Month: April 2014

One of the purported catalysts for yesterday’s late day rebound, was yet another iteration of diplomatic de-escalation in Ukraine, when not only did Russian defense minister Sergei Shoigu advise Chuck Hagel that Russia has no plan of bringing its troops to Ukraine  – something Russia has said since the conflict started, even as it has repeatedly affirmed it would waste no time to protect ethnic Russians in east Ukraine – but when Interfax reported that Russian troops are returning from military drills by the Ukraine border to their respective bases. This alone was enough to send the S&P roundtripping from nearly red for the year, to up half a percent for the day. There are a few problems with this latest de-escalation gambit however.

First of all, as Reuters reported earlier, “NATO has seen no sign that tens of thousands of Russian troops are withdrawing from close to the Ukraine border, a NATO official said today, despite a Russian statement that the troops had returned to their permanent positions.” But… the algos said that all is well again? Guess not.

Russian Defence Minister Sergei Shoigu told U.S. Defence Secretary Chuck Hagel in a phone call on Monday that Russian forces, which started drills near the border last week, had returned to their permanent positions, according to the Russian government.

 

“We currently have no information that indicates a withdrawal of Russian troops from the Ukrainian border. We continue to urge Russia to abide by the Geneva agreement and to pull back all its troops along the Ukrainian border in favour of diplomacy and dialogue,” a NATO official told Reuters, asked about Shoigu’s assertion.

Not only that, but as can be expected, following the latest round of sanctions against Russia by the West, a Russian retaliation was inevitable. Sure enough, Interfax reported that Russia is preparing retaliatory measures after latest round of U.S., EU sanctions, citing Valentina Matviyenko, speaker of Federation Council, upper house of parliament.

“Such unfriendly attacks, imposed unilaterally against Russia without reason, can’t be left without a response, and I believe there certainly will be a response,” Matviyenko is cited as saying.

Furthermore, as AFP reported separately, Moscow on Tuesday vowed to hit back at Japan over its decision to deny visas to 23 Russian nationals as part of additional sanctions linked to the crisis in Ukraine.

The Russian foreign ministry said that Tokyo’s decision was “met with disappointment in Moscow, and of course will not be left without a response”.

And finally, perhaps the best example of what is really going on, we read this:

• PROTESTERS STORMING REGIONAL BUILDING IN LUHANSK: INTERFAX
• PRO-RUSSIA SEPARATISTS CONTROL ADMIN. BUILDING IN LUHANSK: RIA

Interfax adds that some of protesters are carrying sticks, batons, and probably other pain-creating objects. Oh well, the “de-escalation” was fun while it lasted. Back to the same old daily grind again.

via Zero Hedge http://ift.tt/1nZgkf5 Tyler Durden

In what turned out to be immaculate timing, it was only yesterday that we previewed the collapse in Apple’s domestic cash hoard (at the expense of its soaring, if non-recourse offshore cash)… 

… which we concluded by saying that “what this simply means is that after making the history books with the biggest ever, $17 billion bond offering 12 months ago, Apple is about to issue a whole lot more of debt.” Less than 24 hours later, it did just that.

Moments ago Apple filed a bond offering prospectus, in which it laid out a 7-part bond offering consisting of two FRN tranches (due 2017 and 2019), and 5 fixed rate tranches (due 2017, 2019, 2021, 2024 and 2044), with Goldman and Deustche Bank as lead underwrtiers.

The amount on the tranches are still unknown, although according to preliminary reports they will likely match or surpass the record Apple bond offering from last year, in which the company sold $17 billion in debt.

Bloomberg reports the indicative pricing terms on the various tranches:

• FRNS 3ML EQUIVALENT
• 3Y FIXED IPT +30 A,
• 5Y FIXED +50 A;
• 7Y NOTES IPT +75 AREA,
• 10Y NOTES +90 AREA,
• 30Y NOTES +115-120

As a reminder, anyone who bought into the 30 year bond offering from last year, was promptly down 10% in absolute price terms shortly thereafter. We expect the same non-flip event to repeat itself with this issue as well, especially since in light of Apple’s 50% expansion in its capital plan to $90 billion per year, we fully expect that the company will have to access the debt capital markets at least once more, and maybe twice, in the next 12 months to maintain its domestic cash balance at minimum safe levels.

via Zero Hedge http://ift.tt/1khNN21 Tyler Durden

• EU regulators unveil details of bank stress tests (FT)
• Just use NSAfari: U.S., UK advise avoiding Internet Explorer until bug fixed (Reuters)
• China’s Income Inequality Surpasses U.S., Posing Risk for Xi  (BBG)
• US races to refuel infrastructure fund as revenue dries up (FT)
• New Era Dawns at Nokia as Company Appoints CEO, Plans $1.4 Billion Special Dividend, Share-Repurchase Program (WSJ)
• Obama reassures allies, but doubts over ‘pivot’ to Asia persist (Reuters)
• Dissent at SEC over bank waivers (FT)
• U.S. Banks to Help Authorities with Tax Evasion Probe (WSJ)
• U.S., Europe Impose New Sanctions on Russia (WSJ)
• Why the U.S. Is Targeting the Business Empire of a Putin Ally (BBG)
• Euro-Area April Economic Confidence Unexpectedly Declines (BBG)
• Bitcoin traders settle class actions over failed Mt. Gox exchange (Reuters)
• China’s Provinces Fail to Meet Lower 2014 Growth Goals (BBG)

 

Overnight Media Digest

WSJ

* The U.S. and Europe imposed sanctions on a slate of new Russian government officials and business entities in an effort to pressure President Vladimir Putin and his Ukrainian allies to cease their military activity in eastern Ukraine. (http://ift.tt/1khNLXM)

* Nokia on Tuesday named mobile-network veteran Rajeev Suri as its next chief executive and said it would distribute an approximately 1 billion euro ($1.4 billion) special dividend and initiate a share-repurchase program in an effort to return to investment grade. The financial moves come as a result the sale of the company’s handset unit to Microsoft Corp. (http://ift.tt/1iBzFCT)

* Pfizer Inc’s nearly $100 billion offer to buy British rival AstraZeneca Plc, if accepted, would allow the pharmaceutical giant to move its official headquarters overseas, saving the company that started 165 years ago on a Brooklyn, New York, street corner billions in taxes over the next decade. (http://ift.tt/1khNKTN)

* An apparent communications blunder inside Bank of America Corp forced the lender to shelve a plan to buy back shares and boost its dividend for the first time since 2008, another setback for Chief Executive Brian Moynihan’s efforts to escape the long shadow of the financial crisis. (http://ift.tt/1iBzHuD)

* Energy Future Holdings Corp, the Texas utility at the center of the biggest private-equity buyout ever, was preparing to file for Chapter 11 bankruptcy protection as soon as Tuesday morning, after reaching a restructuring deal with creditors. The utility, formerly TXU Corp, was racing to forge a restructuring deal and file for bankruptcy before a grace period on skipped debt payments expired later this week and put the company in default. (http://ift.tt/1khNLXP)

* The weather phenomenon known as El Niño is poised to return, a development that threatens to drive up prices for food and other staples. El Niño has a reputation for triggering sharp run-ups for prices in markets as diverse as nickel, coffee and soybeans, and commodities investors, traders and analysts are bracing for impact. (http://ift.tt/1iBzFCV)

* Toyota Motor Corp will receive $40 million from Texas to consolidate several far-flung units in a new headquarters in the state as the company looks to cut costs and combine its North American sales, manufacturing and financial locations. (http://ift.tt/1khNKTU)

* Lawyers for creditors involved in two proposed class-action lawsuits against Mt. Gox have reached an agreement to support a group of U.S. investors’ bid to revive the bankrupt bitcoin exchange, an agreement that would give the creditors a 16.5 percent stake in the prospective future company. (http://ift.tt/1iBzFCZ)

* Lawmakers pressing Securities and Exchange Commission Chairman Mary Jo White to address worries about rapid-fire trading aren’t likely to hear detailed plans for immediate action when she testifies Tuesday on Capitol Hill. (http://ift.tt/1khNLXT)

 

FT

government in the hopes of winning it over to their rival bids for engineering group Alstom, each arguing that its offer best served the national interest.

Three U.S.-based former Barclays traders will be charged by Britain’s Serious Fraud Office as part of its probe into the alleged manipulation of the Libor interbank rate.

The U.S. department of homeland security has told individuals and companies to avoid using Internet Explorer, after a flaw allowing cyber criminals to impersonate known websites and steal user data was found in the popular web browser.

U.S. Securities and Exchange Commission commissioner Kara Stein has accused the agency of having “strayed from its mission” by allowing two banks that pleaded guilty to interest-rate rigging to access capital markets without regulatory scrutiny.

Britain’s Financial Conduct Authority has slapped fund manager Invesco Perpetual with a 18.6 million pound ($31.26 million) for breaching investment limits and introducing leverage into funds – including those run by Neil Woodford – without proper disclosure.

 

NYT

* The Federal Reserve is tiptoeing away from its economic stimulus campaign, and so far the broader economy has barely noticed. The Fed’s policy-making committee, which meets on Tuesday and Wednesday, is widely expected to announce another $10 billion cut in its monthly bond purchases, to $45 billion, en route to ending the purchases this autumn. (http://ift.tt/1iBzHuH)

* Pfizer Inc proposed on Monday a $99 billion acquisition of its British rival AstraZeneca Plc that would allow it to reincorporate in Britain. Doing so would allow Pfizer to escape the United States corporate tax rate and tap into a mountain of cash trapped overseas, saving it billions of dollars each year and making the company more competitive with other global drug makers. (http://ift.tt/1khNLXY)

* Covington & Burling LLP, the firm where Eric Holder practiced law before becoming attorney general, will announce on Tuesday that Mythili Raman is the latest former senior Justice Department official to join its ranks. Raman, who will be a partner in Covington’s white-collar crime and litigation practices, led the Justice Department’s criminal division until last month. (http://ift.tt/1iBzFD5)

* Bank of America Corp disclosed on Monday that it had made a significant error in the way it calculates a crucial measure of its financial health, suffering another blow to its effort to shake its troubled history. The mistake, which had gone undetected for several years, led the bank to report recently that it had $4 billion more capital than it actually had. After Bank of America reported its error to the Federal Reserve, the regulator required the bank to suspend a share buyback and a planned increase in its quarterly dividend. (http://ift.tt/1khNMec)

* A new government report suggests that errors made by banks and their agents during foreclosures might have been significantly higher than was previously believed when regulators halted a national review of the banks’ mortgage servicing operations. (http://ift.tt/1iBzHL0)

* Yahoo Inc Chief Executive Marissa Mayer announced on Monday evening that Yahoo is commissioning two original TV-length comedy series that will be shown exclusively on its websites and mobile apps. (http://ift.tt/1khNLac)

* Toyota Motor Corp said on Monday that it would move thousands of employees from California and other locations to new North American headquarters in Texas as part of a broad effort to cut costs and streamline operations. (http://ift.tt/1iBzFTm)

* As part of a routine effort to identify acquisition targets, the Walt Disney Co last year zeroed in on BuzzFeed, the fast-growing digital media company, but Disney’s interest quickly dissipated when BuzzFeed valued itself at nearly $1 billion, according to a person with direct knowledge of the talks. (http://ift.tt/1khNMen)

* The Obama administration has begun a wide-ranging search for companies to run the online federal health insurance exchange, seeking new talent to prevent a repeat of problems that immobilized the website last fall. (http://ift.tt/1iBzFTo)

 

Canada

THE GLOBE AND MAIL

* The Harper government has hired two agencies with relatively little experience in elections monitoring to organize hundreds of Canadian observers for next month’s Ukrainian presidential vote. The government has hired the Forum of Federations and CUSO International to replace its longtime Ukraine election partner, the non-governmental organization Canadem. (http://ift.tt/1khNMep)

* Ottawa is relenting to external pressure and now promising to speed up the release of a “public report” on the fighter jets pegged to replace Canada’s fleet of CF-18s. The document, which has been put together for widespread release, lists the risks and benefits of the four fighter jets that were involved in an “options analysis” overseen by the Canadian Forces. (http://ift.tt/1iBzFTq)

Reports in the business section:

* A spat between Barrick Gold Corp and Newmont Mining Corp erupted into a public war of words, with the companies accusing each other of ruining their $13-billion (U.S.) merger. Barrick said its American rival reneged on their deal and tried to change key provisions, including the location of the head office in Toronto. Newmont disagreed with Barrick’s version and faulted the Canadian company’s incoming chairman John Thornton for not being constructive. (http://ift.tt/1khNLam)

* Canadian Imperial Bank of Commerce’s coming leadership shuffle spotlights the need for boards of directors to devote more resources to the crucial task of succession planning, governance experts say. (http://ift.tt/1iBzFTu)

NATIONAL POST

 
* After some tough years of spending restraints, Canada’s economy is soon expected to return to normal levels of growth and possibly get back to budget surpluses ahead of schedule. (http://ift.tt/1khNLqE)

FINANCIAL POST

* Quebecor Inc announced the second surprise change of its leader in little more than a year Monday, leaving the distinct impression of an organization in flux. The Montreal-based telecom and media company cited health reasons for Robert Dépatie’s resignation as president and chief executive less than a year after he took over from Pierre Karl Péladeau. (http://ift.tt/1iBzFTq)

* Premier Kathleen Wynne is promising to create a $2.5-billion fund aimed at keeping businesses in Ontario. Details are scant, but officials say companies would be able to apply for government grants. (http://ift.tt/1iBzFTq)

 

China

CHINA SECURITIES JOURNAL

– The pace of China Securities Regulatory Commission (CSRC) in resuming IPO applications will not overly speed up despite the commission’s recent spate of “pre-disclosure” of companies waiting to be listed, with sources expecting four to five companies to be granted per week in the near term. As of April 28, up to 144 companies have submitted the draft version of prospectuses, the CSRC information disclosure shows.

– Members of the China Iron and Steel Association (CISA) have lost 2.329 billion yuan ($372.5 million) in the first quarter of 2014, with 45.45 percent of the association members losing money because of low demand, high inventory stock and declining price.

SECURITIES TIMES

– A total of 2453 A-share listed companies have released their 2013 annual reports so far, with the sum of their net profit reaching 2,240 billion yuan, a 15 percent rise year-on-year.

– In spite of high rates, the number of China’s new issuance of quasi-municipal bonds in 2014 has reached 215 so far this year, raising 248.31 billion yuan, a 36.28 percent increase from the same time of last year.

CHINA DAILY

– Chinese stocks saw a sharp drop on Monday after the securities regulator said it will resume reviewing IPO applications following an 18-month moratorium. The Shanghai Composite Index lost 1.6 percent before closing at 2003.49, the Shenzhen Component Index dropped 1.14 percent to 7240.46.

SHANGHAI DAILY

– China’s president Xi Jinping visited armed policeman, local residents’ homes and a primary school after arriving in the restive Xinjiang autonomous region on Sunday, encouraging local officials to promote harmony among all ethnic groups.

PEOPLE’S DAILY

– Higher quality as well as wider coverage of road constructing in China’s rural areas must be achieved to fulfil the goal of modern agriculture, an editorial said, commenting on president Xi Jinping’s series of conduct highlighting the significance in rural transportation infrastructure.

 

Britain

The Telegraph

BANKS TO BE TESTED ON PROPERTY MARKET CRASH

The Bank of England is to test Britain’s major banks on their ability to weather a housing market crash that could wipe more than a third off home prices. (http://ift.tt/1iBzHL8)

CITY WATCHDOG SAYS WON’T WASTE RESOURCES ON ROYAL MAIL PROBE

Martin Wheatley, the boss of the Financial Conduct Authority, has told Members of Parliament he saw no reason to investigate the flotation of Royal Mail or the bankers involved pouring water on claims that the historic privatisation was mismanaged. (http://ift.tt/1khNLqK)

SERCO SET TO LAUNCH RESCUE RIGHTS ISSUE

Serco’s shares are expected to fall heavily on Tuesday after the embattled outsourcing firm warned that it is looking at launching a rescue rights issue to bolster its finances. (http://ift.tt/1iBzFTw)

ASSET SELL-DOWN LOOMS AS BG OUSTS CHIEF EXECUTIVE

A sell-down of BG Group’s assets or even a break-up bid have moved a step closer after the ousting of Chief Executive Chris Finlayson just 16 months into the job. (http://ift.tt/1khNLqN)

BP ‘COMMITTED TO ROSNEFT’ AS RUSSIAN ENERGY GIANT’S CHIEF IGOR SECHIN IS PLACED ON U.S. SANCTIONS LIST

BP has said it remains “committed” to Rosneft , after the U.S. placed sanctions on Igor Sechin, the president of the Russian energy giant, in which BP has a 20 percent stake. (http://ift.tt/1iBzI1q)

FITNESS FIRST FLEXES ITS MUSCLES IN SOUTHEAST ASIA

Recovering gym chain Fitness First is investing $140 million to get Southeast Asia into shape and is eyeing a further 50 clubs in the region. (http://ift.tt/1khNLqR)

The Guardian

BRITAIN FILES FIRST CRIMINAL CHARGES AGAINST U.S.-BASED LIBOR TRADERS

Britain filed its first criminal charges against U.S.-based Libor traders on Monday, as the UK arm of a complex global investigation into alleged benchmark interest-rate rigging stretches across the Atlantic. (http://ift.tt/1iBzFTA)

PFIZER ASTRAZENECA TAKEOVER PROMPTS JOB WARNING FROM VINCE CABLE

Battle lines are being drawn over what would be the biggest foreign takeover of a British company after pharmaceutical company AstraZeneca rejected a 60 billion pound ($100.85 billion) approach from U.S. rival Pfizer, prompting a warning on jobs from UK Business Secretary Vince Cable but receiving a warmer welcome from investors. (http://ift.tt/1iBzG9O)

RBS PUT AT ‘COMPETITIVE DISADVANTAGE’ BY BONUS BLOCKING PLANS

Standard Life, one of London’s biggest fund managers, has warned that the British government’s decision to block Royal Bank of Scotland’s bonus plans would put the bank at a competitive disadvantage. (http://ift.tt/1iBzI1t)

HEATHROW CHIEF WARNS STRONG PROFITS WILL NOT BE SUSTAINED IN YEAR AHEAD

Heathrow recorded strong profits and record passenger satisfaction scores over a mild winter but warned it will feel the squeeze in the year ahead. (http://ift.tt/1khNLqU)

The Times

BASKIN-ROBBINS SCOOPS UP CINEWORLD DEAL

Dunkin’ Brands, the group that owns Baskin-Robbins ice cream shops, has scored a victory over one of its biggest rivals after securing a franchise deal to replace Ben & Jerry’s at 45 Cineworld cinemas across Britain. (http://ift.tt/1iBzI1w)

The Independent

UK ADVERTISING MARKET BUOYED BY MOBILE BOOM

A boom in smartphone and mobile advertising has spurred growth in the UK advertising market as industry forecasters reckon ad revenues should soar 5.5 percent this year and 6.5 percent next year to reach a record 20 billion pounds. (http://ift.tt/1khNLHe)

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
S&P Case-Shiller 20-city home price index for February at 9:00–consensus up 0.8% m/m, up 13.0% y/y
Consumer confidence index for April at 10:00–consensus 83.2

ANALYST RESEARCH

Upgrades

Barrick Gold (ABX) upgraded to Neutral from Underweight at HSBC
Boardwalk Pipeline (BWP) upgraded to Equal Weight from Underweight at Morgan Stanley
Boardwalk Pipeline (BWP) upgraded to Market Perform at Raymond James
Boardwalk Pipeline (BWP) upgraded to Outperform from Neutral at Credit Suisse
Chegg (CHGG) upgraded to Buy from Neutral at BofA/Merrill
Choice Hotels (CHH) upgraded to Equalweight from Underweight at Barclays
Clarcor (CLC) upgraded to Buy from Hold at BB&T
DSW (DSW) upgraded to Buy from Neutral at Sterne Agee
El Paso Electric (EE) upgraded to Buy from Hold at Jefferies
GP Strategies (GPX) upgraded to Neutral from Sell at B. Riley
HP (HPQ) upgraded to Outperform from Sector Perform at Pacific Crest
Ingram Micro (IM) upgraded to Strong Buy from Outperform at Raymond James
Intuitive Surgical (ISRG) upgraded to Neutral from Underperform at Sterne Agee
Lakeland Bancorp (LBAI) upgraded to Outperform from Market Perform at Keefe Bruyette
Tech Data (TECD) upgraded to Outperform from Market Perform at Raymond James
WSFS Financial (WSFS) upgraded to Outperform from Market Perform at Keefe Bruyette

Downgrades

ABB (ABB) downgraded to Hold from Buy at Societe Generale
Airgas (ARG) downgraded to Neutral from Overweight at Atlantic Equities
Coca-Cola Enterprises (CCE) downgraded to Reduce from Neutral at Nomura
OncoGenex (OGXI) downgraded to Sector Perform from Outperform at RBC Capital
Stage Stores (SSI) downgraded to Neutral from Buy at Northcoast
Tyson Foods (TSN) downgraded to Market Perform from Outperform at BMO Capital

Initiations

AudioCodes (AUDC) initiated with an Outperform at William Blair
Coca-Cola (KO) initiated with a Buy at Nomura
Five9 (FIVN) initiated with a Buy at BofA/Merrill
Five9 (FIVN) initiated with an Outperform at Pacific Crest
Five9 (FIVN) initiated with an Overweight at Barclays
Five9 (FIVN) initiated with an Overweight at JPMorgan
Gentex (GNTX) initiated with a Sector Perform at Pacific Crest
GrubHub (GRUB) initiated with a Buy at Citigroup
GrubHub (GRUB) initiated with an Equal Weight at Morgan Stanley
GrubHub (GRUB) initiated with an Outperform at BMO Capital
Harman (HAR) initiated with an Outperform at Pacific Crest
Opower (OPWR) initiated with a Buy at Goldman
Opower (OPWR) initiated with a Neutral at RW Baird
Opower (OPWR) initiated with an Equal Weight at Morgan Stanley
Opower (OPWR) initiated with an Outperform at Pacific Crest
Royal Caribbean (RCL) initiated with a Buy at Berenberg
Sonus Networks (SONS) initiated with an Outperform at William Blair
TPG Specialty Lending (TSLX) initiated with a Market Perform at JMP Securities
Vince Holding (VNCE) initiated with an Overweight at Piper Jaffray

COMPANY NEWS

Nokia (NOK) appointed Rajeev Suri as CEO, effective May 1
Herbalife (HLF) announced that it would suspend its quarterly dividend and use its cash instead to repurchase stock, and said it plans to repurchase $581M worth of stock in Q2
Yahoo (YHOO) announced first two original comedies in lineup of long-form shows
Yahoo (YHOO), Live Nation (LYV) announced a deal to stream live concerts
Honeywell (HON) announced an agreement in principle with AT&T (T) for AT&T’s planned in-flight connectivity services
Novavax (NVAX) reported positive results from a Phase 2 trial of its RSV-F protein nanoparticle vaccine candidate
Heartland Advisors said it plans to enter discussions with Lincoln Educational’s (LINC) management regarding potential corporate governance and budget changes

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Spirit Airlines (SAVE), Magellan Health (MGLN), Littelfuse (LFUS), Wolverine World Wide (WWW), World Acceptance (WRLD), Norwegian Cruise Line (NCLH), Pioneer Energy (PES), Huntsman (HUN), United Therapeutics (UTHR), HomeStreet (HMST), BP (BP), Ensco (ESV), Arlington Asset Investment (AI), Ballard Power (BLDP), Hartford Financial (HIG), Wabash (WNC), Cleco (CNL), PartnerRe (PRE), Herbalife (HLF), Kaman (KAMN), Berkshire Hills Bancorp (BHLB), Advent Software (ADVS), Hartford Financial (HIG), Ducommun (DCO), Compass Minerals (CMP), Ameriprise (AMP), NetSuite (N), Intevac (IVAC), CoreLogic (CLGX), OFG Bancorp  (OFG), Luminex (LMNX), Amkor Technology (AMKR), Buffalo Wild Wings (BWLD), STAAR Surgical (STAA), Plum Creek Timber (PCL), Knowles (KN), Ruth’s Hospitality (RUTH)

Companies that missed consensus earnings expectations include:
CIT Group (CIT), Portland General Electric (POR), Stock Building Supply (STCK), Chart Industries (GTLS), Provident Financial (PROV), Headwaters (HW), Volaris (VLRS), PRGX Global (PRGX), Bridge Bancorp (BDGE), RockTenn (RKT), Silicon Motion (SIMO), Seaspan (SSW), Owens & Minor (OMI), Range Resources (RRC), Ultra Clean (UCTT), Container Store (TCS), Rudolph Technologies (RTEC), Meru Networks (MERU), Heartland Financial (HTLF), Questcor (QCOR), MainSource Financial (MSFG), Helen of Troy (HELE), J & J Snack Foods (JJSF)

Companies that matched consensus earnings expectations include:
1-800-Flowers.com (FLWS), Check Point (CHKP), Del Frisco’s (DFRG), Sensata (ST), Silicon Laboratories (SLAB), German American Bancorp (GABC), STMicroelectronics (STM), NBT Bancorp (NBTB), Flotek (FTK), Denny’s (DENN)

NEWSPAPERS/WEBSITES

Disney (DIS) sought to acquire BuzzFeed, Fortune says
Reckitt Benckiser confirms discussions to buy Merck (MRK) unit, WSJ says
Siemens’ (SI) Alstom bid likely to occur today (GE), Reuters reports
HP (HPQ) to launch Android-dedicated laptop (GOOG), BGR says
Netflix (NFLX) signs traffic deal with Verizon (VZ), The Verge reports
Sanofi (SNY) CEO says focusing on smaller, ‘bolt-on’ deals, WSJ reports
Craig Ferguson to leave CBS’ (CBS) “Late Late Show,” Variety reports

SYNDICATE

Burlington Stores (BURL) files to sell 12M common shares for holders
El Paso Pipeline (EPB) files to sell 6.8M shares for limited partners
Forum Energy (FET) files to sell 10M shares for holders
Media General (MEG) files to sell 9M shares for holders
RAIT Financial (RAS) files 10.1M shares for holders of warrants
TOP Ships (TOPS) files to sell $30M in stock and preferred stock purchase rights
Universal Truckload (UACL) files to sell 1.9M shares, including 1.88M for holders

via Zero Hedge http://ift.tt/1khNMuY Tyler Durden

The bankruptcy of Energy Future Holdings, aka TXU, aka the largest LBO ever has been long in coming. As we previewed it most recently in September of last year, “if there was one deal that epitomized the last credit bubble, aside from the Blackstone IPO of course, it was the ginormous, $45 billion 2007 LBO of TXU, now Energy Future Holdings. And while the tide for the New Abnormal credit bubble has yet to expose its megalevered monoliths swimming fully naked, as for now corporations have opted for graduated semi-MBOs in the form of ever larger stock buybacks, the time to pay the piper for the last credit-fuelled binge has arrived and inevitable bankruptcy of this landmark deal is now just days away.”

It turned out it was more like months away, but it finally arrived, and moments ago, TXU finally succumbed to (lack of) cash flow reality, when it filed for a prepackaged Chapter 11 bankruptcy on Tuesday morning after months of negotiations with creditors aimed at speeding the restructuring of the private-equity backed utility’s debt load of more than $40 billion. While it is unclear just how much total debt the company will ultimately restructure, it is likely that the final number will be greater than Enron’s, making this also the largest ever non-financial bankruptcy in history.

As we further previews a year ago, “the losers (in addition to the thousands of company employees who were and are about to be laid off): all those who invested equity in hopes nat gas prices would rise, and even looser credit would mean a quick and profitable flip in the next 3-5 years, namely KKR, TPG, as well as Lehman (RIP), Citigroup, and Morgan Stanley. These banks were also instrumental in underwriting (and holding on to) the loans and bonds that would fund this monster deal, which ultimately led to unprecedented writedowns for all those involved. The irony: the same companies that provided the LBO financing, will also now serve as the source of the company’s $2+ billion DIP loan, so all is well with the world.”

Billionaire Warren Buffett called his $2 billion investment in Energy Future bonds “a big mistake.”

More from the WSJ:

With more than $100 million in skipped debt payments coming due this week, the Texas energy company sought protection in the U.S. Bankruptcy Court in Wilmington, Del., with a plan that involves parceling out the company to appease lenders.

 

In broad outline, Energy Future, once known as TXU Corp., hopes to swap Texas Competitive Electric Holdings, a subsidiary that sells power in wholesale markets to big companies and other utilities, to get $25 billion worth of debt forgiven.

 

Additionally, the company has been in discussions with bondholders owed roughly $1.7 billion about converting their debt to ownership stakes in Energy Future Intermediate Holding Co., the subsidiary that owns Oncor, the company’s regulated business that delivers power to more than 10 million customers across Texas, The Wall Street Journal has reported.

 

Tuesday’s bankruptcy filing was expected, after months of public discussion about the prospect that auditors would raise the “going-concern” red flag, a warning that they doubt a company can continue to operate.

 

Energy Future’s bankruptcy preparations included the negotiation of more than $11 billion in loans, to make sure the company stays in operation during the Chapter 11 proceeding, according to The Wall Street Journal.

So to all those who back in those bubbly, pre-Lehman days of 2007 said that the biggest LBO in history would soon result in the biggest bankruptcy in history (non-financial of course: we had Lehman for that, and all other banks too had it not been for the Fed), congratulations: you are now officially right.

The case is In re Texas Competitive Electric Holdings LLC, 14-bk-10978, U.S. Bankruptcy Court, District of Delaware (Wilmington).

via Zero Hedge http://ift.tt/1mVi8FX Tyler Durden

If one needed a flurry of “worse than expected” macro data to “explain” why European bourses and US futures are up, one got them: first with UK Q1 GDP printing at 0.8%, below the expected 0.9%, then German consumer prices falling 0.1% in April, and finally with Spanish unemployment actually rising from a revised 25.73% to 25.93%, above the 25.85% expected. All of this was “good enough” to allow Italy to price its latest batch of 10 Year paper at a yield of 3.22%, the lowest yield on record! Either way, something else had to catalyze what is shaping up as another 0.5% move higher in US stocks and that something is the old standby, the USDJPY, which ramped higher just before the European open and then ramped some more when European stocks opened for trading. Look for at least one or two more USDJPY momentum ignition moments at specific intervals before US stocks open for trading.

There was more negative newsflow, most notably from Mario Draghi, who told German lawmakers that QE is still “a way off” and relatively unlikely, which in normal days would have been enough to drain some euphoria and enthusiasm to buy anything that is not nailed down, but not today.

But all of that is moot. Remember – the biggest catalyst of what promises to be the latest buying panic rampathon is simple: it’s Tuesday.

Looking at Asian markets today, it’s been a fairly mixed session with Chinese domestic equities (+0.1%) and the Hang Seng (+0.25%) outpacing other markets today. There have been reports that two Chinese cities have begun relaxing home purchasing restrictions amid growing anecdotal evidence that housing prices are falling in the new and secondary real estate markets. Chinese iron ore futures prices have recovered 0.4% this morning, after falling by 3.5% yesterday on news that Chinese banks were being required to clamp down on iron ore inventory financing by the country’s banking regulator. On the fixed income side, the flood of new EM issuance remains a dominant theme. According to the FT, who cite Dealogic data, issuance has reached $27bn for April, beating the previous record for a single month set in January.

Finally, the only key variable that even algos can’t ignore, tensions and escalations in Ukraine, showed yet another round of signs of de-escalation, at least diplomatically, and especially following reports that Russian troops near the Ukraine border had pulled back to their military bases also buoyed sentiment, although this is something we have seen time and again, especially since NATO subsequently reported it had seen no pullback of any Russian troops.

Looking ahead to today, there’s a fair bit on the calendar before we head into the business end of the week. About 30 Stoxx600 companies will be reporting earnings today including a couple of the major banks in continental Europe. It’s a similar story stateside with about 40 S&P500 companies reporting before and after the closing bell, including some high profile tech/retail names like Twitter and eBay. UK Q1 GDP and German CPI are the major data releases in Europe. Across the pond, US Case-Shiller home prices for February will be released and the US conference board reports its April consumer confidence reading.

Bulletin headline summary from Bloomberg and RanSquawk

• Better than expected corporate earnings in Europe offset source comments late yesterday which indicated that ECB’s Draghi sees QE still being ‘a way off’ and ensured that stocks traded broadly higher.
• Spot RUB seen sharply lower as “war premium” relating to the stand-off between Russia/Ukraine is reduced after Russian Deputy Minister said that Moscow has no intent to replay ‘Crimea scenario’ in East Ukraine.
• Attention now turns to the release of the latest US Consumer Confidence Index, weekly API data and also earnings by Merck, eBay and Bristol-Myers.

Asian Headlines

Despite the focus remaining on regulators in China probing iron ore financing deals which also resulted in China’s import iron ore benchmark grade hitting monthly lows, the sentiment was offset by better than expected domestic based earnings, with both Shanghai Comp and Hang Seng settling higher.

EU & UK Headlines

The release of lacklustre money supply data and seasonality skewed German states CPIs, German Bunds remained on a downward trend since the open and instead remained a by-product of firmer stocks and also source comments by Draghi late yesterday who downplayed the likelihood of QE. On the topic of ECB, today’s higher than exp. usage of the regular 7-day MRO by banks should offset the latest 3y LTRO repayment and in turn result in excess liquidity rising back above EUR 100bln, which currently stands at EUR 86.3bln. Analysts at Goldman Sachs expect the ECB to keep policy unchanged next week and do not expect any announcement on unconventional policy.

The release of worse than expected UK Q1 GDP report resulted in an immediate pressure on GBP but failed to support Gilts which remain lower on the session. Interestingly, ahead of the release BoE Governor Carney stated that he sees the UK economy back to pre-crisis levels in 2008 – excluding oil & gas he is correct.

Barclays preliminary pan-Euro agg month-end extensions for April: +0.10y (March +0.07y)

Barclays preliminary Sterling month-end extensions for April: +0.02y (March -0.02y)

US Headlines

Touted pre-hedging of the eagerly anticipated Apple debt deal, together with lower trading Bunds and Gilts in Europe this morning also filtered through into USTs. According to senior Democratic aide, there is a real risk that three Fed nominees will not be confirmed before June. The US Senate Banking Committee are to vote tomorrow on nominations of Fischer, Brainard and Powell to the Fed board.

Barclays preliminary US Tsys month-end extensions for April:+0.08y (March +0.07y)

Equities

Heading into the North American open, stocks (Eurostoxx50, +0.88%) are seen broadly higher following an encouraging set of earning pre-market by Nokia, Infineon and Deutsche Bank. As a result, tech and financials outperformed on the sector breakdown.

FX

GBP/USD slid well away from five-year highs of 1.6858 as UK GDP slumped below expectations. The 1.68 handle nonetheless was held as participants took confidence in the UK economy ex-oil & gas still being larger than pre-crisis levels. Early EUR strength following Draghi’s cautious comments on QE yesterday resulted in EUR/JPY and GBP/JPY firming, allowing USD/JPY to rise toward the 100DMA at 102.95 – the next level that may be tested should USD-strength arise from today’s consumer confidence figures

Commodities

Brent and WTI has seen a rebound from yesterday’s sharp USD 2.00 sell-off after Libya’s Zueitina port exited force majeure. Further support comes from a slightly softer USD -0.06%. In terms of the latest developments surrounding Russia/Ukraine, Russian Deputy Minister said that Moscow has no intent to replay ‘Crimea scenario’ in East Ukraine and won’t rush to retaliate against Western sanctions. In other news, US Gulf refinery maintenance is set to increase in May, rising to 750,000 bpd, almost twice as much as previously expected, and above the 454,00 bpd capacity that was lost in April, according to a revised IIR report.

Jim Reid concludes the overnight summary

Equity markets have been flipping in and out of the black/red this year and Monday’s price action seemed to be a microcosm of this theme. The S&P500 (+0.32%) started the day at around 1870 before dropping 20points only to return to its starting level at the close. At one stage the index appeared to be headed for its YTD starting level of 1848.36, but the combination of solid earnings, some easing of Ukraine/Russian fears and a flurry of M&A activity on both sides of the Atlantic saw sentiment improve as the US session wore on.

By our count, there were at least six large M&A transactions reported or announced yesterday in the US and Europe with the pharmaceutical sector taking the lion’s share of the transaction headlines yesterday. More broadly, we seem to reaching a number of M&A milestones with signs that the volume of large cap M&A deals is now reaching pre-financial crisis levels. Indeed, so far this year there have been 14 deals or bids worth at least $10 billion which have been announced, the most since 2007 and this does not include the transactions announced on Monday (WSJ, Dealogic). Contrary to what one would expect with the conducive credit markets, cash-only deals by dollar volume fell to 48% year to date, the lowest percentage since 2001. By contrast, 18% of announced M&A YTD as measured by dollar volume, were stock-only deals, which is double the rate of the same period last year – as companies take advantage of record high stock prices (Wall Street Journal).

The other interesting point on the recent M&A activity is that although healthcare and tech stocks have underperformed of late, they are amongst the top 3 most active sectors for M&A, accounting for 14.8% and 8.6% of volume in the year to April 28th. According to Dealogic, the Global Technology sector M&A volume stands at $93.7bn in 2014 YTD, up 94% from the same time period in 2013 ($48.2bn) and is the highest since 2000 YTD ($207.7bn) or the last days of last dot-com boom. For credit markets, this current M&A cycle is not yet too worrying because of the relatively low level of cash in the transactions and the fact that its mostly taking place in sectors with low credit issuance. However there’s no doubt that credit investors need to be vigilant given recent trends.

For equity markets, positivity from M&A is being countered to some degree by ongoing events in Ukraine with yesterday’s ups and downs being dictated by headline from the region. The day started with some cautiousness with fears that the sanctions could hit a wide section of the Russian economy. But the actual announcement from the US was greeted with a positive market reaction as there was some relief that there were no injunctions against the major Russian banks. After a fairly miserable performance last week, the MICEX managed to clawback 1.5%, led by a 5% spike in the shares of Sberbank of Russia. Reports that Russian troops near the Ukraine border had pulled back to their military bases also buoyed sentiment, but we would caution that similar reports have been made in recent weeks. Despite this backdrop, ironically it was the US banks (-1.5%) which were under more pressure yesterday. The sector was dragged lower by BofA (-6.3%) who announced that it was suspending its stock buyback and dividend increases after uncovering an accounting error in its Fed capital planning submission. Indeed, none of the 17 banks in the S&P500 managed to close in the black.

Looking at Asian markets today, it’s been a fairly mixed session with Chinese domestic equities (+0.1%) and the Hang Seng (+0.25%) outpacing other markets today. There have been reports that two Chinese cities have begun relaxing home purchasing restrictions amid growing anecdotal evidence that housing prices are falling in the new and secondary real estate markets. Chinese iron ore futures prices have recovered 0.4% this morning, after falling by 3.5% yesterday on news that Chinese banks were being required to clamp down on iron ore inventory financing by the country’s banking regulator. On the fixed income side, the flood of new EM issuance remains a dominant theme. According to the FT, who cite Dealogic data, issuance has reached $27bn for April, beating the previous record for a single month set in January.

That brings the total volume for US dollar bond deals in Asia ex-Japan up to $68bn year to date, also a record for the region. Low USD rates, and tight spreads are helping the primary flow, but there has also been talk of EM investors shifting allocations away from Eastern Europe to Asia to avoid geopolitical risks. Japanese markets are closed today for holidays.

With the Fed beginning the first day of its two day FOMC later today, DB’s Peter Hooper has laid out what he expects from the April meeting. Peter’s expectation is that the April FOMC announcement will prove uneventful. With forecast updates and a press conference absent, this is not the time for any innovations in communication, although the Fed will at some point have some more work to do on its forward guidance. For the time being, the Committee is very much in wait-and-see mode. They want to see how the economy bounces back from an inclement winter; they want to see how the labor market is progressing; and they want to see inflation returning toward more normal levels. So far, the picture is more than good enough to allow them to continue the taper on schedule, but not good (or bad) enough to warrant any significant shift in their message. The Committee may spend a bit more time than usual reviewing the housing market. The most recent housing activity indicators have been mixed, with starts and pending home sales up in March, but new and existing home sales down. Nevertheless all remain at relatively soft levels. The housing sector may well be experiencing ongoing drag from declines in affordability as mortgage rates and home prices have moved up significantly  over the past year.

Looking ahead to today, there’s a fair bit on the calendar before we head into the business end of the week. About 30 Stoxx600 companies will be reporting earnings today including a couple of the major banks in continental Europe. It’s a similar story stateside with about 40 S&P500 companies reporting before and after the closing bell, including some high profile tech/retail names like Twitter and eBay. UK Q1 GDP and German CPI are the major data releases in Europe. Across the pond, US Case-Shiller home prices for February will be released and the US conference board reports its April consumer confidence reading. France’s parliament will consider and vote on President Hollande’s Stability Program which lays out fiscal policy over 2014 to 2017.

via Zero Hedge http://ift.tt/1khA7DW Tyler Durden

Submitted by JS Kim, Managing Director of SmartKnowledgeU

 

It is undeniable that for most of us, our priorities are going to have to change as we all adjust to a standard of living that is less than that of the prior generation. Despite the lies of politicians and bankers worldwide, there has been absolutely no economic recovery, and very little global manufacturing growth and job growth in all major developed world economic regions. Furthermore, developing regions of Asia, flooded by cheap yen, dollars and Euros spurred by out-of-control, unchecked Central Bank monetary creation, has become the 2013 version of the 1997 Asian financial crisis waiting to happen all over again. However, there is reason to be optimistic regarding the future as well, because Central Bank tyrants will fall as all tyrants eventually do. This could open up the doors to re-set the world’s economy based upon a new sound monetary system in which the economic playing field really does provide opportunity to all classes instead of being rigged to serve the 1/10th of 1% only. As we prepare to embark on the lost decade, I believe that

(1) Mental and spiritual preparation; and

(2) Refining your life’s mission

will be essential to forming the resolve necessary to cope with future economic struggles we all will face. We have been a society much too obsessed with celebrity worship and materialism in recent years and discovering one’s life mission can be a fine antidote to this mental sickness that has not only become endemic, but that has also prevented many of us from thinking clearly enough to see through the façades of the many charlatans that lead nations around the world today. Godspeed to all!

 

The Coming Lost Decade: Discovering Your Life’s Mission

(click the above to play the video)

 

via Zero Hedge http://ift.tt/S56i24 smartknowledgeu