Month: May 2014

• Ukraine attacks rebel city, helicopter shot down (Reuters)
• Euro Unemployment Holds Near Record Amid Factory Gains (BBG)
• Yellen’s Fed Resigned to Diminished Growth Expectations (BBG)
• Junket Figure’s Disappearance Shakes Macau’s Gambling Industry (WSJ)
• China tried to undermine economic report showing its ascendancy (WSJ)
• Liquidity Trap Hitting AAA Bonds Has ATP CEO Sounding Alarm (BBG)
• AstraZeneca Snubs Pfizer Approach That U.K. Won’t Block (BBG)
• Missing Jet Recordings May Have Been ‘Edited’ (NBC)
• RBS turns corner as first-quarter profit trebles (Reuters)
• Japan household spending hits four-decade high, wages key to outlook (RTRS) while Real Incomes Drop 3.3% in March, 6th straight decline
• First Million-Dollar Drug Near After Prices Double on Dozens of Treatments (BBG)
• How Canada’s Flirtation with a China Oil Market Soured (BBG)
• Retirement Investors Flock Back to Stocks (WSJ)
• SEC probing hedge funds’ bets on Herbalife (Reuters)
• White House study backs data-gathering (FT)

Overnight Media Digest

WSJ

* German Chancellor Angela Merkel will be carrying a clear message from Germany’s business lobby when she meets President Barack Obama at the White House to discuss the Ukraine crisis: No more sanctions on Russia. (r.reuters.com/qaj98v)

* Pfizer Inc and AstraZeneca have resumed talks about a trans-Atlantic merger of the two drug giants, after Pfizer sweetened the terms of an earlier takeover offer for its British rival. (r.reuters.com/jaj98v)

* Retirement investors are putting more money into stocks than they have since markets were slammed by the financial crisis six years ago. Meanwhile, large investors such as pension funds, banks and insurance companies are showing less appetite for risk. Demand for shares of newly public companies has weakened, and utilities, considered safe when economic growth isn’t robust, are the best-performing group this year. (r.reuters.com/vej98v)

* As Apple Inc and Samsung Electronics Co squabble in court over who copied whose phone features, the companies’ grip over the smartphone industry is slipping. The two companies account for nearly all smartphone hardware profits. But they are losing market share to Chinese rivals with lower-priced phones, particularly in developing nations. (r.reuters.com/hej98v)

* Mark Fields is set to take over as chief executive of Ford Motor Co on July 1, and he’ll face very different set of challenges than those the current boss, Alan Mulally, has tackled over the last eight years. (r.reuters.com/xej98v)

* The New York Stock Exchange agreed to settle allegations it broke rules designed to protect investors, the second such pact in less than two years as the top U.S. securities regulator tries to ratchet up the policing of stock markets. The Big Board, along with affiliated exchanges and a broker, agreed to pay $4.5 million to settle civil charges by the Securities and Exchange Commission that they “repeatedly” broke their own rules or failed to submit rules governing certain activities to the regulator. (r.reuters.com/jej98v)

* J. Crew is developing a new store format aimed at budget-conscious shoppers underscoring the difficulty apparel retailers have had in boosting sales without help from discounts. The new format is called J. Crew Mercantile and will feature merchandise and prices closer to what shoppers would find at J. Crew Factory, the retailer’s outlet stores, than what is available in its full-line stores. (r.reuters.com/rej98v)

* Exxon Mobil Corp is pushing ahead with its plans to drill in Russia’s Arctic seas – its biggest opportunity to discover untapped deposits of oil and gas – even though deteriorating relations between Moscow and Washington have increased the risks. (r.reuters.com/tej98v)

 

FT

U.S. drugmaker Pfizer Inc is planning to sweeten its 60 billion pound ($101.37 billion) takeover bid for AstraZeneca Plc hoping to increase pressure on its UK rival to enter talks to create the world’s biggest pharmaceuticals company.

The U.S. government has said business leaders who attend the St. Petersburg International Economic Forum in May are sending “an inappropriate message, given Russia’s behaviour” in Ukraine.

The two big U.S. credit card companies, Visa and MasterCard, have both warned about the impact of proposed legislation in Russia – a response to U.S. sanctions – that will increase the control of the Russian authorities over its payment systems.

Rolls-Royce Chief Executive John Rishton said he was “reasonably optimistic” about the sale of the company’s energy business to Siemens going through, in a deal expected to raise at least 900 million pounds.

Britain’s financial watchdog, the Financial Conduct Authority, has banned a former co-worker of UBS rogue trader Kweku Adoboli from working in the financial services industry.

 

NYT

* Seattle Mayor Ed Murray presented on Thursday what he described as an imperfect but workable plan to increase the city’s minimum wage to $15 an hour, more than twice the federal minimum wage and one of the highest anywhere in the nation, through a series of complex and phased-in stages. (http://ift.tt/1i0eYQk)

* The White House, hoping to move the national debate over privacy beyond the National Security Agency’s surveillance activities to the practices of companies like Google and Facebook, released a long-anticipated report on Thursday that recommends developing government limits on how private companies make use of the torrent of information they gather from their customers online. (http://ift.tt/RaQ6LA)

* Ares Management LP, a private equity and debt investing firm, is expected to have its debut on the New York Stock Exchange on Friday, becoming the seventh major private equity firm to tap the public markets. The initial public offering was priced conservatively Thursday evening, raising $345.7 million for Ares and a large shareholder, the Abu Dhabi Investment Authority. The shares priced at $19 each, below an expected range of $21 to $23, according to a person briefed on the matter. (http://ift.tt/RaQ6v6)

* Merck & Co Inc, the big health care company, is close to a deal to sell its consumer unit to Bayer AG for about $14 billion, a person briefed on the matter said on Thursday. (http://ift.tt/1i0f0aV)

* Three federal agencies and one billionaire hedge fund manager have placed Herbalife Ltd under the microscope, scrutinizing whether the diet-supplements company is a pyramid scheme. But Herbalife is not the only one under investigation. Some federal authorities are pursuing other inquiries that might expand the regulatory gaze from Herbalife to the traders who traffic in the company’s stock. (http://ift.tt/RaQ86c)

* The auction site eBay Inc has settled a federal antitrust case that accused it of having a secret deal with Intuit Inc not to try to hire each other’s employees. (http://ift.tt/1i0f0aZ)

 

Canada

THE GLOBE AND MAIL

* Ontario’s Liberal government is ramping up the province’s deficit with a big-spending budget designed to either forestall an election or pay off at the polls in the event of a snap vote. (http://ift.tt/RaQ8mK)

* Toronto Mayor Rob Ford, on a leave to seek professional treatment for his addiction issues, is facing a growing chorus of calls to resign from business leaders, political rivals and his council colleagues. (http://ift.tt/1i0f0b1)

Reports in the business section:

* SNC-Lavalin Group Inc is selling its Alberta electricity transmission company AltaLink for C$3.2 billion to Warren Buffett’s Berkshire Hathaway Inc, as it moves away from infrastructure investments and puts its resources into engineering and construction. (http://ift.tt/RaQ8mM)

NATIONAL POST

* The Liberal minority government of Ontario has delivered a budget packed with new spending and tax hikes for high-income earners while allowing this year’s deficit to balloon to C$12 billion, C$2 billion higher than predicted. (http://ift.tt/1i0f0b7)

* Liberal Party of Canada Leader Justin Trudeau’s credibility has again come under fire from a member of his own party, with new allegations that he is stacking the deck to help star candidates win local nomination battles. (http://ift.tt/RaQ71Y)

FINANCIAL POST

* Canadian auto sales rose to record levels in April with Ford Motor Co narrowly outselling its rival Chrysler Canada Inc last month. Overall auto sales increased 4 percent year over year in Canada last month to 178,703 units, up 2 percent from the previous record set for April in 2008, according to figures collected by DesRosiers Automotive Consultants. (http://ift.tt/1i0f0bd)

* Canadian engineering giant SNC-Lavalin Group Inc is selling its entire stake in Alberta electricity transmission company Altalink for about C$3.2 billion to Warren Buffett’s Berkshire Hathaway Inc in a deal priced far beyond what the market had been expecting. (http://ift.tt/RaQ8D4)

 

Britain

The Telegraph

PFIZER MULLS HIGHER BID FOR ASTRAZENECA

Pfizer Inc is mulling a bid in excess of 63 billion pounds ($106.44 billion) for its smaller British rival AstraZeneca Plc, according to reports. (http://ift.tt/1pUPVUo)

SCOTTISH ‘YES’ VOTE COULD IMPROVE UK CREDIT, SAYS MOODY’S

Britain could end up with a better credit rating if Scotland votes for independence, with a “yes” providing the catalyst for an upgrade of the remaining UK’s debt, according to Moody’s. (http://ift.tt/1pUPY2w)

‘DANGEROUS’ TO IGNORE HOUSE PRICE BOOM, WARNS BOE DEPUTY

Surging house prices pose the single biggest threat to UK financial stability, the deputy governor of the Bank of England has warned. (http://ift.tt/1o8u3QW)

The Guardian

ELECTORAL COMMISSION VOIDS CBI LISTING AS NO CAMPAIGNER IN SCOTLAND VOTE

The Electoral Commission has nullified the Confederation of British Industry’s controversial registration as a no campaigner in the Scottish independence referendum, after ruling that the application was made by the wrong CBI official. (http://ift.tt/1o8u735)

FAT FACE AND PIZZAEXPRESS UP FOR AUCTION AS FIRMS TEST BUYERS’ APPETITES

Fat Face and PizzaExpress are the latest consumer brands to go under the hammer as private equity firms look to cash in on rising consumer confidence and buoyant financial markets. (http://ift.tt/1o8u3R0)

The Times

ROLLS CONFIDENT OF RETURN TO GROWTH

Rolls-Royce insisted yesterday that it would not be knocked off course despite a surging pound and a 30 million pound charge to fix a product defect. (http://ift.tt/1pUPVUx)

HENDERSON INVESTORS IN REVOLT OVER CHIEF’S PAY

This year’s bout of shareholder revolts over pay appeared to escalate yesterday after Henderson Group was given a bruising in the wake of a 4.5 million pound annual payout for Andrew Formica, its chief executive. (http://ift.tt/1pUPY2J)

The Independent

POUND LEAPS AFTER SURGE IN MANUFACTURING OUTPUT

The latest stunning evidence of a UK manufacturing revival sent the pound surging to a five-year high yesterday as the City upped its bets on early interest rate rises. (http://ift.tt/1pUPY2L)

HERITAGE OIL FOUNDER SELLS TO QATARI SHEIKH IN 1 BLN STG DEAL

The former prime minister of Qatar is buying Heritage Oil in a deal that values the explorer founded by the former mercenary Tony Buckingham at nearly 1 billion pounds. (http://ift.tt/1o8u47i)

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Change in nonfarm payrolls for April at 8:30–consensus 215K
Unemployment rate for April at 8:30–consensus 6.6%
New York ISM for April at 9:45–consensus 54.0
Factory orders for March at 10:00–consensus up 1.4%

ANALYST RESEARCH

Upgrades

AmTrust Financial (AFSI) upgraded to Buy from Neutral at Compass Point
Aruba Networks (ARUN) upgraded to Outperform from Perform at Oppenheimer
Avanir (AVNR) upgraded to Buy from Neutral at Mizuho
Beazer Homes (BZH) upgraded to Buy from Neutral at Compass Point
Constant Contact (CTCT) upgraded to Outperform from Neutral at RW Baird
Dynegy (DYN) upgraded to Strong Buy from Buy at ISI Group
EP Energy (EPE) upgraded to Buy from Neutral at Mizuho
Endo (ENDP) upgraded to Overweight from Equal Weight at Morgan Stanley
Evercore Partners (EVR) upgraded to Buy from Neutral at UBS
General Dynamics (GD) upgraded to Neutral from Sell at Goldman
InvenSense (INVN) upgraded to Buy from Hold at Needham
Kennametal (KMT) upgraded to Outperform from Market Perform at Wells Fargo
LinkedIn (LNKD) upgraded to Buy from Neutral at UBS
Masco (MAS) upgraded to Neutral from Sell at Goldman
Masco (MAS) upgraded to Strong Buy from Market Perform at Raymond James
Maxwell (MXWL) upgraded to Buy from Neutral at Roth Capital
Mercer (MERC) upgraded to Outperform from Market Perform at Raymond James
Mohawk (MHK) upgraded to Outperform from Market Perform at Raymond James
Novartis (NVS) upgraded to Buy from Hold at Jefferies
OpenTable (OPEN) upgraded to Buy from Neutral at BofA/Merrill
Oracle (ORCL) upgraded to Buy from Hold at Societe Generale
Piedmont Office Realty (PDM) upgraded to Hold from Sell at Stifel
Texas Instruments (TXN) upgraded to Neutral from Reduce at Nomura
United Microelectronics (UMC) upgraded to Neutral from Underperform at BofA/Merrill
Wynn Resorts (WYNN) upgraded to Buy from Neutral at Sterne Agee

Downgrades

AXIS Capital (AXS) downgraded to Underperform from Market Perform at BMO Capital
Avon Products (AVP) downgraded to Neutral from Buy at BTIG
BNP Paribas (BNPQY) downgraded to Neutral from Outperform at Credit Suisse
Broadcom (BRCM) downgraded to Neutral from Buy at Nomura
Cabot Oil & Gas (COG) downgraded to Market Perform from Outperform at Bernstein
DCT Industrial (DCT) downgraded to Neutral from Buy at ISI Group
DirecTV (DTV) downgraded to Neutral from Buy at Citigroup
Oclaro (OCLR) downgraded to Neutral from Buy at B. Riley
PSEG (PEG) downgraded to Sector Perform from Outperform at RBC Capital
Procera Networks (PKT) downgraded to Sector Perform from Outperform at Pacific Crest
United Microelectronics (UMC) downgraded to Neutral from Buy at UBS
Vocera (VCRA) downgraded to Neutral from Overweight at JPMorgan
Wisconsin Energy (WEC) downgraded to Neutral from Buy at ISI Group

Initiations

GAIN Capital (GCAP) initiated with an Outperform at Keefe Bruyette
Gastar Exploration (GST) initiated with a Buy at Wunderlich
Gran Tierra (GTE) initiated with a Neutral at Goldman
Navient (NAVI) initiated with an Equalweight at Barclays
Navient (NAVI) initiated with an Outperform at Keefe Bruyette

COMPANY NEWS

Pfizer (PFE) confirmed delivery of increased offer of $84.47 per share to AstraZeneca (AZN)
AstraZeneca (AZN) rejected proposal from Pfizer (PFE) as ‘substantially’ undervalued
LinkedIn (LNKD) guided to FY14 revenues that were lower than analysts’ current forecasts. The company said it has no plans for a significant increase in China investment
Berry Plastics (BERY) CEO said business will improve in coming quarters
Verizon (VZ) said in a regulatory filing that it believes it would be “perverse and unjust” for the FCC to adopt rules that would “subsidize” companies like T-Mobile (TMUS) and Sprint (S) by allowing them to bid on airwaves set aside for smaller firms
InterContinental Hotels (IHG) announced a $750M special dividend
Royal Bank of Scotland (RBS) said on track to achieve capital targets

EARNINGS

Companies that beat consensus earnings expectations last night and today include:

Newell Rubbermaid (NWL), Hill-Rom (HRC), Alliant Energy (LNT), Dresser-Rand (DRC), Alon USA Energy (ALJ), Alon USA Partners (ALDW), XL Group (XL), MasTec (MTZ), Territorial Bancorp (TBNK), Black Hills (BKH), OpenTable (OPEN), Scansource (SCSC), Sequenom (SQNM), Northeast Utilities (NU), QLogic (QLGC), eHealth (EHTH), Chegg (CHGG), HCI Group (HCI), Bottomline Technologies (EPAY), Autobytel (ABTL), TeleCommunication Systems (TSYS), Mitek Systems (MITK), BioMarin (BMRN), Seattle Genetics (SGEN), Westport (WPRT), Ellie Mae (ELLI), Impax (IPXL), American Vanguard (AVD), Universal Electronics (UEIC), Audience (ADNC), Nutrisystem (NTRI), Tempur Sealy (TPX), Constant Contact (CTCT), Southwestern Energy (SWN), Akamai (AKAM), ON Semiconductor (ONNN), GigOptix (GIG), BJ’s Restaurants (BJRI), PMC-Sierra (PMCS), MICROS (MCRS), InterMune (ITMN), Federated National (FNHC), Web.com (WWWW), Maxwell (MXWL), DigitalGlobe (DGI), Addus HomeCare (ADUS), SBA Communications (SBAC), Outerwall (OUTR), Outerwall (OUTR), Vertex (VRTX), Skullcandy (SKUL), Omnicell (OMCL), Western Union (WU), A10 Networks (ATEN), Wynn Resorts (WYNN), LinkedIn (LNKD), FleetCor (FLT), Affymetrix (AFFX), Expedia (EXPE)

Companies that missed consensus earnings expectations include:

Northwest Natural Gas (NWN), Exelis (XLS), Berry Plastics (BERY), Cheniere Energy (LNG), Integrys Energy (TEG), Eldorado Gold (EGO), Oil States (OIS), Frank’s International (FI), Sierra Wireless (SWIR), Golden Minerals (AUMN), Southside Bancshares (SBSI), Multi-Fineline (MFLX), Bill Barrett (BBG), Manitowoc (MTW), Idenix (IDIX), Computer Programs (CPSI), LRR Energy (LRE), Medley Capital (MCC), Exelixis (EXEL), XPO Logistics (XPO), InvenSense (INVN), Insight Enterprises (NSIT), KEYW (KEYW), Entropic (ENTR), Kodiak Oil & Gas (KOG), Fluor (FLR), Actuate (BIRT), Oncothyreon (ONTY), Standard Pacific (SPF), ServiceSource (SREV), Rubicon (RBCN), RadiSys (RSYS), Procera Networks (PKT), DaVita (DVA), Bally Technologies (BYI), Cornerstone OnDemand (CSOD), DexCom (DXCM), FBL Financial (FFG), FBL Financial (FFG), Einstein Noah (BAGL)

Companies that matched consensus earnings expectations include:
Cheniere Energy Partners (CQH), Immersion (IMMR), Select Medical (SEM), Geron (GERN), SciQuest (SQI), Natural Grocers (NGVC), The Inventure Group (SNAK), First NBC Bank (NBCB), Callidus Software (CALD), Cerus (CERS)

NEWSPAPERS/WEBSITES

U.S. probing Herbalife (HLF) traders, NY Times says
DirecTV (DTV) likely open to a sale, WSJ reports (T)
Regulators against Sprint (S)-T-Mobile (TMUS) deal, sources say, NY Post reports
General Motors (GM) recalls over 50,000 Cadillac SRX SUVs, Detroit Free Press reports
Under Armour (UA) suits part of U.S. speedskating issues in Sochi, WSJ says
New York AG eyeing exchanges in high frequency probe (ICE, NDAQ), Reuters reports

SYNDICATE

Aldexa (ALDX) 1.5M share IPO priced at $8.00
Ares Capital (ARES) 11.4M share IPO priced at $19.00
Chimerix (CMRX) files $200M mixed securities shelf
EQT Midstream Partners (EQM) 10.75M share Secondary priced at $75.75
HD Supply (HDS) 30M share Secondary priced at $26.00
Immunomedics (IMMU) $30M share Spot Secondary; price range $3.35-$3.45
Investors Bancorp (ISBC) 219.581M stock offering priced at $10.00
Media General (MEG) 4.21M share Secondary priced at $15.50
Papa Murphy’s (FRSH) 5.833M share IPO priced at $11.00
Tetraphase (TTPH) files $125M mixed securities shelf

via Zero Hedge http://ift.tt/RaQz0l Tyler Durden

Another day where the taken for granted overnight futures levitation is missing (despite a rather rampy USDJPY), indicates that algos are likely waiting for guidance from today’s NFP data (buy if beat, buy more if miss) before committing monopoly money. The consensus for today’s NFP is 218K, (up from 192K), although as Goldman notes the whisper number is as high as 240K. As DB says, “the honest truth is that markets are in one giant holding pattern at the moment with volatility and conviction low.” One evidence of this is the AAII weekly sentiment indicator which shows the % bullish, bearish or neutral on the US stock market for the next six months. This week the neutral indicator (40.78) is at its highest level for 9 years. No wonder volumes and volatility are low if investors are lacking a directional bias. Yesterday’s reaction to the ISM manufacturing was interesting. Though the headline number came in firmer than expected (54.9 vs 54.3 expected) and more than 1pt higher than last month’s reading of 53.7, the UST and equity reaction suggested that the data had actually surprised to the downside.

In Europe muted price action observed across various asset classes today as market participants come back from May Day holiday and wait for US algos to take charge. In terms of macroeconomic releases, this morning’s release of lower than expected UK Construction PMI failed to result in a meaningful uptick by Gilts, which were weighed on by the unwind of Thursday’s pricing of Wellcome Trust’s GBP 400mln 45-year deal. Limited reaction to EU based PMIs (Italian Manufacturing PMI 54.0 vs. Exp. 52.9, French Manufacturing PMI 51.2 vs. Exp. 50.9, German Manufacturing PMI 54.1 vs. Exp. 54.2 and Eurozone Manufacturing PMI 53.4 vs. Exp. 53.3).

Looking at how Asia is trading this morning, the tone has been generally cautious, with volumes lower across the regions as many participants remain out of the office due to the May Day holidays yesterday, and looming golden week holidays in Japan. The Nikkei (-0.4%), KOSPI (-0.1%) are both lower, as is copper futures (-0.1%). Policy easing appears to be a more remote possibility in both China and Japan based on the latest comments from both country’s state leaders. In an article published late yesterday, Chinese Premier Li again voiced his opposition to short term stimulus policies to boost growth, instead preferring to pursue deeper economic reforms (South China Morning Post). In Japan, Prime Minister Abe said that the recent sales tax hike hasn’t hurt consumption as much as feared (Reuters), perhaps lessening hopes of incremental BoJ easing in the short term. A number of Japanese chain stores said that the sales drop was smaller in April than the one that followed the sales tax hike in 1997 (Japan Times). More than 80% of the Japan’s key retailers believe that the drop in demand following the April 1st tax hike will fade away by June, according to a Nikkei survey. More than seven out of 10 respondents said sales for April met or beat expectations (Nikkei).

 

Bulletin headline summary from Bloomberg and RanSquawk

• Muted price action and light volumes observed in Europe this morning across various asset classes, with stocks seen mixed (Eurostoxx 50, -0.22%), as market participants await the release of the latest jobs report by the BLS.
• GBP underperformed after UK Construction PMI data failed to meet expectations and AstraZeneca’s board rejected Pfizer’s revised bid.
• Treasuries decline, yields 5Y and longer higher by ~1bps before report forecast to show U.S.
  economy added 218k jobs in April while unemployment rate declined to 6.6% from 6.7%.
• Consensus of forecasts revised/made after better than forecast ADP has risen to 225k, RBC’s Adam Cole wrote, signaling downside surprise to have bigger market impact than upside surprise
• The Yellen Fed has resigned itself to diminished growth expectations, stressing the importance of preventing expansion from faltering rather than saying growth must accelerate from 2%-2.5% pace it has averaged since the recession ended
• Ukraine sent armored vehicles and artillery to retake Slovyansk, a pro-separatist stronghold, defying Putin’s demand to pull back troops with Russia’s army massed across the border
• The euro-area unemployment rate held near a record, even as manufacturing grew at the fastest pace in three months, adding to mixed signals about the 18-nation currency bloc’s recovery
• Sovereign yields mostly lower. Nikkei -0.2%; Shanghai closed for holiday. European equity markets mixed, U.S. stock futures rise. WTI crude, gold and copper gain

US Event Calendar

• 8:30am: Change in Nonfarm Payrolls, April, est. 218k (prior 192k)
  • Change in Private Payrolls, April, est. 215k (prior 192k)
  • Change in Manufacturing Payrolls, April, est. 8k (prior -1k)
  • Unemployment Rate, April, est. 6.6% (prior 6.7%)
  • Average Hourly Earnings m/m, April, est. 0.2% (prior 0.0%)
  • Average Hourly Earnings y/y, April, est. 2.1% (prior 2.1%)
  • Average Weekly Hours All Employees, April, est. 34.5 (prior 34.5)
  • Change in Household Employment, April, est. 250k (prior 476k)
  • Underemployment Rate, April (prior 12.7%)
  • Labor Force Participation Rate, April (prior 63.2%)
• 9:45am: ISM New York, April, est. 54 (prior 52)
• 10:00am: Factory Orders, March, est. 1.5% (prior 1.6%)

EU & UK Headlines

Muted price action observed across various asset classes today as market participants await the release of the latest jobs report by the BLS. In terms of macroeconomic releases, this morning’s release of lower than expected UK Construction PMI failed to result in a meaningful uptick by Gilts, which were weighed on by the unwind of Thursday’s pricing of Wellcome Trust’s GBP 400mln 45-year deal. Limited reaction to EU based PMIs (Italian Manufacturing PMI 54.0 vs. Exp. 52.9, French Manufacturing PMI 51.2 vs. Exp. 50.9, German Manufacturing PMI 54.1 vs. Exp. 54.2 and Eurozone Manufacturing PMI 53.4 vs. Exp. 53.3).

Equities

Heading into the North American open stocks in Europe are seen mixed, as market participants await the release of the latest NFP jobs report by the BLS due later on in the session. In terms of notable stock movers, RBS shares surged in London after the bank posted better than expected operating profit, while also noting that it sees modest increases in NIM for rest of year. Also of note, AstraZeneca board rejected Pfizer’s revised GBP 50.00 per share bid, stating that the offer undervalues the company. Focus will now be on earnings by Chevron due out later today.

FX

Combination of weaker than expected UK Construction PMI data, together with reports that AstraZeneca board has rejected Pfizer’s revised GBP 50.00 per share bid meant that GBP/USD underperformed its peers. At the same time, this enabled EUR/GBP to recover off 0.8200 level and advance towards its 10DMA line.

Commodities

Reports that Libya’s Zueitina Port has received first crude tanker has failed to weigh on price, which instead were largely driven by the renewed fears surrounding the stand-off between Russia and Ukraine. Latest reports indicate that that two Ukrainian army helicopters were shot-down by self-defence forces in Slavyansk, according to sources. This follows the Ukrainian army reportedly beginning a special operation against pro-autonomy activists in the area. Additionally, Ukraine’s interim PM said his country was entering its ‘most dangerous 10 days’ since independence.

* * *

DB’s Jim Reid summarizes the balance of overnight news

It’s hard to imagine that we won’t see a fairly strong payroll number today but the question is whether we see a strong enough number to suggest that the US economy will soon be on the path most economists expected at the start of 2014. The 3, 6 and 12 month average for payrolls is 178k, 188k and 187k respectively. Interestingly this would suggest that the weather impact on payrolls this year might only be around 10k/month if you think growth this year is the same as last. If you believe growth is structurally higher in 2014 then we probably do need to be averaging north of 200k consistently and we therefore need a catch-up soon. The street is at 215k today with our very own sunnyside-up Joe Lavorgna at 240k. Consensus is expecting the unemployment rate to drop 0.1ppt to 6.6% (DB is at 6.5%) which if correct would equal the postcrisis lows recorded in January 2014. The other thing worth looking out for is the participation rate (63.2% last month) which has been gradually ticking higher since bottoming in October 2013.

We probably are in a period where strong data would be a relief with the caveat that a number above 250k might shake Treasuries enough for risk to be concerned. So 200-250k might be the sweet spot for equities. 150-200k would probably help the grind slightly higher as yields would stay low and base rate hikes pushed out. A number below 150k seems unlikely today but if it occurs would probably start to put chinks in the armour of the bulls. The above is all very back of the envelope as revisions, the unemployment rate, the participation rate, and other one-off issues can all impact the interpretation of the headline. But it gives an idea of what might happen with a clean number.

The honest truth is that markets are in one giant holding pattern at the moment with volatility and conviction low. One evidence of this is the AAII weekly sentiment indicator which shows the % bullish, bearish or neutral on the US stock market for the next six months. This week the neutral indicator (40.78) is at its highest level for 9 years. No wonder volumes and volatility are low if investors are lacking a directional bias. Yesterday’s reaction to the ISM manufacturing was interesting. Though the headline number came in firmer than expected (54.9 vs 54.3 expected) and more than 1pt higher than last month’s reading of 53.7, the UST and equity reaction suggested that the data had actually surprised to the downside.

Indeed S&P500 futures fell 7.5 points and treasury yields rallied by about 5bp in the minutes after the ISM release. Perhaps markets had been conditioned to expect a strong number following the strength of the Chicago PMI, ADP (Wednesday) and consumer spending reports earlier. Or perhaps it was the miss on the ISM Prices Paid index (56.5 vs 59.5 expected) which fell 2.5points MoM, with low inflation remaining a topical issue. The disappointment on yesterday’s construction spending number (0.2% vs 0.5% expected) could have also explained the market wobble. Looking at the ISM report in more detail, the improvement in the headline was driven by employment (54.7 vs. 51.1 prev) and supplier deliveries (55.9 vs. 54.0). Comments from the Institute for Supply Management indicated that some of the improvement in the former may be due to a catch-up from earlier weather-related weakness.

Coming back to the treasury market, yesterday’s post-ISM rally brought 10yr yields below the 2.60% mark for a brief period yesterday. It eventually finished the  day back above this level, but we’re still firmly at the bottom of the last few months’ trading range. US 30yr yields fell to their lowest in around 10 months, and the 2s/30s curve flattened to its lowest level since June last year. In equities, the S&P500 (-0.01%) closed virtually unchanged with gains in the telco sector (largely M&A driven), offset by weakness in oil & gas following disappointing earnings announcement. Many EM markets were closed, but the announcement of the IMF loan for Ukraine did little to help Ukrainian bond yields which rose significantly. Overnight, there have been reports that Ukrainian military forces have launched a large scale operation in the town of Slaviansk (which lies between Kharkiv and Luhansk) to retake separatist-held areas (RT.com, Reuters). There have been reports of casualties on both sides. Outside of the macro data, M&A still is a key driving force for equities and the deal flow continued yesterday with news such as Pfizer planning to raise its bid for AstraZeneca and Bayer said to be talks with Merck to buy its consumer health unit. The final numbers for April showed that it was the busiest month for M&A in terms of volume since at least mid-2007 according to Bloomberg data. Despite the trend, the average premium paid by acquirers remains in line with historical averages (19-20%) suggesting at least there is some restraint being shown by corporate management. Whether it makes sense to be acquiring companies at near record stock prices is another matter.

Looking at how Asia is trading this morning, the tone has been generally cautious, with volumes lower across the regions as many participants remain out of the office due to the May Day holidays yesterday, and looming golden week holidays in Japan. The Nikkei (-0.4%), KOSPI (-0.1%) are both lower, as is copper futures (-0.1%). Policy easing appears to be a more remote possibility in both China and Japan based on the latest comments from both country’s state leaders. In an article published late yesterday, Chinese Premier Li again voiced his opposition to short term stimulus policies to boost growth, instead preferring to pursue deeper economic reforms (South China Morning Post). In Japan, Prime Minister Abe said that the recent sales tax hike hasn’t hurt consumption as much as feared (Reuters), perhaps lessening hopes of incremental BoJ easing in the short term. A number of Japanese chain stores said that the sales drop was smaller in April than the one that followed the sales tax hike in 1997 (Japan Times). More than 80% of the Japan’s key retailers believe that the drop in demand following the April 1st tax hike will fade away by June, according to a Nikkei survey. More than seven out of 10 respondents said sales for April met or beat expectations (Nikkei).

Turning to the day ahead, the final Euroarea PMIs will be released this morning together with the first readings for the periphery. The US payroll numbers are due 1:30pm London time which will be followed by US factors orders (consensus +1.5% MoM). China’s official services PMI will be released on Saturday.

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After a few days of extended verbal foreplay, it was only a matter of time before Ukraine finally snapped and resumed a military operation to regain the lost cities in the east, especially once the warmongering IMF made it explicitly clear that should Ukraine lose control of pro-Russian controlled cities the $17 billion bailout package would be lost too. Sure enough, early this morning Kiev launched a military operation to regain control of the pro-Russian separatist stronghold of Slovyansk, overrunning numerous roadblocks and surrounding the city, officials said, but meeting stiff resistance from militants who managed to shoot down at least one helicopter.

Pro-Russian soldier with a grenade launcher manning a checkpoint

Ukrainian soldiers stand guard at a Ukrainian checkpoint near the eastern town of Slaviansk May 2, 2014.
Credit: REUTERS/Baz Ratner

 A pro-Russian separatist stands guard on top of an armoured personnel carrier in the town of Slaviansk in eastern Ukraine May 2, 2014.
Credit: REUTERS/Baz Ratner

Ukrainian soldiers stand guard at a Ukrainian checkpoint near the eastern town of Slaviansk May 2, 2014.
Credit: REUTERS/Baz Ratner

A Ukrainian military helicopter flies near a Ukrainian checkpoint near the town of Slaviansk in eastern Ukraine May 2, 2014.
Credit: REUTERS/Baz Ratner

According to WSJ reporters, Ukraine’s Interior Minister Arsen Avakov said militant fighters fought back against the advancing Ukrainian units with heavy weaponry, including grenade launchers and shoulder-fired surface-to-air missiles. There was no immediate sign that Ukraine’s forces were moving further into the city.

Separatist leaders claimed to have shot down four Ukrainian helicopters in the clash, Russian state media reported, but Ukraine’s defense ministry said two helicopters had been shot down and that two soldiers were killed and several more wounded. Ukraine’s state security service confirmed only one Mi-24 chopper was taken down, with one pilot killed and the other taken captive. A spokeswoman for the separatists said one person was killed and another wounded on their side.

Video clip of Ukraine army helicopters shot down in Slavyansk

Reuters adds that a third helicopter, an Mi-8 transport aircraft, was also hit and a serviceman wounded, the Defence Ministry said. The SBU security service said this helicopter was carrying medics.

Yet even this appears merely a preview of the event to come, which on request of western powers, may wait until after the market is closed on Friday afternoon.

Eight hours after Reuters journalists in Slaviansk heard shooting break out and saw one helicopter opening fire, the city of 130,000 was quiet, with shops shut and armed separatists in control of the streets while Ukrainian forces in armored vehicles had taken up positions on the outskirts of town.

 

Ukrainian officials said troops overran rebel checkpoints around the city in an operation launched before dawn and it was now “tightly encircled”. They pointed to the heavy fire that hit the helicopters as proof of the presence of Russian forces, despite repeated denials from Moscow that it has troops on the ground or is controlling the uprising.

And then the Russian warnings started:

Putin’s spokesman heaped blame on the Ukrainian government, which took power two months ago after pro-Western protests forced the Kremlin-backed elected president to flee to Russia. Noting that Putin had warned before that any “punitive operation” would be a “criminal act”, Dmitry Peskov told Russian news agencies that this was what had now happened at Slaviansk, where separatists seeking independence or annexation by Moscow are holding seven foreign European military observers.

 

Saying Putin had sent an envoy, Vladimir Lukin, to southeast Ukraine to negotiate their release, Peskov said that Lukin had not been heard from since the Ukrainian operation began.

 

“While Russia is making efforts to de-escalate and settle the conflict, the Kiev regime has turned to firing on civilian towns with military aircraft and has begun a punitive operation, effectively destroying the last hope of survival for the Geneva accord,” he said, referring to a deal on April 17 signed by Russia, Ukraine, the United States and the European Union.

Reuters is also reporting that Russian President Vladimir Putin’s spokesman said on Friday that Kiev would be held responsible “first of all by its people” for its decision to launch a “punitive operation” in south-east Ukraine.

Kremlin spokesman Dmitry Peskov, speaking on Rossiya 24 television, called on Europe and the United States to give their assessment of the situation in the area, where “aviation is being used against the population” and urged Kiev to think again about its actions, according to the report.

About as clear a warning as one can get that Russia is about to cross the border in a “peacekeeping” mission and get involved as well: hardly the de-escalation the priced to global pax Americana, and climatic perfection rigged and manipulated markets desire.

For now, however, the eye of the military hurricane may be passing over Slavyansk:

Reuters journalists in the city heard shooting from shortly after 4 a.m. (9 p.m. EDT Thursday) and saw a military helicopter open fire. Towards midday, the city was quiet, shops were shut but rebel gunmen appeared to be still in tight control of the streets. Ukrainian troops were at a halt in the suburbs.

 

The SBU said the deadly use by the separatists of shoulder-launched anti-aircraft missiles was evidence that “trained, highly qualified foreign military specialists” were operating in the area “and not local civilians, as the Russian government says, armed only with guns taken from hunting stores”.

 

Armed groups seeking union with Russia have seized a number of government buildings in towns in eastern Ukraine. The action in Slaviansk appeared to mark the heaviest military response by Kiev since it tightened a cordon around the city a week ago.

 

“They wanted to carry out some small-scale tactical operations just to scare the people,” said a militant manning a checkpoint leading to the army-held airfield. “But so far things have not worked out the way they wanted.”

The irony of course is that East Ukraine is for all intents and purposes lost to Kiev, and with the IMF ultimatum hanging over the acting government’s head, a civil was is now all but inevitable, a war which will most certainly end up involving both Russia and NATO eventually:

“Shells came into my garden,” said one local man, Gennady. “They say that they have come to defend us. But who from?” he said of the Ukrainian forces. “Civilians must stop them.”  On the town’s southern outskirts, eight Ukrainian armored personnel carriers cut off the road but faced a cordon two deep of local residents shouting at them to go home.

So while we await the final escalation, here is some media coverage of what really happened.

Amateur footage from a resident in Slavansk shows a plume of smoke rising from the city on Friday morning.

Pictures have emerged in social media of a wounded helicopter pilot being helped into an ambulance by self-defense forces.

???????? ?????? ????????? ???????? ??????.???????? ??????, ?????? ??? ? ????????.@sashakots
#????????.#?????? #????. http://ift.tt/1pVV8LR

— ??????????-LIVE (@NovorossiyaLive) May 2, 2014

helicopter just landed, dispatched another 20 troops and left againm Just outsdie slavyansk http://ift.tt/1pVVa6r

— Kate Parkinson (@katecctvnews) May 2, 2014

Former anti govt militia checkpoint outside Slavyansk taken over by Ukr militiary http://ift.tt/1pVVa6u

— Kate Parkinson (@katecctvnews) May 2, 2014

Ukrainian armored vehicles presses people in Yasnogorka

Helicopters above Slavyansk:

#Slovyansk: 4 #Russian MPADS bargain shoppers held over 2 downed #Ukrainian helos. #Ukraine #Sloviansk #Slavyansk http://ift.tt/1hjMmxQ

— Ukrainian Updates (@Ukroblogger) May 2, 2014

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Just like everything else, it’s the chicken and the egg conundrum. Which came first? Was it the professional society set-up that led to women being paid less than men for the same job and influencing the way parents treat their children at home, or was it the fact that girls get paid less than boys around the house for doing chores that meant that the same scheme of things was reproduced in society in the workplace. We’ll probably never know.

But, what we do know is that the gender gap starts way before the people step into the executive shoes and don the accoutrements of the professional world, according to the research carried out on elementary school children by ThinkProgress.

The statistics show that we are all in the act of perpetuating a gender gap for pay and it starts with allowances given by parents to their children.

• 67% of boys aged between 8 and 18 years of age in the USA get given an allowance by their parents.
• That figure is much lower for girls (only 59%) since they are expected to work for nothing. 
• Boys might well participate much less in household chores according to the research, but when they do do something in the house, they get paid much more than the girls. 
• 52% of boys get some form of financial gain for doing something around the house, while only 45% of girls get given money in return. 
• Girls end up doing more household chores than boys (and get paid nothing or less). 
• Averages show that boys spend 2.1 hours per week on household chores, bringing in $48.
• Girls do 2.7 hours of work in the house and get $45 on average. 
• Does this actually explain why 75% of boys use a financial tool to manage their budgets on a smartphone device (while only 71% of girls do so)? 
• Boys (43%) also believe that they will be earning more than $35,000 a year when they graduate from college in their first job. 
• That figure is much lower for girls standing at 35% who believe that they will earn over $35,000.

Girls are less likely to get given money, making sure that it’s the boys that learn how to run the finances. The boys also learn that we live in a world where everything has a price and that we shouldn’t work for nothing. We would find it hard to believe that any parent would make that sort of distinction between girls and boys, but it’s more likely to be the unconscious bias that we see every day in society. Even women are at fault by reproducing the way things run.

Let’s stop believing that the boys know how to handle money. The banks have proved that one wrong already on many an occasion. Lehman Brothers should never have been run by the men! Let’s stop believing that women are innocent and need protection from the fire and brimstone world of the financial markets.

Strange really that women get paid less and have to work harder and yet growing numbers of people are relying on the salary of women in the household as the sole earner. The Pew Research Center reported last year that 40% of mothers were the sole or primary source of income in households across the country, with the figure tripling since 1960. 66% of those women were single mothers and 37% were married and earning a higher wage than their spouses. Single mothers have just 4% of the wealth of single fathers (just $100 in comparison with $25,300).

Although, maybe one day we might just get to the bottom of the story as to who is at fault for women being paid less than men for the same work. Some believe that we got tot the bottom of the chicken and the egg story since the egg shell relies on the protein only to be found in the chicken’s body (OC-17), thus proving that if the egg shell cannot come into being with that protein and that protein is only to be found in the chicken, then the chicken came first. So what is it in the world that is responsible for women being paid less than men? Is it the family that perpetuates the salary gap that will be reproduced later in life or is it the professional set-up for women that leads parents to pay their children differently?

Whatever it is, women are getting a rough deal in the USA both at home and at work.

Originally posted: Male-Female Wage Disparity Begins at Home

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While the US is quick to demand the rest of the world turn its economic back on Russia – especially the Europeans, it appears they are discovering – just as Putin warned, the world is considerably more inter-dependent than they thought. Following Chuck Hagel’s orders to review the Air Force reliance on Russian rocket engines used to launch US military satellites, Bloomberg reports the Pentagon admits it “has no great solution” to reduce its dependence on the Russian-made engine.

 

As Bloomberg reports,    

The Pentagon has no “great solution” to reduce its dependence on a Russian-made engine that powers the rocket used to launch U.S. military satellites, the Defense Department’s top weapons buyer said.

 

“We don’t have a great solution,” Frank Kendall, the undersecretary of defense for acquisition, said yesterday after testifying before a Senate committee. “We haven’t made any decisions yet.”

 

Defense Secretary Chuck Hagel ordered the Air Force to review its reliance on the rocket engine after tensions over Russia’s takeover of Ukraine’s Crimea region prompted questions from lawmakers about that long-time supply connection.

 

United Launch Alliance LLC, a partnership of Lockheed Martin Corp. and Boeing Co., uses the Russian-made RD-180 engine on Atlas V rockets.

As Putin warned – apparently correctly…

“The US is certainly one of the world’s leaders. At some point it seemed that it was the only leader and a uni-polar system was in place. Today it appears that is not the case. Everything in the world is interdependent and once you try to punish someone, in the end you will cut off your nose to spite your face,” he said.

via Zero Hedge http://ift.tt/1iJbA8k Tyler Durden

Journalism and investment research have a lot in common, notes ConvergEx's Nick Colas; after all, both essentially ask the customer to freely part with three scarce resources: time, attention and money. It’s been a tough decade or two for both the newsroom and the research department in that effort, but at least one prominent venture capitalist, Marc Andreessen, thinks there is a future for the news business, however, due to a rising middle class in emerging markets and mobile Internet distribution. While this audience may not (yet/ever) be hankering to read Buy-Sell-Hold reports on their smartphones, Andreessen’s recently published 8-fold strategy for journalism has lessons for investment research as well. The big takeaway: sell-side research needs to change a lot – and quickly – to survive as anything more than an advertising vehicle for brokerage firms.

Via ConvergEx's Nick Colas,
 
Early on in my sell-side brokerage career – this would have been 1991 – I got a useful piece of advice from the firm’s Machinery analyst.  He was a long time veteran of the business and had been on the very first Institutional Investor All-Star Analyst list back in the 1970s.  To the best of my knowledge, he never fell off this roster during his 30-year career, a unique achievement in a highly competitive business.  When he spoke, all the young pups listened.
 
“You want your initial company reports to be so thick that when the client gets them in the mail and immediately throws them away, they are so heavy that they push all the other competitors’ reports they’ve discarded down to the bottom of the trashcan.”  His message, while disturbing, had the ring of truth.  The client was never going to read your report.  Not most of them, anyway.  But they would remember that you were the analyst who had penned that 100-page report they got, because of its impressive scale and heft.  When you rolled by on a marketing trip or a salesperson made your call, they’d think: “Yeah…   I remember that analyst’s name… I got his War and Peace report a while back…  He must know SOMETHING worthwhile in all that writing.”
 
Technology and competition have changed the role of the brokerage analyst, not to mention a few self-inflicted wounds along the way.  A few points here:

No one prints and mails reports much any more – everything goes by email.  Publishing and postage budgets used to run into the millions of dollars at most large brokerage firms in the 1990s.

 

Clogging up the client’s inbox with a hefty file is actually a big no-no now.  Frequency of publication matter more, which is why you get one of these missives +200 days a year.

 

Analysts stopped being one-stop-shop experts right around the time Reg FD came around, as they lost their unique position in the company-to-investor flow of information.  Companies used to call me first when they were going to miss a quarter, and I let the world know.  Now, expert networks fill an important piece of the investment mosaic, not to mention satellites for hire, Twitter feed analysis and other tech-enabled content.   And companies do their own public pre-releases of quarterly results.

 

The Internet is a lively agora of investment information, full of entertaining and thought provoking content.  And much of it is free.  There was no zerohedge back in the day.  And if you wanted to see a great CNBC interview, you had to be in front of the TV – there was no Web-enabled video library like today.

 

Analysts did themselves no favors in the 1990s, putting out recommendations for retail clients at the height of the dot com bubble that had the intellectual heft of a “Real Housewives” television show.  That malfeasance forced a stricter Chinese Wall around the research department, limiting pay and creating a diaspora of many good – and honest – analysts to the buyside. A few of the old lions remain, and a few new ones manage to come up through the ranks. But “Peak Analyst” happened about two decades ago.

In many ways, this narrative arc resembles the changes in the news business over the same period of time.  The Internet cut out the newsstand and home delivery as the exclusive methods of distribution, replacing the highly profitable full-page print ad with banners for tooth whitening and cut rate mortgages.  Narcissistic content like Facebook and other social media soaks up time, shifting public attention from news to keeping up with the Joneses, in every sense of those words.  Craigslist took away the highly profitable classifieds business.  And new competition from web-only news services fulfilled the classic “Innovator’s Dilemma” paradigm by entering the market with highly efficient Internet-optimized business models.
 
One prominent venture capitalist, Marc Andreessen, recently penned a piece entitled “The Future of the News Business” where he expressed tremendous optimism for the industry.  By his reckoning a rising middle class in emerging markets, paired with affordable mobile Internet access and devices equals the potential for explosive growth in demand for news content.  In developed markets, the Web has actually increased demand for news, just in a way that is ferociously hard to monetize.   Get the right business model, and news could once again be a highly profitable growth industry.
 
Andreessen lists 8 specific issues as a roadmap to this sea change, and the lessons here apply as much to investment research as they do journalism and the news business.  We’ve included the list here, with our thoughts about what it means for Wall Street as well as the newsroom. 

1. Advertising.   Andreessen calls the news industry out for all those “Crappy” dancing girl ads for mortgages on their websites.  Ad sales departments need to partner with companies that reinforce their corporate brands, not erode them.

 

In the investment world, money management businesses understand this very well.  They have begun to hire senior strategists of their own, in direct competition to the brokerage world.  These professionals go direct to the customer base with educational content, investment perspectives, and macro analysis.   Yes, it is ultimately advertising, but by controlling its quality and content these shops control their branding message.

 

2. Subscriptions.  This is where the rubber hits the road in the news business: are consumers willing to pay for it?  If not, then just relying on ad sales is a tough slog indeed.

 

This is also a perennial problem in selling brokerage research.  The classic model is to employ a motivated sales force and go for “Share of wallet” with institutional investors.   Tough game, that – and only more difficult now as these customers are increasingly used to finding their own differentiated sources of information.  Still, some of the best independent research we see has explicit pricing.  It is, therefore, possible.  And increasingly essential.

 

3. Premium Content.  Newspapers like The New York Times offer a limited number of free views before they demand payment.  That segments the market nicely and entices semi-frequent users to upgrade to a paid premium service.

 

Some of this exists in broker research currently.  Better customers get better service.  The more disciplined firms are more rigorous in keeping the gates up until the client pays more.  At the same time, it takes a good deal of intestinal fortitude to hold to this approach.  And just like point #2, it is an increasingly important discipline.

 

4. Conferences and Events.  There is a reason why sporting events still hold pricing power in the world of television: live must-see events draw viewer attention at a specific time.  Very little news content qualifies for this category, so hosting events with opinion leaders and other must-have content is a path to pulling money and attention from customers.

 

Wall Street research does this quite well, but there is always room for improvement.   Industry conferences are commonplace to the point of being largely interchangeable.  New content – issues like market structure are hot at the moment – is essential to holding customer attention.

 

5. Cross Media.  News flow can vector into video content, books, magazines, and other media.  Bloomberg is one good example, as is Yahoo! Finance.

 

Investment research is proceeding down this track, albeit slowly.  How many analysts have their own Twitter following?  Or write books?  Yes, there are some compliance restraints here, but the path forward is clear.  More points of distribution build brand and awareness.

 

6. Crowdfunding.  Andreessen cites the historically important but expensive area of investigative journalism as one ripe for independent funding.  Is global warming your cause celebre? Give $5 to a news website dedicated to the cause…

 

This is also an intriguing direction for investment research.  There are thousands of underfollowed public companies in the U.S., and multiples of that around the world.  Would you pay $100 to get access to better information on a small cap name, buying that content alongside a few hundred other investors?

 

7. Micropayments.  News organizations can tier access to their content along the Basic/Premium approach, but wouldn’t it be better to capture more of the consumer’s wallet by asking for $1 here and $0.50 there?  Current payment systems aren’t particularly friendly to small amounts due to their transaction costs, but Andreessen pitches bitcoin as an answer to that.

 

In the world of investment research, this could be a boon for providers with a broad range of content.  If I have to pay $10,000 for access to a broker’s entire suite of research, I may well pass.  But if I can pay for exactly what I want, I would be willing to shell out $100 a few times a year.  Yes, research providers may well balk at risking their $10,000 price point for fear of massive substitution to lower unbundled pricing. But if they don’t do it, someone else will.

 

8. Philanthropy.  There is a growing trend in journalism to not-for-profit enterprises.  Frontline on PBS is funded this way, with consistently first-rate programming.

 

The connection to stock research comes through socially-aware investing.  Investors, especially public and sovereign wealth funds, are increasingly aware of their societal roles in allocating capital.  They choose investments not just from financial analysis but also with an eye to favoring businesses that adopt and maintain progressive agendas.  That may fly in the face of classical finance, but it is clearly an important trend.  Bottom line: the next “Big Thing” in investment research could be a not-for-profit focused on issues like environmental, social or corporate governance. 

The upshot of all this is simple: the news business isn’t dead, and neither is investment research.  Yes, both have had their troubles and tribulations.   But the trends that have put a foot in the grave for both businesses can also lead them back to health.

via Zero Hedge http://ift.tt/PVuGBa Tyler Durden

Americans Turn Anti-War

The American people are now overwhelmingly opposed to more war in Ukraine, Syria, Iran and elsewhere.

A new Wall Street Journal/NBC poll shows:

Americans in large numbers want the U.S. to reduce its role in world affairs even as a showdown with Russia over Ukraine preoccupies Washington ….

 

In a marked change from past decades, nearly half of those surveyed want the U.S. to be less active on the global stage, with fewer than one-fifth calling for more active engagement—an anti-interventionist current that sweeps across party lines.

A Pew poll from December found a majority of Americans – more than ever before in Pew’s 50-year history of polling this question – think the U.S. “should mind its own business internationally and let other countries get along as best they can on their own.”

A Pew/USA Today poll conducted over the weekend found that Americans  oppose – by a 2-1 margin – any U.S. military aid to Ukraine.

A YouGov poll conducted last month found that only 14 percent of Americans said the U.S. has “any responsibility” to get involved in Ukraine, and only 18 percent think the U.S. “has any responsibility to protect Ukraine if Russia were to invade.”

Huffington Post reports:

Americans are more likely than not to say that the United States has no responsibility to get involved in Ukraine even under extreme circumstances, the new survey shows ….

 

Pluralities of Democrats, Republicans and independents agreed that the U.S. does not have a responsibility to protect Ukraine.

Support for a war against Syria is 500 percent less than for the Iraq war (Americans would rather have a root canal or a colonoscopy than bomb Syria).

A USA Today/Pew Poll from January shows that Americans now believe by a 50%-38% margin that war against Iraq was stupid.

Support even for the Afghanistan war has collapsed. For example, only 35% of all Americans support the Afghanistan war, according to a 2011 CNN poll.

Most Americans are now strongly opposed to intervention in any Arab country.

The warmongers, however, are desperate to drum up business.

War On Drugs

A new Pew poll also shows that the American people are sick of the war on drugs, noting that a broad majority of Americans are ready to significantly reduce the role of the criminal justice system in dealing with people who use drugs.  Pew found:

• 63% of Americans think that we should stop mandatory prison terms for drug law violations

• 54% are in favor of marijuana legalization

• 67% say the government should focus more on providing treatment for people who use drugs like cocaine and heroin, and only 26% think the focus should be more on prosecuting people who use such drugs

Of course, the war on drugs is a total boondoggle.  And stopping government support  for drug dealers and producers might be a good place to start (even though it is making American banks rich).

Other Failed Wars

Obama has also declared a war on inequality.   But given that income inequality has increased more under Obama than under Bush, and that bad policy enacted on a bipartisan basis is making inequality worse and worse, we may be in real trouble.

Of course, neither mainstream political party represents the interests of the people … as revealed by polls.

via Zero Hedge http://ift.tt/1rKCbY1 George Washington