Morning @ Cantor
Morning @ Cantor 7/6
Today’s Stories From Cantor Fitzgerald
Sal Catrini (908) 517-5067
EARLY US LANDSCAPE****
· US Stock Futures up sharply, up 12….good cheer overseas, peripheral country EU spreads tighten today…crude, copper up with risk and reverses recent shellacking
o Shares rise, metals prices rally and dollar softens after the Reserve Bank of Australia says that despite recent caution, it is confident about growth in China and the region
· Shorts on edge today..as Last week wasn’t pretty: The Dow Jones Industrial Average fell for seven straight days, sliding well under 10,000. It ended the week off 457 points, or 4.5%, to 9686. Commodities swooned, too, with crude oil declining 8.5%, while copper fell 6.1%.
· European markets up 3% - moved higher off six-week lows with mining and financials amongst the leading gainers.
o European Market Recap Monday mixed: FTSE 100 (0.30%) to 4823.53, Dax (0.31%) to 5816.20, Cac (0.48%) to 3332.46, DJStoxx (0.16%) to 236.88.
· Good Spanish bond auction today – BBG
· EUR approaches 1.26!....up again….despite worlds most accurate forecaster (TD) talking parity with USD..BBG
· EU trading per Stephen Pope
o With 2 hours of trading under the belt the European markets are showing a decent tone as gains of 1.13% (Switzerland) to 2.47% (Spain) are being booked witgh cyclicals leading the way forward:
o Steel +4.73%...Auto Parts +3.76%...Metal and Mining +3.65%.
o Of course that implies that the defensives are lagging and whilst all European sectors are in positve territory we see
o Pharma +0.15%...Tobacco +0.37%...Water +0.48%.
o The sentiment that equities are undervalued realtive to earnings potential has taken hold this morning and the UK Chamber of Commerce indicated a brighter outlook despite the severiity of the new coalition governments public spending cuts.
o The European Government bond market appears calm this morning and at the 2 year level all spreads over Germany are tighter than they were a week ago. In 5 years paper only Norway is wider although in 10 years there is a mixture of movments with Spain just wider by 1 bps on the week.
o Is this just a lull in the bonds as there is plenty of wire chatter that European banks are looking to hide bad loans and such action would undermine the integrity of the EU stree tests. There is also a growing frustration that the EU has not disclosed the test criteria or whether the secanario modelling will include a sovereign default?
· China’s stocks rose, with the Shanghai Composite Index leading Asian equity markets higher
o Asian Markets Tuesday: Nikkei +0.77%; Hang Seng +1.22%; Shanghai Composite +1.92%
o Yuan touches post-reval high ..Central bank seen planning mini-revaluation of at least 1%At Monday's high, the yuan has risen as much as 0.87 per cent, or at an annualised rate of more than 20 per cent, since being de-linked from the dollar
o
· Pattern of ECB debt purchases emerges – FT
o The European Central Bank bought €4bn ($5bn) in eurozone bonds last week, the same as in the previous two weeks, indicating it had fallen into a pattern of low-level intervention in sovereign debt markets, the FT reports. On Tuesday, the ECB will attempt to “sterilise” €59bn – the total amount of bond purchases so far. Last week the central bank failed to drain the full amount because of banks’ reluctance to give up liquidity ahead of last Thursday’s expiry of €442bn in one-year LTRO loans.
· China Wen: acknowledged Economic Policies Face Increasing Dilemmas – DJ
o China Premier Wen Jiabao acknowledged Sunday that the country's economic policies "face increasing dilemmas" as the impact of the global financial crisis is more serious than expected, but still reiterated that China won't hold back its steps to restructure the economy for long-term growth.
o The remarks were made after recent worse china data was reported PMIs etc)
· EU STORIES:
· Good Spanish bond auction today – BBG
o
o French Fin Min: Reforming Intl Monetary System Is G-20 2011 Priority
o French Fin Min:Regulating Commodities Mkts Other G-20 Priority In 2011
o Europe debt concerns ease but bank fears remain – FT link
§ Last week some of the world’s biggest investment managers started to buy Spanish debt for the first time in months
§ tentative optimism is borne out by signs of recovery in the Spanish, Greek and Portuguese bond markets – those that have been under most pressure during the crisis – and the strengthening of the euro against the dollar in the past month
o Greece on Track to Meet Targets – wsj
§ Greece's finance minister said the country is on track to meet its 2010 deficit targets, and suggested that the recession-hit economy could surprise with a less-than-feared contraction this year.
o Investors Edged Up Anti-Euro Bets Before Rally - DJ
§ -Investors slightly increased their bets against the euro last week and earlier this week ahead of its subsequent move higher according to data released Friday.
§ Net speculative bets, called shorts, against the euro were at 73,700contracts with a net value of $11.2 billion in the week ended Tuesday, up from 71,000 contracts with a value of $10.9 billion the week prior - weekly Commitments of Traders report
o Greece Finance Minister Papaconstantinou said: “Our hope is to tap markets sometime in 2011, though Greece can hold off until 2012," SA
· Fed Watch: Fed’s Lacker, Fisher Differ Over U.S. Consumer, Nikkei Reports
o Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said consumer spending is “moderately strong” and along with business investment will help sustain the recovery, the Japanese newspaper quoted him as saying. Richard Fisher, president of the Dallas Fed, cited “cautious” households as a reason for a growth to cool in the second half.
o The remarks reflect debate on the durability of the economy after reports last week showed private-sector payrolls rose less than forecast in June, consumer confidence slumped and manufacturing growth slowed.
· Fed Watch: Cheap money might be hindering the U.S. economic revival
o Cheap money helped inflate the U.S. housing bubble, and it could be hurting the economic recovery, according to The Wall Street Journal. The Federal Reserve helped keep the economy from collapsing by cutting and maintaining interest rates near zero. Some are concerned that as the recovery stalls, the Fed's loose monetary policy might make the central bank an "agent of deflation." The Wall Street Journal (06 Jul.)
· good news!! Treasuries Showing 12% Chance of Double Dip Recession (BBG)
o U.S. government bond yields are signaling almost no chance of the economy slipping into another recession even as stocks and commodities tumble, according to research from the Federal Reserve Bank of Cleveland.
o The 2.32 percentage point gap between yields on two-year and 10-year Treasuries is more than double the 20-year average and about the same as in 2003, just before gross domestic product rose 3.6 percent. The so-called yield curve suggests growth won’t slow to less than 1 percent and about a 12 percent chance of a recession in the next year
· Rogoff Says China Property Starting to ‘Collapse’ - BBG
o China’s property market is beginning a “collapse” that will hit the nation’s banking system, said Kenneth Rogoff, the Harvard University professor and former chief economist of the International Monetary Fund
o As China’s economy develops, “especially at the speed it’s growing, it’s going to have bumps,” said Rogoff, speaking in an interview with Bloomberg Television in Hong Kong. He also said that while recoveries across the global economy are “very slow,” the danger of a return to recession isn’t “elevated.”
· Depression watch: With the US trapped in depression, this really is starting to feel like 1932 - telegraph
o The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation
o "The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing."
o Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said.
o California is tightening faster than Greece
· China FX: PBoC sets yuan mid point at 6.7790 v 6.7758 prior close – new reval highs to start the week
· China FX: SAFE Says Dollar Drop Won’t Cause China Reserve Loss - BBG
o China’s foreign-currency regulator said a decline in the value of the U.S. dollar won’t cause “real” losses from foreign-exchange reserve investments.
· China FX: Ex-HKMA Chief: Yuan Has Biggest Potential To Be Third International Currency -Xinhua
o The Chinese currency has the biggest potential among all sovereign currencies to be the third international currency following the U.S. dollar and the euro, though it will take many years - former Hong Kong Monetary Authority chief Joseph Yam said Sunday
o "World economic situation and big fluctuations in the dollar and the euro in recent years showed that the current international monetary system supported by 'the two legs' is neither healthy nor stable. So "a third leg" is needed," Yam said.
· Commodity prices are tracking swings in equities more closely than at any time on record, undermining the traditional role of investments in raw materials as a hedge against financial-market volatility, Commerzbank AG said. BBG
· Data
o Australia keeps cash target rate unchanged at 4.5%, as expected
o The Australian dollar gets a lift Tuesday against its U.S. counterpart, after a mostly upbeat policy statement from the Reserve Bank of Australia.
o Aussie trade surplus hits 14-month high
o The Reserve Bank of India said it stands a good chance of implementing a further interest-rate hike, after a surprise increase last week. The central bank raised its reverse-repurchase rate to 4% and its repurchase rate to 5.5%. The bank said it is prepared to "take further action as warranted." Bloomberg (05 Jul.) , The Economic Times (India)/Reuters
o India has raised its short-term lending rate by 25 basis points as it stepped up its efforts to control the country’s accelerating inflation, which surged to 10.2 per cent in May
o Monday data:
§ Germany Jun Final Sercices PMI 54.8 vs cons 54.6; France Jun Final Services PMI 60.8 vs cons 61.6; UK Jun Services PMI 54.4 vs cons 55.0; EuroZone May Retail Sales +0.2% m/m vs cons +0.3%; EuroZone Jul Sentix Investor Confidence (1.3) vs cons (5.0)
· Money Raising:
o Companies reluctant to raise cash: RBC world survey Reuters link
§ Senior executives from around the world are holding off on major fund-raising plans as they wait for global economies to stabilize further, a study by the Economist Intelligence Unit for Royal Bank of Canada shows
o Kohlberg Kravis Roberts & Company is moving closer to gaining its long-sought New York Stock Exchange listing, with a filing expected as early as Tuesday which should detail compensation for top executives at the private equity firm, Reuters reported.
o Ocado has priced its planned initial public offering at 200p-275p a share, valuing the the online grocer that delivers Waitrose produce between £800m and £1.1bn.
o Chinese IPO May Be Largest in History – WSJ link
§ Agricultural Bank of China's massive initial public offering, to be priced as early as Tuesday, is testing global investors' faith in China's fast-growing economy amid global financial turmoil.
o Renminbi bond deals begin to flourish – FT link
§ A Hong Kong-based toll road company will sell renminbi-denominated bonds to international investors this week in a little-noticed deal that marks a big change in China’s currency controls
o Bank of China (601988.CH/3988.HK) gained 3% on announcing its controlling shareholder will take up its full entitlement in the bank’s pending rights offering. (SA)
o Bilfinger Berger postpones IPO of its Australian unit.. Company says due to negative developments on the capital markets
o Big financing !! Reuters) - A potential buyout of Spanish infrastructure company Abertis Infraestructuras SA by major shareholders and CVC Partners [CVC.UL] would involve 10 billion euros ($13.4 billion) in financing, Il Messaggero newspaper said on Tuesday.
o GM Intends To File In Mid-August For IPO –Reuters (midday Friday)
§ GM also is weighing whether to issue additional shares as part of an initial public offering expected later this year, money that could go toward paying
§ down the company's remaining debt and under-funded pension plans, t
§ GM is in talks with banks to set up a $5 billion line of credit as it tries to persuade potential investors it can function without the government's support. WSJ
o Caja (Spain) The Spanish bank created by the merger of Caja Madrid with six other banks may sell shares in an initial public offering, El Mundo reported. Caja Madrid and Bancaja managers had already approved the deal. The two savings banks and five smaller lenders involved in the merger would keep at least 51% of the listed company. The share sale may be announced after completion of the integration expected for next year.
· M&A:
o AIG Chinatrust Financial Holding interested in American International Group's Nan Shan Life -- WSJ
· Illegal trading? Hedge-Fund Lending Draws Scrutiny - WSJ
o Companies that borrow money from hedge funds often see a sharp rise in bets against their shares before the loans or loan amendments are announced, new research shows, suggesting that fund managers or others privy to these deals may be illegally trading ahead of the announcements
o The sharp spike contrasts with little change in the short selling of companies that borrow money from banks
· BP stories
o BP up 4% today ….has rallies Monday (5%) and Tuesday (4%) overseas
o U.K. GOVT WON'T COMMENT ON TIMES REPORT OF BP CONTINGENCY PLAN in case of collapse
o BP provides update on GoM oil spill; cost of response to date $3.12B
o BP Plc’s standby loan facility aimed at helping the oil company meet any liabilities arising from the Gulf of Mexico oil spill has risen to $9 billion as more banks take part. the Wall Street Journal reported
§ Barclays Plc, BNP Paribas SA, Citigroup Inc., Banco Santander SA, HSBC Holdings Plc, Royal Bank of Canada, Royal Bank of Scotland Group Plc and Societe Generale SA are all likely lenders, agreeing to provide as much as $1 billion each on a bilateral basis; the loans have a one-year maturity, with a one-year extension option, and are designed to provided liquidity while the company considers longer-term funding
o BP gets harsh WSJ treatment… analysts are postulating radical scenarios like the company being broken up or taken over
§ A far-reaching management shake-up looks all but certain
o BP sd that while it had been encouraging SWFs et al to buy shares, it does not plan to issue new shares. Reports had Libya, Kuwait, China, and Singapore all possibly making investments in BP. London times etc
o BP may sell Latin America and Asian assets – bbg (Venezuela, coluimbis, vietnam, argentina assets
§ http://www.businessweek.com/news/2010-07-05/bp-said-to-seek-colombia-venezuela-vietnam-sales.html
o BP Launches Search For Strategic Investor - the Sunday Times
§ BP has launched a search for a strategic investor to help secure its independence as it moves to defend itself against potential takeover bids
§ The company's advisers are trying to drum up interest among rival oil groups and sovereign wealth funds to take a stake of between 5% and 10% at a cost of up to GBP6 billion
§ BP management fear a takeover approach as soon as it has plugged the leaking oil well in the Gulf of Mexico, which is expected in the next few weeks
§ BP received investment offers from Middle East financial institutions, the National reported. Middle East investors would also consider buying BP assets.
o Temasek may respond to speculation that Singapore funds are in talks with BP to take a strategic stake in the oil major – reuters
o BP must be cautious about doing deals with sovereign wealth funds – guardian
§ there is clearly a school of thought within BP that thinks it could be jolly useful if a few big Middle Eastern investors decided to buy a few billion shares in the market
§ But there's a problem if the encouragement to sovereign wealth funds is designed merely to frustrate opportunistic takeover bids. Existing shareholders in BP may feel they are quite capable of warding off unwelcome predators themselves.
o Libya hints at taking stake in BP from FT Alphaville
§ Libya’s top oil official on Monday said that his country’s sovereign wealth fund should invest in BP to take advantage of the troubled company’s falling share price, the FT
o Why July 27 is a big day for BP investors, who probably won't include Gaddafi- Telegraph link
§ July 27 looms large for BP. The last Tuesday in the month will be its
o Mitsui & Co. (MITSY, 8031.TO) has been asked by BP to shoulder about $111 million of the cost for recovering oil from the broken well in the Gulf of Mexico, Asahi Shimbun reported in its Saturday morning edition. The Tokyo-based trading company has a 10% stake in the BP's operation. BP made the request in a letter dated June 2, but Mitsui hasn't decided whether to accept the cost
o BP Wants Partners to Help Shoulder Spill Cost from NYT
§ BP has said it would pay for the Gulf of Mexico oil spill. But its actions show it does not intend to go it alone
o BP Didn't Use Industry Risk Test For US Oil Wells
§ BP told The Sunday Telegraph it didn't use an industry standard process to assess risk on any of its U.S. wells, the paper reports Sunday.
§ The procedure, known as a safety case, was developed after the Piper Alpha oil rig explosion in 1988
§ Royal Dutch Shell confirmed it always develops safety cases.
o US government remains big BP customer - Washington Post
§ http://www.washingtonpost.com/wp-dyn/content/article/2010/07/04/AR2010070403632.html
· Good macro news….AIG…ILFC Chief Is in Talks to Buy Jets to Expand After AIG Bailout - BBG
o American International Group Inc.’s plane-leasing business is in talks to buy jets for the first time since 2007 as it seeks to expand after the insurer’s U.S. bailout, the unit’s new chief executive officer said
o International Lease Finance Corp. “is doing extremely well, and we see a continued improvement trend in our ability to engage financing parties,” CEO Henri Courpron said in an interview. “I’m not worried about the outlook for ILFC.”
o Boeing and Airbus weren’t the only planemakers ILFC is talking to, he said
· Bad macro news The Baltic Dry Index, which measures the cost of shipping dry bulk goods, headed into its 27th day of losses on Monday.
· Bulk shipping groups fear fall in profitability – FT
o Owners of dry bulk ships and tankers face sharp falls in profitability after rates for the largest ships at least halved since May on fears about ship oversupply and weak demand
o http://link.ft.com/r/BLH300/8AI1YN/ZOZ9Z/KET73K/A7KYRD/UP/h
· Metals and Miners tues…Xstrata (+4.6%) and Rio Tinto (+4.5%) announce that they are resuming their planned expansion projects in Australia following the final settlement on the resources super-tax.
· TMT sector event this week gets attention - THIS year's Sun Valley retreat
o Mood improves for annual media get-together
o annual gathering of movers and shakers that includes media moguls, tech titans, politicians and sports stars
o Read more: http://www.nypost.com/p/news/business/pleasant_valley_pIQwphj21UVKvSZVWya6lI?CMP=OTC-rss&FEEDNAME=#ixzz0stMd9io6
· Tech stories busy, a lot of Asian data points :
o Samsung reports Thursday – rseuter cautious in front of it
o Powerchip Technology (5346.TT) rose 4% after reporting that June revenue quadrupled y/y.
o Advanced Semiconductor Engineering announces June sales figures Consolidated revenues were NT$16.26B, +4.9% m/m and +110.4% y/y.
o HTC Corp., the world’s largest maker of handsets using Microsoft Corp. and Google Inc. operating systems, posted profit that beat estimates as rising demand for Android phones spurred the company to record sales – BBG
o Semiconductor Industry Association reports global chip sales in May rose 4.5% m/m, 47.6% y/y to $24.65B
§ SIA president George Scalise says sales of semiconductors remain on pace to reach the association's forecast of 28.4% growth for the year, even allowing for a slowdown in y/y and sequential growth rates in H2.
· Communication Workers Union cancels strike ballot at BT Group – FT
o Both sides say they hope to resolve their dispute without a strike. The CWU has asked for a 5% pay raise; BT has offered raises of 2% this year and 3% next year
· JPMorgan upgrades GS, downgrades Deutsche Bank
· HSBC clients are being investigated by the U.S. Justice Department on suspicion of failing to disclose accounts in India or Singapore, Bloomberg
· Talks Restart In Los Angeles Port Strike, But Progress Slow -AP
o Talks between striking clerical workers and shipping companies at the ports of Los Angeles and Long Beach have resumed, the AP reported, but one negotiator said there had been "little progress."
o About 900 clerical workers began picketing Thursday after their contract expired.
o Full story at:
o http://www.ajc.com/business/talks-resume-but-progress-562790.html
· Sen. Brown: 'I'm liking what I see' on financial reform legislation – The Hill
o Sen. Scott Brown (R-Mass.) offered a hint that he may support the financial reform bill when it comes to a vote
· JPMorgan brushes aside bill concerns – FT link
o JPMorgan has brushed aside industry concerns that legislation forcing banks to spin off swap trading desks would make its commodities business less competitive
· US banks good news? China eyes shake-up of bank holdings
o China is considering stripping its $200bn sovereign wealth fund of the country’s banking stakes, in a move that could free it of some restrictions when it invests in the US.
o People familiar with the matter said that, under the proposal, China Investment Corporation would no longer be responsible for holding the state’s majority stakes in the country’s biggest banks, such as Bank of China.
o The move would end CIC’s status as a bank holding company in the eyes of the Federal Reserve Bank of New York.
o That would liberate CIC of certain restrictions when it makes investments in the US, where it is believed to be targeting equities, bonds and real estate deals
o http://www.ft.com/cms/s/0/eab99390-885f-11df-aade-00144feabdc0.html
· Stress tests show EU banks are "solid and healthy," Lagarde says
o Results of stress tests on EU banks will be published about July 23, and the data are expected to paint a favorable picture of the institutions, French Finance Minister Christine Lagarde said. "You will see that banks in Europe are solid and healthy," she said. France 24/Agence France-Presse (04 Jul.)
· EU Reveals Backup Plan for Troubled Banks
o EU Economy Commissioner Olli Rehn said that should any government exhaust national funds in helping a troubled lender, it could turn to "EU financial backstops ... in the second line of defense."
o http://www.cnbc.com//id/38093205
· Banks Redefine Jobs of 'Prop' Traders WSJ
o Some Wall Street firms aren't waiting until the Volcker rule kicks in to shake up the trading desks that wager the banks' own money. Unclear is whether some of the shifts will be seen as anything more than sleight of hand.
o As the financial-regulation overhaul heads toward a final vote in the Senate next week, banks are scrambling to find new positions for star proprietary traders
o Citigroup is considering moving roughly two dozen proprietary traders onto desks that trade with company clients
· Democratic campaign committees losing big Wall Street donors – WP link
o A revolt among big donors on Wall Street is hurting fundraising for the Democrats' two congressional campaign committees, with contributions from the world's financial capital down 65 percent from two years ago
o Shares in Persimmon rose over 6% Tuesday after the U.K. house builder said it’s continuing to invest in new sites as rising volumes and a modest increase in prices helped push revenue up 26% in the first half of the year.
· Real estate: Office Vacancy Rate in U.S. Climbs to 17-Year High, Reis Says
· Inflation: Post Office Plans to Announce New Rate Increase CNBC
o Postal officials scheduled a briefing Tuesday to discuss the amount of the increase, which will go to the independent Postal Regulatory Commission for review
o http://www.cnbc.com//id/38101627
· Inflation: Chinese pay disputes mirrored across region from Financial Times - Asia homepage
o Chinese labour unrest is being replicated in south-east Asia where factories that compete with China to supply low-cost goods face walkouts as employees demand better pay and benefits
· Inflation: Thousands Arrested in Fuel Price Protests in India – NYT link
o Protests against a recent increase in fuel prices shut down businesses across India, and thousands of people were arrested as violence flared in some cities
· Inflation: South Africa government workers threaten strike within 2 weeks Reuters
o Unions representing 1.3 million South African government workers have threatened to strike within two weeks, but any labor action was unlikely to disrupt the soccer World Cup, which heads for its final on Sunday. The state employees are the latest workers to threaten industrial action that could disrupt the world's largest sporting event staged for the first time on African soil, embarrassing President Jacob Zuma and his government. But the unions representing workers includ
· Iran: Reuters) - Iranian planes are getting fuel at airports around the world, Foreign Ministry spokesman Ramin Mehmanparast said on Tuesday, denying reports that some countries were refusing supplies due to sanctions.
· Economics:
o Non-manufacturing ISM at 10.00 ET
o Fed's Kocherlakota speaks on taxing risk in Montreal at 15.30 ET
o API Crude Inventories at 16.30 ET
o Fed's Lacker speaks to business leaders in Norfork VA at 19.15 ET
· Earnings:
o No major companies expected to report
· Alcoa (AA) will unofficially kick off earnings season when the aluminum giant releases results on July 12.
· Two months after a tense meeting at the White House, Israeli Prime Minister Binyamin Netanyahu and President Obama are set to meet on Tuesday with a deceptively simple mission: getting their picture taken together WP
· China is due to release its GDP data for the second quarter on July 15
o Recall, China on Friday (7/2) revised up its gross domestic product last year, which means China's GDP growth calculated year-on-year will have a higher comparison base going forward
· The 27 countries of the EU are currently carrying out stress tests on more than 100 of the largest banks. The results of these tests will be made public July 23. DJ
· Greek Prime Minister George Papandreou is rallying support ahead of a key vote on pension and labor reform this week by deputies and dismissing the prospect of early elections in an interview published Sunday in local newspaper Eleftherotypia
TODAY’S BIG STORIES
· Earnings good news!! Profit Upgrades Clash With El-Erian’s Fading Recovery – BBG
o Analysts are raising earnings estimates for U.S. companies at the fastest rate since at least 2004
o Profit for Standard & Poor’s 500 Index companies will jump 34 percent in 2010, compared with a projected gain of 27 percent on March 29, according to more than 8,000 estimates compiled by Bloomberg.
o The revision, the most during any quarter in at least six years
o “Because corporate earnings estimates are rising, there’s a significant valuation imbalance that suggests later this year stocks are going to start going up again, and they’ll probably go up sharply.”
· Earnings season: S&P 500 Members' 2Q Profit Seen Climbing 27% - Thomson
o Earnings for members of the Standard & Poor's 500 are expected to increase 27% from a year earlier while revenue is seen rising 9%
o A month ago, earnings growth was estimated at 27% and revenue growth at 10%.
o In the second quarter of 2009, S&P 500 companies posted results down 27% during the recession.
o Eight of the 10 sectors are expected to see earnings growth in the second quarter. The materials, energy, information technology and consumer discretionary sectors are seen with the highest growth rates, while telecom services and utilities are projected to post small declines. The energy sector is predicted to have the highest percentage growth and largest dollar-level growth in revenue.
o Excluding energy companies, the estimated revenue growth rate falls to 6%.
o So far, 70 companies in the index have predicted second-quarter results below Wall Street expectations, while 59 have projected above analysts' estimates. That 1.2-1 ratio is below the historical average of 2.1-1.
· Hedge Funds Sidestep Big Losses In 2010 - WSJ
o The $1.8 trillion hedge-fund industry avoided big losses in the first half of 2010 as many managers stayed defensive amid sovereign-debt concerns and worries about a double-dip recession
o A global index of managers compiled by Chicago-based Hedge Fund Research Inc. fell 0.94% in June, according to early estimates. That would leave the index down 1.2% in the first half.
o The Standard & Poor's 500-stock index slumped more than 5% last month, leaving it down 7.6% in the first half.
· Credit Markets: Property Bonds Slump Most Since ’09 on Slowdown - BBG
o Bonds sold by real-estate companies are performing the worst compared with the rest of the market since March 2009 on concern the slowing economic recovery will cause more defaults.
o Yield premiums of bonds sold by real-estate investment trusts, shopping-mall owners and office landlords widened 9 basis points, or 0.09 percentage point, more than those on other debt in June, and continued to rise this month
· Credit Markets, munis: Investors fear rising risk of US regional defaults – FT
o Investors are worried that the risk of default for US local governments is growing, amid signs that some regions are facing the same type of difficulty in curbing pension and budget deficits as some eurozone countries
o http://link.ft.com/r/BLH300/8AI1YN/ZOZ9Z/KET73K/TPB8AE/UP/h
· Credit Markets, munis: Payback Time: Budget in the Red, Illinois Has Stopped Paying Bills
o Illinois’s borrow-and-spend mentality has led it to the brink, but still lawmakers opt not to cut budgets or raise taxes.
· Credit Markets, munis: Alabama County Brainstorms – WSJ
o With support from Alabama Gov. Bob Riley, a group of prominent Birmingham-area business leaders have been trying to find a solution for Jefferson County's crippling $3.2 billion in sewer debt, aiming to avoid what would be the largest municipal bankruptcy in history.
o has discussed ways in which the county might settle the debt, which came as the result of a soured interest-rate swap deal.
· Credit Markets: Moody's Downgrades Another $5 Billion Of Alt-A RMBS
o Moody's Investors Service downgraded its ratings on a total of $5 billion in securities backed by alternative-A mortgages. The downgrades affect 101 tranches from eight residential mortgage-backed securities transactions issued by Bear Stearns in 2005
· U.S. pension funds adopt their own derivatives restriction
o Many U.S. pension funds are implementing an internal limit, or sometimes a prohibition, on the use of derivatives because they are worried about the difficulty of analyzing risk that goes along with complex financial instruments. An Oklahoma pension fund replaced Pacific Investment Management as a bond-fund manager, saying the latter uses derivatives in a way that is essentially impossible to audit. The Wall Street Journal (03 Jul.)
· Jobs: WSJ(7/3) A Grad-School Stint Doesn't Pay Off In Job Market
o College graduates who took a detour around the weak job market by going back for advanced degrees are beginning to emerge from those programs – and finding job prospects aren't much better than they were a couple of years ago
o The jobless rate for 20- to 34-year-olds with master's degrees, though well below the overall 9.5% U.S. average, was 4.2% in June, the Labor Department said Friday, up from 3.9% last year and 2.9% in June 2007, before the recession started.
· Jobs: Job gloom at all-time high
o from Economic news - CNNMoney.com
o More
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· Protectionism: China Steel Group Accuses U.S. Lawmakers of Protectionism
o China's government-backed steel-industry association hit out at a move by U.S. lawmakers that could threaten a plan by China's fourth-largest steelmaker to invest in U.S. steel plants, saying the action amounted to protectionism.
o However, the steelmaker, Anshan Iron & Steel Group Corp., sought to play down the dispute, which could exacerbate trade tensions between the U.S. and China.
· Rating agency Standard & Poor's on Monday upgraded Qatar's sovereign credit rating and state controlled Qatar Petroleum to 'AA' from 'AA-', citing the gas rich Gulf Arab state's strong growth prospects
· Italy Is the Ticking Time Bomb: Economistfrom CNBC
§ As Silvio Berlusconi's government calls for a vote of confidence over his austerity package, one economist is questioning whether the country holds great danger for the euro zone.
· British Government Planning Even Deeper Spending Cuts – DJ
o Britain's coalition government has ordered many ministries to plan for spending cuts of up to 40%, far greater than announced in an emergency budget, the finance ministry said Saturday.
o As Britain bids to slash a record budget deficit, departments had been warned to expect spending cuts of about 25%, but many ministries have now been asked to identify where cuts of 40% could be made.
o It is the latest step in laying the ground for a spending review to be published in October which is expected to be the toughest since World War II.
· German 2011 Budget Lowers Spending, Signals Exit From Stimulus – DJ
o Draft Budget: No Alternative To Exit Now From Fiscal Stimulus
o The German government will spend less next year as its austerity measures, alongside a pick up in the economy, help reduce labor market costs and borrowing levels.
o according to 2011 budget figures seen by Dow Jones
· French Fin Min: Policy Mix Of Spending Cuts, Stimulus – DJ
o France hasn't made a choice between austerity and stimulus, French finance minister Christine Lagarde said Sunday, describing the French economic policy as a mix of spending cuts and measures aimed at boosting demand
o Lagarde also said that European stress tests will show European and French banks to be solid.
· European Stress Tests Won't Include State Bankruptcies - Der Spiegel
o Stress tests of European banks' capacity to withstand shocks won't include scenarios of state bankruptcies
o Such a scenario would only bring new uncertainty into the market, as it would question the effectiveness of European rescue measures. Bank supervisors will instead examine the effect of rising prices for bad debt insurance on government bonds
· German FDP Against Idea Of European Currency Fund- Der Spiegel
o Germany's co-ruling Free Democratic Party FDP rejects the idea of a European currency fund for the rescue of highly indebted euro-zone countries, as put forward by German finance minister Wolfgang Schaeuble, German magazine Der Spiegel reports over the weekend.
o The current euro rescue package shouldn't become a durable institution….
· US Politics: Barron's Cover: Democrats will retain Congress, but barely, in the Nov elections with 220 members in the House and 51 senators
· US, Poland Amend Missile-Defense Pact To Conform With Obama Plan - WSJ
o The U.S. and Poland formally amended their missile-defense agreement to conform with the Obama administration's new plan to protect the U.S. and it allies from missile attacks—especially those that could be launched by Iran.
· Justice Dept. expected to sue Ariz. on immigration, citing 'preemption' grounds
o from Wash Post
o The Justice Department has decided to file suit against Arizona on the grounds that the state's new immigration law illegally intrudes on federal prerogatives, law enforcement sources said Monday.
· French "Burqa Ban" Goes Before Parliament For Debate Tuesday(AFP)
o Mirroring moves in Belgium and Spain, lawmakers in France begin debate this week on a bill aimed at banning the full-face Islamic veil in the country with Europe's biggest Muslim minority
o The legislation would make it illegal to wear the face-covering veil anywhere in public and impose fines of EUR150 to women caught in attire that President Nicolas Sarkozy has described as degrading to women.
· Turkey threatens to sever ties with Israel over deadly flotilla raid – WP link
o Tensions between Turkey and Israel escalated Monday as Turkey's foreign minister said his country would sever diplomatic relations with Israel unless it either apologizes for its deadly raid on a Turkish aid ship or accepts an international inquiry into the incident.
· Iran Could Halt 20% Uranium Enrichment If Given Fuel: Lawmaker - AFP
o A top Iranian lawmaker said on Sunday that Tehran could stop refining uranium to 20% purity level, the most controversial part of its atomic program, if it gets nuclear fuel required for a research reactor.
o "If the fuel for the Tehran research reactor is given, Iran will not insist on continuing the production of the fuel domestically," state news agency IRNA quoted Alaeddin Borujerdi, head of parliament's commission on foreign policy, as saying.
· Iran pushes U.S. on missing scientist
o (Reuters) - Iran has sent to U.S. authorities more documents about the disappearance of a nuclear scientist it says was kidnapped by the CIA, demanding his release, the foreign ministry spokesman said on Saturday
· Clinton concerned over Russian bases in Georgia region from Reuters: Politics
o TBILISI (Reuters) - U.S. Secretary of State Hillary Clinton voiced concern over Russian plans to build up military bases in Georgian rebel regions and called on Moscow to end its "occupation" of Georgian territory two years after a war.
· Russian spying at cold war levels, say experts FT link
o The global media has ridiculed the antics of the alleged agents arrested by the FBI but intelligence sources insist Moscow’s networks pose a real threat
· U.S.-Russian ties will not be harmed: Medvedev
o from Reuters: Politics
o MOSCOW (Reuters) - Attempts to derail improvements in relations between Russia and the United States will fail, Russian President Dmitry Medvedev wrote in a letter to U.S. counterpart Barack Obama amid a spy scandal.
COMPANY NEWS WITH MACRO IMPLICATIONS
· Changes in the latest IBD 100 List. Added: JAS, TJX, CVLT, FDO, FOSL, BCPC, BAP, HSP, SNDK, SLH, AOS, SVR, LTM, PLCE, OPEN. Deleted: CAAS, AAPL, DGIT, VRX, ISRG, MED, CLR, ASPS, WCRX, DTV, WHR, LFT, AGP, NFX, PRXL
· Barron's summary:
o Cover: Democrats will retain Congress, but barely, in the Nov elections with 220 members in the House and 51 senators. Article notes Barron's mis-calling of the 2006 elections and that much can happen between now and November.
o PBR Positive on Petrobras, stock could climb back to around $50 within a year
o Finance professor Raghuram Rajan discusses ways to avoid the next financial crisis.
o Some of America's biggest and most important companies are undervalued.
o ARO Positive on Aeropostale, stock could gain 50% or more.
o CVH Positive on Coventry Health Care.
o Editorial says the financial reform bill ignores most big problems and dodges the rest. The bill seeks to restrain risk in an inherently risky business without tight regulation or free market discipline.
o PBCT The Trader is cautious on residential REITs and says the selloff in People's United Financial has made the stock cheaper than it deserves to be.
o Current Yield says last week's Treasury rally reflected the weakness in employment and residential property.
o European Trader discusses the anomalies in bond pricing caused by the sovereign-debt crisis in Europe.
o Asia Trader says the signs are pointing towards a soft landing of the Chinese economy.
o Commodities Corner argues that the current rally in lumber will likely be short.
o GS The Striking Price looks at Goldman Sachs and its recommended options trade.
o AMR, DAL Preview suggests airline stocks may rally this summer, especially American and Delta.
o TWC, PETM Follow Up is positive on Time Warner Cable and PetSmart where it is not yet time to take profits.
o Up and Down Wall Street discusses the jobs report and weakness in the housing sector.
o Streetwise notes the downward technical trend.
o Economic Beat argues against a double dip recession.
o MSFT, INTC, DELL, HPQ, MRVL, STX, WDC and NVDA Technology Trader argues that PC stocks are screaming buys, especially after the recent declines.
o Plugged In discusses the Supreme Court's recent patent ruling and the closeness of the ruling on whether business process are able to be patented.
INDUSTRIALS
· FDX, UPS Washington Post summarizes fight between FedEx, UPS on labor law
· BA EADS says EC likely to appeal WTO subsidy decision -- WSJ
· COIN Converted Organics files $75M mixed shelf
· NUCO NuCO2 files amended S-1; adds Goldman Sachs as additional lead underwriter
· OSK Oshkosh slightly higher after hours following reports of previously disclosed Army contracts
· Weapons Budget Grows Amid Obama Cuts, Pentagon Comptroller Says
o (Bloomberg) -- U.S. spending on weapons through 2016 likely will grow faster than the overall defense budget, which will have annual increases of only about 1 percent above inflation, according to Pentagon Comptroller Robert Hale
o “Our goal would be to get forces and modernization to grow by 2 or 3 percent,” Hale said in an interview, while saying that “it’s not a given.”
· EADS CEO: EU Likely To Appeal WTO Findings On Loans (Dow Jones)--The European Commission probably will appeal World Trade Organization findings that condemned some loans to Airbus as export subsidies, the chief executive of Airbus's parent company, European Aeronautics Defence & Space Co. (EADSY, EAD.FR), said Saturday. After AIG
TRANPSORTS
· The Baltic Dry Index, which measures the cost of shipping dry bulk goods, headed into its 27th day of losses on Monday.
· Good macro news….AIG…ILFC Chief Is in Talks to Buy Jets to Expand Bailout - BBG
o American International Group Inc.’s plane-leasing business is in talks to buy jets for the first time since 2007 as it seeks to expand after the insurer’s U.S. bailout, the unit’s new chief executive officer said
o International Lease Finance Corp. “is doing extremely well, and we see a continued improvement trend in our ability to engage financing parties,” CEO Henri Courpron said in an interview. “I’m not worried about the outlook for ILFC.”
o Boeing and Airbus weren’t the only planemakers ILFC is talking to, he said
· Bulk shipping groups fear fall in profitability – FT
o Owners of dry bulk ships and tankers face sharp falls in profitability after rates for the largest ships at least halved since May on fears about ship oversupply and weak demand
o http://link.ft.com/r/BLH300/8AI1YN/ZOZ9Z/KET73K/A7KYRD/UP/h
· RDGE Ridgebury Tankers files $250M IPO through Jefferies
· UPS, FDX: FedEx, UPS send out fleet of lobbyists to shape labor law
o http://www.washingtonpost.com/wp-dyn/content/article/2010/07/04/AR2010070404001.html
· Start-Up Airlines in a Struggle to Survive from DealBook
o Start-up carriers in the U.S., like Virgin America, face a long list of challenges in their fight to survive, particularly as big competitors consolidate and expand their global reach, The New York Times's Susan Stellin writes
· Air France to cut 4109 jobs -- Le Figaro
· British Airways (BAY.LN) June passenger traffic, measured in RPK, (11.1%);
· Ryanair (RYA.ID)announces June traffic statistics, June passengers were 6.71M vs year-ago 5.84M; 12 months to end of June 69.2M
· airline Deutsche Lufthansa AG (LHA.XE) and labor union UFO, which represents Lufthansa's cabin personnel, have agreed to continue wage negotiations, after talks Friday ended without any result, Joachim Mueller, UFO's head of wage issues bargaining policy and legal issues, told Dow Jones Newswires Sunday.
· Alitalia to Join Air France-KLM and Delta in Trans-Atlantic Venture
o With Alitalia, the venture will represent 26 percent of the total trans-Atlantic capacity, with annual revenue of more than $10 billion. NYT
·
ENERGY
o Spill panel to hold public meeting July 12-13 from Reuters: Politics
§ A presidential panel to probe the cause of the massive oil spill in the Gulf of Mexico and recommend new rules to prevent future disasters will hold its first public meeting in New Orleans on July 12 and 13, its co-chairs said on Saturday
· BP stories
o BP up 4% today ….has rallies Monday (5%) and Tuesday (4%) overseas
o U.K. GOVT WON'T COMMENT ON TIMES REPORT OF BP CONTINGENCY PLAN in case of collapse
o BP provides update on GoM oil spill; cost of response to date $3.12B
o BP Plc’s standby loan facility aimed at helping the oil company meet any liabilities arising from the Gulf of Mexico oil spill has risen to $9 billion as more banks take part. the Wall Street Journal reported
• Barclays Plc, BNP Paribas SA, Citigroup Inc., Banco Santander SA, HSBC Holdings Plc, Royal Bank of Canada, Royal Bank of Scotland Group Plc and Societe Generale SA are all likely lenders, agreeing to provide as much as $1 billion each on a bilateral basis; the loans have a one-year maturity, with a one-year extension option, and are designed to provided liquidity while the company considers longer-term funding
o BP gets harsh WSJ treatment… analysts are postulating radical scenarios like the company being broken up or taken over
• A far-reaching management shake-up looks all but certain
o BP sd that while it had been encouraging SWFs et al to buy shares, it does not plan to issue new shares. Reports had Libya, Kuwait, China, and Singapore all possibly making investments in BP. London times etc
o BP may sell Latin America and Asian assets – bbg (Venezuela, coluimbis, vietnam, argentina assets
• http://www.businessweek.com/news/2010-07-05/bp-said-to-seek-colombia-venezuela-vietnam-sales.html
o BP Launches Search For Strategic Investor - the Sunday Times
• BP has launched a search for a strategic investor to help secure its independence as it moves to defend itself against potential takeover bids
• The company's advisers are trying to drum up interest among rival oil groups and sovereign wealth funds to take a stake of between 5% and 10% at a cost of up to GBP6 billion
• BP management fear a takeover approach as soon as it has plugged the leaking oil well in the Gulf of Mexico, which is expected in the next few weeks
• BP received investment offers from Middle East financial institutions, the National reported. Middle East investors would also consider buying BP assets.
o Temasek may respond to speculation that Singapore funds are in talks with BP to take a strategic stake in the oil major – reuters
o Why July 27 is a big day for BP investors, who probably won't include Gaddafi- Telegraph link
• July 27 looms large for BP. The last Tuesday in the month will be its
o Mitsui & Co. (MITSY, 8031.TO) has been asked by BP to shoulder about $111 million of the cost for recovering oil from the broken well in the Gulf of Mexico, Asahi Shimbun reported in its Saturday morning edition. The Tokyo-based trading company has a 10% stake in the BP's operation. BP made the request in a letter dated June 2, but Mitsui hasn't decided whether to accept the cost
o BP Didn't Use Industry Risk Test For US Oil Wells
• BP told The Sunday Telegraph it didn't use an industry standard process to assess risk on any of its U.S. wells, the paper reports Sunday.
• The procedure, known as a safety case, was developed after the Piper Alpha oil rig explosion in 1988
• Royal Dutch Shell confirmed it always develops safety cases.
o US government remains big BP customer - Washington Post
• http://www.washingtonpost.com/wp-dyn/content/article/2010/07/04/AR2010070403632.html
· Subsidies, credits, low taxes boost profit for the U.S. oil industry
o As the U.S. oil industry fights a proposed tax for cleaning up spills, it benefits from subsidies and reduced taxes compared with other parts of the economy. The Congressional Budget Office found in 2005 that the effective tax rate on the industry's capital investment was 9%, compared with 25% for businesses in general. Such benefits allow many small and midsize oil companies to generate a greater post-tax return. The New York Times (free registration) (03 Jul.)
· Oil Industry to Begin Airing Anti-Tax Ads from Roll Call - Breaking News
o After a brief pause following the BP spill, Big Oil is back on the attack, with its trade group launching an ad campaign aimed at rallying voters against any oil and gas taxes that lawmakers might insert into energy legislation.
· CNOOC executive says Chinese companies will spend billions more in Canada - Globe and Mail
· PBR Barron's is positive on Petrobras, shares could climb back to $50
· SMA Solar (S92.GR) raises FY10 revenue and EBIT-margin guidance
· Obama Announces $2B Grants For Clean Energy Jobs - DJ
o -President Barack Obama announced Saturday a $2 billion commitment to solar energy companies with the hope of creating new jobs, in light of lackluster employment figures released Friday that bodes poorly for a swift economic recovery.
· WSJ(7/3) Smaller Oil Firms Might Exit Gulf, Browner Says
o The White House's top energy adviser acknowledged that smaller oil firms might no longer be able to drill in the Gulf of Mexico as a result of legislation moving through Congress that would eliminate the cap on their liability for oil spills
o "Maybe this is a sector where you really need large companies who can bring to bear the expertise and who have the wherewithal to cover the expense if something goes wrong," Carol Browner, special adviser to President Barack Obama on energy and climate change, said in an interview. Eliminating the $75 million cap on liability for oil spills "will mean that you only have large companies in this sector," she said.
· Valero Energy (VLO) plans to restart a key gasoline unit at McKee refinery in Sunray, Texas, Sunday morning, according to a filing with state environmental regulators.
o Repairs at the 55,000-barrel-a-day fluid catalytic cracking unit, or FCCU, are being completed ahead of schedule. The unit was shut down in mid-June when the expander coupling on the power train failed and Valero initially estimated that the repairs would be completed in mid-July.
· Macarthur Coal lifts profit guidance Business Spectator
o Coal miner says annual sales volume higher than expected
TMT SECTORS
· Samsung Reuters) - Samsung Electronics' second-half performance might be hit by weak European markets, and the launch of its new smartphones is key as the world's No. 1 memory chipmaker is set to report a record quarterly profit.
· HTC: Strong 2Q numbers across the board on strong demand for Android phones. HTC looks like another tech company not feeling the effects of the Euro. Supply may be tightening, which turns eyes to any announcements coming on demand. Orders currently look strong going into next Q, and HTC is seeing large order momentum for high-end models from Europe.
· Powerchip Semi: NI beat for the 3rd consecutive Q on strong demand for computers boosted prices. Powerchip says expects DRAM prices to be supported this year, and plans to pay down nearly $28b in debt. Also expects DRAM prices to rise 10% in Q3.
·
· Sun Valley Summer Camp: to Focus on Web, Not Mega-Deals say moguls- WSJ
· http://online.wsj.com/article/SB10001424052748703571704575341693673322402.html?mod=rss_Technology
· Sun Valley Summer Camp: More deal talk/ less gloom and doom at this year’s Retreat- NYPOST
· LGF Icahn Affiliates Confirm Control Over 37.9% Of The Common Shrs Of Lions Gate - DJ
· Sanyo to sell chip unit to ONNN On Semi- Nikkei
· Elpida to Cut Debt, Buy Assets Amid Record Profits- BBG
· Towers: WSJ is positive on cellphone tower stocks
· STX: Seagate said its change in place of incorporation to Ireland from the Cayman Islands will become effective Saturday- DJ
· NFLX: has signed a deal with media company Relativity Media to stream major theatrical movies to Netflix customers before they are shown on premium pay-television channels- Reuters
· RCI: How Rogers plans to target 'basic' cellphone users- Globe & Mail
· AAPL, LNVGY: Steve Jobs "Doesn't Care About China," Lenovo Chairman Taunts- "We are lucky that Steve Jobs has such a bad temper and doesn’t care about China. If Apple were to spend the same effort on the Chinese consumer as we do, we would be in trouble."
· http://www.businessinsider.com/steve-jobs-doesnt-care-about-china-lenovo-chairman-taunts-2010-7
· AAPL: SK Telecom: In talks to provide the iPhone and iPad; this deal would break the exclusive agreement Apple has with KT Corp since 2009 -WSJ
· AAPL: iPad monthly orders surpass 2 million units in July- Digitimes
· Gaming: Sales of Violent Video Games Face Possible Legal Curbs- CNBC
· http://www.cnbc.com/id/38038620
· NOK: Renesas to buy Nokia's wireless modem business- EETimes
· SNDK: Shifting to Business Customers, Surges- NYT
· http://www.nytimes.com/2010/07/06/technology/06memory.html?_r=2&partner=rss&emc=rss
· NWS, GOOG, MSFT, YHOO: News Corp. is in talks with Google, Microsoft, and Yahoo about replacing social networking site MySpace's search-advertising partnership with Google- WSJ
· DRAM: Major Taiwan-based DRAM makers saw mixed revenues in June 2010 with mixed results, amid sluggish DRAM prices
· Nanya, Inotera: posted sequential revenues drops in June, mainly due to limited available capacity. Both DRAM makers expect their shifts to Micron Technology's 50nm process would start bringing in solid contributions to revenues in July- Digitimes
· Samsung: Raises 2010 flat-panel TV sales target by 28% to 50M from 39M units, cites higher demand – TTN
· E-Commerce: Media and retail companies are increasingly treading on each other's turf online as they search for new business models.- WSJ
· http://online.wsj.com/article/SB10001424052748703620604575348973109834894.html
· Aluminum Capacitors: Supply to ease in 2H10, says Teapo chairman- Digitimes
· LCD: Global supply of LCD panel components to remain tight in 2H10- Digitimes
· Motherboard makers may fail to meet 2010 shipment targets- Digitimes
· Automotive chip market set to grow 23.5% in 2010- Gartner
MINERS/STEEL Etc
· BHP BHP Billiton upgraded to buy from add at Evolution
· MTL Mechel Steel outlines measures to supply Russian coke plants with coking coal of scarce grades
· AZK Aurizon Mines increases the Hosco measured and indicated mineral resources by 35% at Joanna Property
· RPT Rio Tinto completes sale of Alcan Packaging business with the completion of sales of its two outstanding assets
· CLF Spider Resources agrees to support Cliffs Natural Resources offer of C$0.19/share in cash
· NXG Northgate Minerals renews base C$250M mixed shelf registration
· RTP FT looks at Rio Tinto's situation in Guinea
· TGB Taseko comments on Federal Review Panel findings regarding Prosperity Gold-Copper Project
· VALE Vale reaches tentative agreement to end strike in Ontario - Canadian Press
· Copper Shortage Looms as Codelco Sees Limits on Mines - BBG
o The world’s biggest copper producers are warning of looming supply limits at the same time that growing concerns about the global economy leave investors with the largest losses in nine years.
· SPQ.CN Spider Resources agrees to support Cliffs Natural Resources (CLF) offer of C$0.19/share in cash
· Boral: Planning to raise A$490M (about 17% of market cap)
· Temasek may show resources move, BP plans… leadership plan - reuters
o Resources may be up to 8 pct of portfolio vs 5 pct
o The world's eighth-largest and the city-state's second-biggest sovereign wealth fund, behind the Government of Singapore Investment Corp [GIC.UL], may respond to speculation that Singapore funds are in talks with BPto take a strategic stake in the oil major as it struggles with a devastating oil leak in the Gulf of Mexico
o http://www.reuters.com/article/idUSSGE6650AJ20100706?feedType=RSS&feedName=privateEquity&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FprivateequityNews+%28News+%2F+US+%2F+Private+Equity+News%29&utm_content=Google+Reader
· Protectionism: China Steel Group Accuses U.S. Lawmakers of Protectionism
o China's government-backed steel-industry association hit out at a move by U.S. lawmakers that could threaten a plan by China's fourth-largest steelmaker to invest in U.S. steel plants, saying the action amounted to protectionism.
o However, the steelmaker, Anshan Iron & Steel Group Corp., sought to play down the dispute, which could exacerbate trade tensions between the U.S. and China.
· Rio Tinto says Australia tax among world's highest
o (Reuters) - Australia's watered down mining tax is still among the highest tax regimes around the world and needs deeper study before Rio Tinto will commit to its next big expansion in iron ore, the mining giant's iron ore division head Sam Walsh said on Tuesday.
· China Investigates Neighbors' Resources Such As Iron Ore - China Business Journal
o China's government has started an investigation into its neighbors' resources reserves, such as iron ore, and is seeking possibilities of mergers and acquisitions in the future
o The investigation, launched by China's Ministry of Land and Resources and the Ministry of Finance, targets iron ore, gold, copper and bauxite,
o A reason for the ministry to work on an overseas resources strategy is iron ore pricing power held by BHP Billiton Ltd. (BHP), Rio Tinto PLC (RTP) and Vale SA (VALE, VALE5.BR)
o Besides some neighboring countries such as Russia, China is also investigating countries in east Asia, southeast Asia, Africa and south America
· Rio Tinto completes sale of Alcan Packaging business with the completion of sales of its two outstanding assets
· Vale, Union Reopen Talks To End Strike, To Report Back Sunday
o Ontario's Minister of Labour has told Brazilian miner Vale SA (VALE, VALE5.BR) and the United Steelworkers union to immediately resume talks to end the 11-month strike at Vale's nickel operations in Sudbury and Port Colborne. DJ
· Kronos Worldwide (NYSE: KRO) announced a price increase for all titanium dioxide products sold outside of North America and Europe including among other areas, Asia Pacific, Latin America, Middle East, Africa and Asia.
· FT on Rio Tinto in Guinea
o http://www.ft.com/cms/s/0/2e4ec1be-8853-11df-aade-00144feabdc0.html
AUTOS
· Global car sector’s rebound running out of gas from FT
o Industry recovery falters as US retail car sales have recovered from last year’s lows but slowed over the past two months
·
· F Ford posts H1 Chinese sales of 301,524 units, an increase of +53% y/y
· DAI Daimler's Mercedes-Benz division June sales up +10.6% -- wires
· Chrysler to set up separate dealer network for Fiat - Detroit News
· NHTSA investigating possible power-steering problems in some BMW Group and Mazda Motor vehicles – WSJ
· SMMT Jun UK new car registrations rose +10.8% y/y, up +19.9% in H1
· Car sales in China slow as inflation rises
· from Automotive News
· China's passenger-car sales growth slowed in June as inflation accelerated, reducing consumers' spending power in the world's largest auto market. Sales of cars, sport-utility vehicles and multipurpose vehicles rose 10
· GM
· Aston Martin is considering a tie-up with another car manufacturer and has not ruled out an initial public offering as it develops its strategy to expand its model range. The company is majority owned by the Kuwaiti sovereign wealth fund Investment Dar, which bought it for 503mln£ from Ford in 2007. Aston Martin chairman, David Richards, said that an IPO on the London Stock Exchange is "not out of consideration" and it would value the business in excess of 1bn£. Telegraph
· Fiat (F IM)..Sergio Marchionnne, the chief executive of Fiat, is likely to announce the timetable for the spin-off of Fiat's non car operations at the group 21st July board meeting. Il Corriere della said that Fiat shareholders will give formal approval to the creation of Fiat Industrial when they meet at the beginning of September. Fiat board is also likely to announce the advisors for the spin-off. In the frame, among others, are Goldman Sachs, Banca Leonardo, Unicredit and Banca Imi.
· Toyota to recall Lexus models in Japan, China
o from Automotive News Breaking News
o Toyota will recall Lexus cars sold in Japan and in China after saying engines in up to 270,000 vehicles worldwide may have a defect that can lead to stalling.
· Toyota Knew About Lexus Problem 2 Years Ago - from CNBC
· Volkswagen (VOW.GR) CEO Martin Winterkorn to announce Porsche management reshuffle today - FT
FINANCIALS
· WSJ looks at banks KBW thinks are takeover possibilities
o The list, discontinued in late 2007 but renewed this week, lists the top 7 potential sellers as: ABBC, BPFH, CFNL, EBTX, SUSQ, WAL and WL. The full list includes 26 possible sellers. Potential buyers include large, regional banks like: BBT, PNC and USB.
o http://online.wsj.com/article/SB20001424052748704525704575341200545448886.html?mod=ITP_moneyandinvesting_3
· BK Bank of New York Mellon looking at acquisitions in Europe – FT
· BX BreakingViews says Blackstone Group looks undervalued
· Kohlberg Kravis Roberts expected to lay out timing, details of IPO this week - Telegraph
· European Stress Tests Won't Include State Bankruptcies - Der Spiegel
o Stress tests of European banks' capacity to withstand shocks won't include scenarios of state bankruptcies
o Such a scenario would only bring new uncertainty into the market, as it would question the effectiveness of European rescue measures. Bank supervisors will instead examine the effect of rising prices for bad debt insurance on government bonds
· The City's insiders scrutinize Europe's stress tests on banks
o Insiders from London's financial institutions warned that stress tests on European banks could be useless and hinder market confidence. "I don't think it is going to work," said Jacques Cailloux, Europe economist at Royal Bank of Scotland. "These stress tests are not rigorous enough. Investors are already pricing in a 50% 'haircut' on some Greek bonds so this has to be included, and perhaps 30% for Spain. We have had a complete failure of communication by the eurozone over recent months, with 16 countries all saying different things, and there is a very high chance of another failure this time." Telegraph (London) (05 Jul.)
· How BofA CEO Survived Board Split – WSJ
o When Bank of America announced in December that Brian T. Moynihan was its new chief executive, the giant bank said the board's vote was unanimous. In reality, the final tally had an asterisk.
o http://online.wsj.com/article/SB10001424052748703620604575349232432707598.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
· Lloyds Banking Group PLC (LLOY.LN), 40%-owned by the U.K. government, is under pressure from shareholders to sell its Scottish Widows insurance business, which could raise about GBP7 billion, The Observer newspaper reports Sunday
· Caja (Spain) The Spanish bank created by the merger of Caja Madrid with six other banks may sell shares in an initial public offering, El Mundo reported. Caja Madrid and Bancaja managers had already approved the deal. The two savings banks and five smaller lenders involved in the merger would keep at least 51% of the listed company. The share sale may be announced after completion of the integration expected for next year.
· Some HSBC clients are being investigated by the U.S. Justice Department on suspicion of failing to disclose accounts in India or Singapore, Bloomberg
· Kohlberg Kravis Roberts & Company is moving closer to gaining its long-sought New York Stock Exchange listing, with a filing expected as early as Tuesday which should detail compensation for top executives at the private equity firm, Reuters reported.
· Is Blackstone Undervalued (At Last)? from DealBook
o Three years on, the Blackstone Group may finally be worth a look from bargain-hunting investors, Breakingviews says.
· Chartered hopes tie with AgBank (601288.CH) will help it expand in China – WSJ
· BK Bank of New York Mellon looking at acquisitions in Europe - FT
· RBS Royal Bank of Scotland CEO Stephen Hester tells Welt am Sonntag he will be "disappointed" if government does not start exit next year - Reuters
· Private equity firms looking at 3 large mortgage companies -- NY Post
· ABBC, BPFH, CFNL, EBTX, SUSQ, WAL and WL WSJ looks at banks KBW thinks are takeover possibilities
· STFC State Auto Financial announces Richard Smith resigns from board
· EIG Employers Holdings reorganizes operations
· BRO Brown & Brown announces the asset acquisition of Meridian Group of New York
· RBS Royal Bank of Scotland upgraded to neutral from underperform at Exane BNP Paribas - SA London
· AIG Chinatrust Financial Holding interested in American International Group's Nan Shan Life -- WSJ
· AIG As American International Group tries to quash boardroom squabbles, it is now considering offloading its Asian insurance unit AIA in pieces, sources tell The Post. The break-it-up and then sell-it-off route is the latest option being weighed by the beleaguered insurer -- which earlier this year failed to cement a... NYP
·
· GS JPMorgan upgrades Goldman Sachs to overweight from neutral;Deutsche Bank downgraded to underweight from neutral
· KKR Kohlberg Kravis Roberts expected to lay out timing, details of IPO this week -
REAL ESTATE
· GOV Government Properties Income Trust files $1B mixed shelf registration
· The idea of disbanding Fannie and Freddie raises questions
o U.S. government officials and housing experts are discussing the idea of eliminating or overhauling Fannie Mae and Freddie Mac. Either move would cause significant change for the banking system, and they also prompt the question of who will step in to buy mortgage-backed securities if Fannie and Freddie are not guaranteeing the mortgage payments. CNBC (02 Jul.)
· Fewer homeowners choosing to default on mortgage
o from MarketWatch.com - Top Stories
o Nineteen percent of mortgage delinquencies were “strategic defaults” in the second quarter of 2009, according to findings released this week from Experian and Oliver Wyman. But there’s some evidence that the strategic default phenomenon may have peaked, according to a news release from the two firms
o Link: Real Estate Weekly: Fewer homeowners choosing to default on mortgage
· Office Vacancy Rate in U.S. Climbs to 17-Year High, Reis Says
o Office vacancies in the U.S. rose to the highest level since 1993 in the second quarter as the sluggish economic recovery damps demand from corporate tenants, Reis Inc. said in a report
o The vacancy rate climbed to 17.4 percent from 16 percent a year earlier and 17.3 percent in the first quarter, the New York-based research company said today in a statement. Effective rents, the amount tenants actually pay landlords, fell 5.7 percent from a year earlier and 0.9 percent from the previous three months, according to Reis.
· Credit Markets: Property Bonds Slump Most Since ’09 on Slowdown - BBG
o Bonds sold by real-estate companies are performing the worst compared with the rest of the market since March 2009 on concern the slowing economic recovery will cause more defaults.
o Yield premiums of bonds sold by real-estate investment trusts, shopping-mall owners and office landlords widened 9 basis points, or 0.09 percentage point, more than those on other debt in June, and continued to rise this month
· U.K. builder Persimmon climbs as revenue rises MarketWatch
o Shares in Persimmon rose over 6% Tuesday after the U.K. house builder said it’s continuing to invest in new sites as rising volumes and a modest increase in prices helped push revenue up 26% in the first half of the year.
· Private-equity firms are interested in buying three of the biggest mortgage companies - NYP
o The firms are in the early stages of doing homework on HSBC's Household Finance, AIG's American General and Citigroup's CitiFinancial -- each of which could be worth more than $10 billion, sources familiar with the matter said.
o Mortgage industry analysts consider the prospect good news during a time few banks are issuing mortgages. Those units for sale have generally stopped originating loans.
o Read more: http://www.nypost.com/p/news/business/lenders_on_the_block_Btd8hkRBlSyofuMy46j6dL#ixzz0stRq6q5M
· GOV Govermental Properties Trust Files $1B Mixed Securites Shelf
· GMAC faces New York foreclosure brawl NY Post
o A Bronx homeowner is scheduled for a courtroom battle royale later this month -- facing off in Manhattan bankruptcy court against the largest foreclosure mill in the state to see if the firm's client, GMAC Mortgage, has the right to toss her from her Pelham Gardens home.
· Rogoff Says China Property Starting to ‘Collapse’ - BBG
o China’s property market is beginning a “collapse” that will hit the nation’s banking system, said Kenneth Rogoff, the Harvard University professor and former chief economist of the International Monetary Fund
o As China’s economy develops, “especially at the speed it’s growing, it’s going to have bumps,” said Rogoff, speaking in an interview with Bloomberg Television in Hong Kong. He also said that while recoveries across the global economy are “very slow,” the danger of a return to recession isn’t “elevated.”
CONSUMER
· Desperate Retailers Devise Novel Ways to Revive Sales - NYT
o Tired of waiting for spending to rebound on its own, retailers are taking matters into their own hands. Stores like Sam’s Club, Target, Toys “R” Us, Staples and Office Depot are offering unconventional promotions meant not only to attract visitors to stores, but also to get them feeling profligate.
· Foreign shoppers become a main target for U.S. retailers
o As the world's wealth shifts from industrialized nations to developing economies, U.S. retailers are following suit. Popular retail chains in the U.S. are opening their first stores overseas or stepping up foreign expansion. Wal-Mart Stores told shareholders last month that it was looking for growth outside the U.S. to compensate for sluggish sales at home. Los Angeles Times (05 Jul.) , Retail Traffic (29 Jun.)
· PG, SLE Procter & Gamble completes acquisition of Ambi Pur Brand from Sara Lee - SA London
· SNE Sony Music traveling to the beat of a different drum – NYT
· WMT, UPS, TGT, TOYS, SPLS, ODP Unusual becomes usual as retailers try to drum up business - NYT
· SYMS Syms Corp names Joel Feigenbaum as COO effective 29-Jun
GAMING, LODGING, & LEISURE
· WYN Wyndham Worldwide completes acquisition of Sol Media's TRYP hotel brand
o
HEALTHCARE
· Eli Lilly Retools Pipeline from WSJ
o Eli Lilly's Chief Executive John Lechleiter is focusing more intently on developing new drugs for difficult-to-treat diseases, as patent protection for eight drugs will soon expire
· US claims of higher drug costs under fire from Financial Times
o Claims by the US drugs industry that the US disproportionately funds research and development of new drugs by paying higher prices than Europe for its medicines are undermined by a new study to be published soon
· AZN AstraZeneca and MRC Technology form new strategic collaboration to share access to their collections of compounds
· ELN Elan Corp names Eliseo Salinas EVP/chief medical officer
· AEN Adeona Pharmaceuticals completes equity financing; completes 75% enrollment in Part 2 of CopperProof-2 Study
· AZN AstraZeneca to share experimental drugs with academic researchers - FT
· PRX FDA approves Strativa Pharmaceuticals' Zuplenz (ondansetron) Oral Soluble Film
· AIS Antares Pharma files $100M equity shelf
· ENZ Enzo Biochem files $50M automatic mixed shelf registration
· XNPT Xenoport files $150M equity shelf
· PFE Pfizer announces EU approval of a new form of Lipitor (atorvastatin) for use in children 10 and older with high levels of LDL cholesterol
· CTIC Cell Therapeutics submits Pediatric Investigation Plan to EMEA for pixantrone to treat relapsed or refractory aggressive non-Hodgkin's lymphoma
· APCVZ APP Pharmaceuticals receives FDA approval to market preservative-free Heparin Lock Flush Solution, USP in two dosage strengths
· EU competition commissioner warns drugmakers on patent settlements with generic manufacturers - FT
· PFE Pfizer Japan to begin trials to develop children's versions of three drugs this FY - Nikkei
From our EU/London desk
· Oils
· Tullow Oil (+3.5%). Tullow believes they are now close to receiving final Ugandan governmental approval for their plan to buy Heritage Oils (+5.8%) stake in their Ugandan oil field joint venture, and then sell it on to Total and CNOOC.
· BP (+3.5%). BP announce they won't be issuing new equity to help cover the costs of the Gulf spill. Raised to Buy from Hold by RBS.
· Metals and Miners
· Xstrata (+4.6%) and Rio Tinto (+4.5%) announce that they are resuming their planned expansion projects in Australia following the final settlement on the resources super-tax.
· Norsk Hydro (+2.7%). Last day of trading for the rights.
· Balfour Beatty H1 trading update: remain confident about the outlook for the Group…The company reports that its trading performance continues to be consistent with the expectations for the year
· LAGARDE COULD CUT 2011 FORECAST IN MID-AUGUST, LE FIGARO SAYS
From our Asian trading desks
· Japan
• NKY +0.77%, TPX +1.24%
• NKY rose following a rally in Shanghai. Turnover on the TPX fell to 884.1B yuan from 1.12 trillion yen yesterday
• Stocks rose across most sectors led by financials, materials, tech, industrials and consumer
• Exporters rose as China stocks rallied despite a strong yen: autos +1.82%, CE +1.10%, precision +1.77%. Toyota (7203) +1.32% will recall about 6,000 Lexus vehicles in China. Separately Nikkei reported the automaker’s monthly sales in China rose 7.7% in June
• Traders +2.13% after commodities prices rose
• Sectors with exposure to China outperformed: machinery +1.42%
• Best performing sectors on the TPX: real estate +2.57%, iron & steel +2.45%, banks +2.39%; worst performing sectors: mining -1.09%, other financing -0.37%, food -0.03%
• Daiwa Securities (8601) +1.05% after report it agreed to buy KBC Groep’s (KBC BB) convertible-bond unit and its Asian equity-derivatives business for ~US $1B
• Meidensha Corp. (6508) -0.98% after Mitsubishi UFJ Morgan Stanley cut its 12-mth stock price estimate
· Nikkei today
• A new regulation intended to promote the use of inexpensive heavy oil may lead to consolidation among refiners by putting the onus on TonenGeneral Sekiyu (5012) and Cosmo Oil (5007) to upgrade their plants or else reduce capacity. The Ministry of Economy, Trade and Industry announced Monday that refiners must dedicate a certain amount of their refining capacity to heavy oil. Refiners have until the end of FY13 to increase their ability to process heavy oil or decrease their total output capacity. TonenGeneral (5012) and Cosmo Oil (5007), which have low levels of heavy-oil refining capacity, have further to go to conform to the rules than rivals
· Hong Kong
• HSI +1.22%; HSCEI +2.43%
• Stocks rose as developers gained after reporting higher sales and Central Huijin Investment pledge of support for BoC rights offer boosted bank shares. Turnover on the HSI fell to HK$12.04B from HK$19.33B yesterday
• BOC (3988 HK) +1.79% after report its controlling shareholder Central Huijin Investment will take up its full entitlement of the lender’s rights offer. SCMP reported ICBC (1398 HK) +1.61% will likely follow suit with a rights issue for its A and H share
• Mainland properties rose after Glorious Property (845 HK) +1.82% and Poly Hong Kong (119 HK) +4.26% reported higher sales. China Overseas (688 HK) +3.04%, China Resources Land (1109 HK) +3.48%, Shimao (813 HK) +3.23%
• Chalco (2600 HK) +4.90% said it will seek bank loans after an equity market decline forced it to delay share sale plans
• Singamas (716 HK) +4.17% said factories are full until September as demand for shipping containers recovers
· Headlines:
• Shirble Department Store (312 HK) has postponed its IPO to a later date citing “deterioration in market conditions”
– Bloomberg
• China plans to introduce new measures in 3Q to strengthen the enforcement of existing real estate policies
– 21st Century Business Herald
• Petropavlovsk Plc, Russia’s third-largest gold producer, plans to list its non-precious metals unit in a Hong Kong stock sale that may raise about US $500M, according to people familiar with the matter - Bloomberg
· China
• SHCOMP +1.92%; SZCOMP +2.64%
• SHCOMP rose after report China will kick off the construction of 23 major infrastructure projects in west China this year costing 682B yuan. Turnover on the SHCOMP fell to 42.40B yuan from 61.18B yuan yesterday
• Stocks rose across most sectors led by tech, health care, materials and consumer
• Banks +2.42% led by BoC (601988 CH) after report its controlling shareholder Central Huijin Investment will take up its full entitlement of the lender’s rights offer
• Metals & mining +2.21% after metal prices rose. Chalco (601600 CH) +1.75% said it will seek bank loans after an equity market decline forced it to delay share sale plans
• Shippers +2.52%
• Health care +2.60%
TODAY’S EVENTS
CONFERENCES
o Tuesday July 6:
§ Credit Suisse Group Reserve Management Foreign Exchange Seminar - Jul 04, 2010 - Jul 07, 2010
§ Marcus Evans Asian Infrastructure & Property Development Summit - Jul 05, 2010 - Jul 07, 2010
COMPANY MEETINGS/OTHER DAILY EVENTS
· Tuesday July 6:
o foundries on 7/9 - TSM, UMC June sales and rev release for both
ECONOMICS
· Tuesday July 6:
o 1000 Employment Trends Index
o 1000 ISM Non-Manufacturing report on business
o 1700 ABC News Consumer Comfort Index
EARNINGS
o Financials
· Tuesday July 6: AMFI, FTBK, LBCP
o Media
· Tuesday July 6: DEXO, EMMS
o Energy
· Friday July 2: ALME
INVESTMENT BANKING WRAP
M&A
· Is Bank M&A Set for Takeoff?- WSJ
o The top seven potential sellers include banks many mightn't have heard of, all with market caps of less than roughly $1 billion: BPFH, ABBC, CFNL, EBTX, SUSQ, WAL, ; and WL
o The potential buyers could be large, regional players such as USB, BBT, and PNC that are in the sweet spot for acquisitions, Mr. McGratty says. Their balance sheets are strong, and they "fly under the too to big to fail radar."
· Jewels of British industry at risk of falling into American hands- Telegraph
o American companies are preparing to launch daring takeover bids for a host of Britain's biggest corporate names – including BAE Systems and AstraZeneca – thanks to the weakness of the pound against the dollar
o Sterling has lost about a quarter of its value against the dollar in the last two-and-a-half years, and combined with the feeble recovery in the UK economy, British firms have become much cheaper for American suitors looking for a good deal.
· Abertis investors eye €25bn buy-out- FT
o The two biggest shareholders in Abertis are studying a possible leveraged buy-out with CVC, the European private equity firm, that would value the Barcelona-based infrastructure group at more than €25bn ($31bn)
o La Caixa, Spain’s largest savings bank, and construction group ACS – which together control just under 55 per cent of the target group – are considering creating a buy-out vehicle with CVC that would launch a tender offer to minority shareholders.
o http://www.ft.com/cms/s/0/fb873754-8823-11df-a4e7-00144feabdc0.html
· More deal talk/ less gloom and doom at this years Sun Valley Retreat- NYPOST
o THIS year's Sun Valley retreat, the annual gathering of movers and shakers that includes media moguls, tech titans, politicians and sports stars, is expected to be a much frothier affair than it was last year.
o This year there are other forces afoot -- among them private equity and foreign players -- that may have media moguls rethinking their current configurations
· BP launches search for strategic investors- Ruters
o Oil major BP Plc is seeking a strategic investor to secure its independence in the face of any takeover attempts as it struggles with a devastating oil leak in the Gulf of Mexico
o Britain's Sunday Times said the company's advisers were trying to drum up interest among rival oil groups and sovereign wealth funds to take a stake of between 5 and 10 percent in the company at a cost of up to 6 billion pounds ($9.1 billion).
o http://www.reuters.com/article/idUSTRE6630NG20100705
· BP Said to be seeking more asset sales- BBG
o BP Plc, seeking cash to meet the costs of the worst U.S. spill, is considering selling fields in Colombia, Venezuela and Vietnam, a person with knowledge of the matter said
o BP may also dispose of its 60 percent holding in Pan American Energy LLC, Argentina’s second-largest oil producer, the person said
o http://www.businessweek.com/news/2010-07-05/bp-said-to-seek-colombia-venezuela-vietnam-sales.html
· WSJ says BP May Need Radical Rethink
o Hopes are rising that BP's first relief well will stop the flow of oil into the Gulf of Mexico earlier than expected. If it does, it might also bring forward the end of something else: BP as we know it.
· APOL Apollo threatens to withdraw offer for Brit over lack of access to books- Telegraph
o The private equity suitor told Brit on Friday that it would not be putting forward any further offers without preliminary access to the company’s books.
o Brit left the door open for a higher bid, saying it is open to engaging with Apollo if it puts forward an offer “capable of recommendation”.
· LGF Icahn Affiliates Confirm Control Over 37.9% Of The Common Shrs Of Lions Gate Entertainment- DJ
· Sanyo to sell chip unit to ONNN On Semi- Nikkei
o The two companies are in discussions over the price which is likely to be in the range 20 billion yen to 30 billion yen (about $220 million to $350 million) but agreement is expected before the end of July
· Elpida to Cut Debt, Buy Assets Amid Record Profits- BBG
o Elpida Memory, the world’s third-biggest maker of computer-memory chips, plans to cut debt and buy assets as a recovery in computer sales helps it post record profits a year after receiving a government bailout
o Elpida has 30 billion yen of securities maturing in December and is considering options including selling convertible bonds and dollar notes
· BK BNY Mellon eyes fresh acquisitions- FT
o BNY Mellon, the US asset management and custody group, is to continue with its acquisition drive, focusing future dealmaking on Europe and Asia
o Bob Kelly, the bank’s chief executive, said it was gearing up for expansion in South Korea and China, most likely through organic growth or joint ventures
o http://www.ft.com/cms/s/0/60dc2e5a-8790-11df-9f37-00144feabdc0.html
· CLNE Clean Energy Fuels Corp. Agrees to Acquire IMW Industries- BBG
o Clean Energy Fuels Corp. will acquire IMW Industries Ltd. for $125 million plus a cash earn-out arrangement
· British Bank Is Sued Over Sale of 2 Buildings- WSJ
o During the boom, overseas banks flooded the New York real-estate market with cash. For some, getting out has turned out to be a lot harder than it was to get in
o British bank HBOS PLC is being sued by former business associates to stop the sale of two Manhattan office buildings
· Spider Resources president says CLF Cliffs deal will provide cash and expertise- BBG
o Spider Resources says a friendly takeover by a large U.S. miner will provide the expertise and cash necessary to help develop a lucrative chromite deposit in Northern Ontario's promising Ring of Fire mineral zone.
o "They want to be a fully-integrated company, from the mining right through the production of stainless steel and they have that ability," CEO Neil Novak said
o Cliffs Natural Resources said Spider Resources broke off its agreement to merge with KWG Resources and accepted Cliffs' offer to take over the company
· TPG, GS Goldman set to buy Candover's Ontex- Reuters
o TPG and Goldman Sachs's private equity arm are close to a deal to buy Ontex, the European private-label diaper maker, from buyout firm Candover for 1.2 billion euros ($1.5 billion) or more
o TPG, the U.S. buyout firm, has all but held off from European dealmaking for several years, but last month struck a 300 million pound ($464 million) deal to buy British fashion retailer Republic
o http://www.reuters.com/article/idUSLDE6640C520100705
· Chinatrust Makes Play for Nan Shan Life- WSJ
o Chinatrust Financial Holding Co. wants to purchase American International Group Inc.'s Taiwan life-insurance operations, pitting the Taiwan banking group against would-be former partners in a takeover of Nan Shan Life Insurance
o It's not clear if AIG, which is nearly 80% owned by the U.S. government, will entertain a rival bid for Nan Shan.
o http://online.wsj.com/article/SB10001424052748704535004575348831660519128.html
· Private-Equity looking at three of the biggest mortgage companies- NYPOST
o Private-equity firms are interested in buying three of the biggest mortgage companies, giving a potential boost to the beleaguered mortgage market
o The firms are in the early stages of doing homework on HSBC's Household Finance, AIG's American General and Citigroup's CitiFinancial -- each of which could be worth more than $10 billion
o http://www.nypost.com/p/news/business/lenders_on_the_block_Btd8hkRBlSyofuMy46j6dL#ixzz0stLZikiy
· Renesas to Buy Nokia’s Wireless Modem Business for $200 Million- BBG
o Renesas Electronics will buy Nokia Oyj’s wireless modem business for $200 million.
o The companies will also jointly develop next-generation modem technology, Renesas said today in a statement to the Tokyo Stock Exchange.
· Real estate market stalls as ING retreats with sale- Globe & Mail
o ING looks to sell assets outside of its home market to bolster its balance sheet after the 2008 banking crisis shook it to its foundations.
o The proposed Canadian sale is so big it has frozen other aspects of Canadian commercial real estate, as brokers and interested bidders around the country focus on getting a deal done
· Pearson circles Anglo in Brazil- FT
o Pearson, the publishing and digital information group that owns the Financial Times, is among three bidders circling an education business in Brazil, reflecting strong interest in one of the world’s fastest-growing education markets
o These people cautioned that bids could come in below this and said there was no certainty of a deal
o http://www.ft.com/cms/s/0/5e500180-8609-11df-bc22-00144feabdc0.html
· Spyker Pays Final $24 Million Instalment to GM for Saab Auto- BBG
o Spyker Cars NV said today it has paid the second and final instalment of $24 million plus interest to GM in the purchase of Saab.
o Spyker decided to pay the amount almost two weeks early, the company said in a statement today.
· CKXE Even in decline, 'American Idol' can't be bought for a song- LATimes
o Bids for CKX, which makes the hit TV show, range from $550 million to $600 million. What bidders see in the firm, whose main asset lost 9% of its audience last season, remains a mystery.
o Other than "Idol," CKX has a carry-on bag of pop cultural detritus: It holds a majority stake in the names and images of Elvis Presley and Muhammad Ali (good for licensing and merchandising deals) and operates the tourist mecca Graceland
o http://www.latimes.com/entertainment/news/tv/la-fi-ct-idol-20100706,0,666970,full.story
· Anglo American Sells Coal Stakes to Korea Power, Posco, Cockatoo- BBG
o Anglo American Plc said it entered into a conditional agreement with a group comprising Korea Electric Power, Posco and Cockatoo Coal Ltd. to sell its interests in five undeveloped coal assets in Australia for A$580 million ($500m) in cash.
· CSR Sells Asian Unit to Rockwool for A$128 Million- BBG
o CSR Ltd., Australia’s No. 2 building products maker, agreed to sell its Asian insulation operations to Rockwool International A/S for A$128 million ($107 million), a day after Wilmar International Ltd. bought its sugar unit.
o “Rockwool will acquire 100 percent of CSR’s insulation, panels and trading businesses across the Asian region,” CSR said today in a statement.
· QBE to Buy Reinsurance Company Secura NV From KBC Group- BBG
o QBE Insurance Group will acquire reinsurance company Secura NV from the KBC Group, KBC said today in a statement. The purchase price is 267 million euros ($334 million) plus portfolio gains and 2010 earnings until completion
o “For KBC, the transaction will result in a capital release of 139 million euros, based on an estimate of the gains and profit for the year,”
· Daiwa Agrees to Buy KBC Business for About $1 Billion- BBG
o Daiwa Securities Group Inc., Japan’s second-largest brokerage, agreed to buy KBC Groep NV’s convertible bond and Asia equity derivatives units for about $1 billion as the Belgian bank raises funds to repay state aid
o Under the agreement, Daiwa is paying about $200m for assets and about $800m for the trading position. The transaction is subject to regulatory approval and is expected to be completed early in the fourth quarter
· HMV 'may sell Waterstone's'- Daily Mail
o Simon Fox, CEO of HMV, has signalled for the first time that he would consider selling its Waterstone's book chain, though he said its disappearance would be 'tragic'.
o He said: 'If anyone came along with a large bag of money for any part of the business, we would take that very seriously. But that is not the case.'
o http://www.dailymail.co.uk/money/article-1291719/HMV-sell-Waterstones.html#ixzz0stMOL6gk
· Great Hill Soliciting Written Consents To Reconstitute VITC Vitacost Bid- DJ
o Great Hill Is Vitacost's Largest Stk Hldr
· Wolseley plots sale of tool hire business- The Independent
o The FTSE 100 building products giant is looking to cut its net debt, which stood at nearly £1.1bn at the end of April, and asset sales are an option for divisions that do not meet its turnaround strategy
o Private equity houses Cerberus, RJD Partners, Rutland Partners and turnaround group Endless are believed to be considering bids for Brandon
· Investors press Lloyds Bank to sell off Scottish Widows- The Guardian
o Lloyds Banking Group, 40%-owned by the taxpayer, is coming under pressure from shareholders to sell its Scottish Widows insurance business, which could fetch about £7bn.
o Investors argue it will become more expensive for Lloyds to own Widows when new rules being drawn up by the Basel Committee on Banking Regulation force banks to set aside extra funds to protect themselves against another financial meltdown
o http://www.guardian.co.uk/business/2010/jul/04/lloyds-banking-group-scottish-widows
· Premium Brands buys Maximum Seafood to extend reach- Reuters
o Brands Holdings, a Canadian food producer and distributor, said it will acquire a 76% interest in privately held Maximum Seafood, its first acquisition in Central Canada.
o http://www.reuters.com/article/idUSN0521061020100705
· Spice Rejects Cinven Offer as Too Low, Shuns Talks- BBG
o Spice Plc, the U.K.’s biggest reader of water meters, rejected a revised offer from private equity firm Cinven Ltd., saying it undervalued the company.
o “The Group is now streamlined, and its cost base and net debt levels have been reduced,” said Chief Executive Officer Martin Towers
· Frozen food giants locked in cold war over Unilever's Findus Italy- Telegraph
o Final bids for Unilever's Findus Italy division, which was put up for sale earlier this year, are due on Tuesday.
o Birds Eye Iglo, which is owned by private equity company Permira, and Findus Group, which is owned by Lion Capital and is a completely separate company from Findus Italy, are likely to submit bids. It is thought that private equity companies BC Partners, Charterhouse Capital Partners and PAI Partners are also in the running
· Divestco to sell seismic data library to Pulse Seismic- Reuters
o Divestco, which provides geological services and data to the oil and gas industry, said it would sell its two-dimensional and three-dimensional seismic data library to Pulse Seismic in a cash and stock deal
o The deal, which comprises C$50 million in cash and about 14.3 million of Pulse Seismic's shares, is valued at about C$68.3 million
o http://www.reuters.com/article/idUSSGE6640FD20100705
· China eyes shake-up of bank holdings- FT
o China is considering stripping its $200b sovereign wealth fund of the country’s banking stakes, in a move that could free it of some restrictions when it invests in the US.
o People familiar with the matter said that, under the proposal, China Investment Corporation would no longer be responsible for holding the state’s majority stakes in the country’s biggest banks, such as Bank of China
o http://www.ft.com/cms/s/0/eab99390-885f-11df-aade-00144feabdc0.html
· Mitsubishi close to selling oil hedging unit- Reuters
o "We decided to get out of this business," the source told Reuters.
o http://www.reuters.com/article/idUSLDE6641IE20100705
· ICBC may follow Bank of China on rights issue –IFR- Reuters
o Industrial & Commercial Bank of China, the world's most valuable bank, will likely plan a rights issue for its A and H shares after a similar move by the Bank of China
o Earlier in the month, Bank of China the country's fourth largest lender by assets, said it planned to raise up to $60 billion yuan ($8.9 billion) to provide enough capital for the next three years.
o http://uk.reuters.com/article/idUKTOE66502K20100706
$ RAISING
IPOs
· KKR nears NYSE with compensation details expected- Reuters
o Kohlberg Kravis Roberts & Co is moving closer to gaining its long-sought New York Stock Exchange listing, with a filing expected as early as Tuesday which should detail compensation for top executives at the private equity firm
o KKR filed with the U.S. Securities and Exchange Commission in March to list on the NYSE and trade under the symbol KKR. KKR has said the listing would allow it to have a more permanent capital base, use stock to retain and attract staff, and have a currency to use in making acquisitions
o http://www.reuters.com/article/idUSN0524660720100705
· GM Intends To File In Mid-August For IPO- DJ
o General Motors plans to register for an initial public offering in mid-August, intending to use the proceeds to pay down debt and fund pension plans
o The company, which underwent a short stay in bankruptcy in 2009, hasn't set the valuation for the shares and is likely to accept a lower figure rather than delay the IPO past August
· Aston Martin boss considers £1bn IPO- Telegraph
o Luxury motor marque Aston Martin is considering a tie-up with another car manufacturer and has not ruled out an initial public offering as it develops its strategy to expand its model range
o He says that an IPO on the London Stock Exchange is "not out of consideration" and it would value the business in excess of £1bn.
· RDGE Ridgebury Tankers files $250M IPO through Jefferies- DJ
o Ridgebury Tankers filed plans to sell up to an estimated $250 millionof shares in an initial public offering to purchase vessels that will make up its initial fleet, as well as to fund working-capital needs
o The market for debuts has been choppy in recent weeks, though initial filings have remained largely steady. Some companies cut the size of their IPOs because of higher stock-market volatility. Meanwhile, others haven't been able to complete their efforts to go public, suspending them instead
· Caja The Spanish bank may be seeking an IPO- El Mundo
o The Spanish bank created by the merger of Caja Madrid with six other banks may sell shares in an initial public offering
o The share sale may be announced after completion of the integration expected for next year.
· Coal Miner Oxford Resource Trims IPO Price- WSJ
o Oxford Resource Partners LP, an Ohio steam-coal producer, cut the expected price range for its initial public offering, but maintained the amount of shares it intends to sell
o the coal miner said it expects to sell at least 8.75 million units at $18 to $20 a unit, $1 less than the price it had initially forecast last month. According to the company's SEC filing, it expects net proceeds from the offering to total $154.6 million.
o http://online.wsj.com/article/BT-CO-20100702-710812.html
· CHGN China Green files to offer 1.4M shares at $5 per share through Grandview Capital
· Chinese IPO May Be Largest Ever- WSJ
o Agricultural Bank of China's massive initial public offering, to be priced as early as Tuesday, is testing global investors' faith in China's fast-growing economy amid global financial turmoil.
o If it hits the high end of its expected $23 billion range, AgBank would raise more money than any other company in history, amid a string of major stock offerings from developing markets this year.
PRICINGS
· Initial Offerings
o FBBC Fortune Bank 40M share IPO expected to price 7/08 via KBW: Price Talk $8-10
· Secondary Offerings
o No pricings yet
NEWS
· Daiwa Securities Said to Market 100 Billion Yen Sale of Bonds- BBG
o The brokerage told investors it may price five-year bonds to yield between 20 basis points and 35 basis points more than the yen swap rate
o Daiwa also plans to sell five-year floating-rate notes that yield between 20 basis points and 35 basis points more than the six-month London interbank offered rate for yen
· NXG Northgate Minerals renews base C$250M mixed shelf registration
· Renminbi bond deals begin to flourish- FT
o A Hong Kong-based toll road company will sell renminbi-denominated bonds to international investors this week in a little-noticed deal that marks an important change in China’s currency controls.
o Hopewell Highway Infrastructure, controlled by Hong Kong tycoon Gordon Wu, plans to raise at least Rmb1bn ($150m, €120m, £100m) from institutional investors to finance the construction of expressways in China’s Pearl River Delta region.
o http://www.ft.com/cms/s/0/6d29c264-883d-11df-a4e7-00144feabdc0.html?ftcamp=rss
· Healthcare: COIN Converted Organics files $75M mixed shelf
· Healthcare: XNPT Xenoport files $150M equity shelf
· Healthcare: ENZ Enzo Biochem files $50M automatic mixed shelf registration
· Healthcare: AIS Antares Pharma files $100M equity shelf
· Tech: SCON Superconductor Technologies files for 10M share offering through MDB Capital and Feltl
· Real Estate: GOV Government Properties Income Trust files $1B mixed shelf registration
ENERGY
· BP BP collects approx 8,410 barrels of oil, flares approx 4,065 barrels of oil and 28.8M cubic feet of natural gas
· BP Libya hints at taking BP stake - FT
· BP, APC BP asks partners to pay for part of oil spill costs - NYT
· BP US government remains big BP customer - Washington Post
· BP BP provides update on GoM oil spill; cost of response to date $3.12B
· BP BP looks to support its balance sheet - London Times
· BP Investors getting ready for clear-out of BP top management once GoM well is capped -- FT
· BP WSJ argues for radical change at BP
· BP BP considering selling fields in Colombia, Venezuela, Vietnam - Bloomberg, citing person with knowledge of the matter
· BP BP upgraded to buy from hold at Royal Bank of Scotland
· BP UK government making plans in case BP collapses - London Times
· CLNE Clean Energy Fuels to buy IMW (private) - BBG
***All eco data from Bloomberg and DJ
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