The number whispered on Wall Street is $10 billion (or $14-$15 if you ask The Saudis), but potential investors in the micro-blogger’s IPO will need more to go on than simple valuation math and guided judgment. As ConvergEx's Nick Colas notes, Tech firms are particularly dependent on innovation and human capital for their viability. So while Twitter may come out with a double-digit billion dollar IPO, Colas points out the most important question – Is it actually worth buying there? The bottom line to the success of thriving tech companies (historically names such as Amazon, Google and Apple) is that they consistently and reliably build products that people want to purchase and use. Colas explores multiple avenues to determine whether Twitter has the engine to do this, or whether it could emerge more “Groupon” than “Google” in the public company tech arena – and the answer lies in how you weigh the pros and cons of our top 10 points related to the social network’s IPO.
It is tough to see the exact catalyst for the collapse in AAPL's share price in recent days (though it is clear that no China Mobile news is not good news) - but then aside from Carl Icahn's tweets it was hard to see what the exuberance in August was. Now a month later, AAPL has retraced all Icahn's gains and then some and is trading at 5 week lows. Today's weakness - in the face of a surging broad market - is being pinned on talk of Chinese telecoms firms cutting subsidies - not exactly strategically in line with AAPL's growth goals. Add toi that Wal_mart is already slashing prices on the iPhone 5C - considerably earlier than normal - and it suggest more of the same from AAPL is not beingmet by exuberant demand.
- Summers Quit Fed Quest After Democrats Spurned Obama Favorite (BBG)
- Geithner Still Not Interested in Fed Chair Slot (WSJ)
- Gross’s Trade Sours as Bonds Lose Faith in Fed Guidance (BBG)
- Bob Diamond calls for bank rules shake-up (FT)
- Russia says may be time to force Assad's foes to talk peace (Reuters)
- Iran Dials Up Syria Presence (WSJ)
- Kerry Seeks to Sell Syria Deal (WSJ)
- Shutdown of Japan’s Last Nuclear Reactor Raises Power Concerns (BBG)
- Emerging Stocks Rise to 3-Month High as Bonds Gain on Fed (BBG)
- Bernanke’s Maradona swerve hits bonds (FT)
An increasing cacophony of prognosticators are of the status-quo sustaining belief that stock and bond prices will rally next week when the Fed announces the taper. As Scotiabank's Guy Haselmann notes, the thinking goes that alleviation of the uncertainty will cause a "relief rally." However, as Haselmann notes, since the Fed has provided 5 years’ worth of massive stimulus that has launched asset prices to record highs, the commencement of the withdrawal process is significant... and any relief rally that ensues next Wednesday should be sold. His thoughts extend from Indonesian central bank's dilemma to European political instability, and the next stage of the Syrian crisis...
- Syrian Rebels Hurt by Delay (WSJ), U.S. seeks quick proof Syria ready to abandon chemical weapons (Reuters)
- Lavrov Brings Acerbic Pragmatism to Syria Meet With Kerry (BBG)
- Five years after Lehman, risk moves into the shadows (Reuters)
- U.S. shares raw intelligence data with Israel, leaked document shows (LA Times)
- Japan to raise sales tax, launch $50 bln stimulus (AFP) - so 1) lower debt by sales tax, then 2) raise debt through stimulus.
- Blackstone’s Hilton Files for $1.25 Billion U.S. Initial Offer (BBG)
- Second Life Bankers Thrive in Dubai as Boutiques Boost Fees (BBG)
- Brussels probes multinationals’ tax deals (FT)
- Wall Street's Top Cop: SEC Tries to Rebuild Its Reputation (WSJ) ... and fails
- Tablet sales set to overtake PCs (FT)
- The end of angst? Prosperous Germans in no mood for change (Reuters)
Apple is down over 5% - no worries. The 10Y auction was very well bid and rates are surging lower - sounds good. The USD is collapsing - well that's great news. And sure enough stocks are up for the 7th day in a row (even as Oil rises - not falls - following Obama's 'pause'). We are sure it all makes sense somewhere - even as JPY carry is unwinding... for now it seems VIX is the lever being used to crank on stocks.
Desperation and the sound of hot air hissing out of the Bond Bubble
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?