Smashing the previous record $17 billion deal from Apple which is doing so badly (in yield and spread terms), Verizon - in order to fund the mega deal with Vodafone - is launching an 8-part $49 billion deal done at what appear reasonable spread levels (though spreads are dramatically wider than a month ago as one would expect for such a releveraging). With the bulk of the deal ($36 billion) maturing 7 years or longer, it would appear that (and desk chatter confirms) demand was relatively high and BofAML also notes that Verizon will now have a huge $69 to $79 billion of index-eligible bonds. This will make Verizon the 4th largest issuer in the US high-grade market index, right up their with Goldman Sachs and Citigroup. Amid all this exuberance though, something odd popped up:
- *VERIZON POSTPONES EUROPE INVESTOR MEETINGS ABOUT VODAFONE DEAL
Reuters is reporting that with a $101 billion order book already, it appears they had no ned to shop the deal in Europe. Amazing what ZIRP repression will do...
Plastic phones, a gold cover, and no China Mobile deal seems to have disappointed more than a few AAPL investors this morning. Downgrades are a plenty but we await confirmation from Carl Icahn's twitter account of what to do next as the price of the stock has just fallen below his initial tweet level. Oh well, perhaps now that Apple's conversion to a Wall Street darling is complete (despite the downgrades by UBS, BofA, Credit Suisse and JPM) it is time for even more iBonds to reclaim the largest bond issuer ever title from Verizon...
- Obama Holds Fire on Syria, Waits on Russia Plan (WSJ)
- China Shadow Banking Returns as Growth Rebound Adds Risk (Reuters)
- Not one but two: Greece May Need Two More Aid Packages Says ECB’s Coene (WSJ)
- BoJ insider warns of need for wage rises (FT) ... as we have been warning since November, and as has not been happening
- California city backs plan to seize negative equity mortgages (Reuters)
- Home Depot Is Accused of Shaking Down Suspected Shoplifters (BBG)
- Most-Connected Man at Deutsche Bank Favors Lightest Touch (BBG)
- Norway Pledges to Limit Oil Spending (BBG)
- China Shadow Banking Returns as Growth Rebound Adds Risk (BBG)
- Gundlach Says Fed Is Mistaken in How It's Ending Easing (BBG)
Despite earlier comments from Obama on Tuesday night, who called for a pause in authorizing military strikes on Syria, which led to another drop in crude prices overnight, the drop has since reversed and both WTI and Brent Crude contracts are trading in the green. Whether this is the result of a note by Goldman analysts who noted that the Brent crude sell-off was overdone and that they see no improvement regarding the conflict in Libya which is constraining oil production, or because Russia is once again throwing hurdles in the international process to force Syrian disarmament, is unknown. The lack of any key catalysts and no USDJPY levitation, led to most global markets unchanged, and futures currently trading sideways. What is not trading sideways is Apple which is down over 2% to just over $480 as all hopes of a China Mobile deal fall apart, coupled with pervasive critical panning of the new iPhones which, aside for the commodity version, is just the old iPhone with an extension that allows the NSA's new fingerprint database to be filled in record time.
UPDATE 2: French draft UN security council resolution would give Syria 15 days to make complete declaration of entire chemical arms program
UPDATE 1: NASDAQ Futures are fading the Obama "Pause" spike after AAPL is not announcing a China Mobile deal
Starting just 1 minute late, the President begab by unapologetically conjuring images of WWI and WWII and stuck to the line that "we know" Assad was responsible for killing his own people with Sarin. Then moved to fear-mongery over what Iran might do, adding that he was very much for strikes. But, in giving Congress the hot potato he knew decision would be difficult. The US military does not do 'pin pricks' and a "targeted" strike will send a message to Assad. While recognizing the need for a diplomatic solution, Obama made it clear that those efforts would follow a military strike. But then, after all the angry banter, he then backed down and said, will work for peaceful solution by putting the strike on hold and will bring a resolution to UN. Ending on a more aggressive note, he warned Republican and Democrat lawmakers to rethink their opposition to the strikes should they be needed.
We just can't wait to hear about the different colors, the camera, the screen size, the cheapness, and everything else that has been rumored to make this Apple announcement as un-evolutionary as many of the previous ones. Of course, there could be 'just one more thing', but we suspect not... (and it seems the market agrees with 'sell the news' for now).
Dow Jones To Kick Out Losers From Index: Alcoa, Hewlett, BofA Out; Replaced With Goldman, Nike And VisaSubmitted by Tyler Durden on 09/10/2013 08:41 -0400
In what has become an unspoken tradition for the Dow Jones, which maintains its upward bias by kicking out underperformers and replacing them with the investor darlings du jour, we just learned that as part of its next three-for-three rebalancing, the first since 2004, the DJIA will kick out such recent losers as Alcoa, Hewlett Packard and Bank of America, and will be replaced with Goldman, Nike and Visa:
- ALCOA, BANK OF AMERICA, HEWLETT-PACKARD TO LEAVE DJIA
- GOLDMAN SACHS, VISA, NIKE TO JOIN DJ INDUSTRIAL AVERAGE
- CHANGES WERE PROMPTED BY THE LOW STOCK PRICE OF THE THREE COMPANIES SLATED FOR REMOVAL
What, no inclusion of Apple, Tesla or Netflix? Also, for those keeping track, there are now 10 "industrials" in the 30 company index that make, well, nothing. And how soon until the entire DJIA becomes one daily rebalanced ETF, which has as constituents only stocks that have traded up 5% or higher on the prior trading day?
- Obama Shrinking Second-Term Hastened by Syria Opposition (BBG)
- Obama says Russian proposal on Syria a potential 'breakthrough' (Reuters)
- Poll Finds Support Fading for Syria Attack (WSJ)
- France to Introduce Resolution Aimed at Dismantling Syria's Chemical Arsenal (WSJ)
- Apple to Unveil IPhones Seeking End to Year of Struggles (BBG)
- Verizon Plans Largest Debt Sale Ever: Proceeds From Deal, Expected to Raise $20 Billion, Would Fund Venture Buyout (WSJ)
- Shipping Rates Seen at 2010 High on Record Ore to China (BBG)
- Ads coming to Twitter: Twitter makes its largest acquisition, a mobile ad company (FT)
- Houses on fire as fighting erupts in southern Philippines (Reuters)
- Banks Seen at Risk Five Years After Lehman Collapse (BBG)
For the second day in a row, better than expected Chinese "data" set sentiment across the board when following an improvement in its trade data (even as crude oil imports dropped to an 11 month low), last night China reported a better than expected August Industrial Production print of 10.4%, compared to 9.7% for July, and higher than the 9.9% expected. This was driven by a pick up in Chinese M2, which rose from 14.5% to 14.7% Y/Y, as the PBOC has once again resuming what it does best, injecting liquidity into the system, even if said liquidity no longer makes its way into the proper channels, as new CNY loans missed the expected CNY730bn, rising to 711.3bn for August. Elsewhere, not all was good on the Industrial Production front, following a French miss of -0.6% on expectations of a rebound to +0.5%, as well as a miss in mfg production of -0.7%, down from -0.4% and below the expected 0.7%. This, in parallel with Moscovici once again saying the 2013 deficit will be "slightly higher than 3.7%" means that just like in 2012, and with German economic metrics continuing to contract, as the periphery stages a modest rebound it is the core that threatens Europe's stability once again. Finally, and since in Europe everything is ultimately funded by current account positive Germany either directly or via TARGET2, the recent Italian economic strength, which also means a bounce in imports, meant that Italian TARGET2 liabilities (through which Germany indirectly funds Italy's current account deficit) are once again back at a 4 month high. And so the cycle repeats.
There is a tradable approach to analyzing the fundamentals of supply and demand in the monetary metals markets. This article is a brief summary of the approach we take...
The asbolute, mind-blowing kicker is when, in another secret presentation, the NSA itself mocks Orwell, using a reference from the iconic Apple "1984" advertisement... As it says the man who has become "Big Brother" is none other than AAPL's visionary deceased leader Steve Jobs... And is so very grateful for Apple's paying client "Zombies" who make its job so much easier
- Hedge Funds Cut Back on Fees (WSJ) as we predicted would happen in May
- Syria's Assad denies chemical weapons use; U.S. presses case for strike (Reuters)
- Unemployment Falling for Wrong Reason Creates Fed Predicament (BBG)
- U.S. tapped into networks of Google, Petrobras, others (Reuters)
- Chinese Zombies Emerging After Years of Solar Subsidies (BBG)
- Monte Paschi doubles planned capital hike to 2.5 billion euros (Reuters)
- Loan Size to Be Cut for Fannie, Freddie (WSJ)
- Japan Growth Revision Opens Door to Sales Tax Rise (FT)
- Inside the End of the U.S. Bid to Punish Lehman Executives (NYT)
- Financial Crisis: Lessons of the Rescue, A Drama in Five Acts (WSJ)
- Time Warner Joins IBM in Health Shift for Retirees (WSJ)
- Mideast Derails Key Issues in Congress (WSJ)
As macro news continues to trickle in better than expected, the latest batch being benign (if completely fake) Chinese inflation data (CPI 2.6%, Exp. 2.6%, Last 2.7%) and trade data released overnight which saw ahigher than expected trade balance ($28.5bn vs Exp. $20.0; as exports rose from 5.1% to 7.2%, and imports dipped from 10.9% to 7.0%, missing expectations), markets remain confused: is good news better or does it mean even more global liquidity will be pulled. As a result, the release of an encouraging set of macroeconomic data from China failed to have a meaningful impact on the sentiment in Europe this morning and instead stocks traded lower, with the Spanish IBEX-35 index underperforming after Madrid lost out to Tokyo to win rights to host 2020 Olympic Games. Even though the news buoyed USD/JPY overnight, the pair faced downside pressure stemming from interest rate differential flows amid better bid USTs. The price action in the US curve was partly driven by the latest article from a prolific Fed watcher Jon Hilsenrath who said many Fed officials are undecided on whether to scale back bond purchases in September. Hilsenrath added that the Fed could wait or reduce the programme by a small amount at the upcoming meeting. Going forward, there are no major macroeconomic data releases scheduled for the second half of the session, but Fed’s Williams is due to speak.
Two months ago, when we reported that the NSA has successfully inserted illegal access protocols into the Android OS, thus granting it back door access into nearly three quarters of all cell phones, the news was met with skepticism and resistance: how could an open-sourced architecture be so frail and open to penetration was the most common complaint. We wonder if today's news, broken by Germany's Spiegel, according to which the NSA can spy not only on Android smartphones but tap user data on all iPhone and BlackBerry devices "including contact lists, SMS traffic, notes and location information about where a user has been", will be met with the same skepticism or if the realization that every form of privacy is now gone, has finally dawned on the population. Spiegel reports, citing"internal NSA documents that the NSA has the capability of tapping user data from the iPhone, devices using Android as well as BlackBerry, a system previously believed to be highly secure. The documents also indicate that the NSA has set up specific working groups to deal with each operating system, with the goal of gaining secret access to the data held on the phones." While at this point it should come as no surprise that the NSA pervasively spies on Americans without a warrant or clearance, and has access to every device permitting electronic communication, the bigger question is: if everything is being spied on, what is left? Is carrierpigeons.com about to IPO?