Morning @ Cantor
Morning @ Cantor 7/2
Today’s Stories From Cantor Fitzgerald
Sal Catrini (908) 517-5067
EARLY US LANDSCAPE****
· US Stock Futures flattish … Rates- 10 yr flattish a 7am et ….European Stocks Higher Ahead Of US Payrolls.. Tighter Start For iTraxx Indexes, peripherals
· Commodities bouncing today…ex crude flat. zinc is up 4%, copper is up about 2.5%,
· .. Spot gold was down $43 yesterday…this morning, spot gold is up $11 to $1210
· Libor 3-month: Dollar: 0.534% vs prior 0.533%
· Jobs today!!!! Jun Change in Nonfarm Payrolls: -130Ke v +431K prior; Change in Private Payrolls: +110Ke v +41K prior; Change in Manufacturing. Payrolls: +25K e v +29K prior; - 8:30 (US) Jun Unemployment Rate: 9.8%e v 9.7% prior
· EU stocks up 0.33% - middle of range at 7am et
o European peripherals spreads continue to narrow after finding some relief in the recent ECB 3-month LTRO and 6-day MRO operations… Spain may need to tap the EU-IMF rescue fund and its PM Zapatero is to meet IMF’s chief economist (SA)
· Asian Markets: Nikkei +0.13%; Hang Seng (1.11%); Shanghai Composite +0.38%
· China Shares End Up On Bargain Hunting After 7 Sessions Of Losses
· Goldman Sachs Cuts China Growth Forecast on Property
o Goldman Sachs Group Inc. cut its growth forecast for China this year to 10.1 percent from 11.4 percent as government restrictions on lending and real estate slow expansion in the world’s third-largest economy
· Miners positive open Aussie mining tax change –up 3% or so..but miners hit hard this week…..Xstratart dn 9% this week! On weak china story line
· US stock Technical’s in focus today..will the jobs report cause a big volume bottom in stocks? Hard to say with vacations weekend upcoming
o Fears Of the Dreaded 'Death Cross' when the Standard & Poor's 500 SPX 50-day moving average crosses beneath the 200-day moving average, has not yet made a complete appearance but is, by some estimates, just days away.
o S&P Cuts '500' Target, Says Bear Market Looms – CNBC link
· FX: EUR/CHF continued with it's rebound from fresh all-time lows set on Thursday at 1.3070 and rallied above 1.3350 today.
· FX: EUR/USD hovering around the 1.25 handle
· FX: The recent slowing in the US economy has led to speculation that the US dollar could have passed its peak - London Telegraph; "today could be a turning point for the dollar, as concerns about the US economy and US deficit might finally trump concerns regarding fiscal problems in Europe
· FX: Aussie/yen pair sharply higher fri morning…on Aussie mining tax news/ risk appetite better
· FX: Yuan Forwards Set for Fourth Weekly Gain After Euro Rallies
o Twelve-month non-deliverable forwards jumped 0.3 percent to 6.6630 per dollar as of 11:37 a.m. in Hong Kong and strengthened 0.23 percent in the week
· FX: China's SAFE: To "optimize" currency composition of fx reserves; has dollar, euro, yen and emerging market currencies in fx portfolio
· Rates. 10 yr flattish a 7am et….Treasuries Rise small, Extending Weekly Gain, Before U.S. Jobs Report
o Flattening continues… Treasury Yield Curve Flattest Since October on Deflation View
§ 2- 10 yr…spread between the two securities was at 231 basis points today. It dropped yesterday to 227 basis points, the least since Oct. 2
· Oil Trades Around $73, Heads for Weekly Loss Before Jobs Report… Crude oil heading for its first weekly decline in four weeks… Crude fell 7.5 percent in the past four days, touching a three-week low of $72.05 yesterday,
· Rehn Open to Orderly Insolvency of Euro States, Handelsblatt
· Japan Reuters) - The Bank of Japan is expected to revise up its economic forecast for the year to March 2011 at its next policy meeting on July 14-15, the Nikkei newspaper reported on Friday
· China vs West: CEO of General Electric, Immelt on China: They Won't Let Us Win
o Jeffrey Immelt, the CEO of General Electric, has become the latest high-profile U.S. business leader to sound off about China.
o It's getting harder for foreign companies to do business there, he told Italian business leaders. "I really worry about China," the FT quotes him as saying. "I am not sure that in the end they want any of us to win, or any of us to be successful."
· EU vs EU: EU's 'Opposite Twins' Clash Over Future – WSJ link
o France and Germany are on different sides of crucial issues in Europe's debate over its economic future. The awkward personal chemistry between their leaders has complicated the two countries' relationship further.
· German Lower House of Parliament backs law banning naked Short Selling of shares and state bonds from Euro member states -- Reuters
· Spain: Moody’s on Spain..says fumdamantlas strong – BBG
· Spain: Jobless claims in Spain fell by 83,834 in June, down 2.1% on the prior month and the third straight monthly decline, according to the Ministry of Employment.
· Spain: Spain's debt crisis may force the country to tap the EU-IMF rescue fund over the next two to three months and set off a political storm, according a confidential report by the Bank of America Merrill Lynch.
· Data
o Euro-Zone May Unemployment Rate: 10.0% v 10.1%e
o Italy May Unemployment Rate: 8.7% v 9.0%e
o Euro Zone May PPI M/M: 0.3% v 0.3%e
o Spain Jun Net Unemployment M/M: -83.8K v -65.0Ke
o UK Jun Construction PMI 58.4 vs consensus 58.5. EuroZone May PPI due at 5ET
· Money Raising:
o Venture-backed initial public offerings are the highest since before the financial crisis, even as venture-backed M&A activity is slipping, according to a survey by Thomson Reuters and the National Venture Capital Association.
o DJ Edenred Stock +24% From Start Price In 1st Day of Listing
o Welsh Property Trust, the real estate investment trust, on Thursday canceled plans for its initial public offering for the second time in four weeks, after a big price cut on its shares still couldn't get the deal done – NYT
o Tesla Shares Sink as I.P.O. Excitement Wanes NYT
§ Shares of Tesla Motors sank Thursday as the fervor surrounding the electric car maker's blowout public offering washed away
o Shares of AutoNavi, the Chinese digital map services provider, rose 8 percent in its first day of trading Thursday, following the company's $107.8 million initial public offering, The Associated Press
o Lagardère to list its Canal Plus stake FT
§ French media group says it will sell its 20 per cent stake in the pay-TV operator in an initial public offering after failing to sell the stake to Vivendi
· M&A:
o LCC US Airways Gains Altitude Flying Solo- WSJ
o Lloyd's of London insurer Brit Insurance said it had rejected an improved takeover proposal from U.S. buyout firm Apollo Management, but signalled it was open to further offers Reuters
o Dana Petroleum (+20%). Company receives a preliminary approach from Korea National Oil Corp. with the FT valuing the potential bid at £1.5bn.
o Blockbuster is in talks to sell a stake to a strategic investor and yesterday received a 45-day extension from lenders to reach a deal, NYP
o Google Buys Flight Search Engine; Travel Sites Drop
§ Google thrust itself into the online travel industry by agreeing to acquire flight-information software maker ITA Software for $700 million in a deal likely to bring fresh antitrust scrutiny to the search giant. WSJ
o AIG May Seek to Sell Japan Insurance Units to Help Repay Rescue (again)..BBG
o Chloride Group PLC Accepts Bid From Emerson
o ONNN Sanyo close to sale of semiconductor unit to ON Semiconductor - Reuters
o Lions Gate Entertainment Corp. (LGF) said late Thursday that it has adopted a shareholder rights plan, or "poison pill", that is designed to discourage or buy time against any hostile takeover bid. The company has been the target of a hostile takeover bid by activist investor Carl Icahn
o Bloomberg) -- The bankruptcy examiner probing Tribune Co.’s 2007 buyout won more time to investigate whether the deal is subject to a court challenge
o Sanofi planning $20bn US acquisition…France’s largest drugmaker is preparing to make a US acquisition, five people familiar with the matter have told Bloomberg.
o Brit Insurance Rejects 824 Million-Pound Approach From Apollo - BBG
o DJ Sanyo Electric In Talks To Sell Chip Ops To ON Semiconductor
· BP stories:
o BP’s Gulf Intercept Well Ahead of Schedule With 600 Feet to Go
o BP Criminal Case in Oil Spill May Be Inevitable, Analysts Say – BBG
o Cnooc Group Declines Comment on Talks to Buy BP Argentine Stake – BBG
§ Spec to buy as much as $9 billion worth of BP Plc’s assets in South America
o Paul Rubin: Why Is the Gulf Cleanup So Slow? – WSJ link
§ There are obvious actions to speed things up, but the government oddly resists taking them.
o BP oil spill: Italy drilling ban hits UK-listed explorer
§ from Telegraph Finance
§ Italy's plan to restrict drilling offshore after BP's catastrophic oil spill may cause difficulties for UK-listed Mediterranean Oil & Gas.
· The Australian government announce details of the new mining super tax, with several concessions to previous expectations; The headline rate will be 30%, not 40% as previously announced. It will only apply to coal and iron ore. There will also be a A$50m profit threshold. (Rio Tinto +0.7%, Billiton +1%, Xstrata +3%)
· U.S. Treasury reduces its stake in Citigroup to about 18%
o The U.S. Treasury sold 1.1 billion shares of Citigroup stock, bringing its total sales to 2.6 billion shares and reducing its stake in the bank to about 18%. The latest sale brings the government's profit from selling Citigroup shares to more than $2 billion. "We are pleased that Treasury has profitably sold a third of its common shares in Citi, adding to the substantial return for taxpayers realized last year," said Jon Diat, a Citigroup spokesman. The Wall Street Journal
· Airlines miss…CAL June RASM 21.5%, below consensus 23% plus
o More Airline data expected over tthe next week..say tuned
· 'Pent-up demand' for travel erupts over July 4th holiday USATODAY
o Far more Americans are predicted to hit the road this weekend to celebrate July Fourth than did last year
· MediaTek (fell on a digitimes eport it is less confident that Q3 revenue will jump sequentially.
· Video Game Sales Have Smaller Drop in May
o After a surprising—and staggeringly bad—April, the video game industry showed fledgling signs of life in May—but nothing that’s going to cause investors to cheer
o Overall industry sales for the month were down 5 percent to $823.5 million, according to the NPD Group, which tracks video game sales. Software sales, which investors and industry observers track more closely, were up 4 percent, however, to $466.3 million. The software numbers were slightly lower than analyst expectations, which ranged from 5 percent to 11 percent increases.
o http://www.cnbc.com/id/38047430
· Macau Casino Revenue in June Declines on World Cup
o Bloomberg) -- Macau’s casino revenue declined 20 percent in June from the previous month as the World Cup kept some gamblers away from card games and slot machines in the world’s biggest betting hub
o Gambling revenue for casinos in the city fell to 13.6 billion patacas ($1.69 billion) in June from 17.1 billion patacas in May, according to Macau’s Gaming Inspection and Coordination Bureau. SJM Holdings Ltd., the casino operator with the biggest market share in Macau, fell the most in five months on Hong Kong’s stock market.
· steel demand Kloeckner says European steel demand likely to fall in H2 vs H1 -- Reuters citing Kloeckner CEO
· CON.GR Continental reports preliminary H1 results
· Autos: Reuters) - U.S. auto sales slipped in June from the previous month and major automakers said there was no sign of the second-half recovery the battered industry had expected at the start of the year.
· Autos: Daimler CEO: Vehicle Sales In June Could Mark New Record (Dow Jones)--Daimler AG (DAI.XE) Chief Executive Dieter Zetsche said Friday that June could be a new record month for the German automaker in terms of global vehicle sales as demand in China continues to soar.
o The automaker is due to release monthly vehicle sales data for its core Mercedes-Benz division next week.
· Autos: GM: China June Car Sales 176,486 Units; Up 23.2% On Year
· Daimler's Mercedes-Benz China June car sales jump +177% at 13,700 -- Dow Jones
· S&P Document Gives Rare Look at NY Yankees Finances - CNBC link
· Sen. Cantwell to Support Financial Overhaul Bill – WSJ
o bringing the White House to the verge of the 60 Senate votes it needs to ensure passage.
o Ms. Cantwell said she was convinced the bill would toughen regulation of the derivatives market.
o Ms. Cantwell's support for the bill had previously been unclear. She voted against an earlier Senate version of the legislation in May over her concerns the derivatives section wasn't strict enough.
o With her support, Democrats likely need the support of just two Republicans for the bill to have the 60 votes necessary to block any filibuster. Sen. Susan Collins (R., Maine) has already said she's inclined to support the bill, which means Democrats and the White House might only need one more vote.
o Many congressional aides expect Sen. Olympia Snowe (R., Maine) to announce she will support the bill, though her office has so far declined to comment. Sens. Scott Brown (R., Mass.) and Charles Grassley (R., Iowa) are also considered possible supporters, though they have also remained uncommitted.
· Companies Push for Clarity on Derivatives Regulation – WSJ link
o Democrats are trying to quell an outcry over a last-minute change to their financial-regulation overhaul that has sparked confusion over regulation of the giant derivatives market.
· Berkshire May Be Spared Collateral Posting on Financial Reform - BBG
o Warren Buffett’s Berkshire Hathaway Inc., which lobbied Congress to exclude its derivatives contracts from new collateral requirements, may get its way as the financial regulatory overhaul nears approval
o The new rules won’t alter previously written derivative contracts, Democratic Senators Chris Dodd of Connecticut and Arkansas’s Blanche Lincoln told Democratic Representatives Barney Frank of Massachusetts and Minnesota’s Collin Peterson in a letter
· Belarus, Russia Sign Long-awaited Gas Transit Deal (AFP)--Belarus and Russia Friday signed a gas transit deal expected to end disagreements that prompted Moscow to reduce supplies last month
· Lloyd's is restricting cover for any ships carrying refined oil products to Iran, the Financial Times reports Friday. The move ensures Lloyd's complies with the latest round of sanctions on Iran, which were signed into law in the U.S. Thursday.
· Bloomberg) -- President Barack Obama today will announce $795 million in government grants and loans to expand broadband access by building network infrastructure and public computing centers.
· (Bloomberg) -- Mexicans will go to the polls in fourteen states this weekend after mounting drug-related violence made this campaign the bloodiest since 1994, posing a threat to the country’s democracy and adding to investor risk.
- Economics:
- US Manufacturing Payrolls (Jun) SA Consensus 25K at 08:30 ET
- US Avg Hourly Earnings (Jun) m/m SA Consensus 0.1% at at 08:30 ET
- Jun Employment Report at 08:30 ET
- US Avg Hourly Earnings (Jun) SA Consensus 0.1% at 08:30 ET
- US Nonfarm Payrolls (Jun) SA Consensus (122K) at 08:30 ET
- US Avg Weekly Hours (Jun) SA Consensus 34.2 at 08:30 ET
- US Private Payrolls (Jun) SA Consensus 111K at 08:30 ET
- US Unemployment Rate (Jun) SA Consensus 9.8% at 08:30 ET
- Factory Orders (May) SA Consensus (0.7%) at 08:30 ET
- Earnings:
- No major companies expected to report.
TODAY’S BIG STORIES
· Equity Wrap:
o Thursday was an interesting day, so many dislocations. Guys were hurt on their short in the euro, and not to mention Gold was in giveback mode(felt like one of the few things left with meat on it to raise money). They had us down early out of Europe with a somewhat favorable reception to the Spanish bond auction because it didn’t cost them much vs. last time around. But history has changed, it was 17 of the last 20 times that the 1st of July was up to start the 3rd qtr, well it is now 17 of 21. They had the climax after hat ugly data around the horn, ism was weaker, as was jobless claims and especially may pending home sales which trailed by double the estimate. All said and done, at this point, I would say an ugly number is factored in going into the non-farm number tomorrow, especially since you got a slight peek with the adp earlier in the week. The action was mixed, had vanillas adding to some stuff after the ugly data but they are pretty much down to tags at best and need to be pushed to add to things if the prices become that dislocated. Hedgys also covered some shorts earlier in the day and then tried to press them again later in the day and quant’s were somewhat quiet
o Technically you had that 1,014 level hold for the most part, still a lot of people are talking about that right shoulder which can take us down to 875 with time. Personally, like I said, it does really seem like most powder has been used at higher levels and the amount of cash and conviction left to buy stocks remains low and lower. I speak to a good amount of value guys and they’ve been quiet and wait for spx 850. Breadth to the market had sell names outnumber buy names by 1 ½-1, while internally here, buy and sell names were equal
o Asian Markets were led lower by a weaker than expected Chinese Purchasing Managers Index. As a result, S&P’s started a bit easier, though they got a little help from Europe as the Spanish auction of 3.5B (Euros) in 5 year paper went better than feared. With weaker domestic economic data, however, the bears really took control, driving the cash market to a 1.95% loss just before lunch. At this point bargain hunters emerged, and the balance of the session was spent in rally mode, though we still fell short of an up day, ending off 0.3%. On the economic front, most of the news was disconcerting. Initial jobless claims were 472k, 17k worse than expected, while Continuing Claims came in 66k worse at 4.616m. The ISM Manufacturing Index fell from 59.7 to 56.2; 59 had been expected. Pending home sales fell 30% MoM (expected decline was 14.2%), and both Domestic and Total Vehicle Sales disappointed.
o One factor helping the bulls may have been new money being put to work as we begin the third quarter; another positive was a call by Doug Cass (a tweet, actually): “I believe today will mark a classic bottom”. Recall that Doug successfully called the bottom in March of 2009. The strongest sector of the market was Consumer Discretionary (up 0.8%), led by letter F (up 4.9%), ARO (up 6.5%) and ANF (up 4%). Financials were weakest, off 0.85%, as BofA cut earnings estimates for the banks across the board due to a decline in trading volumes.
o (Billy Clark and team)
· Treasury’s Wrap:
o After yesterday's late afternoon rally attributed to the review of Spain by Moody's, month end/quarter end buying and weakness of equities, many had looked for a small pullback today but to no avail as Treasuries were quickly bid from the get go in Asia amid the fears around European debt and more so the worse than expected manufacturing data from China. Treasuries came off these levels during the European session as the Euro rallied (up over 2.5cents on the day) with the less than anticipated loans the ECB would need to make to banks. As the New York session opened Treasuries were at their intraday lows with buying quickly emerging mainly in the longer end of the curve. The worse than expected claims data (initial 472K versus expected 455K and continuing 4616K versus 4550K) aided the Treasury rally although the major run-up did not take place until the release of pending home sales and ISM both significantly worse than expected (ISM 56.2 versus expected 59.0, pending home sales -30.0 MoM expected -14.2%). Treasuries made their intraday highs shortly thereafter with the short end running into a wall while the longer end continuing to trade extremely well on this continued weak data and double dip recession fears along with forced short covering by real money account at what is currently extreme yields that the market has not seen in over 14 months, 10s traded to 2.879% 30s 3.826%. Treasuries quieted down in the early afternoon mainly drifting lower throughout the remainder of the session as equities came off their worst levels of the day and profit taking. At 3PM Treasuries finished mixed with the curve once again continuing its flattening 2/10s flatter by 3.3bps at 230 2/30s flatter by 5.2bps at 324.
o All eyes will be on tomorrow highly anticipated payrolls report with a consensus right now of -125K but a gain of 115K private sector jobs. Our long term outlook remains to buy Treasuries on dips favoring a small curve flattener.
o Commodity and TIPS markets significantly underperformed today on the global growth concerns and the Euro's reversal. B/Es on TIPS were in 5-10bps across the curve, while oil and gold both down around 4% on the session. The Treasury also announced they will sell $12Bln 10 year TIPS, this is $1Bln larger than we had expected. Given the July 4th holiday, 3/10/30s will be auctioned Monday July 12-Wednesday July 14th.
o Primary Dealer
· Credit Markets Mortgage Bonds Booming – WSJ link
o Investors are seeking out mortgage bonds backed by the U.S. government as a safe haven from the tumult of the global economy, a reversal of fortune that has helped drive mortgage rates for consumers to record lows.
· Credit Markets Pimco’s Kiesel Says Energy Company Bonds Make ‘Sense’
o bloomberg) -- Pacific Investment Management Co., the world’s biggest bond-fund manager, says select energy company bonds make “increasing sense” after prices on the debt dropped following the worst oil spill in U.S. history
· Credit Markets AIG Bondholders Get Top Returns With Benmosche: BBG
o Fixed-income investors betting on American International Group Inc. Chief Executive Officer Robert Benmosche were rewarded with the best-performing investment- grade corporate bonds in June
o AIG debt gained 4.92 percent last month, the most among the 50 biggest U.S. issuers
· Credit Markets Foxwoods Debt Talks Test Tribal Bets – WSJ link
· Money flows:
o Emerging-Market Bonds Attract Record Inflows as Stocks Struggle
§ Funds dedicated to debt in developing countries attracted $17 billion of net inflows in the first six months, compared with $14 billion in the second-half of 2009, EPFR Global said today in a statement. A net $4.5 billion was taken out of emerging-market bonds in the January-June period of last year.
§ “Flows continued to show investors’ marked preference for fixed-income assets over equity,”
o Developing-market stock funds received $17.4 billion between January and June, EPFR said, compared with $47.7 billion in the second half of 2009 and $35.6 billion in the first half of that year, it said.
· IMF studies creation of a global emergency fund to cope with crises
§ The International Monetary Fund and major economic powers are considering creating an emergency fund that could act as a safety net for nations in crisis. If the proposal goes forward, it could transform the IMF from an institution that reacts to crises to one that anticipates them and intervenes to prevent them from deepening and spreading. The Washington Post (02 Jul.)
· US states:
o N.Y. MTA Reduces Week’s Largest Taxable Sale as Spreads Widen
§ Bloomberg) -- The Metropolitan Transportation Authority, which runs New York City’s subways, buses and commuter trains, shrank a $555 million taxable debt offering by 16 percent as it struggled with a deficit and as investors sought to avoid risk
o House Approves War Funding, State Aid After Obama Veto Threat (Bloomberg) -- The U.S. House approved a war-funding measure that includes $10 billion in aid to state governments to prevent thousands of teacher layoffs, after a veto threat from the White House
o New Jersey Bloomberg) -- New Jersey lawmakers may defy Governor Chris Christie’s calls to hold special sessions on property-tax limits during the U.S. holiday weekend, as the governor threatened to ask the courts to force them to meet.
o New York Bloomberg) -- The New York Senate adjourned without voting on a $1 billion package of tax and revenue measures needed to pay for spending bills they passed four days earlier
· NYs Paterson Retreats From Taxing Hedge-Fund Managers BBG
o New York Governor David Paterson is retreating from a plan to tax hedge-fund managers who commute into the state, which was projected to raise $50 million a year to help balance an overdue budget
o Paterson, a Democrat, said today he no longer supports the levy because investment companies could avoid it just by moving to neighboring states. Connecticut Governor Jodi Rell yesterday sent a letter to the New York Hedge Fund Roundtable urging its members to relocate to her state to escape the proposed tax.
· SEC Said to Investigate Marketing of Principal-Protected Notes
o The U.S. Securities and Exchange Commission has asked several inancial firms how they market “principal-protected” notes, after investors said they lost more than $1 billion on the securities when Lehman Brothers Holdings Inc. collapsed
· Obama to Announce $795 Million for Expanding Broadband Access
o President Barack Obama today will announce $795 million in government grants and loans to expand broadband access by building network infrastructure and public computing centers.
· Energy Hedge Funds Close After Investor Withdrawals
o (Bloomberg) -- Energy hedge funds in Europe are collapsing after investor withdrawals forced managers to scale back bets amid sliding prices for oil, coal and electricity
o At least six funds managing more than $158 million shut in the first half, including four in May and June, according to data compiled by Bloomberg. London-based Rampart Capital LLP succumbed after failing to reach “critical mass” within nine months of opening, according to Chief Investment Officer Marcello Romano.
· Six House Democrats Flip to Support Unemployment Bill
o from Roll Call
o Six of the 16 House Democrats who voted against extending unemployment benefits Wednesday had a change of heart overnight and backed the bill Thursday.
· Krugman or Paulson: Who You Gonna Bet On? - BW link
· Drug hitmen kill Mexican official ahead of vote Reuters
o Suspected drug hitmen in Mexico killed a top prosecutor, murdered 21 people in a shootout and dumped a severed head outside the house of a mayoral candidate days before elections, authorities said.
· Climate Plan Depends on Energy Saving, Carbon Storage, IEA Says - BBG
o Any plan for halving global greenhouse-gas emissions by 2050 will depend on cutting the energy used by buildings and vehicles and on developing technology to capture and store pollution, the International Energy Agency said today
o More energy-efficient buildings and cars could provide 38 percent of the carbon dioxide cuts necessary, and “should be the highest priority in the short-term,” according to an IEA report.
COMPANY NEWS WITH MACRO IMPLICATIONS
· S&P New Share Changes Announced
S&P 600 for Wednesday, July 7
Adding: MEND
Deleting: CKR
*CKR Restaurants being acquired
· IRSN Irvine Sensors entered into subscription agreements
ENERGY
· BP stories:
o BP’s Gulf Intercept Well Ahead of Schedule With 600 Feet to Go
o BP Criminal Case in Oil Spill May Be Inevitable, Analysts Say – BBG
o Cnooc Group Declines Comment on Talks to Buy BP Argentine Stake – BBG
§ Spec to buy as much as $9 billion worth of BP Plc’s assets in South America
o Paul Rubin: Why Is the Gulf Cleanup So Slow? – WSJ link
§ There are obvious actions to speed things up, but the government oddly resists taking them.
o BP oil spill: Italy drilling ban hits UK-listed explorer
§ from Telegraph Finance
§ Italy's plan to restrict drilling offshore after BP's catastrophic oil spill may cause difficulties for UK-listed Mediterranean Oil & Gas.
· Dana Petroleum (+20%). Company receives a preliminary approach from Korea National Oil Corp. with the FT valuing the potential bid at £1.5bn.
· Pimco’s Kiesel Says Energy Company Bonds Make ‘Sense’ (Bloomberg) -- Pacific Investment Management Co., the world’s biggest bond-fund manager, says select energy company bonds make “increasing sense” after prices on the debt dropped following the worst oil spill in U.S. history
· HLX Helix updates oil and gas divestment efforts and mid year reserves
· LINE Linn Energy LLC initiated buy at UBS; target is $31.
· LGCY Legacy Reserves initiated buy at UBS; target is $26.
· ARD Arena Resources announces expiration of "go shop" period
INDUSTRIALS
· GVA Granite Construction JV team awarded $106M Mountain View Corridor project in and around Salt Lake County, Utah
· CE Celanese announces ethylene vinyl acetate price increases
· GDI Gardner Denver acquires ILMVAC GmbH
· TKR Timken announces its Timken-XEMC Joint Venture in Xiangtan China, recently began delivering its initial production of ultra-large bore bearings
· CE Celanese increases quarterly dividend by 25.0% to $0.05 from $0.04
· TKR Timken announces its Timken-XEMC Joint Venture in Xiangtan China, recently began delivering its initial production of ultra-large bore bearings
· CE Celanese increases quarterly dividend by 25.0% to $0.05 from $0.04
· UTX Sikorsky Aerospace Services acquires LifePort; no terms disclosed
· LDL Lydall Sells Electrical Papers Product Line and Licenses Manufacturing Technology
· FLOW Flow International reports Q4 EPS
· EMR Chloride says will recommend Emerson Electric's offer of 375 pence per share
· GD: Bloomberg) -- General Dynamics Corp.’s $15.5 billion Expeditionary Fighting Vehicle program, to build amphibious transports for carrying Marines ashore, should be considered for cancellation, according to congressional auditors.
· Airbus Partners Eye Change In Launch Aid Terms - European governments that have pledged launch aid for Airbus's new A350 commercial jet are considering changing the way in which they will provide the funding, the Financial Times
TRANSPORTS
· Airlines miss…CAL June RASM 21.5%, below consensus 23% plus
o More Airline data expected over tthe next week..say tuned
· 'Pent-up demand' for travel erupts over July 4th holiday USATODAY
o Far more Americans are predicted to hit the road this weekend to celebrate July Fourth than did last year
· US Airways Gains Altitude Flying Solo
o Poised to Return to Profit, Carrier Says It Is 'Happy' on Its Own
o In late April, the smallest of the major spoke-and-hub carriers broke off talks with UAL Corp.'s United Airlines after it learned United was in serious discussions with Continental Airlines
o Some industry watchers predicted that US Airways' days would be numbered if it didn't quickly tie the knot with AMR Corp.'s American Airlines, one of the few remaining prospects.
o "All we needed was for the economy to come back," says US Airways CEO Doug Parker, shown in January.
o Instead, US Airways shares have rallied, and the carrier is expected to return to profit this year
o http://online.wsj.com/article/SB10001424052748704256304575320811511271410.html?mod=WSJ_hps_LEFTWhatsNews
Tech/media/ telecom sectors
· Tech Spending Is Back. And It May Even Last- BBG
o http://www.businessweek.com/magazine/content/10_28/b4186033349524.htm?campaign_id=rss_topStories
· WPO: Fred Drasner, Avenue Capital Said to Submit Bids for Newsweek- BBG
· GOOG: Google Ruled a Monopoly in France- Dealbook
o This week, the French Competition Authority officially declared Google a monopoly. That conclusion is hardly novel, but the decision appears to go beyond any previous official ruling in the United States or elsewhere
o Google points out that the ruling is an interim order and forecasts that it will prevail after it provides more detailed rules to the French agency
o http://dealbook.blogs.nytimes.com/2010/07/02/google-ruled-a-monopoly-in-france/
· GOOG to Acquire Travel-Data Provider ITA Software- BBG
· GOOG: ITA deal talks unnerves travel bosses- Reuters
· GOOG: Web Search in China Is ‘Partially Blocked,’ Company Says- BBG
· GOOG, NFLX: Netflix looks for Android experts, app should be coming soon- IntoMobile
· GOOG, AAPL: Apple doesn't appear to have barred Google and others from selling targeted ads inside iPhone and iPad applications, after implying several weeks ago that it might- WSJ
· Broadband: Obama to Announce $795 Million for Expanding Broadband Access- BBG
· DELL Agrees to Acquire Server-Software Maker Scalent- BBG
· DELL: Speaks About Its Struggles With Faulty PC Components- NYT
· http://feeds.nytimes.com/click.phdo?i=5cdfa213a5a8a7a7dcfa52882db1ca53
· LGF Adopts Shareholder Rights Plan- RTT News
· Piracy: New rules bring online piracy fight to US campuses- AP
· DIS acquires iPhone game maker Tapulous- AP
· BBI: Blockbuster Cuts Deal With Noteholders To Delay Debt Payment- Barron’s Tech
· BBI: Blockbuster is in talks to sell a stake to a strategic investor and yesterday received a 45-day extension from lenders to reach a deal- NYPOST
· Gaming: May Video Game Sales Off 5%; Hardware Down, Software Up- Barron’s
· BIDU: to invest 5 billion yuan in browser business- Digitimes
· MEMS auto sensor market set to rebound in 2010- iSuppli
· Component suppliers conservative about 3Q10 LCD panel market; expect flat to 2-3% growth- Digitimes
· Touchscreen module revenues to reach US$14 billion by 2016- DisplaySearch
· TV: Global shipments to grow 15% on year to 242 million units in 2010- DisplaySearch
· NAND: E-book demand stimulates NAND flash spot pricing- inSpectrum
· AAPL: PR says recent Steve Jobs emails are fake- Engadget
· ONNN: Sanyo Electric In Talks To Sell Chip Ops To ON Semiconductor- DJ
· MediaTek June revenues to reduce sharply on slack sales in China- Digitimes
· Beijing Slams EU Modem Probe- WSJ
o China lashed out at the European Union Thursday over an anti-dumping investigation into a type of wireless modem
o http://online.wsj.com/article/SB10001424052748703571704575340594126210292.html
· AAPL iTunes in the cloud "definitely" coming soon - Boy Genius Report
· NWSA London Times paywall goes live - BBC
· EXTR Extreme Networks adopts amendment to shareholder rights plan designed to preserve net operating losses
· SCOR comScore acquires products division of Nexius, Inc.
· ERIC Endesa outsources corporate communications network operations to Ericsson - SA London
MINERS/STEEL Etc
· Deal on Australia's resources super profits tax announced – FT
· The Australian government announce details of the new mining super tax, with several concessions to previous expectations; The headline rate will be 30%, not 40% as previously announced. It will only apply to coal and iron ore. There will also be a A$50m profit threshold. (Rio Tinto +0.7%, Billiton +1%, Xstrata +3%)
· AKS AK Steel announces August 2010 surcharges for electrical and stainless steels
· RBS RBS completes sale of Sempra commodities metals, oil and European energy Businesses to JP Morgan
· BHP BHP Billiton gets lower copper processing fees from LS-Nikko Copper, says Brook Hunt - Bloomberg
· AAP lays out differences between resources super profits tax and minerals resource rent tax
· Rusal Dow Jones)--Russian aluminum giant UC Rusal (0486.HK) said Friday it has divided its smelters into two substructures, East and West, with the former to include all its largest and most profitable Siberian smelters to meet demand from Asia
· steel demand Kloeckner says European steel demand likely to fall in H2 vs H1 -- Reuters citing Kloeckner CEO
· Chalco Shelves Plan for Australian Mine – WSJ link
· Fortescue disappointed by tax snub
o from Business Spectator
o Forrest says junior miners should have been consulted by the govt on the development of new resources tax. 2 Jul 2010 7:09 PM
AUTOS
o DAI target increased to €52 from €48 at Equinet - SA London
o TM Toyota Motor prepares to recall 270K luxury vehicles worldwide - Nikkei
o TTM Tata Motors June vehicle sales 67,730 units vs year-ago 45,440 units
o VLKAY Volkswagen's Audi says H1 car sales in China up +64% to 109,887 -- - SA
· General Motors Chief Executive Ed Whitacre said on Thursday that despite low consumer confidence levels, 2010 is a "great year" for a G.M. initial public offering, Reuters reports.
· Autos: June in a nutshell: A tepid start to the rest of the year
o from Automotive News Breaking News Feed
o U.S. sales rose 14 percent in June, giving the industry a 17 percent gain for the first half of the year. The seasonally adjusted annual sales rate slipped to 11.1 million as the recovery from last year's 27-year lows began to lose steam
· Autos: Reuters) - U.S. auto sales slipped in June from the previous month and major automakers said there was no sign of the second-half recovery the battered industry had expected at the start of the year.
· Germany 2010 car registrations to total 2.8M to 2.9M -- wires citing VDA
· Daimler CEO: Vehicle Sales In June Could Mark New Record (Dow Jones)--Daimler AG (DAI.XE) Chief Executive Dieter Zetsche said Friday that June could be a new record month for the German automaker in terms of global vehicle sales as demand in China continues to soar.
o The automaker is due to release monthly vehicle sales data for its core Mercedes-Benz division next week.
Financials:
· Sen. Cantwell to Support Financial Overhaul Bill – WSJ
o bringing the White House to the verge of the 60 Senate votes it needs to ensure passage.
o Ms. Cantwell said she was convinced the bill would toughen regulation of the derivatives market.
o Ms. Cantwell's support for the bill had previously been unclear. She voted against an earlier Senate version of the legislation in May over her concerns the derivatives section wasn't strict enough.
o With her support, Democrats likely need the support of just two Republicans for the bill to have the 60 votes necessary to block any filibuster. Sen. Susan Collins (R., Maine) has already said she's inclined to support the bill, which means Democrats and the White House might only need one more vote.
o Many congressional aides expect Sen. Olympia Snowe (R., Maine) to announce she will support the bill, though her office has so far declined to comment. Sens. Scott Brown (R., Mass.) and Charles Grassley (R., Iowa) are also considered possible supporters, though they have also remained uncommitted.
· Companies Push for Clarity on Derivatives Regulation – WSJ link
o Democrats are trying to quell an outcry over a last-minute change to their financial-regulation overhaul that has sparked confusion over regulation of the giant derivatives market.
· Berkshire May Be Spared Collateral Posting on Financial Reform - BBG
o Warren Buffett’s Berkshire Hathaway Inc., which lobbied Congress to exclude its derivatives contracts from new collateral requirements, may get its way as the financial regulatory overhaul nears approval
o The new rules won’t alter previously written derivative contracts, Democratic Senators Chris Dodd of Connecticut and Arkansas’s Blanche Lincoln told Democratic Representatives Barney Frank of Massachusetts and Minnesota’s Collin Peterson in a letter
· Rep. Frank predicts SEC would subject brokers to a fiduciary duty
o The U.S. House approved this week legislation to overhaul financial regulation, but before the vote, Rep. Barney Frank, D-Mass., suggested that he expects the Securities and Exchange Commission would hold brokers to a fiduciary standard. The legislation would give the SEC authority to impose a fiduciary duty on insurance agents as well as broker-dealers. "We gave the SEC the power to do it," Frank said. "And they're going to do it." InvestmentNews (01 Jul.)
· U.S. Treasury reduces its stake in Citigroup to about 18%
o The U.S. Treasury sold 1.1 billion shares of Citigroup stock, bringing its total sales to 2.6 billion shares and reducing its stake in the bank to about 18%. The latest sale brings the government's profit from selling Citigroup shares to more than $2 billion. "We are pleased that Treasury has profitably sold a third of its common shares in Citi, adding to the substantial return for taxpayers realized last year," said Jon Diat, a Citigroup spokesman. The Wall Street Journal
· Funding for U.K. residential mortgages is set to fall, BoE warns
o The Bank of England said home-mortgage funding is set to contract significantly during the next three months, possibly creating a major setback for the housing market. The central bank said mortgage activity was already beginning to falter in the second quarter. The Independent (London) (02 Jul.)
· Credit Markets AIG Bondholders Get Top Returns With Benmosche: BBG
o Fixed-income investors betting on American International Group Inc. Chief Executive Officer Robert Benmosche were rewarded with the best-performing investment- grade corporate bonds in June
o AIG debt gained 4.92 percent last month, the most among the 50 biggest U.S. issuers
· Morgan Stanley loses 2nd Asia M&A head
o from Business Spectator
o Peter Ding will leave the bank; follows his boss to BarCap: sources
· KCG Knight Capital completes acquisition of Urban Financial Group
· AIG American International Group CEO Robert Benmosche, chairman Harvey Grubb agree to work together - WSJ
· FMR First Mercury Financial to acquire Valiant Insurance Group
· Senator Maria Cantwell plans to support financial regulatory reform bill
· UWBK United Western Bancorp enters agreement with OTS
· CIT CIT Group completes sale of CIT Vendor Finance, Australia to Bank of Queensland, updates on other matters
· Fed reports balance sheet assets of $2.33T on Wednesday, ($13.6B) w/w and +$326.9B y/y
· EPR Entertainment Properties Trust increases credit line to $320M from $215M
· DHIL Diamond Hill Investment reports preliminary AUM of $6.48B as of 30-Jun
· BRO Brown & Brown announces the asset acquisition of Commonwealth Insurance Group
· WIBC Wilshire Bancorp guides Q2 to a net loss
· RBS Royal Bank of Scotland upgraded to buy from hold at UniCredit
· WIBC Wilshire Bancorp provides further guidance for Q2
· FIG Fortress Investment paying about $300M for CW Financial Services - WSJ, citing people familiar with deal
· RBS HSBC buys RBS India units for up to $95M
REAL ESTATE
· PEB Pebblebrook Hotel Trust acquires InterContinental Buckhead Hotel for $105M
· NHI NHI announces sale of two skilled nursing facilities in Texas
· OLP One Liberty Properties acquires Kohl's Dept. store in Kansas City, MO
· GOV Government Properties Income Trust increases quarterly dividend by 2.5% to $0.41 from
· Mortgage Bonds Booming – WSJ link
§ Investors are seeking out mortgage bonds backed by the U.S. government as a safe haven from the tumult of the global economy, a reversal of fortune that has helped drive mortgage rates for consumers to record lows.
· Housing Market's Recovery Stalls (Washington Post)
o After showing signs of a fledgling recovery from the worst downturn in decades, the U.S. housing market appears to be heading back toward the doldrums, as the expiration of a lucrative tax credit for buyers and increased uncertainty about the economy cause home sales to plummet
o The sudden weakness in residential real estate has struck nearly every region of the country, according to recent government and industry data, driving down sales of new and previously owned homes alike in May. On Thursday, the National Association of Realtors said an index that measures sales contracts signed on existing homes plunged 30 percent in May, more than twice what analysts had forecast, to the lowest level since the group started tracking the numbers in 2001.
· Drop in pending sales signals a dark future for housing, experts say
o Houses under contract for sale in the U.S. have decreased the most in history and dropped to their lowest level, according to the National Association of Realtors. From April to May, the group's Pending Home Sales Index fell 30%. Experts said they expect the index to hold at the May level until fall. U.S. News & World Report (01 Jul.) , Bloomberg Businessweek (01 Jul.) , Builder Online (01 Jul.)
· Housing sector without Fannie and Freddie is possible, regulator says
o Edward J. DeMarco, director of the Federal Housing Finance Agency, offered a number of scenarios for the future of the U.S. housing sector, including one without Fannie Mae and Freddie Mac. DeMarco said another scenario could include Fannie and Freddie, but the mortgage giants would no longer be dependent on the government. However, he warned that infrastructure must be developed that would allow private firms to re-enter the mortgage market. CNBC (01 Jul.)
· Fortress Buys While Real Estate Is Down – WSJ link
· Foxwoods Debt Talks Test Tribal Bets – WSJ link
· Mortgage Rates Drop to Lowest Rate in 50 Years – CNBC link
· Why Congress Extended the Home Buyer Tax Credit – CNBC link
o Housing's Powerful Lobby Surges Ahead
o can't tell you how many calls we got here in the CNBC DC bureau from Realtors claiming there would be "rioting in the streets" (I'm not kidding—and that was a Connecticut Realtor) and PR reps for industry types offering endless "experts" to discuss the "vital" need for the extension.
o The Realtors alone are one of the most powerful lobbying forces in Washington
o http://www.cnbc.com/id/38038267
· Charity Joins Top Home Builders' Ranks – WSJ link
o Habitat for Humanity emerged as one of the nation's top 10 builders last year as the recession hammered publicly traded companies.
· INTERCONTINENTAL HOTELS Sells Maryland hotel for US$105m
· London Luxury-Home Prices Driven Higher by Overseas Purchasers - BBG
· Luxury-home prices in central London are increasing in value twice as fast as the U.K. market as a whole as the weaker pound leads more overseas buyers to shrug off higher taxes and seek bargains in the most expensive neighborhoods, according to Knight Frank LLP
· Prices of properties costing more than 2 million pounds ($3 million) rose 20 percent in June from a year earlier, the London-based real estate broker said in an e-mailed report today. U.K. house prices gained 8.7 percent in the same period, Nationwide Building Society, Britain’s largest customer-owned lender, said June 30
· “Central London is now a market apart,” Liam Bailey, head of residential research at Knight Frank, said in the report.“The recovery in prices has been driven in large part by the strength of demand from international buyers.”
CONSUMER
· PPD Pre-Paid Legal reports Q2 new sales associates enrolled +44.3% y/y to 36,313
· FO Fortune Brands upgraded to hold from sell at Citi; target remains $41.
· BBI Blockbuster enters into forbearance agreement with certain senior secured note holders
· ADS, EFX Alliance Data's Epsilon completes previously announced purchase of Equifax's Direct Marketing Services for $117M cash
· FC Franklin Covey company reports Q3 EPS
· OME Omega Protein adopts shareholders rights plan
· ROL Rollins, inc. announces share repurchases in 2Q10
· TECD Tech Data announces new $100M repurchase program following completion of previous $100M repurchase program
· SYMS Syms Corp reports Q1 EPS
· BBI Blockbuster announces revised preliminary annual meeting vote results and expected NYSE delisting
· CSTR Redbox testing video-game rentals - Myce
· LGF Lions Gate adopts Shareholder Rights Plan
o
GAMING, LODGING, & LEISURE
· IHG InterContinental Hotels announces sale of InterContinental Buckhead Atlanta to Pebblebrook Hotel Trust for $105M cash
o
HEALTHCARE
· HMOs trigger upcoming…by end of July? - WSJ 7/2
o The new rules could be a game changer, especially for smaller insurers with high overhead
o Winners and losers are soon to be determined in the health-insurance industry, which is holding its breath as regulators decide to what extent a key aspect of health reform will clip profits.
o How federal regulators interpret a metric known as a medical-loss ratio could affect players from industry giant UnitedHealth Group Inc. down to specialized companies such as American National Insurance Co. Plans could be forced to pay out millions in rebates, while others may be driven out of the market.
o Health insurers are waiting for regulators to clarify how companies must account for the numbers—whether they can average the MLRs of their subsidiaries, for instance. The National Association of Insurance Commissioners, a group of state regulators charged with drafting the rules, is hoping to make recommendations to the Department of Health and Human Services by the end of this month.
o http://online.wsj.com/article/SB10001424052748703374104575336951608609446.html?mod=WSJ_hps_LEFTWhatsNews
· SNY Sanofi-Aventis plans major U.S. acquisition - Bloomberg, citing sources
· CPD Caraco Pharmaceutical starts shipping rivastigmine tartrate capsules
· NPD reports May software sales +4% vs StreetAccount consensus +11%
· HITK Hi-Tech Pharmacal temporarily and voluntarily suspends sales of certain products
· KV K-V Pharmaceutical discloses resignation of accountant KPMG
· MEND, CKR Micrus Endovascular to replace CKE in the S&P SmallCap 600
· LH Laboratory Corp purchased certain assets of Westcliff Medical Labs and related entities
· UTHR United Therapeutics and Lee's Pharmaceutical sign Remodulin distribution agreement for China
· FURX Furiex Pharmaceuticals announces issuance of U.S. patent for dapoxetine method of treatment
· DRRX DURECT Corp secures $50M committed equity financing facility
· CPHD Cepheid issues recall of Xpert MRSA/SA blood culture product
· HMA Health Management Associates acquires controlling interest in Three Shands Healthcare Hospitals for $21.5M
· BIOD Biodel abstracts to be presented at the European Association for the Study of Diabetes meeting in Sept.
· ISPH Inspire Pharmaceuticals chief research and development officer Ben Yerxa to resign, effective 1-Aug, as part of new management structure
· SNY Sanofi-Aventis declines to comment of report it plans major US acquistion -- Reuters citing Sanofi spokesman
· RHHBY Roche says ICON7 study of Avastin met its primary endpoint of improving progression-free survival in women with ovarian cancer
From our EU/London desk
· Miners
· The Australian government announce details of the new mining super tax, with several concessions to previous expectations; The headline rate will be 30%, not 40% as previously announced. It will only apply to coal and iron ore. There will also be a A$50m profit threshold. (Rio Tinto +0.7%, Billiton +1%, Xstrata +3%)
· Oils
· Dana Petroleum (+20%). Company receives a preliminary approach from Korea - S&P National Oil Corp. with the FT valuing the potential bid at £1.5bn
· LAGARDERE: Launches IPO of Canal+ France- S&P
· SANOFI-AVENTIS preparing US$20bn US acquisition move- S&P
· TOTAL: Drilling in deep water is essential – CEO- S&P
· FIAT: Italian new car sales -19% y/y in June- S&P
· AKZO NOBEL sets US$3bn target in China- S&P
· CHLORIDE: Board recommends Emerson- S&P
· INTERCONTINENTAL HOTELS Sells Maryland hotel for US$105m- S&P
· MARSHALLS: 1H revenue up 2.4%, market demand stabilising - S&P
· RBS: Sells Sempra's European business for US$1.60bn - S&P
· TRAVIS PERKINS: Rebound continues, to resume dividends- S&P
· XSTRATA resumes Australian copper projects - S&P
Asia Market Recap
· Japan
• NKY +0.13%, TPX +0.31%
• NKY clawed higher in choppy trade after a rise in the euro prompted some short-covering while investors remained concerned about the strength of global economic recovery following weak US manufacturing and employment data. Turnover on the TPX fell to 1.21 trillion yen from 1.33 trillion yen yesterday
• Stocks rose across most sectors led by oil & gas, telecom, health care and materials. Utilities fell
• Exporters rebounded after the euro rose to the 1.24 handle: autos +0.01%, CE +0.07%. Toyota (7203) +0.33% said it will begin recalling 270,000 vehicles worldwide from Monday to fix an engine problem; Canon (7751) +1.09% on Mizuho upgrade
• Metals +0.57%, mining +0.34% after the Australian government agreed to revise a tax on mining projects. Komatsu (6301), which supplies earthmoving machinery to Australia’s top 2 mining companies, rose 1.01%
• Gaming: Nintendo’s (7974) +1.80% and Sony’s (6758) +0.61% PlayStation Portable handheld players led a 4.9% decline in U.S. video-game sales to US $823.5M in May
• Best performing sectors on the TPX: airline +3.20%, oil & coal +1.66%, mining +1.37%; worst performing sectors: other financing -1.16%, traders -0.98%, shipper -0.80%
• Toshiba (6502) +1.59% after the Nikkei reported it would supply lithium-ion batteries for an electric vehicle that Mitsubishi (7211) plans to launch in the near future. GS Yuasa (6674) -3.25% has a partnership with Mitsubishi (7211) to provide lithium-ion cells for Mitsubishi’s electric cars
• Seven & I (3382) -2.07% after 1Q operating profit fell 11% to 52.4B yen
• JX Holdings (5020) +2.30% after the oil refiner said it will build a liquefied-natural-gas facility on Japan’s northern island of Hokkaido
· Nikkei today
• Toyota Tsusho (8015), Itochu (8001) and other major trading houses are plotting full-scale expansions into the apparel market in China
Hong Kong
• HSI -1.11%; HSCEI -1.91%
• Stocks fell after Goldman Sachs cut its China economic growth forecast and worse-than-expected US economic data fuelled concerns about global economic recovery. Trading was thin as investors await key US employment data tonight. Turnover on the HSI fell to HK$20.01B from HK$22.34B on Wednesday
• Mainland banks fell: CCB (939 HK) -2.21%, ICBC (1398 HK) -1.75%, BoComm (3328 HK) -2.17%. BOC (3988 HK) was suspended from trading after report it plans to raise up to 60B yuan in a rights offer in Shanghai and HK
• Local property developers rose: Cheung Kong (1 HK) +0.55%, New World (17 HK) +0.47%, Henderson Land (12 HK) +0.22%, Hang Lung (101 HK) +0.17%. SCMP reported homebuyers snapped up units at the Hermitage, the first residential development launched since the government introduced tighter property measures
• Macau gaming fell after Macau casino revenue fell 20% MoM in June as World Cup keeps gamblers away: SJM (880 HK) 6.68%, Melco (200 HK) -1.61%, Sands China (1928 HK) -4.44%, Wynn Macau (1128 HK) -2.95%
• Chalco (2600 HK) -3.16% after it slashed alumina price by 7% reflecting weakening demand
• Foxconn (2038 HK) -4.50% after at least three analysts cut its share price forecasts
• Xinao Gas (2688 HK) +1.72% after its finance director said local government in 14 provinces may increase retail gas prices after wholesale costs were raised June 1
• Gome Electrical (493 HK) +2.10% will sell Haier Group products in a deal it says may generate 50B yuan in sales over 3 years
· Headlines:
• China may raise retail natural gas prices in some regions before September, according to Xinao Gas (2688). Local governments in 14 provinces where the company operates may increase prices after wholesale costs were raised June 1-Bloomberg
• China National Bureau of Statistics raised its estimate for economic growth in 2009 by 0.4% to 9.1% as output by industrial and services companies increased at a faster pace – Bloomberg
• Rural banks on the mainland are expected to mushroom this year and next with Beijing setting a goal of having 1,027 country banks by 2011 – SCMP
• Hong Kong retail sales rose 19.7% YoY in May, beating consensus 17.3% and 15.6% in Apr - Bloomberg
China
• SHCOMP +0.38%; SZCOMP -0.61%
• SHCOMP erased losses as financials led a rally offsetting losses from health care, tech and materials sectors. Turnover on the SHCOMP fell to 45.94B yuan from 50.81B yuan yesterday
• Stocks were mixed. Financials, oil & gas, industrials, utilities and telecom rose while health care, tech, materials and consumers fell
• Financials outperformed, gaining 1.24%. Real estate +3.20%: Beijing Capital (600376 CH) surged the 10% daily limit after saying 1H net income may have gained 150% YoY
• Pharma -2.94%. The NDRC said it will investigate the ex-factory prices of almost 900 drugs produced by about the same number of manufacturers. The regulator last month said it will draw up a plan to limit “substantial” gains in medicine prices and curb profiteering
• Iron & steel +0.40% after after the Australian government agreed to revise a tax on mining projects
TODAY’S EVENTS
DAILY VIEW
CONFERENCES
· Friday July 2:
o Citi Malaysia Investor Conference- 07/01/10 - 07/02/10 London, GB
o JPMorgan Asia Pacific Conference- 07/01/10 - 07/02/10 London, GB
COMPANY MEETINGS/OTHER DAILY EVENTS
· Friday July 2:
o Shareholder Meetings
§ AWI, SVT
o Investors will be focused on the nonfarm payrolls report for June. A drop-off in census workers is seen reducing the headline number by more than 100,000, but private payrolls are seen rising- Barron’s
o Look for nonfarm payrolls to fall 150,000 in June, on a drop in census workers, says MFR's Josh Shapiro. He sees private payrolls up about 100,000, and the jobless rate up to 9.8%.- Barron’s
ECONOMICS
· Friday July 2:
o 0830 change in Payrolls
o 0830 Average Hourly Earnings
o 0830 Unemployment Rate
o 1000 Factory Orders
EARNINGS
o Materials
· Friday July 2: CLU
o Tech/Telecom
· Friday July 2: DRAM
o Energy
· Friday July 2: ALME
INVESTMENT BANKING WRAP
· Brit Insurance Rejects 824 Million-Pound Approach From Apollo - BBG
INVESTMENT BANKING WRAP
M&A
· AIG May Seek to Sell Japan Insurance Units to Help Repay Rescue- BBG
o AIG, the insurer selling assets to repay a U.S. rescue, may seek buyers for its Japanese life units as Chief Executive Officer Robert Benmosche reshapes the firm
o The Congressional Oversight Panel and analysts including Suneet Kamath of Sanford C. Bernstein & Co. have said AIG’s Star Life Insurance Co. and AIG Edison Life Insurance Co. may attract interest
· Fred Drasner, Avenue Capital Said to Submit Bids for WPO Newsweek- BBG
o Media executive Fred Drasner and investment firm Avenue Capital submitted separate offers to purchase Newsweek magazine ahead of today’s deadline for final offers
o Rima Calderon, a spokeswoman for Donald Graham, chairman of the Post, said the company “will not have anything to say for weeks” concerning the bidding process
· KEY KeyCorp, Regions may sell as bank M&A returns: KBW- Reuters
o Keefe, Bruyette & Woods said KeyCorp (KEY.N), Regions Financial (RF.N) and Synovus Financial Corp (SNV.N) may look to sell themselves as a wave of open-bank consolidations emerges within the next 12 to 18 months
o The wave is likely to be spurred by improved asset liquidity and price certainty as well as limited organic growth opportunities, analysts at the brokerage said
o http://www.reuters.com/article/idUSSGE6600KM20100701
· GOOG Google to Acquire Travel-Data Provider ITA Software- BBG
o Google agreed to buy flight- information provider ITA Software Inc. for $700 million to get a bigger slice of the online travel business and make it easier for users to find trip information on the Web
o http://www.businessweek.com/news/2010-07-01/google-to-acquire-travel-data-provider-ita-software.html
· GOOG Google-ITA deal talks unnerves travel bosses- Reuters
o Google's talks to buy ITA, an airline IT and services provider, has travel executives worried that the search engine giant could wield too much power in their industry
o Some industry executives would like to see Google give assurances that it would not link using ITA to its general search results, the industry source said
o http://www.reuters.com/article/idUSTRE65T03220100630
· SNY Sanofi Is Said to Plan Major Acquisition of $20b in U.S., Brief Board- BBG
o Sanofi-Aventis SA, France’s biggest drugmaker, is preparing a major acquisition in the U.S., according to five people with knowledge of the situation
o Chief Executive Officer Chris Viehbacher briefed the board on the transaction at a special meeting this week, said two of the people, who declined to be identified because the plan is confidential. The process is in very early stages and an agreement with the unidentified target may not be reached
· SNY Sanofi-Aventis declines to comment of report it plans major US acquisition- Reuters
· Australia mining tax deal seen unlocking M&A pipeline- Reuters
o The Australian government's compromise mining tax deal is expected to unlock a stalled pipeline of mergers and acquisitions in the booming resources sector, although some political hurdles for big deals remain
o http://www.reuters.com/article/idUSSGE66104F20100702
· Brit Says Possible 10.50-Pound a Share Apollo Offer Undervalues- BBG
o Brit Insurance Holdings NV said Apollo Global Management LLC’s possible revised indicative proposal of 10.50 pounds per share undervalues the company and “does not represent a basis on which the Board is prepared to engage.”
o Brit remains open to further engagement with Apollo, if it was to put forward “an offer capable of recommendation,” the company said.
· DIS Disney Acquires Tapulous- BBG
o Tapulous, a leading mobile gaming company, to strengthen Disney Interactive Media Group’s Mobile Business
o “Mobile gaming is seeing unprecedented growth and this is the right time to invest to strengthen our position in the mobile business,”
· FIG Fortress Is Buying While Real Estate Is Down- WSJ
o The New York private-equity firm said its funds have acquired CW Financial Services, one of the largest servicers of souring commercial mortgages packaged into bonds
o In recent days, Fortress also closed on a roughly $250 million investment in daVinci Holdings K.K., a high-profile and struggling Japanese real-estate firm
o Though the two Fortress deals are relatively small—the firm is paying about $300 million for CW, according to people familiar with the acquisition— they highlight the opportunities distressed investors see in sagging commercial-property markets
· Private equity takes stake in BJ's; shares jump- Reuters
o A private equity firm that has invested in several retailers has taken a 9.5 percent stake in BJ's Wholesale Club (BJ.N) and said it might propose taking the warehouse club operator private
o BJ's shares jumped as much as 18 percent to a more than two-year high on Thursday after Green Equities Investors V L.P. announced the stake in a regulatory filing. The fund is the fifth from private equity firm Leonard Green & Partners
o http://www.reuters.com/article/idUSN0113948320100701
· Icahn Holds 34% of LGF Lions Gate as Offer Closes- WSJ
o Billionaire investor Carl Icahn, in the final two weeks of his tender offer for Lions Gate Entertainment, was able to scrape together just enough of a stake to give him veto power over major transactions such as acquisitions or asset sales
o Under Canadian regulatory laws, by exceeding the 33% threshold, Mr. Icahn now has "negative control" over Vancouver-based Lions Gate, allowing him to block transactions, like a possible merger with debt-laden film maker MGM
o http://online.wsj.com/article/SB10001424052748704525704575340731370986108.html
· LCC US Airways Gains Altitude Flying Solo- WSJ
o "We're perfectly happy with [our] standalone" status, said US Airways Chief Executive Doug Parker, in an interview last month. "We don't accept the premise that we need to do a transaction, or that there's only one partner."
o "We're perfectly happy with [our] standalone" status, said US Airways Chief Executive Doug Parker, in an interview last month. "We don't accept the premise that we need to do a transaction, or that there's only one partner."
o http://online.wsj.com/article/SB10001424052748704256304575320811511271410.html
· Dell Agrees to Acquire Server-Software Maker Scalent- BBG
o Dell agreed to buy Scalent Systems, a maker of software for managing server computers, as the world’s third-largest PC maker pushes to expand sales of data-center products
o Dell is seeking to compete with companies such as IBM. and HPQ in the market for more complex computer systems and technology services that yield higher profits than desktop and laptop PCs
· South Korea's KNOC makes billion-pound takeover approach for Dana Petroleum- Telegraph
o The company confirmed it has been contacted about a potential offer, but declined to name the interested party, after its share price rose 42p, or 4pc, to £11.77.
o The approach is understood to be set as high as £18 per share – a huge 50pc premium to the company's closing share price yesterday – and management is thought to look favourably on the potential deal
· LGF Lionsgate Adopts Shareholder Rights Plan- RTT News
o The company said that the rights plan allows significant interests to be established or increased through a creeping bid. The Rights Plan intended to ensure that, the Board to explore alternatives for maximizing shareholder value, to provide adequate time for competing transactions to emerge
o http://www.stockmarketsreview.com/news/19021/
· InterContinental Sells Buckhead Atlanta for $105 Million- BBG
o InterContinental Hotels Group said it will sell its 422-room InterContinental Buckhead Atlanta to Maryland-based Pebblebrook Hotel Trust for $105 million in cash
· ACL Alcon Sets Vote on NVS Novartis Nominees- WSJ
o Alcon said it will hold a shareholder meeting in August to vote on five board nominees proposed by Swiss pharmaceutical giant Novartis AG, which tried earlier this year to essentially take over the eye-care and medical-device company
o Novartis, which already holds a stake in Alcon, said the five nominees are "well-qualified and experienced
· LVMH Moet Hennessy to acquire 70% interest in Sack's; terms are undisclosed- SA
· HSBC Agrees to Acquire RBS’s Indian Operations for $95 Million- BBG
o HSBC Holdings said it has agreed to acquire RBS’s retail and commercial banking businesses in India for as much as $95 million. HSBC expects to complete the acquisition, which is a subject to regulatory approvals, in the first half of 2011.
· Chloride Says Will Support Takeover Offer From Emerson- BBG
o Chloride Group Plc said its board members have voted to support a takeover offer from Emerson Electric, valued at 375 pence a share.
· Mercer says acquires IPA- Reuters
o Mercer acquires IPA, accelerating expansion into full spectrum of health and benefits administration markets
· Cnooc Group Declines Comment on Talks to Buy BP Argentine Stake- BBG
o China National Offshore Oil Corp., the country’s third-largest oil and gas company, declined to comment on reports it is in talks to buy as much as $9 billion worth of BP Plc’s assets in South America
o “We don’t comment on market rumors,” Jiang Yongzhi, a Beijing-based spokesman for China National, said by phone today
· Ageas to Buy PAI Partners’ Kwik-Fit for 215 Million Pounds- BBG
· Parkway Gains After S$3.2 Billion Fortis Buyout Offer- BBG
o Parkway Holdings, Asia’s biggest hospital operator, jumped in Singapore trading on speculation Malaysia’s sovereign wealth fund will raise its takeover offer for the company after being outbid by Fortis Healthcare
o Billionaire brothers Malvinder and Shivinder Singh, who run Fortis, are moving to block Khazanah from gaining control of Parkway’s 16 hospitals in Asia, where the Indian company forecasts annual health-care spending will grow as much as 17 percent. Khazanah isn’t likely to accept the Fortis offer
· RDC Rowan to buy Norway's Skeie for about $250 mln- Reuters
o Rowan said it plans to buy Norway's Skeie Drilling for about $250m , becoming the latest oil rig contractor to expand despite concerns about weak conditions
o Skeie is building three high-specification jack-up drilling rigs, which Rowan expects will cost $420 million to complete
o http://www.reuters.com/article/idUSN0111467320100701
· UBS China dealmaker quits- T
o UBS’ leading China investment banker has resigned in a move that will test the Swiss bank’s ability to remain a leading force in the important Asian market.
o People familiar with the matter said that Henry Cai, chairman of Asia investment banking, sent a memo to staff on Thursday outlining his decision to “take a long break” because he was “very tired”.
o
· Sanyo Electric In Talks To Sell Chip Ops To ONNN ON Semiconducto- DJr
· SCOR ComScore acquires Nexius unit- reuters
o Digital market research firm ComScore Inc (SCOR.O) acquired the products division of Nexius Inc, a provider of network analysis focused on the experience of wireless subscribers, to strengthen its product line-up targeted at wireless carriers.
o http://www.reuters.com/article/idUSSGE6600LK20100701
$ RAISING
IPOs
· Welsh Property Trust Cancels I.P.O. for 2nd Time
o from DealBook
o Welsh Property Trust, the real estate investment trust, on Thursday canceled plans for its initial public offering for the second time in four weeks, after a big price cut on its shares still couldn't get the deal done – NYT
· Lagardere to Start Canal+ IPO as Vivendi Talks Fail- BBG
o Lagardere SCA said it will start the process for an initial public offering of its 20 percent stake in pay-television company Canal Plus France after failing to reach an agreement to sell the holding to Vivendi
· U.S. venture-backed IPOs show rebound as M&A slips- Reuters
o The number of venture-backed IPOs in the second quarter is the highest it has been since the forth quarter of 2007, according to the survey. There were 17 venture-backed IPOs worth $1.3 billion in the second quarter, which was the third consecutive quarterly increase in volume and the second in dollar amount
o But there are still signs of uncertainty. Only five of the 17 IPOs in the second quarter were trading at or above their IPO prices at the close of markets on Wednesday and the deal flow is still far below historic highs
o http://www.reuters.com/article/idUSN0112425520100701
· G.M.’s Whitacre Says 2010 ‘Great Year’ for I.P.O.- Dealbook
o “We’re aiming for it as soon as we can get there,” Mr. Whitacre told reporters. “We have some things we have yet to do. I can’t have a date but I think this is a good year to do it if we can get everything done. I think it’s a great year.”
o The G.M. I.P.O. is expected to be one of the biggest ever
o http://dealbook.blogs.nytimes.com/2010/07/02/gms-whitacre-says-2010-great-year-for-i-p-o/?src=busln
· Agricultural Bank attracts $50bn in Hong Kong bids- FT
o Institutional investors have placed bids valued at $50bn for the Hong Kong portion of Agricultural Bank of China’s mammoth dual-listing, according to people close to the deal.
o http://www.ft.com/cms/s/0/26082b0a-8531-11df-9c2f-00144feabdc0.html?ftcamp=rss
PRICINGS
· Initial Offerings
o No pricings left for this week
· Secondary Offerings
o No pricings left for this week
NEWS
· BBI Blockbuster Continues to Explore Various Recapitalization- BBG
o Blockbuster a leading provider of media entertainment, today announced that it has entered into a Forbearance Agreement with certain of its senior secured noteholders that provides the Company with additional time and flexibility as it continues to engage in productive discussions with certain of these noteholders and strategic parties regarding various recapitalization opportunities
· TRB Tribune Bankruptcy Examiner Gets More Time for Probe of Buyout- BBG
o The bankruptcy examiner probing Tribune Co.’s 2007 buyout won more time to investigate whether the deal is subject to a court challenge
o Carey also extended the deadline for Tribune’s creditors to vote on the company’s reorganization plan, saying votes must be postmarked by Aug.
· DRRX DURECT Corp secures $50M committed equity financing facility
· CIT Refinances Key Units, Sells Other Assets- American Banker
o CIT Group Inc. announced a package of refinancings and asset sales on Thursday, a step that CEO John Thain billed as a sign of its more stable footing
o http://www.americanbanker.com/issues/175_126/cit-1021752-1.html
· Foxwoods Debt Talks Test Tribal Bets- WSJ
o With a mid-July deadline looming for a big payment to its lenders, the Indian tribe that runs the nation's largest casino is in talks with banks and bondholders about how best to restructure more than $2 billion in debt that it can no longer afford
· Report: Bank of China aims to raise as much as $8.9B with a rights issue
o China's third-biggest lender by market value, Bank of China, is preparing a rights issue that could bring in as much as $8.9 billion, according to a media report. Trading of the bank's stock was suspended in Hong Kong and Shanghai after Caixin Online reported that the bank's board of directors approved the deal Wednesday. Bloomberg (02 Jul.)
·
***All eco data from Bloomberg and DJ
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