Cessna

• J.P. Morgan Knew of Risks: Warning Flags Raised Two Years Ago About CIO (WSJ)
• Cyprus Poised to Seek Bailout within Days (FT)
• U.S. Exempts India, South Korea From Iran Oil Sanctions (Bloomberg) - so those countries who need Iran crude?
• Barroso Pushes EU Banking Union (FT)
• Hollande Set for Poll Victory (FT)
• Fed Says U.S. Wealth Fell 38.8% in 2007-2010 on Housing (Bloomberg)
• Fed Officials Amplify Concerns over Europe (Reuters)
• Fed's Lockhart Says Lower Yields Bolster Case for No New Action (Bloomberg)

• Asia stocks mixed after Fed said it was ready to do more to recharge the US economy.
• Fed hinted it is becoming uneasy about the outlook, but deferred taking any new steps.
• Fed suggest it could buy more bonds; Way eased for new programme of QE.
• Iceland cuts base rate by 0.75% to 6.25%.
• Las Vegas home sales fall as area unemployment lingers near 15%
• Oil hovers above $75 in Asia after report shows US supplies unexpectedly rose last week.
• UK Business Secretary plans to announce a review of takeovers, executive pay.

South Korea (EWY) is the “K” that should be in “BRICK.” The country where the classic “V” shaped recovery is real. The international nuclear industry was blown away by Korea Electric Power’s $20.4 billion UAE deal. Speaking volumes about the direction of the global economy. South Korea takes a quantum leap ahead in the race for competitiveness, while the US falls further to the back in the dust. One small problem: the megalomaniac who lives next door with the starving million man army. Time for a visit to the Hermit Kingdom. (EWY)

On September 2 Goldman upgraded Textron to Conviction Buy ($23 PT) and provided the following catalysts as key items to keep an eye on:

A
year ago, each of Textron’s businesses were going the wrong way:
Corporate profits and the Industrial economy were rolling over, which
had negative implications for Cessna and Industrial, Financials were
facing severe challenges which had negative implications for TFC, and a
leadership change was about to take place in Washington with negative
implications for Defense and therefore Bell and Systems. Today,
we see the exact opposite occurring.

Unfortunately for Goldman's pie in the sky/conviction buy thesis what we really are seeing today is the opposite of the opposite, which comes to us via the following press release from Textron:

The company has
been in discussions with a large customer concerning the cancellation of
about $1.1 billion of jets it had on order with Cessna.

Are the dominoes about to start falling? From Morgan Stanley's London desk:

Ukrainian Railway defaulted on a Barclays bond. They have another, government guaranteed obligation with DB. If DB accelerates the payment & IF it is then not paid, it will count as a government default.

We are closely following the releases out of S&P and Moody's analysts to see if they have gotten into the office after their leisurely orgy at the nearest Turkish bath insider info leak session. Potentially nothing actionable just yet, but that a government-backed bond can't make its payments, should prompt the IMF apparatchiks to promptly take the next Textron Cessna straight into Kiev (after they get 20 Goldman flu shots each) and spend a few more billions in US taxpayer money and/or sell more gold to quickly stuff even more corpses under the carpet.

Not a bad time to allocate the last big bonus on Wall Street to as many people as possible. According to Down Jones, "Chief Executive Lloyd C. Blankfein and President Gary D. Cohn said in the email that those named helped the bank survive the financial crisis. They also said the new managing directors will be integral to our service to clients, the strength of our reputation and the long-term success of the firm." God's anointed acolytes are multiplying. There is no information yet if a Textron-made (GS: Conviction Buy) Cessna jet with an autopilot program for a one way trip to [Venezuela, Colombia, Brazil, Argentina] is included in the promotion package.

An amusing reminder of just how different opinions can be among (conflicted) finance professionals, was today's disclosure by risk evaluator Audit Integrity, which has put together a list of the twenty companies with a market cap over $1 billion most likely to file for bankruptcy. Among them: none other than Goldman Conviction Buy candidate, Textron Inc.

Probably the best performing stock in the S&P today is that of private-jet maker Textron, which received a double whammy of upgrades from taxpayer darlings Morgan Stanley and Goldman Sachs. Yesterday, MS upgraded the stock from an Underweight to an Overweight, passing Neutral, and putting a $25 price target on the stock. Today, Goldman, never too far behind, especially in names in which it is significantly axed in CDS and other OTC products, upgraded the Cessna maker from Neutral to Conviction Buy, with a price target increase from $16 to $23.

Cessna maker Textron, whose stock has gotten bombed over the past year after the very public bashing of any and all private jet purchases, might be in more hot water. After briefly making the press in relation to speculation that it could be an acquisition target, which subsequently turned out to be a large insider trading leak that subsequently led to the suicide of the alleged perpetrator, Textron is now being sued by the City of Roseville Employees' Retirement System for business condition misrepresentations.

• Manufacturing, Housing may signal economy close to hitting bottom.
• IMF Chief says worst of crisis may be yet to come.
• Obama's regulatory plan to remake Fed's power.
• AIG says it exceeded obligations to Air France passengers.
• Air India will pay 31,000 employees two weeks late as the carrier runs short of cash.
• Airbus CEO: Airbus aircraft deliveries could fall by 25% this year.
• Amazon.com to pay $51M to Toys R Us to settle a long-standing legal dispute.
• Anheuser to sell Central, Eastern Europe units; proceeds (~$2B) to be used to red
  

• Initial Unemployment claims in US decrease, signal worst of slump ending.
• Oil climbs higher in Asia, nearing $70 a barrel ahead of US jobs report.
• ABM Industries beats by $0.05; posts Q2 EPS of $0.32. Revs fell 5.6% to $855.7M.
• AIG may raise $988M selling portion of Transatlantic Holdings stake.
• Abercrombie & Fitch's May same-store sales drops 28%.
• American Apparel's May same store sales at -10% vs. cons est.
  

• Busting Bank of America (WSJ, hat tip Agrotera)
• The tyranny of experts (The Barricade)
• More on the idiotic jet flyover (NYT)
• Bair seeks to expand power, end "too big to fail" (Bloomberg)
• Volcker punctures the nonse
  

Everyone's favorite Cessna maker which recently was plumbing all time stock price lows after it was made clear that no corporate CEO will ever be allowed to buy a private jet ever again, was up a whopping 10% today on takeover speculation, to $8.00. This is likely not much of a consolation to longs, as TXT was trading north of $60 a year ago. Bloomberg quotes reputable sources such as Michael Nasto, senior trader at U.S.

S&P earlier downgraded Textron and Textron Financial to BBB- which was not at all surprising. However, an amusing tidbit in their report presents just how ingrained the sentiment against private jets is: if the ultimate lagging indicator S&P is saying jets are a liability, it may be time to actually splurge for that Dassault you have had your eye on recently.