funding
o http://ftalphaville.ft.com/blog/2010/06/28/272161/quantifying-the-ecb-overdraft/
· Finance reform bill – multiple articles over the weekend, most say banks dodged a bullet – but the uncertainty over the final language keeps them guessing
o An element of doubt about the legislation’s passage emerged on Sunday when the office of Robert Byrd, the 92-year-old Democratic senator from West Virginia, said he was seriously ill. Scott Brown, the Republican from Massachusetts who had supported the measure, signalled his reservations about the proposed $19bn bank levy. “I’ve said repeatedly that I cannot support any bill that raises tax,” he said. FT
o Banks appeared to have dodged some of the harshest provisions of previous versions of U.S. legislation overhauling financial rules. WSJ
§ "There is no way to view this bill as a positive for the financial sector. Yet it could be much worse,"
o US banks face more sweeping overhaul – per FT
§ could face a more draconian overhaul than they expect, according to people involved with drafting financial reform legislation.
§ There’s no doubt that the legislation that is on its way towards enactment in Congress will require some of these firms in a range of ways to raise more capital, better quality capital
§ http://www.ft.com/cms/s/0/df0bb466-820f-11df-938f-00144feabdc0.html
o Byrd's Illness Could Delay Financial-Regulation Vote – DJ: Sen. Robert Byrd (D., W. Va), currently Congress's longest-serving member, has been hospitalized in "serious" condition, diminishing the chances of the Senate putting the financial-overhaul bill to a vote this week.
§ If Byrd isn't present to vote this week, that means Democrats would only have 56 of the 60 votes needed to invoke cloture on the bill
o Scott brown waffles..could derail fin reform?
§ Mr. Brown on Friday said he was concerned about a bank assessment Democrats added to the bill last week, and his vote was now considered more uncertain. WSJ
o Democrats are hoping to have the financial-overhaul package up for a vote in the House of Representatives on Tuesday and possibly up for a vote in the
o Senate as soon as Thursday
o If the measure passes both chambers, President Barack Obama could sign it into law before July 4. If the measure isn't passed by then, it likely won't see votes until at least mid-July. WSJ
o Obama: Bank Bill Is '90% Of What I Proposed' – DJ
o With Reform Battle Over, Obama Turns to Bank Tax
§ on Saturday urged Congress to take up his proposal for a $90 billion, 10-year tax on banks as the next step in reform.
§ Obama wants to slap a 0.15 percent tax on the liabilities of the biggest U.S. financial institutions to recoup the costs to taxpayers of the financial bailout.
§ http://www.cnbc.com/id/37943013
o Why Wall Street Will Love The 3% Solution in Reform Bill – CNBC
§ The new limits on proprietary trading and hedge fund investments may actually benefit big banks more than harm them—especially in the hedge funds they market to clients
§ http://www.cnbc.com/id/37921692
o On Finance Bill, Lobbying Shifts to Regulations
§ Well before Congress reached agreement on the details of its financial overhaul legislation, industry lobbyists and consumer advocates started preparing for the next battle: influencing the creation of several hundred new rules and regulations
§ notably short on specifics, giving regulators significant power to determine its impact — and giving partisans on both sides a second chance to influence the outcome.
§ http://www.nytimes.com/2010/06/27/business/27regulate.html?partner=rss&emc=rss
· Rating agencies: should be banned from rating complicated financial credit vehicles
o Peter Sands, the chief executive of Standard Chartered, in an article for The Sunday Telegraph
o Rating agencies should be banned from rating complicated financial credit vehicles if they are being paid to do so by the institution that has put together the structure, according to one of the world's most senior bankers.
o national leaders are in danger of imposing the wrong solutions to the banking crisis and threatening an economic downturn.
o http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7856535/Bank-chief-calls-for-ban-on-distorting-credit-ratings.html
· Banks…trigger in July??
o Regulators reject reports that some Basel III rules were shelved
o The Basel Committee on Banking Supervision acknowledged that reform to the Basel II framework, known as Basel III, will need to be reshaped but said no decision will be made until its meeting in July. Reports indicated that the panel had agreed to scrap parts of Basel III, specifically a proposal for a net stable funding ratio, but insiders said that is not true. Risk.net/Risk magazine (25 Jun.)
· CIT Prepays $1.25 Billion In Debt - WSJ link
· For Financial Companies, Some Reasons For Optimism - WSJ
o Activity in the U.K.'s financial-services sector rose at the fastest rate since September 2007 over the last three months, and companies are optimistic that business will pick up further in the months ahead, the Confederation of British Industry said Monday.
o The business group said the modest pickup in activity in the past three months had fallen short of expectations, and financial-services companies still considered levels of business to be well below normal.
· UK Banks: WSJ(6/28) Lenders Move Quickly To Blunt New Levy
o Just days after the U.K. announced a planned levy for its country's banks and urged other nations to follow suit, banks are marshalling their forces to lobby the government on ways to minimize the impact.
o London-based international banks with significant operations outside the U.K. are prepared to push back against which of their assets can count toward the levy, and analysts say banks could shift their activities to different jurisdictions in order to minimize the charge.
· G-20 aims to finish new banking regulations at November summit in Seoul – NYT
o http://www.nytimes.com/2010/06/28/business/global/28bank.html?ref=business
· Sen Robert Byrd (D-WV) dies - Charleston Gazette
o http://www.wvgazette.com/News/201006280099
· WSJ on Bank Bill: “Biggest Banks Dodge Some Bullets at the End”
o http://online.wsj.com/article/SB10001424052748704569204575329171439242664.html
· BBG on bank Bill: “Banks ‘Dodged a Bullet’ as Congress Dilutes Rules”
o http://www.businessweek.com/news/2010-06-25/banks-dodged-a-bullet-as-congress-dilutes-rules.html
· Bank Bill: Charlie Gasparino—there are still plenty of loopholes in it for bankers to exploit.
· Bank of Cyprus says will review capital base at forthcoming directors meeting
· National Bank of Greece says has no plans for capital increase- Reuters
· BK China Banking Regulatory Commission authorizes Bank of New York Mellon to set up branch in Beijing
· Credit Mutuel to acquire 5% stake in Banco Popular Espanol- DJ
· New law could subject US banks to "more sweeping overhaul" than they expect – FT
o http://www.ft.com/cms/s/0/df0bb466-820f-11df-938f-00144feabdc0.html
· Standard Chartered Shares opened down 1.6% after company guided H1 income flat y/y to $1.8B. Company noted income levels lower in May and June but expected a double-digit growth in H2
· Nomura Securities upgrades LLoyds; downgrades Barclays, and HSBC
· Sources say Committee of European Banking Supervisors stress tests could grow to be applied to 100 banks – FT
o http://www.ft.com/cms/s/0/7a844f9e-821e-11df-938f-00144feabdc0.html
· Planned boardroom shakeup at Prudential PLC could lead to departure of chairman -- London Times
o http://www.thesundaytimes.co.uk/sto/business/Finance/article328918.ece
· Prudential denies it plans to replace chairman Harvey McGrath – Telegraph
o http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7858000/Prudential-denies-succession-planning.html
· Dexia in talks to sell its 65% stake in Dexia Israel- Globes
· NYX Barron's is positive on how much more exposed to derivatives the NYSE Euronext is becoming
o http://online.barrons.com/article/SB50001424052970203296004575320882627122638.html
· Shareholders in Prudential PLC (PRU.LN) are expected to meet this week to assess sentiment towards the U.K. insurer's senior management, including the possibility of calling for the resignation of Chairman Harvey McGrath, The Independent on Sunday reports. McGrath and senior independent director James Ross have met with most of the company's largest shareholders.
· AIG Sen. Charles Grassley (R., Iowa) on Friday sent a letter to American International Group Inc. (AIG) asking for more information about an exit package the government-controlled insurance giant gave its former chief compliance and regulatory officer in late 2009.
Real Estate:
· KBH KB Home says SEC is investigating its joint ventures and accounting practices – WSJ
· KBH – WSJ mixed article … KB Home's Next Act
o http://online.wsj.com/article/SB10001424052748704569204575329314276895050.html?mod=WSJ_newsreel_markets
· Taylor Wimpey [TW.UK] opened up 1% after trading update where it reiterated that trading was in line with expectations
· MDC Standard & Poor's Ratings Services lifted its outlook on homebuilder M.D.C. Holdings Inc. (MDC), saying the for-sale housing market is stabilizing, although conditions are expected to remain choppy over the near term, followed by a slow recovery.
· Bank Bill: New Mortgage Rules' Impact Difficult To Tell – DJ
o New rules embedded in the financial-overhaul bill are set to transform the mortgage market by establishing minimum underwriting standards and requiring banks to retain some credit risk on the loans they sell or package
o But the impact on lenders and borrowers is difficult to gauge because so much depends on how regulators implement the legislation, industry experts said
o "Ask me that in two years. This legislation is really the skeleton," said Mortgage Bankers Association President and CEO John A. Courson. "Once the rules are done, then we have meat on the bones."
· Mortgages Face New Rules – WSJ link
o The financial-regulatory overhaul offers greater protections for consumers against riskier types of mortgages. But some warn the legislation also may lead to higher costs and fewer choices for consumers.
· WSJ(6/28) Race Is On To Grab Mortgage Tax Break
o Home buyers who signed contracts two months ago are racing to close sales ahead of Wednesday's deadline to claim a federal tax credit as banks and title companies deal with a crush of closings
o Congress last fall extended a tax credit, worth as much as $8,000, to buyers that signed contracts by April 30 and closed on transactions by June 30. The real-estate industry stepped up calls for an extension of the closing deadline in recent weeks amid concerns that some buyers might miss the deadline after a last-minute home-buying rush led to bottlenecks at banks, appraisal firms and title insurers
o But a Senate bill that included the extension failed to secure enough votes last week and has been shelved
o The National Association of Realtors said that as many as 180,000 contracts that were signed by April 30 might miss the June 30 closing deadline
· Apartment Sales Up In Manhattan WSJ(6/26)
o Sales of Manhattan apartments picked up during the second quarter, to the fastest pace since the summer of 2008, an illustration that the market has been recovering during the spring selling season, usually the busiest time of the year
o A Wall Street Journal review of closed-sales filings with New York City Department of Finance shows that during the second quarter, which ends June 30, sales were running 80% above the pace reported a year ago.
o Analysts said there has likely been a modest recovery in prices as well
o Real Estate: Manhattan Major brokerage firms are scheduled to release quarterly market reports on price trends next week.
Consumer sector:
· Restaurant Chains Target Manhattan WSJ(6/26)
o PNRA and others mentioned
· KFT Kraft Foods to sell Cadbury's E. Wedel business in Poland to Lotte Group
o
· YUM Taco Bell relaunching in UK - London Times
o http://www.thetimes.co.uk/tto/business/industries/leisure/article2576652.ece
· Barron’s is positive NYX
· Home Depot (HD) executives meet with Wall Street analysts on Wednesday in New York and could offer the latest indication on the strength of consumer spending following disappointing reports on economic growth and weak new-home sales. WSJ
· Beer..Brazil's Brito Aims To Revive Budweiser In The U.S. - WSJ
o Over two decades, Carlos Brito helped transform a Brazilian beer maker into a giant that swallowed America's dominant brewer.
o Now, the chief executive of Anheuser-Busch InBev NV (BUD, ABI.BT) is trying to revive Budweiser and Bud Light amid one of the U.S. industry's worst slumps.
o Brito, a 50-year-old native of Rio de Janeiro, plans to revamp the marketing of Budweiser, whose sales have slipped for 21 years even though it remains the second-largest U.S. beer brand after Bud Light. He wants to halt the iconic brew's decline in its largest market while expanding sales in such countries as China and Russia.
GAMING, LODGING, & LEISURE
· Ladbrokes CEO Richard Glynn hires consultants to review company's operations, strategy – Telegraph
· PartyGaming unable to reach agreement on merger with Bwin Interactive Entertainment – Trend
o http://www.trend.at/articles/1025/580/271797/die-partnersuche-us-anbieter-bord
· Bwin Interactive Entertainment denies merger talks with competitor collapsed; confirms talks ongoing with several potential partners-SA
· PartyGaming awarded licences by French gaming regulator to operate online poker and sports betting websites
· David Winters of the Wintergreen Fund likes WYNN – barons
HEALTHCARE
· Barron's cover is positive on Big Pharma, stocks could rally 30%
o http://online.barrons.com/article/SB50001424052970203296004575324902997001566.html
· Medco Health (MHS) added; Pfizer (PFE) removed from Conviction Buy List at Goldman Sachs
· NicOx says test results show NCX 434 reduces retinal damage due to ischemia
· AMLN Citi positive on Amylin following Roche's taspoglutide data at ADA
· Astellas Pharma, Teva Pharmaceutical settle pending litigation over US patent for VESIcareR
· ACL Alcon Independent Director Committee announces that Swiss corporate governance expert supports its position against Novartis' takeover bid
· Sun Pharmaceuticals to stop selling oxaliplatin in US 1-Jul - Press Trust of India
· TEVA Teva Pharmaceutical entered MOU with Clal Biotechnology regarding wound care - Ha'aretz
· MorphoSys and Xencor sign license and collaboration agreement
· JNJ Johnson & Johnson reports positive phase 2b results for canagliflozin, phase 3 trials initiated- SA
· SNY Sanofi-Aventis says Lantus and Apidra regime provided less glycemic variability and better patient reported outcomes than premix analog insulin- SA
· MRK Merck says treatment with Janumet resulted in significantly greater blood sugar lowering compared to Pioglitazone
· BMY Bristol-Myers and AstraZeneca say 52-wk study finds Onglyza when added to Metformin not inferior to Titrated Glipizide when added to Metformin
· AUXL Barron's questions how big the market for Auxilium Pharmaceuticals' Xiaflex actually is
o http://online.barrons.com/article/SB50001424052970203296004575324902997001566.html
· AMLN Pooled summary of Bydureon shows it was generally well-tolerated
· SOMX Somaxon Pharmaceuticals files $75M mixed securities shelf registration
· MRK Merck says that it will challenge verdict in Fosamax trial
· SNY Sanofi-Aventis announced results from RABBIT-2 surgery Lantus study
· BIOD Biodel announces final results of phase III VIAject study
· SKBI Skystar Bio-Pharmaceutical withdraws June 1 filing for secondary offering
From our EU/London desk
§ Oils
§ BP (+3.6%). Tropical storm Alex veers away from the Gulf leak and heads towards Belize. Also, the WSJ report that BP have secured another $5bn in available credit.
§ Encore Oil (+47%) & Premier Oil (+8.6%). Companies announce the discovery of a major oil field at the North Sea Catcher East well (Encore own 15%, Premier 35%) which could contain up to 300m barrels of oil.
§ Utilities
§ E.on (+0.35%). E.On may soon sell their 3.5% stake in Gazprom, according to Interfax.
§ EADS: Dubai renegotiating Airbus contracts– S&P
§ DEUTSCHE BANK still hiring in investment banking – S&P
§ DP CEO refutes talk of new restructuring programme– S&P
§ MAN bullish on engine and turbine business– S&P
§ RHEINMETALL automotive business higher in 2Q– S&P
§ Russia's Sistema to take 29% stake in INFINEON– S&P
§ FIAT in negotiations over EUR 4bn financing - WSJ
§ PIRELLI & C. CEO confirms 2010 targets– S&P
§ DSM claims biofuels breakthrough – FT
§ CEO says H&M not for sale– S&P
§ REPSOL YPF: Pulls out from giant gas project in Iran– S&P
§ ABB eyeing further acquisitions– S&P
§ BAE SYSTEMS set to cut hundreds of jobs– S&P
§ BRITISH AIRWAYS: Fresh offer for cabin crew – S&P
§ STANDARD CHARTERED: 1H income seen broadly flat – S&P
§ TAYLOR WIMPEY says sales have picked up since election – S&P
Asia Market Recap
· Japan
• NKY -0.45%, TPX -0.75%
• NKY slipped to 2-week closing low in directionless trading amid lack of buying cues. Turnover on the TPX rose to 1.27 trillion yen from 1.03 trillion yen last Friday
• Stocks fell across most sectors led by oil & gas, financials, tech and industrials. Flow was defensive with utilities and health care outperforming
• Exporters fell on a strong yen: autos -0.56%, CE -0.82%. Toyota (7203) -1.12% after it halted sales of a new hybrid Lexus model because too much fuel spilled in government crash tests
• Banks -1.31%. Mizuho (8411) -2.61% after saying it will sell new shares; Shinsei Bank (8303) -4.88% after CS cut its target share price
• Shippers -2.67% as the Baltic Dry Index extended fall
• Traders -1.55%
• Best performing sectors on the TPX: food +0.44%, pharma +0.35%, electric power & gas +0.32%; worst performing sectors: shippers -2.67%, other financing -2.00%, mining -1.73%
• Eisai (4523) +1.17% after report it plans to start a pharmaceutical R&D laboratory in India as early as next year
• Showa Shell Sekiyu (5002) -2.32% after CS initiated coverage with a “underperform” rating
· Hong Kong
• HSI +0.16%; HSCEI -0.07%
• Stocks rose time in three days, led by developers and oil producers, after the Standard newspaper said Sino Land sold apartments athigher prices, and crude oil advanced. Turnover on the HSI rose to HK$18.40B from HK$14.60B last Friday
• Coal names fell after NDRC told producers to keep prices of the fuel “stable” as part of efforts to control inflation: China Shenhua (1088 HK) -2.93%, China Coal (1898 HK) -6.42%, Yanzhou Coal (1171 HK) -7.19%
• Power producers rose on anticipation stable coal prices will benefit them: Huaneng Power (902 HK) +4.48%, Huadian Power (1071 HK) +3.19%
• Properties rose after The Standard reported Sino Land (83 HK) sold apartments at higher prices: Sino Land (83 HK) +2.23%, Sun Hung Kai (16 HK) +1.26%, New World (17 HK) +1.87%
• China Shipping Container Lines (2866 HK) +1.03% after it said it plans to impose additional surcharges on transpacific shipments next month due to a global container shortage
• Skyworth Digital Holdings (751 HK) -7.38% after its China unit sales growth missed estimates
• Standard Chartered (2888 HK) -2.64% after the bank said it was on track for a strong 1H performance
• China Unicom (762 HK) +4.68% after report it is in talks with Apple to launch the iPhone 4 and iPad in China
· Headlines:
• China ITS (Holdings), which provides information tech for transportation infrastructure projects, plans to raise as much as HK$923.7M from a Hong Kong IPO by selling a combined 236.84M shares at HK$2.85 – 3.90 each. Bank of America Merrill Lynch, CCB International and Macquarie Group are managing the sale. The stock will list on July 15 – Bloomberg
• China set the strongest yuan exchange rate in years on Monday after Beijing came under renewed pressure at the Group of 20 summit over the weekend to let the currency appreciate. The PBoC said it set the central parity rate - the centre point of the currency's allowed trading band - at 6.7890 to the dollar, a fraction stronger than Friday's 6.7896 – SCMP
· China
• SHCOMP -0.69%; SZCOMP -1.53%
• Stocks fell as tight liquidity conditions worsened by Agricultural Bank of China’s looming stock offering starved the market of momentum for near-term gains. Turnover on the SHCOMP rose to 51.52B yuan from 50.84B yuan last Friday
• Stocks fell across most sectors led by tech, consumer, health care and materials. Telecom rose
• Coal -1.96% after the NDRC told producers to keep prices of the fuel “stable” as part of efforts to control inflation
• Airlines -3.09%
• Banks +0.26%. Bloomberg reported Agricultural Bank of China set a price range of 2.52 – 2.68 yuan/sh for the Shanghai portion of its IPO to raise up to a combined US$20.1B
TODAY’S EVENTS
DAILY VIEW
CONFERENCES
· Monday June 28:
o American Diabetes Association 70th Scientific Sessions- 06/25/10 - 06/29/10 Orlando, FL
o CFO Core Concerns Conference- 06/27/10 - 06/29/10
o Credit Suisse Group CSSS Consumer Conference- 06/28/10 - 06/29/10 Cape Town
§ 5:30AM: **TNC
o Government Technology CTO Summit- 06/28/10 - 06/29/10 IL
o Information Management Network (IMN) 2nd Annual East Coast Beneficial Owner's Securities Lending Summit - 06/28/10 - 06/29/10 Boston, MA
o Institute for International Research Managed Services & Network Sharing- 06/28/10 - 06/30/10 London, GB
o Jefferies & Co. Annual Boston Energy Day
§ NTS: CLR , ESV , SM
o JPMorgan Asia Pacific Conference- 06/28/10 - 06/30/10 New York, NY
o Nomura Alternate Energy Corporate Day
§ NTS: CPBY
o Windhover Information Inc Euro-Biotech Forum- 06/28/10 - 06/30/10 Paris, FR
COMPANY MEETINGS/OTHER DAILY EVENTS
· Monday June 28:
o Shareholder Meetings
§ UTHR, JERT, KMX, BELM, GNCMA
o ABMD Analyst Meeting
o ROG Investor Day
o CSCO: Around the world with Cisco part 1
§ Webcast: http://investor.cisco.com/.
ECONOMICS
· Monday June 28:
o 0830 Chicago Fed National Activity Index
o 0830 Personal Income & Outlays
o 1030 Texas Manufacturing Outlook Survey
o 1200 CFMMI Chicago Fed Midwest Manufacturing Index
EARNINGS
o Materials
· Monday June 28: NOEC, ZEP, FRD
o Industrials/Homebuilders
· Monday June 28: TIK, BUKS, IGC, FEIM
o Consumer/Retail/Education
· Monday June 28: BKS, MSN, CRWS, GAI
o Financials
· Monday June 28: FLFL, CARY, OSBK
o Tech/Telecom
· Monday June 28: MU, SMSC, CRWG, WPCS
o Healthcare
· Monday June 28: ADMP, OXBT, AEMD
o Media
· Monday June 28: VALU
o Energy
· Monday June 28: QTWW, MXC, TOTY, MILL. SNRV
o Autos
· Monday June 28: CIEC
INVESTMENT BANKING WRAP
M&A
· M&A Sags In 2Q, As Economic Woes Weigh On Dealmakers- WSJ
o The half-year figures appear to confirm that concerns over the macroeconomic environment--particularly in Europe--and still-tepid equity and debt markets are crimping deal-making appetite, although economic fundamentals more broadly may be recovering
o http://online.wsj.com/article/BT-CO-20100627-704250.html
· WPO Bids for Newsweek are due in at Allen & Co. by 5 p.m. on Thursday. – NYPOST
o So far, five bidders have been identified, although the rumor mill continues to hum with the expectation that one or two potential bidders are quietly waiting to "pull a Bloomberg," which means stealthily monitoring the early progress of the auction and then pouncing at the last minute as Mike Bloomberg's company, Bloomberg L.P., did with McGraw-Hill.
· LGF Icahn critical of possible Lions Gate, MGM merger- reuters
o Billionaire Carl Icahn said on Friday that Lions Gate Entertainment Corp (LGF.N), the company he has sought to control in a hostile takeover, has problems and should avoid merging with financially troubled Metro-Goldwyn-Mayer
o http://www.reuters.com/article/idUSN2518893620100625
· PALM Shareholders Approve Deal With HPQ Hewlett-Packard- DJ
o Palm Inc. (PALM) shareholders have approved takeover plans by Hewlett-Packard Co. (HPQ), clearing the way for a $1.2 billion deal that would unite the smartphone innovator with the world's largest computer maker
· UAUA-CAL United, Continental Had Exploratory Merger Talks In 2006- WSJ
o UAL and Continental Airlines engaged in preliminary talks about a merger as early as 2006, the two companies said in a joint proxy statement and prospectus filed with the Securities and Exchange Commission Friday regarding their merger plan agreed in May
o But Northwest Airlines Corp. held a "golden share" of preferred stock in Continental at the time, giving Northwest the ability to block a Continental merger.
o http://online.wsj.com/article/SB10001424052748703615104575329361015768570.html
· UAUA-CAL UAL, Continental pilot negotiations hit snag- Reuters
o Negotiations on the early stage transition agreement have stalled over issues the pilots say would have little financial impact on the new airline, the Air Line Pilots Association (ALPA) said in a statement
o http://www.reuters.com/article/idUSN2518097720100625
· HAS Trader Bets Hasbro Will Deal- WSJ
o Toy maker Hasbro has said it isn't interested in the buyout offered by a private-equity firm, but one options trader isn't so sure.
o "Someone's taking the bet that the company's either telling the truth but will change their mind or is bluffing for now," said Alex Wohl, chief executive of Woodlawn Advisors. "It's a low-risk bet on a takeover actually happening, regardless of what the company actually said."
o http://online.wsj.com/article/SB10001424052748704569204575329192278146412.html?mod=googlenews_wsj
· Creston agrees to sell ad agency DLKW to IPG for 28m pounds- Reuters
· AIG- Chinatrust won't get stake in Nan Shan- WSJ
o Primus and China Strategic, which agreed in October to buy Nan Shan from AIG for $2.15 billion, have denied such links to the mainland, and AIG said it received "legally binding representations" from them that no mainland Chinese money is being used to fund the deal.
o http://online.wsj.com/article/SB30001424052748703615104575328391760870562.html
· H&M CEO Says Company Isn't For Sale- DJ
o "H&M is not for sale. The Persson family...owns 37% of its capital and 70% of the voting rights," he said, according to the interview. He added that the company isn't currently engaged in an "active phase of acquisitions."
· NVS Novartis needs ACL Alcon directors' OK for buyout- Reuters
o "The Alcon board will not be able to validly decide on Novartis' merger proposal without the IDC's prior recommendation of that proposal," Professor Hans Caspar von der Crone was quoted as saying in a statement from the IDC.
o http://www.reuters.com/article/idUSLDE65R0EZ20100628
· CMCSA/NBC Bloomberg says Comcast should have to sell CNBC
o New York media firm Bloomberg L.P. says Comcast would have the incentive to keep the currently unrated Bloomberg TV buried in its cable TV channel lineup, permanently sealing CNBC's position as the No. 1 business-news channel.
· Banks Hire For Securitisation Surge- WSJ
o Banks are recruiting senior securitisation specialists in anticipation of a pick-up in the sector in Europe, with up to EUR1.25 trillion ($1.55 trillion) in securitised assets expected to be sold.
o http://online.wsj.com/article/BT-CO-20100627-703893.html
· Trade Exits Hit Highest Level For Two Years- WSJ
o Private equity exits to trade buyers have hit their highest level for two years, sparking hopes that buyout firms might be able to begin realizing greater returns.
o The exit route comprised 66% of all private equity exits, its highest proportion for a year
o http://online.wsj.com/article/BT-CO-20100627-703894.html
· CLF Cliffs Natural Resources raises offer for Spider Resources to C$0.19/share in cash
o Cliffs has now determined that it will not bid for KWG assuming Cliffs' bid for Spider is successful, and it may sell down its 19.3% ownership position in the company.
· Infineon Technologies trading higher on reports Sistema wants 29% stake (FT, DJ)
o Russian’s Medvedev and Putin are pressuring German Chancellor Angela Merkel to allow Sistema to take a 29%-stake in Infineon
o Dow Jones reported citing an Infineon Technologies spokesman that the company isn't engaged in participation talks with Sistema
· PartyGaming unable to reach agreement on merger with Bwin Interactive Entertainment-= Trend
o Ultimately, one could not reach agreement with PartyGaming over the operational details of a joint group. Androsch, chairman and bwin with a stake of just less than ten percent of the single largest shareholder confirmed the failure of the talks
· Bwin Interactive Entertainment denies merger talks with competitor collapsed; confirms talks ongoing with several potential partners- SA
· URS makes recommended cash offer of 210 pence per share for Scott Wilson Group- SA
o Under the terms of the Offer, Scheme Shareholders will receive 210 pence in cash for each Scott Wilson Share, valuing the entire issued and to be issued share capital of Scott Wilson at approx £161M
o the directors of Scott Wilson intend unanimously to recommend that Scott Wilson Shareholders vote in favour of the Scheme and the resolutions to be proposed at the Court Meeting and the General Meeting
· IPG Interpublic to buy Delaney Lund Knox Warren from Creston Group for $40M in cash
· China Mobile Interested in Investing in Africa, Chairman Says- Bloomberg
o China Mobile, the world’s biggest phone carrier, is interested in investing in Africa, where it can boost services in rural areas, Chairman Wang Jianzhou said.
o The company doesn’t have any acquisition targets in Africa yet and hasn’t identified a specific region on the continent where it would like to invest, Wang said in an interview at the Fortune Global Forum in Cape Town today
o http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aoW9dfw9MhjQ
· Telefónica-Portugal Telecom bid battle goes to the wire- FT
o A highly acrimonious bid battle should reach a climax on Wednesday, when Portugal Telecom's shareholders vote on Telefónica's €6.5bn ($8bn) offer to buy the Portuguese telecoms company out of their Brazilian mobile phone joint venture
o http://www.ft.com/cms/s/0/18b27b5a-824c-11df-9467-00144feabdc0.html
· Consultants to work on Ladbrokes' strategy- Telegraph
o The new chief executive of Ladbrokes has brought in consultants Alix Partners to assist with a review of the bookmaker's entire operations, including the shape of the business and its strategy
o Alix Partners, which sees itself as a specialist in "improving corporate financial and operational performance" is already well known to Ladbrokes
· France Tel drops out of Le Monde's race- Reuters
o France Telecom will withdraw its bid for France's Le Monde once the daily newspaper's supervisory board hands its final vote on Monday
o http://www.reuters.com/article/idUSLDE65R0FW20100628
· ATML Atmel to sell Smart Card business to INSIDE Contactless
· Le Monde staff vote for takeover- FT
o Journalists at Le Monde, France's most prestigious newspaper, yesterday voted overwhelmingly in favor of a takeover by three businessmen, dashing the hopes of a rival consortium which included France Telecom and Prisa of Spain
o "I find it hard to imagine the external shareholders going against the staff, who vote with a crushing majority [for Pigasse-Bergé-Niel]," said Gilles Van Kote, the deputy chairman of the supervisory board
o http://www.ft.com/cms/s/0/314f01ae-80b9-11df-be5a-00144feabdc0.html
· RCOM all set to sell tower business to GTL Infra for $6 bn- Economic Times
o Anil Ambani-controlled Reliance Communications (RCOM) is all set to divest its tower business to Manoj Tirodkar-controlled GTL Infrastructure for an enterprise value of $6 billion in a cash-stock deal creating the world’s largest independent telecom tower company
o Both parties are likely to sign a definitive agreement on Sunday to consummate the transaction, which will see RCOM transferring its 50,000 towers alongwith $3 billion debt to GTL Infrastructure
· R-Infratel, GTL approve Rs 50,000-cr deal- Business standard
o The Boards of RCom, its subsidiary Reliance Infratel Ltd. And GTL Infrastructure today in-principle approved a Rs 50,000-crore (USD 11 billion) deal to create the world's largest independent telecom infrastructure company, neither owned nor controlled by any telecom operator, the company said in a statement
o http://www.business-standard.com/india/storypage.php?autono=99380&tp=on
· U.S. VAL Valspar to buy Australia's Wattyl Ltd- Reuters
o Paint and coatings company Valspar said on Sunday it had agreed to acquire Australian paint maker Wattyl for about A$142 million and also assume its existing debt
· Wattyl Up 27% At A$1.60; Recommends A$1.67/Share Offer By VAL Valspar- DJ
o Wattyl entered a deal with Valspar (VAL), after Valspar raised its initial offer to A$1.67/share cash for all of the paint maker's shares on issue. In late May, Wattyl received a non-binding offer from Valspar for A$1.30/share, but since then there has been little news on the deal.
· Mizrahi in talks to buy Dexia Israel- Globes
o Franco-Belgian bank, Dexia has initiated negotiations with Israeli banks to sell its 65% stake in Dexia Israel, because it wants to quit activity in Israel
o http://www.globes.co.il/serveen/globes/docview.asp?did=1000569919
· Credit Mutuel to acquire 5% stake in Banco Popular Espanol- DJ
· Elbit to take over Mikal- Globes
o Sources inform "Globes" that Elbit Systems will shortly take over Mikal for $100-150m. The acquisition will be by way of the exercise of an option given to Elbit in an agreement for investment in Mikal signed in June last year, under which Elbit lent Mikal $18m, later converted to a 19% stake in the company
o http://www.globes.co.il/serveen/globes/docview.asp?did=1000569937&fid=1725
· M&A, protectionism?: Chinese gold producer Zijin ended its offer to buy Australia's Indophil because government approval for the deal in China was taking too long. WSJ
· MTN in talks to buy stake in India's Loop- Business Standard
o South Africa's MTN is in talks with Loop Telecom to buy a stake in the Indian mobile operator to gain an entry into the world's fastest growing wireless market
· Athabasca says more oil sands partners possible- reuters
o The company, among the largest owners of undeveloped lands in the oil sands of northern Alberta, is talking to potential partners capable of bringing marketing expertise or new technologies to projects
o http://www.reuters.com/article/idUSN2514405820100625
· Mullen nearly doubles stake in Logan Intl- Reuters
o Canada's Mullen Group on Friday nearly doubled its stake in Logan International Inc to 12.5 percent
o http://www.reuters.com/article/idUSSGE65O0H720100625
$ RAISING
IPOs
· TSLA Tesla Motors files amended S-1; increases share size of offering to 13.3M through Goldman, Morgan Stanley, JPMorgan, and Deutsche
· The Demise of the IPO—and Ideas on How to Revive It- WSJ
· Morpol allocates 66M shares in IPO at NOK 22/share
· Agricultural Bank Of China May Set A-share IPO Range At CNY2.71-CNY3.3- DJ
o At the top end of that range, AgBank, the last of China's Big Four state banks to float shares, could raise as much as CNY84.5 billion (US$12.4 billion) in Shanghai, if the overallotment option is fully exercised.
o AgBank will disclose the price range for the Shanghai listing Monday evening
· AgriBank IPO May Raise $20 Billion on Shanghai Price- BBG
o AgBank of China Set a price range for the Shanghai part of its initial public offering that will allow it to raise as much as $20.1b, according to three people with knowledge of the matter
o Agricultural Bank may still surpass Industrial & Commercial Bank of China Ltd.’s 2006 IPO as the world’s largest if it exercises an option to expand the sale to $23.1 billion
· CIS Camelot Information Systems files $250M IPO through Goldman Sachs and Barclays
· Emerging Markets Set the Pace in IPOs- BBG
o China, Poland, India, and other developing nations are raising more cash than industrialized markets, extending emerging markets' dominance to five quarters
o http://www.businessweek.com/magazine/content/10_27/b4185037582818.htm?campaign_id=rss_topStories
· DP World shelves London listing plans- FT
o DP World, the world’s fourth-largest container terminal operator, has postponed plans for a dual listing in London until 2011, blaming technical problems arising from the merger of the Dubai and Nasdaq stock exchanges.
o http://www.ft.com/cms/s/0/060a1200-827f-11df-85ba-00144feabdc0.html?ftcamp=rss
· Wattyl deal lifts bar for Orica's DuluxGroup spin-off- Reuters
o DuluxGroup, Australia's biggest paints business, may be seen as a juicy takeover target after peer Wattyl agreed to be bought for a big premium, but also faces stiffer competition from its beefed up rival.
o http://www.reuters.com/article/idUSSGE65R05Z20100628
PRICINGS
o Initial Offerings
o TSLA tesla Motors 11.1m share IPO expected to price 6/28 via GS, JPM, DB, and MS: Price Talk $14-16
o HSFT HiSoft Technology International 140.6m share IPO expected to price 6/29 via DB, UBS, and Citi: Price Talk $11-13
o AMAP AutoNavi holdings 34.5m share IPO expected to price 6/30 via GS: Price talk $10.50-12.50
o ECT ECA Marcellus Trust 8.8m share IPO expected to price 6/30 via Raymond James and Citi: Price Talk $19-21gs,
o MX MagnaChip Semiconductor Corp 7.5m share IPO expected to price 6/30 via Barclays, GS, and DB: Price Talk $15.50-17.50
o Secondary Offerings
o BOFL Bank of Florida Corp 38.8m share secondary expected to price 6/28 via Kaufman
o RSOX Resaca Exploitation Inc 20m share secodnaary expected to price 6/28 via RBC
o SPU SkyPeople Fruit Juice Inc 5.3m share secondary expected to price 6/30 via Rodman & Renshaw
o SKBI Skystar Bio-Pharmaceutical withdraws 1-Jun filing for secondary offering
NEWS
· Some institutional investors feel they are being squeezed out of Agricultural Bank of China's IPO because of an abundance of cornerstone investors and strong retail demand. WSJ
o they worry they mightn't be able to secure a large enough allocation to make the investment worthwhile.
o At as much as US$23.6 billion, the IPO could be the largest ever, eclipsing Industrial & Commercial Bank of China's US$21.9 billion 2006 offering.
· TRB Tribune creditors are girding to grill Zell- NYPOST
o Tribune Co. creditors itching to take a crack at Chairman Sam Zell, whose disastrous 2007 buyout of the media company landed it in bankruptcy, could get their chance today.
· Hopewell to sell yuan corporate bonds in landmark issue- Reuters
o Hopewell Highway Infrastructure, a toll-road infrastructure company, said on Sunday that it would issue yuan-denominated corporate bonds to institutional investors, the first of its kind in Hong Kong.
o http://www.reuters.com/article/idUSTRE65R0J520100628
· VSTNQ Visteon cleared to put reorganization plan to vote- Reuters
o The company has proposed a plan that would put the former Ford Co (F.N) subsidiary under the control of bondholders, who are owed $870 million.
o http://www.reuters.com/article/idUSN2517685020100625
· Foursquare close to obtaining funding – WSJ-
o Startup website Foursquare, a location-based services company, is close to getting new funding that would allow it to expand
o The terms of the deal were not disclosed. The funding, led by Silicon Valley venture-capital firm Andreessen Horowitz, could be announced as early as this week
· Healthcare: GOVX GeoVax Labs to offer between 5M and 35M units on a best efforts basis through Global Hunter
· Healthcare: SOMX Somaxon Pharmaceuticals files $75M mixed securities shelf registration
· Materials: LDSH Ladish Company files 2.5M share common stock shelf
***All eco data from Bloomberg and DJ
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