Month: July 2014

Equity bulls should be exuberant. The last time Alan Greenspan warned of exuberance and potential for a correction, stocks soared for a few more years. While Yellen’s stock-picking skills have been questioned in recent days, Greenspan has once again weighed in:

• *GREENSPAN SAYS ‘KEY QUESTION’ IS WHETHER U.S. FACES FALSE DAWN
• *GREENSPAN PREDICTS AT SOME POINT EQUITIES TO HAVE CORRECTION

Although Greenspan declined to second-guess the Fed, he sees a problem moving toward “normalized” policy for his descendants.

 

Speaking on Bloomberg TV, Greenspan has lots to say…

• *GREENSPAN SAYS `OPEN QUESTION’ WHETHER INFLATION WILL SURPRISE
• *GREENSPAN DECLINES TO `SECOND GUESS THE FED’
• *GREENSPAN SEES `A LOT OF UNCERTAINTY’ ON ECONOMY
• *GREENSPAN SAYS `WE HAVE A LOT OF UNCERTAINTY OUT THERE’
• *GREENSPAN SAYS HE’S CONCERNED BY SLOWER OUTPUT PER HOUR
• *GREENSPAN SAYS PRODUCTIVITY WILL HAVE TROUBLE ACCELERATING
• *GREENSPAN SEES PROBLEM MOVING TOWARD `NORMALIZED’ POLICY

He is also an oil analyst…

• *GREENSPAN SAYS OIL MARKET HAS EXCESS CAPACITY, SLACK
• *GREENSPAN: WITHOUT MIDDLE EAST TENSION OIL PRICES WOULD FALL
• *GREENSPAN: CRUDE WOULD BE $15-$20 LOWER IF NOT FOR MIDEAST WOES

And warns of US fiscal problems…

• *GREENSPAN SAYS U.S. LACKS `FISCAL RESOURCES’
• *GREENSPAN SAYS U.S. HAS `NO WAY TO FIND NEW REVENUES’
• *GREENSPAN SAYS U.S. `RUNNING OUT OF BUFFER IN ECONOMY’
• *GREENSPAN SAYS FISCAL POLICY MAY PUT STATUS OF DOLLAR AT RISK

And then there’s this…

• *GREENSPAN SAYS DOLLAR HELD `IN EXTRAORDINARY ESTEEM’

Except in Russia, China, Brazil, and India?

via Zero Hedge http://ift.tt/1zuRIB8 Tyler Durden

Bond yields jumped over 4bps on the better than expected GDP print. Stocks popped along with the USD index. Gold was flip-flopped all over the place – an initial dump was followed by a rip back over $1300 only to be sold back down to $1295 now… Equity exuberance is fading back a little now as machines ‘read’ the anti-goldilocks ADP print and inventory-stuffed Fed-hawk-supporting GDP print as indicative of a punch bowl that just got dragged away a little more…

 

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

Moments ago the Commerce department reported Q2 GDP which blew estimates out of the water, printing at 4.0%, above the declining 3.0% consensus, as a result of a surge in Inventories and Fixed Investment, both of which added over 2.5% of the total print, while exports added another 1.23% to the GDP number. The full breakdown by component is shown below. 

What is interesting is that the Commerce Department announced that as a result of incomplete June data, the biggest components of the GDP beat, Inventories and Trade, were estimated. In other words, assume that future revisions of Q2 GDP will be lower, not higher, as the actual data comes in, and especially as the CapEx data, which contrary to the GDP report, has not rebounded. Speaking of revisions, today the BEA also released its annual revision of all data from 1999 to Q1 2014, which made last quarter’s -2.9% print a more palatable -2.1%, in the process throwing everyone’s trendline calculations off as yet another GDP redefinition was implemented.

The chart of the original and revised data is shown below.

Here are some additional details via Bloomberg:

• 2Q personal consumption up 2.5% vs est. up 1.9% (range 1.5%-2.9%); prior revised to 1.2% from 1%
• Core PCE q/q 2% vs est. 1.9% (range 1.4%-2.3%)
• Gross private investment up 17% in 2Q after falling 6.9% in 1Q
• Residential up 7.5% after falling 5.3%
• Purchases of durable goods jumped 14%, most since 3Q 2009
• Corporate spending up 5.9% vs little changed q/q
• Inventory accumulation added 1.7ppts to GDP

And the quarterly breakdown between the original and revised data:

via Zero Hedge http://ift.tt/1Ayqs6f Tyler Durden

No reasons given but Moscow Stock Exchange has just suspended trading with no reasons specified…

 

 

One can’t help but wonder if this is another ‘sanction’ that was not officially described by President Obama and Jack Lew…

via Zero Hedge http://ift.tt/1oKx3FA Tyler Durden

Following last month’s exuberant explosion of job gains according to ADP (the most since Nov 2012), the ADP employment report shows jobs missing expectations at 218k (vs 230k) and tumbling from the 281k print in June. Curious, there were still two days in the month when ADP estimated the full month print, which is curious considering ADP staunchly refuses to provide its unadjusted numbers. This is the 3rd ADP miss in 4 months. Zandi helpful addition, “there’s job growth everywhere” except as we noted – not as much as expected. Today’s print appears the anti-goldilocks, not low enough to prompt the Fed to get more dovish and not high enough to suggest growth is anything like markets expect.

 

 

The breakdown:

 

Some details:

Goods-producing employment rose by 16,000 jobs in July, down from 43,000 jobs gained in June. The construction industry added 12,000 jobs over the month, less than half last month’s gain. Meanwhile, manufacturing added 3,000 jobs in July, less than one-third the number of jobs added in June.

Service-providing employment rose by 202,000 jobs in July, down from 238,000 in June. The ADP National Employment Report indicates that professional/ business services contributed 61,000 jobs in July, down from 79,000 in June. Expansion in trade/transportation/utilities grew by 52,000, down slightly from June’s 56,000. The 9,000 new jobs added in financial activities was down 25% from last month’s number.

 

“Although down from June, the July jobs number marks the fourth straight month of employment gains above 200,000,” said Carlos Rodriguez, president and chief executive officer of ADP.

Here are the key charts:

 

Where the jobs were:

via Zero Hedge http://ift.tt/1lcZ3gd Tyler Durden

After Eric Cantor’s shocking defeat at the hands of an unknown Tea Party member several months ago, US immigration reform was said to be all but dead, a condition which has been substantially exacerbated by recent tensions over the influx of Central American children crossing the southern US border. However, contrary to initial appeals that Obama is limited in what he can do without a cooperative Congress, the president now appears set to take his latest unilateral decision, one that is set to set republicans fuming and the ranks of future potential democrat voters soaring, when as the WSJ reports, Obama may take “broad action to scale back deportations that could include work permits for millions of people, according to lawmakers and immigration advocates who have consulted with the White House.”

From the WSJ:

Mr. Obama already has offered work permits and safe harbor from deportation to so-called Dreamers—about 500,000 people brought to the U.S. illegally as children. The new action could expand those protections to their parents or to other sets of illegal immigrants.

 

Such a move would please many Hispanic Americans and immigrant-rights advocates, who have pressed Mr. Obama to use executive authority to protect illegal immigrants with roots in the U.S. But it certainly would anger Republicans, who say Mr. Obama already has overstepped his authority by expanding protections from deportation.

 

“Such unlawful and unconstitutional action, if taken, cannot stand,” Sen. Jeff Sessions (R., Ala.) said on the Senate floor this week.

 

An announcement is expected soon after Labor Day, an administration official said. The White House said Tuesday that no decisions on new deportation policy had been made.

What is strange is the timing of this development, coming at a time when the nation is already up in arms over the latest immigration scandal when the administration also responds to a surge in Central American children crossing the U.S. border. Paradoxically, in that case, “Mr. Obama has taken a tough stance, saying that everyone who doesn’t meet narrow legal criteria to stay will be deported.”

So on one hand the White House is responding to what is clear public anger at an untenable situation, on the other he is already campaigning for future votes.

The border crisis doesn’t appear to be dissuading Mr. Obama from considering policy changes to offer a measure of safe harbor for at least some of the 11 million people already settled illegally in the U.S. After legislation died in Congress that would grant many of them a route to citizenship, he said he would “fix as much of our immigration system as I can on my own, without Congress.”

 

Last month, Mr. Obama told members of the Congressional Hispanic Caucus he was prepared to take significant executive action, said Rep. Luis Gutierrez (D., Ill.). The lawmaker said Mr. Obama suggested he would offer safe harbor from deportation to certain illegal immigrants with roots in their communities and family ties to U.S. citizens.

What options could the White House pursue? There are several: “One option under consideration would expand the program that offers work permits and protection from deportation to many young people who were brought to the U.S. illegally as children, known as Deferred Action for Childhood Arrivals.

In a series of meetings with immigration advocates, faith leaders and experts, senior White House officials have asked how the administration might structure an expansion of that program, such as who might be included, participants said. The meetings have been run by White House Counsel Neil Eggleston and Cecilia Munoz, who heads the White House Domestic Policy Council..”

One possibility under discussion is to protect people with children who are U.S. citizens, participants said. That group numbers about 4.4 million, according to the research group National Foundation for American Policy.

 

Another option is to include parents of existing participants in the deferred-action program, a group estimated to range from 550,000 to 1.1 million. Other options include defining the group based on length of U.S. residence or employment status.

 

Participants said administration officials have also asked about an alternative approach to protecting people called “parole in place,” which has a different legal foundation but also could allow the government to issue work permits to illegal immigrants.

 

“It was clear the administration is really, finally looking at providing a temporary solution to the 11 million that are here,” said one participant, Marielena Hincapie, executive director of the National Immigration Law Center. Laura Murphy, who heads the ACLU’s Washington legislative office, said she came out of her meeting sure that the administration is considering significant action to help undocumented residents.

But the bottom line here is that Obama will once again do it alone, especially at a time when there is increasing noise that the Senate too may soon have a GOP majority.

As for the punchline:

The White House is currently debating the limits of its legal authority, knowing its actions could be challenged in court by opponents.

Surely this will be the first time the White House is debating about such trivial matters.

Finally, for those who missed it, here is a map showing the top breakdown of immigrant source nations by state:

via Zero Hedge http://ift.tt/1oKx5NN Tyler Durden

• Fed Decision-Day Guide: QE Tapering to Inflation Debate (BBG)
• Obama says strains over Ukraine not leading to new Cold War with Russia (Reuters)
• Siemens to BP Prepare for Downward Russia Business Spiral (BBG)
• Paying Ransoms, Europe Bankrolls Qaeda Terror (NYT)
• Argentina Banks Preparing Bid to Help Argentina Avoid Default (WSJ)
• Obama Weighs Fewer Deportations of Illegal Immigrants Living in U.S. (WSJ)
• India Warships Off Japan Show Rising Lure as China Counterweight (BBG)
• Hong Kong Popping Housing Bubbles London Can’t Handle (BBG)
• Carnage at U.N. school as Israel pounds Gaza refugee camp (Reuters)
• Loan Snarl Punishes Spain Builder Backed by Soros, Gates (BBG)
• California Health Insurance Rates Rise Up to 88% in ’14 (BBG)
• Ending ‘Too Big to Fail’ Could Rest on Obscure Contract Language (BBG)
• Upstart trading venue IEX may prompt U.S. market rule change (Reuters)
• Cohen Still Beating Hedge Funds After Shutting Down SAC (BBG)
• Putin Sets $110,000 Bounty for Cracking Tor as Anonymous Internet Usage in Russia Surge (BBG)

 

Overnight Media Digest

WSJ

* The European Union and the United States adopted broad economic sanctions against Russia on Tuesday to punish Moscow’s unbending stance in the Ukraine conflict. (http://on.wsj.com/1klsySg)

* Members of Argentina’s banking association, known as Adeba, are working on a last-minute plan to help the country avoid default, according to people familiar with the idea. The association’s plan, which hasn’t been completely hashed out among the banks, would entail buying the legal claim and paying off the holdout creditors who are suing Argentina in U.S. courts for full payment on bonds the country defaulted on in 2001. (http://on.wsj.com/1ppxMuZ)

* For months, U.S. President Barack Obama said there were limits to his power to protect people living illegally in the U.S. from deportation. Now, he is considering broad action to scale back deportations that could include work permits for millions of people, according to lawmakers and immigration advocates who have consulted with the White House. (http://on.wsj.com/1xwAdxe)

* Israeli forces pounded Hamas symbols of control and Gaza’s only power plant in one of the heaviest bombardments in the three-week conflict, trying to raise pressure on the Islamist group to accept Israel’s terms for a cease-fire. (http://on.wsj.com/UJEGje)

* A little-known U.S. telecom company has hit upon a creative strategy that could help the industry shield billions of dollars from tax collectors. In a development that caught Wall Street by surprise, Windstream Holdings Inc was cleared by the Internal Revenue Service to reclassify most of its copper and fiber-optic lines as real estate, which could enable it to cut millions of dollars from its annual tax bill. (http://on.wsj.com/1lbOMkc)

* Drug makers and researchers are increasingly concerned that online chatter could unravel the carefully built construct of the ‘blind’ clinical trial. (http://on.wsj.com/XcHfMP)

* The slow progress in Sprint’s pursuit of T-Mobile is in part tied to the public nature of the deal. With all the details out, there isn’t as much pressure to make an announcement. (http://on.wsj.com/1oIWU0G)

* Twitter Inc quieted its doubters, at least for now, over its ability to jump-start shrinking user growth in the shadow of larger rival Facebook Inc. The social media company posted strong results across the board. (http://on.wsj.com/1zrH3ah)

* New York’s Department of Financial Services is pushing to install monitors inside the U.S. offices of Deutsche Bank AG and Barclays PLC as part of an investigation into possible manipulation in the foreign-exchange market. (http://on.wsj.com/1s0BInK)

* McDonald’s Corp could be treated as a joint employer with its franchisees in labor complaints, according to a National Labor Relations Board legal determination that could have far reaching implications. (http://on.wsj.com/UJ2vb6)

* China confirmed it is investigating whether Microsoft Corp broke its antimonopoly laws, the latest sign of growing commercial and policy tensions between the U.S. and China that are roiling technology companies in both countries. (http://on.wsj.com/1klEvHD)

* FedEx Corp pleaded not guilty Tuesday in San Francisco federal court on 15 charges related to transporting painkillers and other prescription drugs that had been sold illegally. (http://on.wsj.com/1klFjfA)

 

FT

The Bank of England is set to unveil a tough new regime on Wednesday, aimed at stamping out misconduct in Britain’s banking industry. The framework includes powers to claw back bonuses up to seven years after they have been paid and a new law that would see reckless bankers sent to jail.

Twitter’s New York-listed shares jumped as much as 34 percent in after-hours trading after the online messaging service beat analysts’ earnings expectations and reported accelerated user growth in the second quarter.

UBS agreed to pay 300 million euros ($402.27 million) to settle a probe by authorities in Bochum into whether it helped German clients evade taxes, as it reported better-than-expected quarterly results.

Pfizer said it was still interested in deals that would allow it to put offshore revenues beyond the reach of the U.S. taxman as it called for the “fundamental reform” of its domestic tax system.

A top U.S. labour regulator has accused McDonald’s of being jointly responsible for working conditions at its franchisees’ restaurants, a decision that could deal a blow to the long-running fast food franchise model.

 

NYT

* Barring a last-minute deal, Argentina will default on billions of dollars of bonds on Wednesday. It would be Argentina’s second default in 13 years. A default has been in the making since a group of New York hedge funds gained significant victories in American courts, where they are demanding that Argentina should pay them in full on government bonds that defaulted in 2001. (http://nyti.ms/1tYjH9c)

* The United States and Europe kicked off a joint effort on Tuesday intended to curb Russia’s long-term ability to develop new oil resources, taking aim at the Kremlin’s premier source of wealth and power in retaliation for its intervention in Ukraine. The goal was not to inhibit current oil production but to cloud Russia’s energy future. (http://nyti.ms/1rBMLBL)

* The general counsel of the National Labor Relations Board ruled that McDonald’s Corp could be held jointly liable for labor and wage violations by its franchise operators. The ruling comes after the labor board’s legal team investigated myriad complaints that fast-food workers brought in the last 20 months, accusing McDonald’s and its franchisees of unfair labor practices. (http://nyti.ms/1nEK6Z1)

* After New York proposed the virtual currency regulations two weeks ago, bitcoin enthusiasts have had a mixed reaction on whether the new rules will help legitimize the virtual currency or whether they will thwart innovation and threaten the very freedom that bitcoin was meant to promote. (http://nyti.ms/1pDxAWj)

* Lawmakers in Washington ratcheted up the pressure on Tuesday on companies seeking tax relief by moving overseas, introducing a bill that would withhold government contracts from companies that undertake so-called inversion deals. (http://nyti.ms/1n1bj39)

* Swiss bank UBS AG and Deutsche Bank AG of Germany became the latest banks to disclose that they were facing inquiries from regulators after Attorney General Eric Schneiderman of New York sued the British bank Barclays PLC last month over its private stock trading platform, known as a dark pool. (http://nyti.ms/1pDyhyL)

* The boutique investment bank Qatalyst Partners, which was hired by Trulia Inc three years ago, will also receive the reward of Trulia’s sale to Zillow Inc. Qatalyst was unable to strike a deal three years ago and ultimately watched JPMorgan Chase & Co advise Trulia on its IPO. Qatalyst said that its old contract with Trulia was still valid and the fee now paid will be split between Qatalyst and JPMorgan. (http://nyti.ms/1n1dzXY)

* IAC/InterActive Corp said its online tutoring unit, Tutor.com, would buy the Princeton Review, whose test preparation guides are familiar to students studying for the SAT and other standardized tests, from Charles bank Capital Partners, a private equity firm based in Boston. The terms were not disclosed. (http://nyti.ms/1lUkzXb)

* Steven Cohen’s renamed firm, Point72 Asset Management, which manages $9 billion to $10 billion of his personal fortune, is proving to be nearly as profitable as his former hedge fund. Over the first six months of this year, the firm generated a profit of nearly $1 billion. (http://nyti.ms/1nGjAP1)

* Twitter Inc reported strong growth in the second quarter, driven in part by heavy use of the service by soccer fans around the world during the month long FIFA World Cup, which spanned June and July. Twitter’s results far exceeded Wall Street’s expectations, and the company’s shares rose about 29 percent in after-hours trading. (http://nyti.ms/1pDvfum)

* Oracle Corp kicked off its new cloud computing technology center in Seattle on Tuesday. On hand were several recruiting executives; initially designed for 100 cloud engineers, the facility is expected to hire a lot more and serve as an education and training facility as well. (http://nyti.ms/1k6nq3V)

 

Canada

THE GLOBE AND MAIL

* The owners of a sawmill that exploded in Prince George, British Columbia, two years ago, killing two workers, have been fined more than C$700,000 by the workplace safety agency. (http://bit.ly/1lcjTMG)

* An international effort to build an enormous telescope in Hawaii has taken an important step forward, a signal that the Canadian government will have to decide soon if Canadian astronomers will have a share in the instrument’s future discoveries. (http://bit.ly/WMNOG1)

Reports in the business section:

* Penn West Petroleum Ltd, one of Canada’s largest energy companies, has unveiled details of accounting irregularities and launched a review of its financial statements dating back four-and-a-half years. The company said it has notified securities regulators in Canada and the United States about the issues, which include some entries that reduce expenses. (http://bit.ly/1pEjDHJ)

NATIONAL POST

* The Canadian military is looking for an air defence system to protect its VIP aircraft, including the one used by Canadian Prime Minister Stephen Harper, from surface to air missiles. And one of Israel’s top defence contractors, Elbit Systems Ltd , has been working behind-the-scenes for months to get in on the anticipated project. (http://bit.ly/1km1UbH)

* The Canadian military had to send its fledgling fighter pilots to the United States because of continuing problems with training, including several plane crashes, according to documents obtained by Postmedia News. (http://bit.ly/1AxJ0n7)

FINANCIAL POST

* TransCanada Corp expects to file an application for its massive Energy East project as early as next month. Touted as one of North America’s largest energy projects at C$12 billion, the proposed conduit will find a new outlet for Alberta’s landlocked crude as Canadian pipelines heading south to the U.S. and to the Canadian west coast are facing strong opposition. (http://bit.ly/1qKjyZe)

* Exxon Mobil Corp is assessing a floating liquefied natural gas apparatus on Canada’s west coast that could see up to six barges moored in a narrow inlet north of Prince Rupert in British Columbia. (http://bit.ly/1lVIDJf)

 

China

CHINA SECURITIES JOURNAL

– China has drafted standards for crude oil delivery and inspection to prepare for the launch of crude oil futures trading in Shanghai.

SECURITIES TIMES

– China is preparing a new manufacturing industry plan, said Li Dong, Deputy Director of the Equipment Department of the Ministry in a summit on Tuesday. The plan is expected next year, said the newspaper.

– Wenzhou, a southern Chinese city, has removed eligibility criteria for home buyers, said Wenzhou Municipal Commission of Housing and Urban-Rural Development in a conference on Tuesday.

CHINA DAILY

– Nearly a quarter of employers in China are experiencing hiring difficulties, according to a survey conducted by Manpower Group Inc. Those skilled in trades, such as electricians, and sales representatives are the hardest to find.

SHANGHAI DAILY

– Li Daqiu, a former senior political adviser, has been charged with taking bribes, said China’s highest court on Tuesday. Li was the vice chairman of the Guangxi political advisory body from 2003.

Britain

The Times

TULLETT WIELDS THE AXE AS CALM RETURNS

Tullett Prebon is to cut almost 10 percent of its staff as the interdealer broker reels from a slowdown in trading. (http://thetim.es/1rNkE6j)

GUARDIAN CARE HOMES SET TO SUE LLOYDS IN LIBOR CASE

Guardian Care Homes, which was at the centre of a 40 million pound ($67.77 million) settlement with Barclays, is now preparing a new legal action against Lloyds Banking Group that will focus on the taxpayer-backed lender’s involvement in rigging borrowing rates. (http://thetim.es/UAbkUM)

The Guardian

BANKERS BRACED FOR NEW UK REGULATORY SCHEME FROM BANK OF ENGLAND

Britain’s bankers are braced for the introduction of a tough new regulatory regime to be outlined by the Bank of England on Wednesday, under which they will have to wait longer for their bonuses and could be deemed guilty until proven innocent. (http://bit.ly/1uEeAPq)

BP FEARS SANCTIONS OVER STAKE IN RUSSIAN OIL FIRM WILL HIT PROFITS

British oil and gas group BP has warned investors that its finances and corporate image could be hurt by western sanctions against Russia. (http://bit.ly/1k5Qpop)

VODAFONE CHAIRMAN PROMISES TO PROTECT CUSTOMERS’ RIGHT TO PRIVACY

Vodafone’s chairman, Gerard Kleisterlee, has promised to protect the right to privacy, saying the mobile network will engage with the UK government’s review of how the intelligence agencies intercept and collect data on its customers. (http://bit.ly/1k5MJmH)

The Telegraph

CENTRICA APPOINTS IAIN CONN AS CHIEF EXECUTIVE WITH 3.7 MLN STG PAY PACKAGE

Iain Conn, the veteran BP executive, has been appointed as Centrica chief executive with a pay package worth up to 3.7 million pounds, the British Gas owner announced. (http://bit.ly/1nFDCc9)

MONARCH RESHUFFLES TOP TEAM AHEAD OF CASH INJECTION

Airline and tour operator Monarch has reshuffled its top team at a critical time as it searches for new investors to help it become a more serious contender in the low cost travel market. (http://bit.ly/1nRYBtx)

The Independent

ELECTRA REJECTS ED BRAMSON’S RESTRUCTURING PLAN

Private-equity group Electra has rejected an attack by activist investor Ed Bramson, who wants to sit on the company’s board and launch a review of its strategy. (http://ind.pn/1ppjDOl)

NEXT BEATS MARKS & SPENCER AGAIN AS IT RAISES PROFIT FORECAST

Fashion giant Next put rival Marks & Spencer in the shade again today as Chief Executive Simon Wolfson raised its profit forecast following a strong quarter. (http://ind.pn/1lbdeSM)

 

 

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
ADP employment report for July at 8:15–consensus 235K
First-estimate GDP growth for Q2 at 8:30–consensus 3.1%
FOMC meeting announcement to be released at 14:00

ANALYST RESEARCH

Upgrades

Altisource Residential (RESI) upgraded to Outperform at Keefe Bruyette
C.H. Robinson (CHRW) upgraded to Neutral from Underperform at BofA/Merrill
Financial Engines (FNGN) upgraded to Market Perform from Underperform at Raymond James
Freescale (FSL) upgraded to Equal Weight from Underweight at Morgan Stanley
Intercept (ICPT) upgraded to Buy from Neutral at Nomura
Internap (INAP) upgraded to Outperform from Market Perform at Cowen
InvenSense (INVN) upgraded to Buy from Hold at Ascendiant
Oshkosh (OSK) upgraded to Outperform from Neutral at RW Baird
Prudential (PRU) upgraded to Buy from Hold at Canaccord
Roadrunner (RRTS) upgraded to Outperform from Market Perform at Raymond James
S&T Bancorp (STBA) upgraded to Neutral from Sell at Guggenheim
SEI Investments (SEIC) upgraded to Outperform from Perform at Oppenheimer
Twitter (TWTR) upgraded to Buy from Fair Value at CRT Capital
Twitter (TWTR) upgraded to Buy from Neutral at BofA/Merrill
Twitter (TWTR) upgraded to Market Perform from Underperform at Cowen
Twitter (TWTR) upgraded to Neutral from Sell at UBS
United Continental (UAL) upgraded to Overweight from Neutral at JPMorgan
YRC Worldwide (YRCW) upgraded to Market Perform from Underperform at Raymond James

Downgrades

Aflac (AFL) downgraded to Sector Perform from Outperform at Scotia Capital
Alaska Air (ALK) downgraded to Neutral from Overweight at JPMorgan
American Capital Agency (AGNC) downgraded to Neutral from Buy at UBS
Brandywine Realty (BDN) downgraded to Hold from Buy at Stifel
CBS Outdoor (CBSO) downgraded to Equal Weight from Overweight at Morgan Stanley
Cablevision (CVC) downgraded to Sell from Neutral at Citigroup
Carbonite (CARB) downgraded to Underperform from Neutral at BofA/Merrill
Domtar (UFS) downgraded to Neutral from Buy at Goldman
Eaton (ETN) downgraded to Neutral from Buy at Goldman
Eaton (ETN) downgraded to Neutral from Overweight at JPMorgan
Enbridge (ENB) downgraded to Buy from Conviction Buy at Goldman
FirstEnergy (FE) downgraded to Sell from Neutral at UBS
Impax (IPXL) downgraded to Hold from Buy at WallachBeth
Lamar Advertising (LAMR) downgraded to Equal Weight from Overweight at Morgan Stanley
Maxim Integrated (MXIM) downgraded to Underweight from Equal Weight at Morgan Stanley
Merit Medical (MMSI) downgraded to Outperform from Strong Buy at Raymond James
Michael Kors (KORS) downgraded to Neutral from Outperform at RW Baird
National Oilwell (NOV) downgraded to Hold from Buy at Jefferies
Pacific Sunwear (PSUN) downgraded to Neutral from Buy at B. Riley
Twitter (TWTR) downgraded to Sell from Hold at Pivotal Research
Verizon (VZ) downgraded to Neutral from Outperform at Macquarie
Waddell & Reed (WDR) downgraded to Market Perform from Outperform at Keefe Bruyette
Windstream (WIN) downgraded to Market Perform from Outperform at Raymond James

Initiations

Aerohive Networks (HIVE) initiated with an Outperform at Pacific Crest
Netgear (NTGR) initiated with a Sector Perform at Pacific Crest
NextEra Energy Partners (NEP) initiated with a Market Perform at Wells Fargo
Ruckus Wireless (RKUS) initiated with an Outperform at Pacific Crest

COMPANY NEWS

Amgen (AMGN) said it will reduce global workforce by 12%-15%, or 2,400-2,900 employees, beginning later this year
Icahn reduced stake in Family Dollar (FDO) to 6.03% from 9.39%, citing ‘better’ return potential elsewhere
Twitter (TWTR) reported Q2 Average Monthly Active Users 271M
RadioShack (RSH) may run through liquidity in 2015, Moody’s said
Amazon (AMZN) called on Hachette to lower e-book prices
AstraZeneca (AZN) has entered an agreement to transfer to the company the rights to Almirall’s respiratory franchise for an initial consideration of $875M on completion, and up to $1.22B in development, launch, and sales-related milestones
Twitter (TWTR) acquired Madbits
DreamWorks Animation (DWA) said SEC investigating ‘Turbo’ writedown

EARNINGS

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

Twitter (TWTR), American Express (AXP), Marriott (MAR), Nutrisystem (NTRI), Panera Bread (PNRA), SPX Corp. (SPW), Simon Property (SPG), Cenovus Energy (CVE), Haemonetics (HAE), ICON plc (ICLR), Newmont Mining (NEM), Ocean Power (OPTT), RockTenn (RKT), U.S. Silica (SLCA), XPO Logistics (XPO), HCC Insurance (HCC), FARO Technologies (FARO), Ameriprise (AMP), Cempra (CEMP), Aegerion (AEGR), AXIS Capital (AXS), M/A-COM (MTSI), NuVasive (NUVA), LeMaitre (LMAT), RingCentral (RNG), Corporate Executive Board (CEB), Team Health (TMH), Invesco Mortgage (IVR), ExamWorks (EXAM), Sequenom (SQNM), Cray (CRAY), Verisk Analytics (VRSK), Trinity Industries (TRN), Huron (HURN), C.H. Robinson (CHRW), Endocyte (ECYT), RenaissanceRe (RNR), International Game (IGT), Express Scripts (ESRX), Cloud Peak (CLD), Calamos (CLMS), U.S. Steel (X), Arthur J. Gallagher (AJG), Calix (CALX), Vertex (VRTX), ZELTIQ (ZLTQ), Power Integrations (POWI), National Instruments (NATI), Blackstone Mortgage (BXMT), NCR Corp. (NCR), Cincinnati Financial (CINF), United Insurance (UIHC), Edwards Lifesciences (EW), Amgen (AMGN), Rubicon Project (RUBI), Covance (CVD), , QIAGEN (QGEN), Global Payments (GPN), Aflac (AFL), Fiserv (FISV), Dyax (DYAX), Amdocs (DOX), Dynamic Materials (BOOM), Buffalo Wild Wings (BWLD), Acadia Healthcare (ACHC), Castlight Health (CSLT), Ultimate Software (ULTI), Plantronics (PLT)

Companies that missed consensus earnings expectations include:

Adeptus Health (ADPT), NICE Systems (NICE), Ballard Power (BLDP), UGI Corporation (UGI), Pulaski Financial (PULB), AmeriGas (APU), Aegion (AEGN), SM Energy (SM), Sturm, Ruger (RGR), Landec (LNDC), AmREIT (AMRE), Innovative Solutions (ISSC), Green Plains (GPRE), XPO Logistics (XPO), Chemtura  (CHMT), EXCO Resources (XCO), Access Midstream (ACMP), 1st United Bancorp (fubc), USANA (USNA), Newfield Exploration (NFX), Internap (INAP), Covisint (COVS), Move, Inc. (MOVE), Anadarko (APC), Big 5 Sporting (BGFV), Owens-Illinois (OI), DreamWorks Animation (DWA), Safe Bulkers (SB), Ruby Tuesday (RT), EZCORP (EZPW), Merit Medical (MMSI), Ternium (TX), CAI International (CAP)

Companies that matched consensus earnings expectations include:

Humana (HUM), LPL Financial (LPLA), Humana (HUM), Regal-Beloit (RBC), Marlin Business (MRLN), Genworth (GNW), PCTEL, Inc. (PCTI), Inphi (IPHI), Compuware (CPWR), Applied Micro Circuits (AMCC), InvenSense (INVN)

NEWSPAPERS/WEBSITES

NY regulator seeks monitors in Deutsche Bank (DB), Barclays (BCS), WSJ reports
T-Mobile (TMUS), Sprint (S) merger not anticipated prior to September, Reuters reports
Amazon (AMZN) plans $2B investment in India, WSJ reports
Airbus (EADSY) considers Dassault Aviation stake sale, FT reports
Netflix (NFLX) will pay AT&T (T) to speed up its video streams, Mashable reports
Facebook (FB) shutting down Gifts business, Re/code reports
Baidu (BIDU) developing ‘self-driving’ car, China Daily reports
UBS (UBS) could have 25% upside, Barron’s says

SYNDICATE

Cousins Properties (CUZ) files to sell 18M shares of common stock
Mavenir Systems (MVNR) files to sell 4.5M shares of common stock
TherapeuticsMD (TXMD) files to sell $40M in common stock
Westlake Chemical Partners (WLKP) 11.25M share IPO priced at $24.00

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

This week’s US data onslaught begins today, with the ADP private payroll report first on deck (Exp. 230K, down from 281K), followed by the number of the day, Q2 GDP, which after Q1’s abysmal -2.9%, is expected to increase 3%. Anything less and in the first half the US economy will have contracted, something the purists could claim is equivalent to a recession. The whisper numbers are to the downside since consumption and trade never caught up and the only variable is inventory as well as Obamacare, whose original $40 billion “contribution” in Q1 was entirely eliminated and converted into a deduction, something we expect will be reversed into Q2.

Following the backward looking GDP (which will be ignored by the sellside penguins if it is bad and praised if good) at 2:00 pm Yellen Capital LLC comes out with a correction on her call to short social networking stocks, as well as admit once again that the “data-driven” Fed really has no idea what it is doing and how it will tighten, but that tightening is imminent and another $10 billion taper to QE will take place ahead of a full phase out in October. Joking aside, the Fed is expected not to do much if anything, which may be just the right time for Yellen to inject an aggressively hawkish note considering her inflation “noise” refuses to go away.

In terms of market action so far, here is the latest:

• S&P 500 futures up 0.2% to 1966.3
• Stoxx 600 down 0.2% to 341.7
• US 10Yr yield up 1bps to 2.47%
• German 10Yr yield down 0bps to 1.12%
• MSCI Asia Pacific up 0.3% to 149.9
• Gold spot down 0% to $1298.8/oz

The reason for the US equity future rise is the latest round of USDJPY levitation, which has also pushed the Nikkei higher, which was to be “expected” following the worst industrial production print in post-Abenomics Japan since the 2011 Fukushima disaster.

Stocks traded mixed in Europe this morning, as market participants positioned for key risk events due later today. As a result, the more defensive sectors such as health care outperformed, with Bayer (+2.58%) leading the move higher following earnings. Peripheral EU indices outperformed, the Spanish IBEX-35 index trading higher since the get-go following earnings by BBVA (+1.13%).

In European bond markets, we should also highlight that there were fresh all time multi-century lows in yields for several European sovereigns yesterday including Spain (2.47%), Holland (1.31%), Germany (1.12%) and France (1.51%). Bund yields are now below the previous trough of July 2012, when we were in the midst of the Eurozone debt crisis. Recent economic data has been a factor in driving lower yields (e.g. German IFO), together with recent coupon/principal repayments, but the evidence continues to suggest that demand for carry and fixed income remains high amongst investors. 

Turning to Asia, a less defensive tone has prevailed overnight led by the HSCEI (+0.4%) and KOSPI (+1.1%). The Nikkei is somewhat lagging (+0.1%) after mixed corporate earnings reports but S&P500 futures are just in positive territory (+0.1%). USDJPY is rising following disappointing Japanese industrial production data for June. IP fell a seasonally-adjusted 3.3% MoM in June, below consensus of -1.2%. Shipments fell 1.9% and have now fallen for five straight months. According to DB’s Japanese economist, the weakness in production reflects not only the negative payback following the VAT-induced front-loading of demand, but also stagnant exports. In China, following Premier Li’s dovish comments earlier this week, the Chinese President has repeated that the economy faces headwinds and that the government should focus on targeted measures to manage those downside risks.

Last but certainly not least, Argentina has until today to settle with holdout creditors or face a default on restructured debt. The WSJ writes that Argentina, however, could continue to claim that it isn’t in default. Argentine officials contend they have met their obligations by transferring money to the trustee for an interest payment that was due June 30 on some of the bonds it issued in past restructurings. Due to the 2012 ruling, the bank cannot disburse the money to investors without risking being held in contempt of court (WSJ). The debt payment is due at midnight US ET today.

Bulletin headline summary from RanSquawk and Bloomberg

• The cautious sentiment ahead of the key risk events such as the US GDP report and FOMC meant that health care stocks outperformed on the sector breakdown in Europe.
• Bunds and Gilts failed to benefit from month-end related flow, as expectations of another taper to Fed’s QE program saw bond yields climb.
• FOMC expected to taper their QE program by another USD 10bln today, with US GDP also due – expected to rebound to +3.0%, in terms of earnings focus will be on Metlife, Phillips 66, Southern Co and Sprint.
• Treasuries decline before FOMC announces rates/QE decision; most expect additional $10b taper, possibility of first fed funds hike sooner than many expect; first look at July jobs comes with ADP at 8:30am, est. 230k.
• Week’s auctions conclude today with $15b 2Y FRN at 11:30am, $29b 7Y notes at 1pm; latter yield 2.165% in WI trading, awarded at 2.152% in June
• Russia’s central bank said it’s ready to help any of the financial institutions targeted by the U.S. and Europe in the latest round of sanctions, as international investigators reportedly abandoned the latest attempt to  visit the crash site of Malaysian Air Flight 17
• Netanyahu told Israel to prepare for an extended effort to “neutralize” the tunnels that have penetrated Israel from Gaza and that Hamas must be disarmed under any truce
• Japanese industrial output fell the most since the March 2011 earthquake, highlighting the widening impact to the economy of April’s sales-tax increase
• The non-profit groups that employed two American citizens who contracted Ebola in Africa have closed a Liberia treatment center over civil disturbances, and plan to evacuate 60 people because of the disease risk
• Chinese President Xi Jinping’s biggest political maneuver since he took the nation’s helm — a corruption probe of former state security chief Zhou Yongkang — both increased his authority within the Communist Party and escalated the risks of its legitimacy
• Sovereign yields mostly lower. Euro Stoxx Banks +0.5%. Asian stocks mostly higher, European equities decline, U.S. stock futures gain. WTI crude and gold little changed, copper higher

US Event Calendar

• 7:00am: MBA Mortgage Applications, July 25 (prior 2.4%)
• 8:15am: ADP Employment Change, July, est. 230k (prior 281k)
• 8:30am: GDP Annualized q/q, 2Q, est. 3% (prior -2.9%)
  • Personal Consumption, 2Q, est. 1.9% (prior 1%)
  • GDP Price Index, 2Q, est. 1.8% (prior 1.3%)
  • Core PCE q/q, 2Q, est. 1.9% (prior 1.2%) Central Banks
• 2:00pm: FOMC seen maintaining overnight bank lending rate target near 0%, reducing QE by another $10b Supply
• 11:30am: U.S. to sell $15b 2Y FRN
• 1:00pm: U.S. to sell $29b 7Y notes

FIXED INCOME

Bunds failed to benefit from somewhat lacklustre performance by EU stocks this morning, as expectations of yet another Fed QE taper, together with profit taking related flow having touched on contract highs yesterday weighed on prices. So much so that month-end and coupon/redemption related flow took a back seat. Somewhat mixed German states CPI data failed to have a meaningful impact on the price action of various asset classes, although German 5y B/E rates fell to lowest level since June 2012.

In terms of month-end revisions, Barclays Final Pan Euro Agg Month-end Extension +0.12y vs. Prelim. +0.11y (Prev. month 0.09y, 12m Avg. 0.08y) and Barclays Prelim Sterling Agg Month-end Extension +0.04y (Prev. month 0.03y).

EQUITIES

Stocks traded mixed in Europe this morning, as market participants positioned for key risk events due later today. As a result, the more defensive sectors such as health care outperformed, with Bayer (+2.58%) leading the move higher following earnings. Peripheral EU indices outperformed, the Spanish IBEX-35 index trading higher since the get-go following earnings by BBVA (+1.13%). The sentiment towards financials was also supported by earnings by Barclays (3.99%), which outperformed in the FTSE-100 index following earnings pre-marke

FX

EUR/USD and GBP/USD traded lower, as short-end rate differential flows supported the USD index ahead of the FOMC decision later on today. At the same time, favourable interest rate differential flows meant that USD/JPY was able to continue to consolidate above the key 200DMA line.

COMMODITIES

Gold has traded sideways since the European open after a lacklustre performance overnight, remaining below the USD 1300 level as markets await the FOMC rate decision, and a slew of US data in the form of GDP and ADP. After the large drawdown for US API inventories yesterday the energy complex had seen some early upside momentum, however with little further news flow for WTI or Brent crude prices have since retraced. The markets now look ahead to the DoE inventories later today, with the headline number expected to show a drawdown of 1250K (Prev. drawdown 3969K).

Finally, here is DB’s Jim Reid with his take on overnight events and today’s key highlights

GDP is backward looking so it’s not usually the most important data release but it will surely be a fairly poor indictment of the US economy if today’s Q2 print doesn’t have at least a 3-handle (expectations 3.0%, DB at 4.2%). Notwithstanding any revisions to Q1’s -2.9% print, we need a 3+% print to ensure any growth at all in H1. The early year bad weather did clearly have an impact but a healthier economy would surely have taken it more in its stride over a 6 month period. However on the plus side employment has been decent all year and the ADP report out today (+230k expected, DB at +250k) is likely to be seen as more important than GDP barring a big move or revision in the latter. Our take on the US economy continues to be that it’s growing but that the trend rate of growth is currently structurally impaired and that the disappointments relative to expectations that have characterised this recovery will broadly continue. Clearly today’s number might show a better story but it wouldn’t change our view about the structural impairments. We should say though that we think the US has one of the best potential growth rates in DM so our comments are not anti-US they are a reflection of structural growth problems in most of these countries. Having said all this, today is the day when you can be made a fool of as we see the annual US GDP revisions which see history rewritten over the past 3 years. So watch out for these.

Also today we have the conclusion of the FOMC but this is likely to be the tamest statement of the year. There is no planned press conference so markets will be left interpreting any tweaks to the FOMC’s policy statement. DB’s Peter Hooper thinks neither the overall economic activity picture nor the inflation data have been firm enough recently to move the Committee to signal that they are moving closer to lift-off on rates. Similarly, the WSJ’s Fed watcher Hilsenrath thinks that tame inflation expectations are the trump card for the doves on the Committee. He notes that households surveyed by the University of Michigan see inflation of 3.1% in the year ahead. That’s above the Fed’s official 2% objective, but in line with where they’ve seen inflation over the past decade.

Ahead of today’s busy calendar, there are plenty of questions about the recent price action in bond markets and what it is trying to tell us. In the US, the main theme is the continued flattening of the treasury curve. The spread between the US 5yr and the 30yr bond finished Tuesday at 152bp, which is the narrowest it’s been since January 20th 2009. Meanwhile the 2s/10s curve (192bp) reached its flattest level since June 2013. We mentioned earlier this week that it seems that the low-for-longer view camp, which we’re already members, has gained more followers recently. To be fair, some of the flattening has been caused by the front end of the treasury curve which has tracked higher in yield this year, though this has been met with a significant move lower in longer bonds. Part of this can be attributed to the renewed interest in the theme that the US economy faces a lower terminal cash rate, whether it is due to productivity constraints or other structural constraints. Our rates strategists also think that foreign official investors still have cash to put to work in Treasuries after a period of underinvestment, and they continue to think that real money investors are short duration in the longer end as a hedge to overweight positions in spread product. So perhaps there is more demand at the long end to come if this positioning reverses.

In European bond markets, we should also highlight that there were fresh all time multi-century lows in yields for several European sovereigns yesterday including Spain (2.47%), Holland (1.31%), Germany (1.12%) and France (1.51%). Bund yields are now below the previous trough of July 2012, when we were in the midst of the Eurozone debt crisis. Recent economic data has been a factor in driving lower yields (e.g. German IFO), together with recent coupon/principal repayments, but the evidence continues to suggest that demand for carry and fixed income remains high amongst investors. Indeed, yesterday’s US$35bn 5yr UST auction saw direct bidders take up their largest share at a 5yr auction since December 2012 according to Reuters. Dealers were left with just 26% of the issue. Yesterday’s CaseShiller home price data (-0.3% vs +0.3% expected) helped support USTs, but this was partially unwound following the better than expected US consumer confidence data (90.9 vs 85.4 expected).

It was a different story for Russia’s finance ministry who cancelled its weekly domestic treasury auction for the second week in a row yesterday, calling market conditions “unfavourable”. No doubt the threat of sanctions have a part to play, but it was interesting to see the Ruble rally after yesterday’s sanction headlines suggesting that there was relief that broader, more disruptive phase 3 sanctions had been avoided for the time being. The Ruble rallied about 0.6% from the lows against the USD, and closed only .0.15% lower on the day. EU governments have reportedly reached a preliminary deal to bar Russian state-owned banks from selling new shares or bonds in Europe and restrict the export of equipment to modernize the oil industry. New contracts to sell arms to Russia and the export of machinery, electronics and other civilian products with potential military uses will also be banned (Bloomberg). Already under pressure by that stage, the S&P500 (-0.45% on the day) took another leg lower following an announcement from the White House that it will add three Russian banks (VTB, Bank of Moscow and the Russian Agricultural Bank) and United Shipbuilding Corp (shipbuilder for Russian Navy) to its list of sanctioned entities (restricting their ability to raise long term financing in USD, amongst other restrictions). In reaction to the increased sanctions, a group of Russian lawmakers have proposed banning the “Big Four” global accounting firms and two of the world’s largest consulting groups from the country (FT). The article says that a sudden ban on foreign providers of such services would seriously disrupt a large number of the country’s companies which use offshore holding structures governed by English law.

Turning to Asia, a less defensive tone has prevailed overnight led by the HSCEI (+0.4%) and KOSPI (+1.1%). The Nikkei is somewhat lagging (+0.1%) after mixed corporate earnings reports but S&P500 futures are just in positive territory (+0.1%). USDJPY is rising following disappointing Japanese industrial production data for June. IP fell a seasonally-adjusted 3.3% MoM in June, below consensus of -1.2%. Shipments fell 1.9% and have now fallen for five straight months. According to DB’s Japanese economist, the weakness in production reflects not only the negative payback following the VAT-induced front-loading of demand, but also stagnant exports. In China, following Premier Li’s dovish comments earlier this week, the Chinese President has repeated that the economy faces headwinds and that the government should focus on targeted measures to manage those downside risks.

There’s plenty of data, headlines and meetings to keep us on our toes today. As we go to print, Barclays, Bayer AG & Banco Popular Espanol are due to report earnings before European markets open. Spain reports preliminary Q2 GDP while Spanish and German CPI will be closely watched ahead of Thursday’s Euroarea inflation number. The US data docket starts with ADP employment today at 1:15pm London time, followed by GDP and PCE at 1:30pm. The FOMC’s statement is due at 7pm.

Last but certainly not least, Argentina has until today to settle with holdout creditors or face a default on restructured debt. The WSJ writes that Argentina, however, could continue to claim that it isn’t in default. Argentine officials contend they have met their obligations by transferring money to the trustee for an interest payment that was due June 30 on some of the bonds it issued in past restructurings. Due to the 2012 ruling, the bank cannot disburse the money to investors without risking being held in contempt of court (WSJ). The debt payment is due at midnight US ET today.

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