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Frontrunning: September 13

Tyler Durden's picture




 
  • Italy Says It Won't Seek Aid (WSJ)... and neither will Spain, so no OMT activation, ever. So why buy bonds again?
  • European Lenders Keep Ties to Iran (WSJ)
  • Fink Belies Being Boring Telling Customers to Buy Stocks (Bloomberg)
  • Dutch Voters Buck Euro Debt Crisis to Re-Elect Rutte as Premier (Bloomberg)
  • Anti-Europe sentiment rises sharply in UK (FT)
  • China's Xi cited in state media as health rumors fly (Reuters)
  • China vs Japan: Tokyo must come back 'from the brink' (China Daily)
  • Manhattan Apartment Vacancy Rate Climbs After Rents Reach Record (Bloomberg)
  • Well-to-do get mortgage help from Uncle Sam (Reuters)
  • Princeton Endowment Expected to Rise Less Than 5% in Year (Bloomberg)
  • Protesters Encircle U.S. Embassy in Yemen (WSJ)
  • US groups step up sales of non-core units (FT)

Overnight Media Digest

WSJ

* Airbus parent European Aeronautic Defence & Space Co and Britain's BAE Systems Plc said they are in advanced merger talks to create the world's largest aerospace-and-defense company, leapfrogging U.S. rivals.

* Apple Inc unveiled the iPhone 5 on Wednesday, packed with new features. The phone is thinner and has a bigger display. It can connect to 4G data networks and has faster processing. Its Siri virtual assistant has grown more powerful.

* Germany's highest court cautiously approved the creation of the euro zone's permanent bailout facility, but insisted that the country keep its effective veto on all of the vehicle's decisions, a ruling that removes a question mark over two crucial elements of the euro zone's plans for mastering its debt crisis.

* A plan to create a banking union with a single regulator for all euro-zone banks has become the latest battleground between Germany and its partners over the future shape of the currency area.

* The U.S. Justice Department has asked a federal judge to impose a $1 billion criminal fine on Taiwan's AU Optronics Corp because of its March conviction for participating in a scheme to fix prices on liquid-crystal-display panels.

 

FT

EADS AND BAE IN TIE-UP TALKS

Britain's BAE Systems and Airbus-owner EADS are in advanced merger talks to create a combined group worth $48 billion.

LIFE BAN AND FINE FOR HBOS' CUMMINGS

A banker who led British bank HBOS Plc to the brink of collapse in 2008 has been given a record fine and banned for life from the industry.

US AMBASSADOR KILLED IN LIBYA ATTACK

The U.S. ambassador to Libya was killed in an attack on the consulate in the eastern city of Benghazi.

APPLE UNVEILS THINNER AND LIGHTER IPHONE

Apple has unveiled its iPhone 5 which is thinner and lighter than older models and also has faster wireless.

UBS LOOKS TO PUT CAP ON BANKER BONUSES

UBS is considering a range of options to cap bankers' bonuses.

BANKS FORCE ALUMINIUM MARKET SHAKE-UP

The arrival of investment banks in the aluminium market has triggered a shake-up in the $100 billion industry.

BARROSO CALLS FOR EU 'FEDERATION'

The president of the European Commission Jose Manuel Barroso called on Wednesday for the European Union to be turned into a 'federation of nation states'.

BANKS IN LEGAL ACTION AGAINST DUBAI GROUP

Three banks have launched legal proceedings against a Dubai investment firm, calling for repayment of loans.

HYDE PARK MANSION ON SALE FOR 300 MLN GBP

The London mansion of Lebanon's late prime minister, Rafiq Hariri, has been put up for sale and is expected to sell for around 300 million pounds.

 

NYT

* The iPhone 5 has plenty of new features to keep Apple Inc fans happy. But there is one feature Apple unveiled on Wednesday that is likely to annoy many: a new connector on the phone's base.

* The two biggest European aerospace and defense companies said they were in discussions about a potential merger that would create an industry behemoth with a combined market value of nearly $50 billion. EADS, which is the parent of Airbus, and BAE Systems Plc are looking to join forces as their respective industries become increasingly competitive.

* The Federal Constitutional Court in Germany gave Chancellor Angela Merkel a significant victory on Wednesday in her bid to master the debt crisis that has buffeted the continent for years and endangered its common currency, granting approval to one of the main pillars of her strategy.

* McDonald's Corp said on Wednesday that it would begin posting calorie counts on all its menus next week - a move that could put pressure on other fast-food restaurants to do the same. The company also unveiled several menu additions aimed at making its offerings more healthful.

 

Canada

THE GLOBE AND MAIL

* The Canadian government is defending itself against allegations it is deliberately dragging its feet in allowing Omar Khadr to return from Guantanamo Bay by arguing much of the delay is the fault of the Americans, new court documents show.

* Alan Trivett, executive director of Triathlon Canada, is calling physiologists and doctors involved in Paula Findlay's care to determine how her case of iron deficiency could have been missed before she competed at the London Olympic Games.

Reports in the business section:

* Telus Corp is forging ahead with plans to consolidate its dual-share structure after scoring a court victory over a U.S. hedge fund.

NATIONAL POST

* After a 24-hour barrage of questions surrounding his football coaching duties - first for abandoning work early to go to a game, and then for apparently using city resources to manage summer teams - Toronto mayor Rob Ford stuck to his playbook and was back on the field Wednesday.

* Toronto police have stalled in their quest to apprehend a handful of Scarborough gang members suspected in a year-long spate of shootings, including the July gun battle on Danzig Street that killed two bystanders and wounded nearly two dozen others.

FINANCIAL POST

* Rogers Communications Inc, the second-largest media and telecom conglomerate in Canada behind BCE Inc warned regulators Wednesday that allowing its arch-competitor to acquire outright Astral Media Inc would hand BCE "overwhelming control" of the broadcasting marketplace.

* Maple Group, now known as TMX Group Inc, expects to close its acquisition of Canada's main stock exchanges on Friday. At a special meeting of shareholders on Wednesday, near unanimous approval - 99.9 percent of votes cast - was received for the last leg of the transaction that was more than a year in the making.

 

European economic update

  • Russia Budget Level $529.4bn. Previous $282.6bn    
  • Switzerland Producer & Import Prices - 0.5% m/m – lower than expected. Consensus -0.1% m/m. Previous -0.3% m/m
  • Sweden Consumer Prices - CPIF 0.1% m/m 0.7% y/y. Previous -0.4% m/m 0.8% y/y.
  • Sweden Unemployment Rate 7.2% - higher than expected. Consensus 6.8%. Previous 7.0%.
  • Switzerland Monetary Policy Meeting 0.0%-0.25% - in line with expectations. Consensus 0.0%-0.25%. Previous 0.0%-0.25%.   
  • Italy Harmonised CPI 0.0% m/m 3.3% y/y. Previous -1.7% m/m 3.6% y/y. 

Fly On The Wall 7:00 am Market Snapshot:

ANALYST RESEARCH

Upgrades

Jive Software (JIVE) upgraded to Buy from Neutral at UBS
National Retail Properties (NNN) upgraded to Outperform from Neutral at RW Baird
Precision Drilling (PDS) upgraded to Outperform from Market Perform at Wells Fargo
Realty Income (O) upgraded to Outperform from Neutral at RW Baird

Downgrades

AMD (AMD) downgraded to Neutral from Buy at Citigroup
Corcept Therapeutics (CORT) downgraded to Neutral from Overweight at Piper Jaffray
Darden (DRI) downgraded to Neutral from Outperform at RW Baird
Intel (INTC) downgraded to Neutral from Buy at Citigroup
Marvell (MRVL) downgraded to Neutral from Buy at Citigroup
Nike (NKE) downgraded to Neutral from Buy at Citigroup
Northrop Grumman (NOC) downgraded to Sell from Neutral at UBS
T. Rowe Price (TROW) downgraded to Neutral from Outperform at Credit Suisse
UPS (UPS) downgraded to Equal Weight from Overweight at Barclays

Initiations

Abercrombie & Fitch (ANF) initiated with a Sell at Citigroup
American Eagle (AEO) initiated with a Buy at Citigroup
Ascena Retail (ASNA) initiated with a Buy at Citigroup
Coach (COH) initiated with a Neutral at Citigroup
Gap (GPS) initiated with a Neutral at Citigroup
Haemonetics (HAE) initiated with a Buy at Benchmark Co.
Limited (LTD) initiated with a Buy at Citigroup
Michael Kors (KORS) initiated with a Buy at Citigroup
Microsoft (MSFT) initiated with a Hold at Jefferies
Nuance (NUAN) initiated with an Overweight at Morgan Stanley
QR Energy (QRE) initiated with a Buy at Wunderlich
Red Hat (RHT) initiated with a Buy at Jefferies
Ross Stores (ROST) initiated with a Buy at Citigroup
Signet Jewelers (SIG) initiated with a Buy at Citigroup
TJX (TJX) initiated with a Buy at Citigroup
Tiffany (TIF) initiated with a Buy at Citigroup
Urban Outfitters (URBN) initiated with a Neutral at Citigroup

HOT STOCKS

A.M. Best said AIG (AIG) credit rating of “bbb” unchanged following Treasury sale
SunPower (SPWR) extended long-standing partnership with Toshiba (TOSBF)
Related Companies commenced $5.00 tender offer for all KSW (KSW) shares
Ralcorp (RAH) amended some financial statements, cites Post brand separation
Pervasive Software (PVSW) to solicit potential bids from interested parties
Sanofi (SNY) won FDA approval for MS drug Aubagio
Vical (VICL) licensed DNA immunization technology to Bristol-Myers (BMY)
AtriCure's (ATRC) ABLATE post approval study received FDA approval
Pier 1 Imports (PIR) sees FY13 SSS growth in mid single-digit range

EARNINGS/GUIDANCE

Companies that beat consensus earnings expectations last night and today include:
K12 (LRN)

Companies that missed consensus earnings expectations include:
Evolution Petroleum (EPM), Pall Corp. (PLL), Spartech (SEH)

Companies that matched consensus earnings expectations include:
Pier 1 Imports (PIR)

NEWSPAPERS/WEBSITES

Economists are skeptical about the economic benefits of another round of bond buying by the Fed, though most expect the central bank to embark on that course when its latest policy meeting concludes today, according to the Wall Street Journal's latest forecasting survey
The planned European aerospace and defense mega-merger of European Aeronautic Defence and Space (EADSY) and BAE Systems (BAESY) could set-off the largest shake-up among U.S. rivals in nearly 20 years, the Wall Street Journal reports
CME Group (CME) said it plans to expand its offering of yuan products to include deliverable offshore yuan futures, a move which should further help internationalize China's currency. It
plans to have the futures dual-listed on the CME and CME Europe in Q4 2012 and Q2 2013,  respectively, Reuters reports
U.S. regulators and exchanges are looking at sweeping circuit breakers and other speed bumps for high-speed electronic trading in case glitches occur, industry executives said, Reuters reports
Wilbur Ross, whose WL Ross & Co. manages about $10B of assets, said private equity investors are increasingly interested in shipping after a four-year rout caused by overcapacity. His firm was among investors who spent $900M last year on 30 tankers hauling refined oil products, Bloomberg reports
Nestle (NSRGY) said China sales will probably grow about 20% this year as a result of increasing wages and the government’s policy to boost local consumption, Bloomberg reports

SYNDICATE
Chesapeake Lodging (CHSP) announces proposed offering of 5.5M common shares
Genesee & Wyoming (GWR) proposes offering of 3.5M shares of common stock
Halcon Resources (HK) 35M share Secondary priced at $7.00
Pluristem Therapeutics (PSTI) intends to offer common stock and warrants
inContact (SAAS) announces intention to offer common stock

 

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Thu, 09/13/2012 - 07:53 | 2788764 jayman21
jayman21's picture

"Italy Says It Won't Seek Aid (WSJ)... and neither will Spain, so no OMT activation, ever. So why buy bonds again?"

 

They (Spain and Italy) currently have a backdoor.  Keep an eye on Target 2 and then try to follow the collateral.  It is the fake collateral for cash program.  When the Germans finally figure it out, I think the DM just might make a comeback.

Thu, 09/13/2012 - 08:43 | 2788887 taraxias
taraxias's picture

I like cryptic posts as much as the next guy but can you please elaborate on this?

Thu, 09/13/2012 - 09:03 | 2788953 jayman21
jayman21's picture

Mish has been posting on this subject as of late:

http://globaleconomicanalysis.blogspot.com/2012/09/noose-tightens-but-on...

 

Target 2 Explained.

http://globaleconomicanalysis.blogspot.com/2012/06/discussion-of-target2...

 

I cannot find where I read that bank bonds are being used as collateral in Spain or Italy.  But the short not so detailed version is that the ECB or one of the other agencies is providing cash for this collateral that is worth less than the bag I use to clean up after my dog when we go for a walk.  I think it was Mish who posted it, but I cannot find it.  If I do, I will post *edit with link.

Thu, 09/13/2012 - 09:10 | 2788993 taraxias
taraxias's picture

Thanks, I'll follow up on the links you posted.

Thu, 09/13/2012 - 09:20 | 2789034 jayman21
jayman21's picture

The page is locked, so I cannot edit.

In any case, as Mr. Kelly from Trend Macrolytics points out above, 'it is a perfect life support system' for zombie banks, but 'not a system for what happens after that'. As to the ECB trying to pass the risk buck back to the sovereigns that as a rule 'guarantee' the IOU's the commercial banks issue as collateral to their NCB's in ELA operations, this is completely moot in the case of insolvent sovereigns or in case the guarantee itself is what ultimately bankrupts the sovereign. Whoever extended the funds will end up eating the losses.


http://www.acting-man.com/?p=17155

 


Thu, 09/13/2012 - 07:56 | 2788771 Gully Foyle
Gully Foyle's picture

So then nothing will be posted today about the coming end of the world economic collapse and how everyone should have a golden safety blanket?

I so enjoy the strained reach for new metaphors regarding anything apocalyptic.

( By the way how the fuck did White people get it so wrong from the much more important source word?

Origin:

1125–75; Middle English < Late Latin apocalypsis < Greek apokálypsis revelation, equivalent to apokalýp(tein) to uncover, reveal (apo- apo- + kalýptein to cover, conceal) + -sis -sis)
Thu, 09/13/2012 - 08:46 | 2788899 taraxias
taraxias's picture

Here, if you insist, I'll post something for you.

 

Nothing has changed, just the mirrors have be shuffled.

 

BUY GOLD.

Thu, 09/13/2012 - 08:00 | 2788783 youngman
youngman's picture

"The London mansion of Lebanon's late prime minister, Rafiq Hariri, has been put up for sale and is expected to sell for around 300 million pounds."

Who says there isn´t any money in Politics....

Thu, 09/13/2012 - 08:20 | 2788826 i-dog
i-dog's picture

Is that deliberate disinfo, or just tongue in cheek?

"Hariri took over Oger, forming Saudi Oger, which became the main construction firm used by the Saudi Royal family for all of their important developments. As a result, only a few years after his first contract with King Khaled, Hariri had become a multi-billionaire."

... 20 years before becoming Prime Minister.

http://en.wikipedia.org/wiki/Rafic_Hariri#Rise_to_wealth

Thu, 09/13/2012 - 08:09 | 2788802 kneelb4me
kneelb4me's picture

i love this new frontrunning page.

Do NOT follow this link or you will be banned from the site!