Morning @ Cantor
Morning @ Cantor 6/29
Today’s Stories From Cantor Fitzgerald
Sal Catrini (908) 517-5067
EARLY US LANDSCAPE****
· US Stock Futures dn as … Risk aversion seen across the asset classes..
o Dollar holds near highs, up 0.43 to 86.127
o S&P futures down 12.60 on weakness sin Europe and Asia after China revised it economic index lower.. and weak Japan economic data.. Euro suffers on ECB debt expiration jitters… Focus on maturity of ECB 1-year repo operation on July 1st
o Europe: FTSE 100 down 2%, DAX down 2.2%... Financials and materials make the biggest dent in overall performance, followed by industrial and energy stocks.
o Asia: Nikkei down 1.27%, Hang Seng down 2.3%, Shanghai Composite down 4.27%
o OIL: down 1.54 to 76.71.. Crude fell for a second day in New York on speculation a tropical storm will bypass production areas in the Gulf of Mexico, and on concern China’s economy is growing at a slower pace than estimated.
o National Hurricane Center: Tropical Storm Alex strengthens slightly; likely to become a hurricane on Tuesday
o GOLD: up .4 to 1239 on people moving away from risk this morning on overseas concerns
o Spot gold down $16 yesterday…tues, spot gold is down another $3 to $1236
o Base metals up yesterday…Nickel was up 4.5%, copper was down 2.15 cents to $3.0895 ..tues base metals are lower...Zinc is down 4%, copper down 3.5%,
o EUR below 1.22 ; 2 yr yield dn to 59bp
o The Spain 5-year Credit Default Swaps (CDS) widened over 10bps above 275bps (record high).
o Risk aversion drags 2-year Treasury's yield to historic low
§ Investors fleeing to the safety of U.S. government debt drove the yield on the two-year Treasury to an all-time low below 0.60%. The previous record was 0.6044%, reached Dec. 17, 2008
o Libor Three-Month Euro Libor Rises to 9-Month High of 0.688%
o Libor 3-month: Dollar: 0.533% vs prior 0.533%
o Spanish banks hit hard..Spain sovereigns heavy...Spanish banks rage at end of ECB offer – FT
§ Greek 2 year paper now yields 960 bps over Germany from 955bps yesterday. Even the UK which had been rewarded for a tough budget by tighter spreads last week has backed out to 17.8bps over Germany from 16,4bps yesterday
· Asian Markets: Nikkei (1.27%); Hang Seng (2.31%); Shanghai Composite (4.27%)
o Chinese Conference Board announced China’s economic index rose 0.3% in April, rather than the 1.7% previously reported. The board cited a “calculation error.
o Japan fell on a surprise rise in the unemployment rate for May.
o NKY fell to 3-wk closing low following a regional sell-off and as the yen strengthened to the 88 handle vs. the dollar. Turnover on the TPX fell to 957.17B yen from 1.27 trillion yen yesterday
o China dn 4% - Stocks slumped driving the benchmark index down the most in 6 weeks on low volume. While some investors pointed to a revised “leading” economic index (for April) as an excuse to sell, others pointed to the upcoming Agricultural Bank IPO limiting short term liquidity (BBG etc..)
· FX: EUR under 1.22….
· FX: Stanchart Lowers Dollar Forecasts on Declines in U.S. Yields
· FX: Yen Reaches Eight-Year High Versus the Euro on Recovery Concern
· FX: Nikkei noted that Japanese exporters might at some point begin to sell off their EUR holdings against JPY on waning expectations of a rebound in Euro - TTN
· FX: PBoC sets yuan mid point at 6.7901 v 6.7967 prior close (weaker Yuan setting vs prior)
· FX: IMFs Strauss-Kahn Says Yuan Revaluation Won’t Occur ‘Very Rapidly’ - BBG
· FX: IMF Would Consider Yuan in its Basket of Currencies – CNBC link
· FX: JPY firmer across the board on Japanese press report corporate will have to repurchase JPY against EUR on concern regarding diminished prospects of EUR recovery
· FX: Russia Central Banker: Ulyukayev commented that a strong Ruble currency appreciation would not be good for Russian economic recovery – TTN
· Data
o UK may mortgage approvals miss..hurt Pound overnight
o Japan jpbles rate
o Japan May jobless rate 5.2% vs survey 5.0%. May industrial production (0.1%) m/m vs survey 0.0%
o France June Consumer Confidence (39) vs consensus (39).
o UK May Mortgage approvals 49.8K vs consensus 51.0K.
· EU stress worries, stories:
o Spanish banks hit hard..more worries over ability to raise cash in Greece and Spain..also worries over ECB removing liquidity this week – BBG, FT
o Spanish banks rage at end of ECB offer - FT
§ Spanish banks lobby the Bank to ease the systemic fallout from the expiry of a €442bn funding programme this week, accusing it of “absurd” behaviour in not renewing the scheme
§ On Thursday, the clock runs out on the ECB’s Long-Term Refinancing Operation (LTRO). FT Alphaville has a guide to the €442bn question and a chart of ECB liquidity cliff risk
§ http://link.ft.com/r/5F39HH/PRGUWT/NNT7T/ZB5WSB/262HZ5/ID/h
o German banks face a new levy of 5%-15% of annual profits as their contribution to the cost of the financial crisis, according to a draft law obtained by Reuters
o European Union banking stress tests should take into account sovereign debt risks, according to a draft EU document obtained by Bloomberg News. EU finance ministers are due to discuss the tests in two weeks and will also ask the Committee of European Banking Supervisors, which is conducting the exercise, to extend them to include more financial institutions
o European leaders reportedly suggest at the Group of Eight summit last week that they will consider injecting public funds into banks if stress tests show a need to replenish their capital. MW
o No turnaround is in sight for Ireland despite austerity
§ Ireland was the first developed country to implement harsh spending cuts and tax increases, something the most advanced nations are saying they want to do. Nearly two years after taking the bitter medicine, there's still no growth in sight for Ireland. Unemployment has increased to more than 13%, and government officials are warning of more pain to come. The New York Times (free registration) (28 Jun.) , The Irish Times (Dublin) (29 Jun.) , Independent.ie (Ireland) (29 Jun.)
o two of Greece's largest unions, General Confederation of Greek Workers (GSEE) and Civil Servants' Confederation (ADEDY), held 24-hour strike as planned
o Greece's best option is an orderly default – Roubini in FT
§ public resources would be better used to help ring-fence other embattled eurozone economies - such as Spain - whose debt may come under renewed pressure.
§ http://www.ft.com/cms/s/0/6558878a-831c-11df-8b15-00144feabdc0.html
o Europe Double-Dip May Bring Correction: Roubini
§ Economic woes in Europe could spread to the U.S. and lead to a further correction in stock prices, Nouriel Roubini, chairman of Roubini Global Economics, told CNBC on Monday.
§ Fiscal austerity is needed in Greece, Spain and Portugal but countries like Germany, Japan, China, should be doing fiscal stimulus
o Hungary Debt Agency sold HUF45B in 3-month Bills; avg yield 5.31% v 5.28% prior; Bid-to-cover: 1.6x v 1.9x prior – TTN
§ Troubled savings banks in Spain, may be allowed to be privatized under legal changes proposed by the Spanish Saving Banks Association (CECA) - ABC Newspaper
§ ECB's Noyer commented that countries needed to stop building up debt and stressed that the issue could be a concern if nothing was done
§ ECB Walks a Fine Line Siphoning Off Its Liquidity WSJ link
§ European Commission authorises extension of bank support schemes in Ireland, Spain, Denmark and Hungary
• The European Commission has extended until 31-Dec 2010, guarantee schemes for banks in Ireland, Spain and Denmark and a liquidity scheme in Hungary.
· BIS plays with fire, demands double-barrelled monetary and fiscal tightening
o BIS Warns Countries Over Debt WSJ link
o Immediate, front-loaded fiscal consolidation is required in several industrial countries
· Japanese exporters may at some point begin to sell off their EUR holdings against JPY on waning expectations of a rebound in EUR - Japanese press (per TTN)
· China and Taiwan to sign trade agreement today; Taiwan GDP may rise to 8% following China trade agreement - Commercial Times
· Money Raising:
o Electric car company Tesla Motors said its initial public offering of 13.3 million common shares was priced at $17 a share, above the offering price of $14 to $16 a share.
o American Capital, the private equity firm that counts John Paulson as its largest shareholder, said Monday it succeeded in restructuring $2.4 billion of debt, The Associated Press reported.
· M&A:
o ABT: (Reuters) - U.S. drugmaker Abbott Laboratories Inc is looking to sell its flu vaccine business in a deal that could fetch 500 million euros ($614 million), the Wall Street Journal said, citing people familiar with the matter.
o LGF: Investor Carl Icahn said Lions Gate Entertainment Corp. will drop below his $7-a-share offer price once his hostile tender for the independent film and television studio expires. BBG
o JBS may be trying to purchase SFD Smithfield foods
§ For experts, the transaction makes sense because the American lives delicate situation.
§ Through his press office, JBS said it would not comment on market rumors.
o URS mulls raising offer for UK engineer Scott Wilson- Reuters
o GE Bloomberg asks FCC to force Comcast (CMCSA) to give up CNBC if ti takes NBC Universal - NY Post
o Chloride intends to "engage with Emerson Electric" (EMR) to clarify aspects of its offer
§ Bloomberg) -- Emerson Electric offered to buy Chloride Group Plc for 997 million pounds ($1.5 billion) in an effort to derail ABB Ltd.’s planned takeover of Britain’s biggest maker of gear to protect against power outages. Under the terms of the offer, Chloride shareholders would receive 375 pence a share, Emerson said in a statement today. That’s 15 percent higher than ABB’s 325 pence-a-share bid, announced June 8 and accepted by Chloride.
o Taiwan approves Taiwan Semiconductor (2330.TT)'s taking 8% stake in SMIC - DigiTimes
o S&P analysts name European companies that could be targeted by US buyers (Astrazenaca, Vivendi, BAE Systems, Balfour Beatty, and Tui are named) – Telegraph (this actually hit last week I believe)
· BP stories
o BP (-1.8%), planned asset sales will be mostly from E&P. JPMorgan says Exxon or Shell could consider Bid.
o BP Says Oil Spill Cleanup Operation May Be Delayed by Storm
o BP Sued Over Losses in Employee Pension Plan After Gulf Spill
o Wall Street Exposure to BP Probed by NY Fed: Report cnbc link
§ Wall Street's exposure to BP's mounting troubles is not as bad as some had feared, according to an internal investigation by the Federal Reserve Bank of New York. After poring over documents for the past two weeks, Fed officials "gave banks' exposure to BP a passing grade - NYP
o Bond investors ‘very negative’ on BP in US - FT
§ BP has the most shorted bond among US investment grade corporate issuers, and, unusually, more of its bonds are being borrowed for shorting than its shares.
§ http://link.ft.com/r/5F39HH/PRGUWT/NNT7T/ZB5WSB/NS3IPI/ID/h
· Goldman makes nice with financial crisis panel NY Post
o A source at the Financial Crisis Inquiry Commission, which is headed by former California State Treasurer Phil Angelides, tells me that Goldman has been "cooperating since the subpoena" was dropped on the firm a couple of weeks ago.
· Financial overhaul:
o Political momentum was expected to carry a sweeping Wall Street reform bill to approval in the U.S. Congress, but the death of Senator Robert Byrd threatened to delay final action until mid-July. Reuters
o Senator Russ Feingold, Democrat of Wisconsin, one of two Democrats to vote against the financial regulatory bill, said he would also vote against the final version of the bill. NYT
o the late addition of a fee on banks and hedge funds to cover the cost of the legislation is roiling the few Republicans thought likely to vote for the package….the vote could get pushed after the break, giving critics in the GOP time to pressure Republicans who were leaning toward supporting the bill – WSJ
o Ms. Snowe was one of three Republicans who voiced disquiet about the fee . Scott Brown also on the fence
o another potential complication revolves around the timing of Mr. Byrd's funeral and whether he will lie in state in the Capitol, which could delay any vote
o Volcker Rule May Give Goldman, Citigroup Until 2022 to Comply – BBG
§ Rules curbing banks’ investments in their own funds would take effect 15 months to two years after a law is passed, according to the bill. Banks would have two years to comply, with the potential for three one-year extensions after that. They could seek another five years for “illiquid” funds such as private equity or real estate
o Overhaul Foes Let Loose Last Volleys WSJ link
§ As uncertainty over the fate of the financial-overhaul bill swelled, analysts and investors expressed relief that proposed changes would end some doubts that have dogged financial stocks.
o Finance Bill's Fate Uncertain in Senate WSJ link
o New Bank Taxes May Derail Financial Reform Bill – cnbc link
o Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co., the three biggest U.S. debit-card issuers, may face $1.38 billion in annual lost revenue from a proposed cap on “swipe” fees, said Moody’s Investors Service.
· GOOG softens policy to keep china biz… will stop auto forwarding to HK…– BBG
o Google May Lose Chinese License After Government Objections
·
· MU- Strong May Q on the back of better DRAM pricing and higher NAND bit shipments, but slightly dampered by flattish DRAM and NAND bit guidance for the next Q. Bears may focus on lack of capacity going into a seasonally strong Q. Micron Management is not seeing any significant impact from European macro issues – as emerging market strength is offsetting limited issues in Europe. Mgmt also indirectly raised CY11 capex by stating it will ramp its 100K IMFS NAND shell to 60% during the year.
· Carpetright shares lose 9% after disappointing results
· Mining companies may restart media campaign against the super-profits tax if progress in dispute is not made by Jul 2nd - The Australian
· Mining Australia PM Gillard: Confirms national elections to take place in 2nd half of the year; Looking for "good will" in mining tax resolution
· . Airlines are sharply lower after IATA figures showed Europe was the region with the weakest traffic growth in May. International scheduled passenger traffic rose 11.7% in May while freight demand jumped 34.3% y/y. IATA says passenger traffic is now 1% above pre-recession levels, while the freight market is 6% bigger. BA (-3.06%), LUFTHANSA (-4.01%), IBERIA (-2.4%) and AIR FRANCE-KLM (-4.29%) suffer
· British airways warns cabin crew they risk legal action on new strike – BBG
· Ryanair to cut U.K. winter capacity by 16% - MW
· SIEMENS (-2.01%) says 3Q new orders and revenues are higher at its three core sectors y/y and q/q, but losses at divisions which it wishes to divest are weighing on earnings. Says the quarter about to end is likely to show profits below those of the previous quarter
· Siemens plans to set up own bank - FT
o The German engineering group plans to set up its own bank in a move that underscores how large industrial groups are seeking rapidly to reduce their reliance on bank financing after the credit crisis
o http://link.ft.com/r/5F39HH/PRGUWT/NNT7T/ZB5WSB/LQFD39/ID/h
· Ritholtz: The Second Leg Down in Housing... cnbc link
· John Paulson Bullish on US, Denies Subprime Culpability cnbc link
o "We had absolutely zero impact on the mortgage or credit crisis,” the noted hedge fund manager said.
· US arrests 10 alleged Russian spies – FT
· China / NK: Reuters) - China on Tuesday rejected President Barack Obama's suggestion that it was hiding from the risks posed by North Korea, and said it felt the dangers on the divided Korean peninsula more deeply than Washington.
· Economics today:
o ICSC-Goldman retail sales at 7:45 ET
o Redbook retail sales at 8:55 ET
o Apr S&P/CaseShiller Home Price Index at 09:00 ET
o Jun Consumer Confidence at 10:00 ET
o API Crude Inventories released at 16:30 ET
· Earnings:
o Reporting after the close: GIS
· Forbes celebrity 100 hits news stands today – Oprah back in top spot for 4th time…knocks off Angelina..Laday Gaga at #4
· Dozens of lawmakers will head to the White House on Tuesday to huddle with President Barack Obama on energy and immigration, two major issues that have stalled this year.
TODAY’S BIG STORIES
· Equity Wrap:
o It remained very quiet closing basically flat with the mixed eco data this morning and the G-20’s plan to cut deficits, at this point most are happy holders and are willing to wait it out for the next couple of weeks barring any major news until we kick off earnings again on the 12th.
o Desk had the value guys participating lightly on both sides of the net, but nothing dramatic to speak of.
o We did see a very ambitious call by Goldman on the S&P 500 looking for 1300 within 12 months – let’s see if this is more on the mark than their $200 call on crude.
o Internally sell names were 1 ½ - 1 over buyers, the breadth of the market had declining issues edging out advancing.
o Technically we closed flat with 1075 holding support at the close.
o Overnight, Asia was mixed; Europe however was up 1-1 ½% across the board (the UK lagged, up only 0.5%). S&P’s began the early morning up about 4 to 5 points. With the 8:30 release of Personal Spending and Personal Income, along with the Chicago Fed National Activity Index, S&P’s dropped a quick 6 points 10 1073. Once the cash market opened, they fell another 6 to 1073. This would prove to be the low of the day. We immediately traversed the day’s entire trading range (about 11 points), before settling into progressively smaller swings for the balance of the session. Futures ended off 4 points at 1074.70.
o Bloomberg carried an interesting story which focused on the correlation between the S&P 500 and 10 year Treasury rates (the 10 year ended with a yield of 3.02%. the lowest since April of 2009). Apparently the S&P 500 and 10 year rate have a correlation coefficient of 0.8412, the highest since 1962. The last time this statistic rose anywhere near this level was just before the onset of the 2002-2007 bull market. The idea here is that the overriding driver of equity prices right now is the macro picture; if we get any relief on this front, investors will feel free to focus on industry and stock specific positives (low PE’s, strong balance sheets, greater possible upside vs. other asset classes), allowing equity prices to rise. The article goes on to point out a fairly tight correlation between the S&P and the CRB index of raw materials. Such tight correlations are a function of rising fear that we may be in for a repeat (or reprise) of the financial crisis. Any emerging confidence that the recovery could regain its footing would be a welcome surprise at this point.
o Of 10 S&P groups, the defensive Consumer Staples fared best, rising 1.14%, while Energy fell the most, off 1.26%. Tobacco stocks and gun manufacturers did well after the US Supreme Court declined to hear an appeal of a lower court ruling on a Tobacco Case (no RICO), and a Chicago handgun ban was struck down. Specific beneficiaries: RAI (Reynolds American, up 4%), MO (up 3.2%), LO (up 2.5%), SWHC (Smith and Wesson, up 5.6%) and RGR (Storm Ruger, up 2.2%). Letter S (up 6.2%) was another name to gain due to government action (Obama’s executive order freeing up some spectrum for sale).
o (Billy Clark and team)
· Treasury’s Wrap:
o Treasury market continued its rally throughout the session with the major move occurring relatively early in New York then a slow grind higher in price for much of the remainder of the session. The belly, once again significantly outperformed the wings with 7-10s the best performing sector. 3.06% had been the major resistance level on 10s which attempted to hold but could not pushing yields to the lowest levels since April 2009 (10s closed the day at 3.032, traded below 3.02 intraday). Today's buying can be attributed to real money, short covering and technical's. At 3PM yields were lower across the curve by ~3-9bps.
o The grind to lower yields continues as the sovereign debt crisis in Europe and worse than expected data in the US puts the V shape recovery in question. As the "deflation" words is spoke about in a greater proportion and quantitative easing once again gets mentioned there is without question US Treasuries can continue to grind to lower yields. In our long term view we look for rates to continue this trend looking to buy dips in the market.
o Data remains light for the remainder of the week with ISM and pending home sales on Thursday and employment taking centre stage Friday.
o Primary Dealer
· CMBS DAILY RECAP
o Snoozer today. Saw $140mm in BWICs including $31mm in AM/AJ paper. The '05 AJ, sans a couple outliers, traded in the +600s/n. WBCMT 05-C20 AJs covering with a $85 handle looked to me to be the cheapest on the list. Spreads were essentially unchanged. Call GG10s 3bps tight at +372/$98-03.
o GEORDIE WALKER
· Credit Markets Bond Upgrades Top Cuts for First Time Since ‘07: BBG
o U.S. credit-rating upgrades are poised to exceed downgrades this quarter for the first time since before credit markets froze as the economic recovery boosts company profits
o Standard & Poor’s lifted the ratings of 238 U.S. issuers, including Santa Clara, California-based chipmaker National Semiconductor Corp. and department-store chain Macy’s Inc., while cutting 210, according to data compiled by Bloomberg.
o Moody’s Investors Service upgraded 200 borrowers and lowered ratings on 129. Upgrades haven’t surpassed downgrades since the second quarter of 2007.
·
· Official warns of asset risk for Fed – FT
o The Federal Reserve would risk its credibility if it bought more assets to stimulate the economy, board member Kevin Warsh said in a speech
o http://link.ft.com/r/5F39HH/PRGUWT/NNT7T/ZB5WSB/262HZ2/ID/h
· A stern warning on the current state of affairs comes from the Basel Bank of International Settlements (BIS) in its annual report.
o http://www.bis.org/publ/arpdf/ar2010e_ov.htm
o The Bank says that, “The combination of remaining vulnerabilities in the financial system and the side effects of ongoing intensive care threaten to send the patient into relapse and to undermine reform efforts,” and explains further that, “Macroeconomic support has its limits. Recent market reactions demonstrate that the limits to fiscal stimulus have been reached in a number of countries.
o Immediate, front-loaded fiscal consolidation is required in several industrial countries. Such policies need to be accompanied by structural reforms to facilitate growth and ensure long-term fiscal sustainability. In monetary policy, despite the fragility of the macroeconomy and low core inflation in the major advanced economies, it is important to bear in mind that keeping interest rates near zero for too long, with abundant liquidity, leads to distortions and creates risks for financial and monetary stability.”
· U.S. Supreme Court keeps Sarbanes-Oxley centerpiece intact
o In a 5-4 decision, the U.S. Supreme Court said the executive branch should have more say over the Public Company Accounting Oversight Board, created by the Sarbanes-Oxley Act. The court said the Securities and Exchange Commission must have authority to fire members of the board, including the chairman, to adhere to the Constitution's separation-of-power provision. Bloomberg (28 Jun.) , The Wall Street Journal/Deal Journal blog (28 Jun.) , CFO.com (28 Jun.) , New York Law Journal/The National Law Journal (29 Jun.)
· New York May Tax Out-of-State Hedge Fund Execs
o from DealBook
o Recession-hit New York could raise an extra $50 million a year by collecting income taxes from people who work for hedge funds in the state, but live elsewhere, according to a legislative plan to raise revenue
· New Jersey Republicans End Holdout, Back Budget Plan
· Illinois Reschedules $900M Build America Bond Sale
o Illinois was expected to bring the debt to market as soon as this week, but opted to wait until Governor Pat Quinn made a decision on whether or not he will sign off on the state's budget. Illinois' fiscal year begins Thursday.
o The $900 million debt offering, now expected to sell July 14, will fund various capital projects such as roads, bridges and high-speed rail projects, and should create around 20,000 to 25,000 jobs, Sinsheimer said.
o http://online.wsj.com/article/BT-CO-20100628-712931.html?mod=WSJ_latestheadlines
· China expects revenue amount to be second only to that of U.S.
o China is expected to receive fiscal revenue totaling $1.18 trillion by the end of this year, state broadcaster CCTV reported. The amount would make China the world's second-largest economy ranked by fiscal revenue, after the U.S. China Daily (Beijing) (29 Jun.)
· China Labor Unrest to Speed Up Automation Trend – CNBC link
· IMF Would Consider Yuan in its Basket of Currencies – CNBC link
· China vs West: Protectionism: (Reuters) - The United States has slapped final duties ranging up to almost 175 percent on about $56 million of electric blankets from China because of unfair pricing, the U.S. Commerce Department said on Monday.
· China vs West: Protectionism: Reuters) - European firms remain optimistic about China's economic growth prospects, but are less confident about the near-term outlook for profits and are very concerned about regulatory unpredictability, according to a survey.
· W.H. halts $20B in tech programs POLITICO Top Stories
o Sweeping review of information technology spending eyes possible cuts to many more.
· US arrests 10 alleged Russian spies - FT
o A story of spies and Moscow’s supposed quest for US nuclear and diplomatic secrets was unveiled on Monday when the Department of Justice announced the arrest of 10 alleged Russian agents in the US
o http://link.ft.com/r/5F39HH/PRGUWT/NNT7T/ZB5WSB/HD94JJ/ID/h
· Kissinger warns on Afghan exit strategy
o Henry Kissinger, the former US secretary of state, has warned that Washington’s plan to begin handing over responsibility to national forces in Afghanistan in July next year “provides a mechanism for failure”
o http://link.ft.com/r/5F39HH/PRGUWT/NNT7T/ZB5WSB/262HZV/ID/h
· U.K. Weighs Immigration Caps WSJ link
o The U.K. government began a consultation with the business community over plans to impose an immigration cap on workers coming into the country.
· Killing Escalates Mexico Drug War WSJ link
o A leading Mexican gubernatorial candidate was killed in a state bordering Texas, in the highest-level assassination of a politician since President Calderón declared war on drug cartels in 2006.
· Chinese Gangs Step Into Gap Left By Mafia (Telegraph)
o Chinese gangs have exploited a gap in Italy's crime world, expanding into northern and central cities while the traditional mafia concentrates on the country's south. Italian police targeted the Chinese gangs in raids across the country this week, arresting 24 people with suspected links to a multibillion euro money-laundering operation
· China military denies exercise aimed at U.S
o BEIJING (Reuters) - The Chinese military denied media reports that an artillery drill in the East China Sea was a rebuke of a planned military exercise between South Korea and the United States.
· Diplomat Opens Window on Tehran – WSJ link
o A former Iranian nuclear negotiator has taken up residence at Princeton, marking the highest-ranking member of Tehran's political elite to relocate to the U.S. since the uprising against Ahmadinejad.
· Junk food and obesity: Taking a cue from tobacco control from L.A. Times - Business
o That means strict measures to reduce consumption of what's bad for us, and aggressive public education campaigns
o What to do about the obesity epidemic? Here's a thought: Substitute "tobacco" for "junk food." That provides a pretty clear road map about what government authorities should be doing to safeguard public health.
COMPANY NEWS WITH MACRO IMPLICATIONS
ENERGY
o President Barack Obama will meet with senators on Tuesday to push for passage this year of a bill to fight climate change and revamp energy policy, the White House said
o PBR Petrobras awards FTI FMC Technologies $300M subsea manifold frame agreement
o SXL Sunoco Logistics Partners acquires Texon's butane blending business
o MILL Miller Petroleum President and Vice Chairman Ford Graham resigns effective June 25
o According to a NY post article citing an internal investigation from NY Fed, Wall Street's exposure to BP is not as bad as feared. Meanwhile, CEO Hayward is still in Russia and is in talks with Lukoil for possible joint projects
o BP BP reports ~7,020 barrels of oil were collected during the first 12 hours (midnight to noon) on June 28
o Conergy nears deal with banks to complete €325M loan refinancing reports Focus-Money- Bloomberg
o In theory, XOM Exxon Mobil or RDS Royal Dutch Shell could consider a bid for BP- JP Morgan
o Natural-gas pipeline rivalry may be shelved in favor of teamwork - Houston Chronicle
§ BP-ConocoPhillips venture planning to build a huge natural gas pipeline from Alaska to the Lower 48 is in early talks to join a competing project headed by Trans- Canada and Exxon Mobil Corp.,
o Oil find off Scottish coast could restart North Sea search
§ Two wells off the eastern coast of Scotland identified a reservoir that experts said could contain 300 million barrels of oil. The find is the biggest North Sea discovery since 2001, when a formation of 1 billion barrels was found off Aberdeen. The discovery could stimulate exploration in the North Sea, which was widely regarded as depleted. The Times (London) (subscription required) (28 Jun.) , The Independent (London) (29 Jun.) , The Scotsman (Edinburgh) (29 Jun.)
INDUSTRIALS/ HOMEBUILDERS
o Dubai Jet Order Is at Risk WSJ.com:
§ The future of a $29 billion jetliner order that state-controlled Dubai Aerospace Enterprise placed with Airbus and Boeing is uncertain amid the aircraft-leasing company's growing financial concerns
o CLC CLARCOR names Chris Conway president and COO, effective immediately
o CAT Caterpillar to increase excavator production in China
o FRD Friedman Industries reports Q4
o CH2M HILL Cos confirms terms of 245p per share cash offer for Scott Wilson; URS to consider options
o EMR Emerson fights ABB with $1.5 bln bid for Chloride- Reuters
§ http://www.reuters.com/article/idUSLDE65S09220100629
o ABB says considering its options in light of EMR Emerson Electric's bid for Chloride
o Systemair acquires Greek ventilation products distribution group Poliplevro; no financial details disclosed
o Peab to restore railroad North of Karlskrona for SEK 265M
o Siemens provides Q3 trading update at its Capital Markets Day
§ Says new orders and revs will be up.
o Steven Udvar-Hazy prepares to return to aviation financing – FT
§ http://www.ft.com/cms/s/0/c2e31f7e-831b-11df-8b15-00144feabdc0.html
o MMM 3M ups Q2 rev guidance
o WSJ says the Supreme Court ruling on the 2nd Amendment may actually cool gun sales
TRANSPORTS
- . Airlines are sharply lower after IATA figures showed Europe was the region with the weakest traffic growth in May. International scheduled passenger traffic rose 11.7% in May while freight demand jumped 34.3% y/y. IATA says passenger traffic is now 1% above pre-recession levels, while the freight market is 6% bigger. BA (-3.06%), LUFTHANSA (-4.01%), IBERIA (-2.4%) and AIR FRANCE-KLM (-4.29%) suffer
· British airways warns cabin crew they risk legal action on new strike – BBG
· Ryanair to cut U.K. winter capacity by 16% - MW
o
o IATA reports May International scheduled traffic: Passenger traffic rose +11.7% y/y, Cargo load factor 55.7% y/y
§ Passenger load factor 76%
§ Freight demand rose 34.3% y/y
§ North American load factor 82.4% y/y
§ Capacity rose +4.8% y/y
§ European Airlines saw +8.3% growth y/y
o WSJ is positive on the investments the railroads have made during the downturn
§ http://online.wsj.com/article/SB10001424052748704569204575328994241506542.html?mod=ITP_marketplace_0
o National Express issues H1 trading statement; trading has continued in line with expectations through Q2
§ http://www.nationalexpressgroup.com/nx1/media/news/corp_news/pr2010/2010-06-29/
o PRPX Portec Rail Products announces preliminary injunction to tender offer and merger dissolved- SA
o NSC Norfolk Southern reports weekly carloads up 20.2%
o GLAH Global Aviation files $100M IPO through Morgan Stanley and Jefferies
o PRXI Premier Exhibitions reports
TECH/MEDIA/TELECOM
· Goldman Sachs upgrades DIS, NWSA; downgrades TW
· MU- Strong May Q on the back of better DRAM pricing and higher NAND bit shipments, but slightly dampered by flattish DRAM and NAND bit guidance for the next Q. Bears may focus on lack of capacity going into a seasonally strong Q. Micron Management is not seeing any significant impact from European macro issues – as emerging market strength is offsetting limited issues in Europe. Mgmt also indirectly raised CY11 capex by stating it will ramp its 100K IMFS NAND shell to 60% during the year.
· AAPL: Users report issues with iPhone 4 proximity sensor during calls- AppleInsider
· AAPL WSJ suggests some caution on Apple given the iPhone antenna issue
· AAPL: Hon Hai to shift production facility for Apple products from Shenzhen to north and central China region to reduce costs after a round of wage hikes – FT
· AMZN, GOOG: Amazon Releases Kindle App for Android Phones- NYT
· GOOG: Android 2.2 Froyo FRF85 now available for Nexus One- Engadget
· GOOG: Chrome overtakes Safari for number three browser spot in the US sez StatCounter- Engadget
· GOOG: Google faces losing its China license; to end automatic rerouting from China site- FT
· http://www.ft.com/cms/s/2/3ea0fa9c-8352-11df-8451-00144feabdc0.html
· GOOG Former Facebook CTO says Google Me is not a rumor – TechCrunch
o http://techcrunch.com/2010/06/29/google-me-facebook/
· Facebook, GOOG: Is Facebook's Social Search Engine a Google Killer?- BBG
· CVC: 5-10% pay cuts at Newsday unions- NYPOST
o Newsday's unionized workers voted to accept a Cablevision offer that will slice pay for most workers by 5 percent over three years, while truckers get a 10 percent whack
· Solar: Some Taiwan-based solar cell makers plan to hike spot quotes in 3Q10- digitimes
· LGF: Icahn Says Lions Gate Will Fall After Offer Expires- BBG
· NBC/CMCSA: Executives face tense wait on future in merger- NYPOST
· Vivo: Telefonica’s Vivo Bid Stirs Portuguese Hostility Before Vote- BBG
· TSMC receives approval to take SMIC stake- Digitimes
· WLAN chip vendors cutting prices to clear inventories- Digitimes
· Foursquare prefers more venture capital to YHOO takeover talks- Independent
· LED TV: TV vendors expect LED TV to account for 30-40% of their LCD TV shipments in 2010- Digitimes
· Smartbooks: Lenovo and Toshiba ready to launch smartbooks- Digitimes
· 3D: 3D models to account for over 86% of total PDP TV shipments in 2013- Display Search
· NAND flash contract prices to rebound in late July- DRAMeXchange
· Internet: Obama pledges to increase internet capacity- FT
· Patents: The US Supreme Court yesterday ruled that so-called business method patents are eligible for legal protection- FT
· http://www.ft.com/cms/s/2/39dba856-8319-11df-8b15-00144feabdc0.html
· RMBS Rambus and GE Lighting sign license agreement to create LED lighting solutions for global markets
· VSH Vishay, TSEM TowerJazz expand business relationship to include planar MOSFETs, Super Junction MOSFETs
· ITA Becomes Hot Ticket- WSJ
o Eager to snap up a company that makes some much-used travel-search technology—and keep it out of Google Inc.'s hands—several potential buyers are circling ITA Software including EXPE, Kayak.com, and Travelport
· Gemalto buys wireless communication co cinterion for €163m
· BELM Bell Microproducts shareholders approve acquisition by AVT Avnet
· ADBE Porn industry to abandon Flash in favor of HTML 5 - Conceivably Tech
o http://www.conceivablytech.com/1553/business/an-unexpected-apple-ally-porn-industry-to-drop-flash/
· CAJ: Canon to make Canon Machinery, Tokki Corp wholly owned subsidiaries 1-Oct- Nikkei
o http://e.nikkei.com/e/ac/TNKS/Nni20100628D28SS466.htm
· SPIR Spire Receives DOE grant to develop LED-based solar simulator
· SMSC Standard Micro reports better Q1
· CKXE CKX Inc signs "new CEO" Michael Ferrel to contract through 2013 - LA Times
· VIA.B Viacom downgraded to neutral from buy at Goldman Sachs
· Infineon and group Sistema may form a Russian joint venture- Sueddeutsche Zeitung
Miners/ steel sectors etc
· UK listed miners are down…Rio Tinto is down 5.5%, Xstrata, Vedanta and Lonmin are down 4.5%, china growth worries
· Vale May Surpass Petrobras as Biggest Latin Stock - BBG
· POT Potash files $2B debt shelf registration
· Gold Fields Q4 attributable group production to be +13% seq, or about 895K oz
· Teck Resources reports explosion in coal dryer at Greenhills coal mine in British Columbia- RTT News
· Vedanta Resources may get to mine bauxite for aluminum refinery in Orissa - Economic Times
· SMMX Symyx Technologies rejects Certera's best and final offer of $5.75 per share
· ZEP Zep reports Q3 in line to better
· Corn, Soybeans May Advance as U.S. Crop Ratings Worsen on Rain- BBG
· XRM Xerium Technologies to close Stowe Woodward Plant in North America
· Discord erupts again at Norilsk Nickel – FT
o http://www.ft.com/cms/s/0/8fd7d79c-8306-11df-8b15-00144feabdc0.html
· Mining companies may restart media campaign against the super-profits tax if progress in dispute is not made by Jul 2nd - The Australian
· Australia PM Gillard: Confirms national elections to take place in 2nd half of the year; Looking for "good will" in mining tax resolution
· Mitsui signs first iron ore swap - TTN
·
Autos sector:
· TSLA Tesla Motors ups IPO size to 13.3m shares and prices above the range at $17 by GS, MS, JPM, and
· Cable signals end to aid for car industry
o Business secretary Vince Cable said on Monday the car industry was no longer in an ‘emergency’ situation, warning manufacturers that they could no longer count on direct government support
o http://link.ft.com/r/5F39HH/PRGUWT/NNT7T/ZB5WSB/GKQ5SU/ID/h
· Honda Motor to spend $70M to raise annual motorcycle capacity in Vietnam by 500K, or 33% - Nikkei
§ http://e.nikkei.com/e/ac/tnks/Nni20100629D29JF526.htm
·
· Toyota starts production of first European made hybrid car
Financials:
· Goldman makes nice with financial crisis panel NY Post
o A source at the Financial Crisis Inquiry Commission, which is headed by former California State Treasurer Phil Angelides, tells me that Goldman has been "cooperating since the subpoena" was dropped on the firm a couple of weeks ago.
· Financial overhaul:
o Political momentum was expected to carry a sweeping Wall Street reform bill to approval in the U.S. Congress, but the death of Senator Robert Byrd threatened to delay final action until mid-July. Reuters
o Senator Russ Feingold, Democrat of Wisconsin, one of two Democrats to vote against the financial regulatory bill, said he would also vote against the final version of the bill. NYT
o the late addition of a fee on banks and hedge funds to cover the cost of the legislation is roiling the few Republicans thought likely to vote for the package….the vote could get pushed after the break, giving critics in the GOP time to pressure Republicans who were leaning toward supporting the bill – WSJ
o Ms. Snowe was one of three Republicans who voiced disquiet about the fee . Scott Brown also on the fence
o another potential complication revolves around the timing of Mr. Byrd's funeral and whether he will lie in state in the Capitol, which could delay any vote
o Volcker Rule May Give Goldman, Citigroup Until 2022 to Comply – BBG
§ Rules curbing banks’ investments in their own funds would take effect 15 months to two years after a law is passed, according to the bill. Banks would have two years to comply, with the potential for three one-year extensions after that. They could seek another five years for “illiquid” funds such as private equity or real estate
o Overhaul Foes Let Loose Last Volleys WSJ link
§ As uncertainty over the fate of the financial-overhaul bill swelled, analysts and investors expressed relief that proposed changes would end some doubts that have dogged financial stocks.
o Finance Bill's Fate Uncertain in Senate WSJ link
o New Bank Taxes May Derail Financial Reform Bill – cnbc link
· AFL: Bloomberg) -- Aflac Inc., the largest supplemental health insurer, dumped all its Greek sovereign debt at a loss to reduce the risk of further writedowns. The company advanced 2.7 percent in New York trading.
· Large German banks will have to pay a higher bank levy than smaller counterparts, according to a German draft bill outlining an insurance-style resolution fund, the FT reports. Berlin wants to impose a progressive tax on bank balance sheets, with taxable liabilities under €10bn (£8bn, $12bn) being taxed at 0.02 per cent, those over €10bn one basis point higher, and those above €100bn at 0.04 per cent.
· UBS investment bank chairman Rick Leaman to leave
· Siemens to establish bank – FT
o http://www.ft.com/cms/s/0/4f3f6dae-82ec-11df-8b15-00144feabdc0.html
· Standard Chartered downgraded to hold from add at Oriel Securities
· Dexia may sell its Turkish insurance unit -- Les Echos
o http://www.lesechos.fr/info/finance/020633978594.htm
· Industry sources say Aviva to target Prudential's UK business if breakup occurs – Guardian
REAL ESTATE
· COR CoreSite Realty files amended S-11; increases size of IPO to $345M from $230M through Citi, BofA/ML and RBC Capital
o The new information is the increased size. The IPO was initially filed 13-May and the proposed symbol on the NYSE is 'COR.'
· Mortgages modified under HAMP fare better than others, report says
o Borrowers whose loans were modified under the U.S. Home Affordable Modification Program are more likely to remain current than homeowners with loans modified through other programs, according to a study by the Office of Thrift Supervision and the Office of the Comptroller of the Currency. Less than 17% of HAMP-altered mortgages were behind one monthly payment or more, according to the study. Las Vegas Sun/The Associated Press (29 Jun.)
· LEN Lennar upgraded to outperform from market perform at Keefe, Bruyette & Woods
· WLS Welsh Property Trust to offer 35.8M shares in range of $8.50-10.50 through UBS and JPMorgan
· FUR Winthrop Realty Trust announces multiple small acquisitions
· Ritholtz: The Second Leg Down in Housing... cnbc link
· Fed's Mortgage Plan Lowers Its Sights – WSJ link
o from NY Post: Business
o The latest commercial property loan to go into special-servicing is at a surprising address: RFR Realty's 757 Third Ave. at 48th Street, a nearly 500,000-square-foot office tower. The $126 million loan was quietly shipped into special servicing via LNR this month
·
CONSUMER
· JBS looking at possible acquisition of SFD Smithfield foods- Valor Economico
o For experts, the transaction makes sense because the American lives delicate situation.
o Through his press office, JBS said it would not comment on market rumors.
·
· KO WSJ examines Coca-Cola's WOrld Cup advertising campaign
o http://online.wsj.com/article/SB10001424052748704569204575328983721865268.html?mod=ITP_marketplace_0
· Groupe Danone upgraded to overweight from neutral at JPMorgan
· MLP Maui Land & Pineapple announced that the subscription price is $3.85 per share for previously announced $40M rights offering
· GIS General Mills authorizes repurchase of up to 100M common shares
· GIS General Mills increases quarterly dividend by 14.3% to $0.28 from $0.245
· BKs Barnes & Noble reports a mixed Q4. Res look better, but EPS is a miss
· Pendragon trading update for half year to 30-Jun: remains cautiously optimistic for rest of 2010, expects FY profit to be in line with expectations
· Knight Vinke builds strategic stake in Kesa
o The activist investor buys a 3% stake in the electricals retailer just a week after the company outlined how it would fight Best Buy's (BBY) move to the UK and a resurgent DSG International
o http://link.ft.com/r/5F39HH/PRGUWT/NNT7T/ZB5WSB/8A40XJ/ID/h
· Asahi Breweries may report H1 Op Profit ¥22.5B, +5% y/y (guided ¥24B on Apr 30th) - Japanese press – per TTN
GAMING, LODGING, & LEISURE
o CNTY Century Casinos extends exclusive, long-term agreement with Oceania Cruises
·
HEALTHCARE
o ABT: (Reuters) - U.S. drugmaker Abbott Laboratories Inc is looking to sell its flu vaccine business in a deal that could fetch 500 million euros ($614 million), the Wall Street Journal said, citing people familiar with the matter.
o BMTI BioMimetic Therapeutics receives filing letter from FDA for Augment Bone Graft PMA
o AMMD American Medical Systems receives FDA clearance for Miniarc precise single-incision sling
o Soleil Securities initiates LLY at sell, MRK at hold
o PTIE Pain Therapeutics amends agreement with King Pharmaceuticals (KG
o Genolier Swiss Medical network says Swiss Takeover Board opens proceedings to determine takeover offer obligation
o Axis-Shield H1 trading update: reported revenues up approx +2% y/y; revenues impacted by poor influenza season
o Teva Pharmaceutical announces FDA approval of Venlafazine HCl ER capsules
o Assura Group reports looks in line
From our EU/London desk
· All equity indices lower between 1.5% and 2.8% as several factors hold the markets attention.
o Greek unions embark on the 5th national strike in protest against the austerity measures in place so a draft EU document reveals that all sovereign risk exposure should be assesed to measure how finacial institutions would cope in the event of shocks to the system.
o Greek 2 year paper now yields 960 bps over Germany from 955bps yesterday. Even the UK which had been rewarded for a tough budget by tighter spreads last week has backed out to 17.8bps over Germany from 16,4bps yesterday.
o BP Plc is being sued by the members of the employee savings plan (ESP). The suit now filed as a class action as it is stating that the ESP should not have invested in BP ADR's.
o EU wide consumer confidence unexpectedly rose to 98.7 in June from 98.4 in May. The fall in the Euro was seen as boosting economic recovery prospects.
o All sectors are lower, the fall led by cyclicals.
· Energy
· European Oils -1.5-2.5%. Brent 76.73 -1.28.
· BP (-1.8%), planned asset sales will be mostly from E&P. JPMorgan says Exxon or Shell could consider Bid.
· Salamander Energy (-5.5%), abandons dry well in Vietnam.
· Mining
· UK Miners -3 to 5% following China comments.
· Vedanta ( -4.5%), may be allowed to mine bauxite in Orissa---(TIMES)
· Rio (-5.5%)
· BHP (-3.7%)
· CONTINENTAL plans to issue high-yield bond – S&P
· SIEMENS 3Q new orders and revenues up– S&P
· AXIS SHIELD: Poor flu sales to hit 1H revenues – S&P
· SWATCH GROUP: Chairman Hayek passes away – S&P
· CARPETRIGHT: FY profits in line, demand to remain subdued– S&P
· CHLORIDE: Firm offer from Emerson at GBP3.75 – S&P
· NATIONAL EXPRESS: Expects improvement in 2H– S&P
· PENDRAGON: Cautiously optimistic– S&P
· SERCO: On track to meet guidance – S&P
Asian wrap from our desks:
Japan
o NKY -1.27%, TPX -1.00%
o NKY fell to 3-wk closing low following a regional sell-off and as the yen strengthened to the 88 handle vs. the dollar. Turnover on the TPX fell to 957.17B yen from 1.27 trillion yen yesterday
o Stocks fell across most sectors led by oil & gas, tech, industrials, materials and consumer. Telecom and utilities outperformed, rising 0.55% and 0.02% respectively
o Exporters were hit hard as the yen strengthened to the 88 level vs. the dollar: autos -1.08%, CE -1.02%
o Sectors with exposure to China fell after the China Conference Board revised down its April gauge of the outlook for China’s economy. Machinery -1.35%
o Oil & gas producers -1.98% as crude oil price fell
o Best performing sectors on the TPX: info & comm. +0.16%, land transport +0.03%, electric power & gas +0.03%; worst performing sectors: mining -3.39%, other financing -2.00%, rubber products -2.00%, real estate -2.00%
o Buckling the trend, Nippon Telegraph & Telephone (9432) +0.97% after a Nikkei report that NTT Finance Corp, which manages funds for group companies and makes business loans, may report its first operating profit in three years
o Tokio Marine (8766) +0.21% after the insurer said it plans to buy back as many as 16M shares or 2% of its stock for up to 25B yen
o Elpida (6665) +4.20%
Nikkei today
o Japan industrial production fell a seasonally adjusted 0.1% in May MoM, the first decline in 3 mths due in part to lower output in the transportation equipment and pulp and paper sectors. The figure was slightly below consensus expectations to stay flat. Manufacturers polled by the ministry expect their orders to rise 0.4% in June, and climb 1.0% MoM in July
o Japan’s unemployment rate rose for the 3rd consecutive mth in May, up a seasonally adjusted 0.1% MoM to 5.2%. The ratio of job-to-applicant rose 0.02 to 0.50. The number of job openings offered rose 12.3% YoY in May, helped by 43.5% jumped from manufacturers. Also hiring appeared to have picked up with the fear of double-dip recession gone, the overall employment situation remains grim
o Production of cars, trucks and buses in Japan increased 30.6% YoY in May, the 7th consecutive mth, the Japan Automobile Manufacturers Association reported
o Japan household spending fell 0.7% YoY in May, the 2nd consecutive mth of decrease, the Ministry of Internal Affairs reported. The figure missed consensus expectations for 0.3% rise
Hong Kong
o HSI -2.31%; HSCEI -2.70%
o Stocks fell tracking the mainland index in a regional sell-off. Turnover on the HSI fell to HK$15.30B from HK$18.40B yesterday
o Airlines: China Eastern (670 HK) -5.44% after mainland media reported a former General Manager of the air carrier is under investigation for misappropriation of company funds. China Southern (1055 HK) -4.32% after the China Business news reported two more China Southern Airlines Executives have been detained for questioning, following the detention of seven on Jun 9
o China Resources Enterprise (291 HK) -2.61% said it had acquired an 80% stake in Hong Kong coffee chain Pacific Coffee from Chevalier Pacific Holdings for HK$326.6M
o Li & Fung (494 HK) -4.82%, Esprit (330 HK) -2.72% as investors are concerned exporters earnings will weaken in 2H as margins come under pressure on rising Chinese wages and exports to Europe fall
o Appliances extended fall after Skyworth (751 HK) May sales at its China unit missed expectation: Skyworth (751 HK) 8.85%, Haier (1169 HK) -10.64%, TCL (1070 HK) -8.94%
o Commodities producers fell: Chalco (2600 HK) -2.85%, oil & gas -2.89%, Jiangxi Copper (358 HK) -3.27%
· Headlines:
o The Conference Board revised its leading economic index for China to 0.3% growth in April, less than the 1.7% percent gain it previously reported. The Conference Board said the previous reading contained a “calculation error” for total floor space on which construction began – Bloomberg
China
· SHCOMP -4.27%; SZCOMP -5.44%
· Stocks slumped driving the benchmark index down the most in 6 weeks on low volume. While some investors pointed to a revised “leading” economic index (for April) as an excuse to sell, others pointed to the upcoming Agricultural Bank IPO limiting short term liquidity. Turnover on the SHCOMP fell to 44.92B yuan from 51.52B yuan yesterday
· Stocks fell across most sectors led by consumer, materials, tech, industrials and health care
· Real estate -6.80%. Gemdale (600383 CH) slumped after Zhao Hanzhong, a senior VP and member of the company’s board, resigned citing personal reasons
· Airlines -8.15%. Mainland media reported a former General Manager of China Eastern Airlines is under investigation for misappropriation of company funds while the China Business news reported two more China Southern Airlines Executives have been detained for questioning
· Mining -4.83%, metals -5.22%
TODAY’S EVENTS
Conferences
o Tuesday June 29:
§ American Diabetes Association 70th Scientific Sessions- 06/25/10 - 06/29/10 Orlando, FL
§ Bank of America Merrill Lynch German Jour Fixe 1-1 Conference - 06/29/10 London, GB
§ CFO Core Concerns Conference- 06/27/10 - 06/29/10
§ Close Brothers Seydler AG North, Central Europe, Central Asia & Turkey - Midcap Conference
1. NTS: ZKM.L
§ Credit Suisse Group Basic Materials Conference
1. NTS: CLD , HXL , KRA , POL
§ Credit Suisse Group CSSS Consumer Conference- 06/28/10 - 06/29/10 Cape Town
§ DealFlow Media, Inc.: The Reverse Merger Conference- 06/29/10 - 06/30/10 Toronto, CA
§ Government Technology CTO Summit- 06/28/10 - 06/29/10 IL
§ Information Management Network (IMN) 2nd Annual East Coast Beneficial Owner's Securities Lending Summit - 06/28/10 - 06/29/10 Boston, MA
§ Institute for International Research Managed Services & Network Sharing - 06/28/10 - 06/30/10 London, GB
§ JPMorgan Asia Pacific Conference- 06/28/10 - 06/30/10 New York, NY
§ JPMorgan Media CEO Conference- 06/29/10 - 06/30/10 London, GB
§ OneMedForum Emerging Company Finance Conference- 06/29/10 - 06/30/10 New York, NY
§ Oppenheimer & Co. Consumer, Gaming, Lodging & Leisure Conference- 06/29/10 - 06/30/10 Boston, MA
1. 9:30AM: FLWS , JACK , NWL
2. 10:05AM: BJ , MNRO , SSI
3. 10:40AM: DSW , PEET
4. 11:15AM: GME , LCUT , RRGB
5. 11:50AM: BJRI , CRI , OMX
6. 1PM: JAH , MSSR
7. 1:35PM: CHH , LTM , MRT , NTY
8. 2:10PM: BKC , SMG
9. 2:45PM: AFCE
10. 3:20PM: SONC
11. NTS: URBN
§ Platts Annual European Nuclear Power Conference- 06/29/10 - 06/30/10 London, GB
§ SEMI PVJapan Conference- 06/29/10 - 07/01/10 Yokohama, JP
§ Windhover Information Inc Euro-Biotech Forum- 06/28/10 - 06/30/10 Paris, FR
Company Meetings/Other Daily Events
o Tuesday June 29:
§ Shareholder Meetings
1. NWLI, ROIAK, ATP, CHKP, IUSA, UAHC, PIR, BFIN, CYTR, NARA, CBMX, PIR
§ CSCO: Around the world with Cisco part 2
1. Webcast: http://investor.cisco.com/.
§ BKS Investor Day
§ SMSC Analyst Day
§ MMM consumer-and-office business review
§ DM Investor Day
§ The House is set to vote on a landmark bill to reform financial regulation- Barron’s
§ General David Petraeus undergoes confirmation hearings as the new commander of U.S. forces in Afghanistan
§ The World Gold Investment Congress takes place in London.
Economics
o Tuesday June 29:
o 0745 ICSC-Goldman Sachs Chain Store Sales Index
o 0855 Johnson Redbook Retail Sales Index
o 0900 S&P / Case-Shiller Home Price Index
o 1000 Consumer Confidence Index
o 1630 API Weekly Statistical Bulletin
o 1700 ABC News Consumer Comfort Index
Earnings
o Materials
§ Tuesday June 29: OMN
o Consumer/Retail/Education
§ Tuesday June 29: ZZ, PARL
o Healthcare
§ Tuesday June 29: MDX
INVESTMENT BANKING WRAP
M&A
· BP M&A possibilities- In theory, XOM Exxon Mobil or RDS Royal Dutch Shell could consider a bid for BP, says JPM- FTA
o As fantasy corporate finance goes, an Exxon bid for BP is not as far fetched as it sounds — and certainly more realistic than an approach from either PetroChina or Gazprom
o http://ftalphaville.ft.com/blog/2010/06/29/273596/fantasy-oil-major-ma/
· JBS looking at possible acquisition of SFD Smithfield foods- Valor Economico
o For experts, the transaction makes sense because the American lives delicate situation.
o Through his press office, JBS said it would not comment on market rumors.
·
· S&P analysts name European companies that could be targeted by US buyers- Telegraph
o Astrazenaca, Vivendi, BAE Systems, Balfour Beatty, and Tui are named as potential tarets
o S&P analysed more than 620 US deals announced in the past 12 months involving a European target, finding that more than two-thirds came from four industry sectors: information technology, consumer, industrials and healthcare.
· LGF- Icahn Says Lions Gate Will Fall After Offer Expires- BBG
o Investor Carl Icahn said Lions Gate Entertainment Corp. will drop below his $7-a-share offer price once his hostile tender for the independent film and television studio expires
o The bid won’t be extended again when it expires on June 30, Icahn said today in a statement. He’s the studio’s largest shareholder, with a 32 percent stake
· NBC/CMCSA- Executives face tense wait on future in merger- NYPOST
o While NBC Universal management will ultimately make the staffing decisions, Comcast, which is acquiring a 51 percent stake in the conglomerate from General Electric, is legally permitted to work in consultation with NBC Universal execs to decide on the management makeup of the post-merger giant.
· ABT Abbott looks to sell its flu vaccine unit – WSJ
o U.S. drugmaker Abbott Laboratories is looking to sell its flu vaccine business that it recentl acquired from Solvay in a deal that could fetch 500 million euros ($614 million),
o The flu vaccine unit, which will clock about 200 million euros in sales this year, is expected to draw interest from big pharma companies
o http://www.reuters.com/article/idUSSGE65S06520100629
· Sunoco Logistics to buy some Texon assets for $140 mln- Reuters
o Sunoco Logistics Partners L.P. said Monday it signed an agreement to buy a butane-blending business from Texon L.P. for $140 million plus inventory
o http://www.reuters.com/article/idUSSGE65R0JV20100628
· EMR Emerson fights ABB with $1.5 bln bid for Chloride- reuters
o Spurned suitor Emerson Electric upped its cash offer for Chloride to $1.5b, seeking to tempt the British group away from a recommended $1.25b deal from Switzerland's ABB
o ABB said to be considering options
o http://www.reuters.com/article/idUSLDE65S09220100629
· URS mulls raising offer for UK engineer Scott Wilson- Reuters
o U.S. engineering firm URS Corp said on Tuesday it was considering raising its offer for Britain's Scott Wilson, after privately held U.S. consultancy CH2M Hill's 245 pence-per-share cash offer trumped its initial bid.
o "URS has matching rights arrangements agreed with Scott Wilson and is considering increasing its offer to 245 pence or above,"
o http://www.reuters.com/article/idUSSGE65S09C20100629
· SMMX Symyx Technologies rejects Certera's best and final offer of $5.75 per share- SA
· ITA Becomes Hot Ticket for potential buyers- WSJ
o Eager to snap up a company that makes some much-used travel-search technology—and keep it out of Google Inc.'s hands—several potential buyers are circling ITA Software including EXPE, Kayak.com, and Travelport
· BELM Bell Microproducts shareholders approve acquisition by AVT Avnet
· FSTR LB Foster's PRPX Portec deal faces DoJ antitrust concerns- Reuters
o Although the DoJ has not made a final determination, it may seek various restructuring alternatives, including the sale of certain assets associated with the merged company's rail joint business
o http://www.reuters.com/article/idUSSGE65R0JW20100628
· Telefonica’s Vivo Bid Stirs Portuguese Hostility Before Vote- BBG
o The vote on Telefonica SA’s 6.5 billion-euro ($8 billion) offer for Portugal Telecom SGPS SA’s stake in their Brazilian venture may be too close to call, turning on how a centuries-old antagonism plays out
· Portuguese market regulator determines that Telefónica still controls 10% of voting rights in Portugal Telecom- SA
· FUR Winthrop Realty Trust announces multiple small acquisitions
· TSMC receives approval to take SMIC stake- Digitimes
o An application of Taiwan Semiconductor Manufacturing Company to take up a stake in China-based Semiconductor Manufacturing International Corporation has been approved by the Investment Commission of Taiwan's Ministry of Economic Affairs
o http://www.digitimes.com/news/a20100629PB200.html
· Dexia may sel its Turkish insurance unit- Les Echos
o “Given the interest in this asset, we could sell it right away, but its activities are of value to the pace of acquiring new customers DenizBank”
· Gemalto buys wireless communication co cinterion for €163m
· China Resources buys HK coffee chain for $42 mln- Reuters
o China Resources Enterprise has bought an 80 percent stake in Hong Kong coffee chain Pacific Coffee for HK$326.6 million ($41.97 million), in a move by the retail firm to enter the coffee store business in the mainland that is now dominated by U.S. chains
o http://www.reuters.com/article/idUSTOE65S04T20100629
· Le Monde Chooses Investors in Close Vote- Dealbook
o The supervisory board of Le Monde, the distinguished and debt-laden French newspaper, chose on Monday to accept a bid from a trio of left-leaning entrepreneurs, saving the paper from bankruptcy but taking control out of the hands of its journalists
o The vote, after several hours of discussion, was a close, even ambivalent one, with 11 board members voting for the investor group and the other 9 abstaining, according to a report from inside the meeting
o http://dealbook.blogs.nytimes.com/2010/06/29/le-monde-chooses-investors-in-close-vote/
$ RAISING
IPOs
· TSLA Tesla prices at $17 in upsized IPO- Reuters
o The company, known for its $109,000 Roadster, sold 13.3 million shares for $17 each, the source said, raising about $226 million. It raised the number of shares it hoped to sell by 20 percent. It had planned to sell 11.1 million shares for $14 to $16 each.
o http://www.reuters.com/article/idUSTRE65R2B620100629
· REAL ESTATE: COR CoreSite Realty files amended S-11; increases size of IPO to $345M from $230M through Citi, BofA/ML and RBC Capital
o The new information is the increased size. The IPO was initially filed 13-May and the proposed symbol on the NYSE is 'COR.'
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· Agricultural Bank’s hopes on IPO hit- FT
o Agricultural Bank of China, which hopes to raise as much as $23bn in the world’s biggest initial public offering, has been forced by the weak mainland stock market to offer its shares at a lower price range in Shanghai than in Hong Kong
o “I don’t see much appetite for this deal [among retail investors] in the A-share market,” said one bank analyst.
o http://www.ft.com/cms/s/0/1c2dfbd0-82c7-11df-b7ad-00144feabdc0.html
· Ownership claim casts pall over Berau's Indonesia IPO- Reuters
o A firm linked to U.S. hedge fund Farallon has filed a lawsuit in Singapore claiming it owns a small stake in Indonesia's 5th largest coal producer, PT Berau Coal, complicating the latter's planned bond and share offers.
o http://www.reuters.com/article/idUSSGE65M0A120100629
· Seaspan Says Yuan Controls ‘Biggest Issue’ for Shanghai Listing- BBG
o Seaspan Corp., the ship lessor interested in selling shares in Shanghai, said yuan convertibility is the “biggest issue” that needed to be resolved before China could attract listings from overseas
o “If I sell shares in Shanghai I get yuan in return, but yuan are no use to me,” Chief Executive Officer Gerry Wang said in an interview in Shanghai yesterday. “I need to convert them into dollars.”
· WLS Welsh Property Trust to offer 35.8M shares in range of $8.50-10.50 through UBS and JPMorgan
· Mexico Eases IPO Rules With New Equity Class to Spur Offerings- BBG
o Mexico’s stock exchange is easing regulations to let smaller companies list shares after attracting only two initial public offerings since 2008.
o Bolsa Mexicana de Valores SAB will allow companies with estimated market values of less than $250 million to offer shares before meeting corporate governance standards required for larger IPOs in Mexico
· GLAH Global Aviation files $100M IPO through Morgan Stanley and Jefferies
PRICINGS
· Initial Offerings
o TSLA Tesla Motors ups IPO size to 13.3m shares and prices above the range at $17 by GS, MS, JPM, and DB
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
· 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
NEWS
· American Capital Completes Debt Restructuring- Dealbook
o American Capital, the private equity firm that counts John Paulson as its largest shareholder, said Monday it succeeded in restructuring $2.4 billion of debt
o American Capital defaulted on its revolving line of credit, bonds and privately placed term notes last year as the credit quality of its loan portfolio deteriorated amid the recession
o http://dealbook.blogs.nytimes.com/2010/06/29/american-capital-completes-debt-restructuring/
· Services: IRM Iron Mountain files mixed shelf of indeterminate amount
· Materials: POT Potash files $2B debt shelf registration
***All eco data from Bloomberg and DJ
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