Following the DoJ's 'surprising' August decision to block the $11bn merger of American and US Airways (after approving other airline mergers in the recent past), it would appear the parties have reached a settlement:
*U.S. FILES PROPOSED SETTLEMENT IN AMR CASE IN FEDERAL COURT
*DOJ REQUIRES US AIRWAYS, AMERICAN AIRLINES TO DIVEST FACILITIES
*AIRPORT SLOTS TO BE SOLD UNDER PROCESS APPROVED BY U.S.
*AMR SEES COMBINED CO OPERATING 12 FEWER DAILY DEPARTURES AT LGA
*AMR SEES COMBINED CO OPERATING 44 FEWER DAILY DEPARTURES AT DCA
Some of the initial details (Full statement below) include divesting slots at Laguardia and Reagan National. AMR is trading up over 25%...
- Twitter's IPO to Make Market Debut (WSJ); Twitter Raises $1.82 Billion, Pricier Value Than Facebook (BBG)
- Worried Senators Press Obama on Health Law (WSJ)
- Greenspan Says Yellen Was His Guide to Economics Research at Fed (BBG)
- European Central Bank seen holding rates despite inflation tumble (Reuters)
- Wall St. Bonuses Over All Are Predicted to Rise 5 to 10% (NYT)
- Cautious consumers seen curbing U.S. economic growth (Reuters)
- China Grants U.S. Investors Indirect Access to Its Stock Markets (WSJ)
- Higher Tax Rates Give Top U.S. Earners Year-End Headaches (BBG)
- Iran Loses Nuclear Leverage as World Ignores Export Drop (BBG)
- NYPD Commissioner Ray Kelly in the running for JPMorgan job (Post)
Contrary to initial reports that the shooter was an off-duty NSA agent, subsequent updates have revealed that the LAX shooter, who reportedly is still dead, although unclear if he was killed before or after he was in police custody, as Paul Anthony Ciancia, a 23-year-old who was either a Los Angeles native, or from Pennsville, N.J. Additionally, we have learned that according to a law enforcement official, who was briefed at LAX on the investigation but not authorized to speak publicly, said the gunman was wearing fatigues and carrying a bag containing a hand-written note that said he "wanted to kill TSA and pigs." The official requested anonymity because he was not authorized to speak publicly. Considering the accuracy with which this news event has been broken, most of it relying on unsubstantiated and often times fake Twitter sources (some had reported earlier, falsely, that the former NSA chief had been shot as well), we won't be surprised if this story were to change a few more times.
The Justice department is said to plan to block the AMR-US airline merger:
*AMR-US AIRWAYS DEAL SAID TO BE SUBJECT OF U.S. ANTITRUST SUIT
*US AIRWAYS ALSO SUED BY TEXAS, ARIZONA, FLORIDA, DC, VIRGINIA
*JUSTICE DEPARTMENT SAID TO PLAN SUIT TO BLOCK AIRLINE MERGER
*AMR CAN EMERGE FROM BANKRUPTCY WITHOUT MERGER, U.S. SAYS
Both stocks are down notably on the news - AMR -22%, LCC -11%; and the rest of the airlines sector is weakening. Among the DoJ's 'gotchas - "A US Airways document said that capacity reductions have “enabled” fare increases." Perhaps the lowly lobbyists of the Airline industry should have 'donated' just a little more money...?
- Botulism toxin? There's an apology for that - Fonterra CEO apologizes, sees China dairy curbs lifted within days (Reuters)
- Patent troll-In-Chief strikes again: Veto of Apple Ruling Likely to Upend Big Patent Battles (WSJ)
- Because scapegoating means justice FTW - SEC Gets ‘Shot in the Arm’ With Victory in Tourre Case (BBG)
- Insider-Trading Probe Caught in a Washington Knot (WSJ)
- Miners return to hedging as gold (FT)
- Toyota’s $37 Billion Cash Pile Means Turning Point for Abenomics (BBG)
- Inside the battle at Germany's Siemens (Reuters)
- ‘One million’ UK workers on zero hours contracts (FT)
- Wag the dog, part 1984: Iran Seen Trying New Path to a Bomb (WSJ)
- Tokyo Cheap to Hong Kong Luring Asian Bargain Hunters (BBG)
- Obama budget defeated 414-0 (Washington Times) yes, the Democrats too...
- German Central Banker: ECB Loans Only Buy Time (AP)
- Baku grants Israel use of its air bases (Jerusalem Times)
- Japan May Understate Deflation, Hampering BOJ, Economist Says (Bloomberg)
- BRICS flay West over IMF reform, monetary policy (Reuters)
- Five Portugal Lenders Downgraded by Moody’s (Bloomberg)
- SEC Registration Captures More Hedge Fund Advisers (Bloomberg)
- EU Nears One-Year Boost in Rescue Fund to $1.3 Trillion (Bloomberg)
- Consumers plot emergency oil release as Saudi decries high prices (Reuters)
- Japan Plans to Draft Stopgap Budget for First Time in 14 Years (Bloomberg)
Nic Colas, of ConvergEx, waxes nostalgic at the dreadful deja-vu he sees in his monthly review of the Street’s revenue expectations for the companies of the Dow Jones Industrial Average. Finding that while markets may be in rally mode, analysts are still fretful about near term sales momentum at these large multinationals. Currently, they expect the average Dow company to post only a 3.6% sales “Comp” in Q1 2012 versus last year, or 5.0% for the non-financial companies in the index. That is the lowest expected growth rate for the current quarter since we started keeping tabs on what the analysts had in their models a year ago. They don’t have to bump numbers to pound the table on their favorite names. The current rally has been more about valuation than revenue and earnings momentum – our revenue expectation data is all the proof you need on that score. So why raise numbers if your “Buy” rated names are rallying without the need to put yourself on that limb? All of this sets up market psychology on a razor’s edge for Q1 earnings reports. And what about ‘Sell in May and go away?' Only 31 trading days left until May 1st.
The same themes remain in place (equity to credit preference, up-in-quality credit, and rising dispersion or idiosyncratic risk), all of which warrant concern over equity levels. While earnings are supposedly the mother’s milk of stock prices (someone really smart told me that every day this year?), we are reminded that free cash flow is the real driver and profits are a levered result of GDP growth which is being downgraded lemming-like as we speak. While credit availability remains good for IG issuers, the potential for relevering (shareholder-friendliness) may be tainted if US CEOs continue to behave like Japanese CEO did in the 80s/90s – expecting lower than trend growth they hoarded and burned through cash. We like IG-HY decompression, HY 3s5s flatteners, Financials underperforming non-financials, and would remain fully hedged in The A-List for now. Our ETF Arb is stable and has more room for upside.
Markets mostly bullish this AM following the holiday weekend in the US. Friday’s CPI print seemed reflective of inflation, showing increases in core and non-core metrics, while retail sales was mixed relative to expectations. We fear the real demand rally might well be short lived. Today’s Empire Manufacturing and November TIC flows will be watched closely for forward indications in the US, while the story out of Europe continues to be the market’s focus.
- API reports surprise declines in US fuels inventories.
- China ordered some lenders to increase their reserve ratios by 50 bps from Nov. 15.
- China posted a larger-than-forecast $27.1B October trade surplus.
- EU fined 11 airlines a total of $1.11B for forming cartel to fix air-freight tariffs.
- FDIC Board voted to take initial steps to implement higher fee structure for its deposit-insurance fund.
- G20 draws up two-tier bank plan; Global and national regulators to split focus.
- Euro weakens versus Dollar, Yen on speculation tests to reveal loan losses.
- 3M net income climbs 43%; raises 2010 EPS view to $5.65-5.80 (prev $5.40-5.60).
- Adidas posts 2Q results 'significantly above' market expectations.
- Akzo Nobel says net profit rose 76% in 2Q thanks to sales growth.
- Amazon's Q2 earnings rose 45% to $207M on a 41% increase in sales of $6.57B.
- AmEx's Q2 profit rose to more than $1B from $337M, and Capital One's increased to $608M from $223M.
- AT&T's Q2 net income jumps 25% to $4.0B; adds 1.6 million wireless accounts.
Weekly technical profiles of Gamestop (GME), Waters (WAT), Liberty Media (LINTA), JetBlue (JBLU), Radioshack (RSH), Exelon (EXC), Monsanto (MON), H&R Block (HRB) & China North East Petroleum (NEP) with explicit trade setups
- Asian bourses turn lower after release of higher-than-expected Chinese inflation data.
- Bank of Korea keeps key interest rate at record low as economic growth slows.
- China inflation, production accelerate, adding pressure for stimulus exit.
- Chinese property prices were 10.7% higher than a year earlier in February: Govt agency.
- Federal Reserve gets a new look as regulator of largest, riskiest firms.
- Japan's Q4 GDP grew at an annual 3.8% pace - lower than the prelim reports of 4.6%.
- Oil falls below $82 in Asia as traders look for US crude demand to match growing economy.
- US Senate passes $150B bill for jobless aid, tax breaks.
- Asian stocks fluctuated as shipping lines and oil companies declined.
- British banks face increased bonus disclosure as Myners plans to lower bar
- China's trade surplus shrinks to smallest in a year as imports surge 44.7% in Feb.
- Chinese banks lend about $102.6B in February, around half the loans issued in Jan.
- EU is considering a ban on speculative derivative trades, including credit default swaps.
- Japan's Jan machinery orders fall 3.7%; business spending revival may be slow.
- Manufacturing in U.K. unexpectedly plunges as it sees `fragile' economy
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