Month: November 2014

Isn't it ironic that the demographic in America that has seen the largest job growth during the 'recovery' turned out in droves to vote (against the incumbents) while the generation that remain mired in student debt, living at home with their mom-and-dad in record amounts, and having lost hope of the American Dream were apparently uninterested in 'change'. Perhaps, just perhaps, the elder generation still believes there is a difference between the two parties… or perhaps they are the ones who are most pissed as the promises of sipping margaritas on a golden beach in retirement is crushed into the reality of working to your grave at Home Depot…

Irony?

h/t @NBCNews

Which is ironic given that the Over-60s (and only over-60s) have been hired in droves…

Here is the breakdown of job gains by all age groups since the start of the depression in December 2007: 5.5 million jobs "gained" in the 55-69 age group. What about the core, 25-54 demographic? Negative 2.04 million.

 

*  *  *

Forget racism, prepare for ageism.

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

Nothing to see here, move along…

 

We are sure it’s nothing to worry about, and in now way indicative of any global aggregate economic weakness, but global commodity prices (that would be the ‘stuff’ that is used to make the ‘stuff’ we all buy every day) are collapsing at the fastest rate since Lehman…

 

Of course, it’s all about over-supply, not under-demand… just like the Baltic Dry was not low because of shitty trade volumes but because of too many ships… but it’s just the other side of an uncomfortably real mal-investment-driven fiasco…

As the chart below shows… maybe it is the economy stupid and with US GDP expectations being ratcheted down after construction spending and trade deficit data, maybe the US is not decoupling after all.

 

But is merely ‘lagging’ as it always does…

Charts: Bloomberg

via Zero Hedge http://ift.tt/1uuXOm0 Tyler Durden

Isn’t it odd that ‘they threw the bums out’ last night and yet, economic confidence is high, stocks are high, and now, according to ADP, private payrolls are great too? Something doesn’t add up. ADP printed 230k against expectations of 220k, modestly up from a revised 225k in September. Small and Medium-sized businesses added jobs while the largest firms (over 1000 people) slashed jobs (which is great for the stock, right?).

 

 

The breakdown:

Mark Zandi may not have gotten the memo, but his eagerness to please the Obama administration will no longer bear any fruit. Also, the “folks” no longer believe what he says:

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is steadily picking up pace. Job growth is strong and broad-based across industries and company sizes. At this pace of job growth unemployment and underemployment is quickly declining. The job market will soon be tight enough to support a meaningful acceleration in wage growth.”

Uhm, no. More from the report:

“Employment continues to trend upward as we begin the last quarter of 2014, driven mostly by small to mid-sized companies,” said Carlos Rodriguez, president and chief executive officer of ADP. “October’s job growth is the highest since June and the second highest gain of 2014.”

People almost believe this. Almost.

Payrolls for businesses with 49 or fewer employees increased by 102,000 jobs in October, up from 93,000 in September. Job growth was up dramatically over the month for medium-sized firms. Employment among companies with 50-499 employees rose by 122,000, well over twice September’s increase of 47,000. Employment at large companies – those with 500 or more employees – saw a big drop from 85,000 the previous month to only 5,000 jobs added in October. Companies with 500-999 employees added 14,000 jobs, up from September’s 8,000. However, this increase was offset by the loss of 8,000 jobs by companies with over 1,000 employees.

Thank you M&A.

Some more meaningless, goalseeked, seasonally-adjusted charts:

Change in Nonfarm Private Employment

 

Historical Trend – Change in Total Nonfarm Private Employment

 

Total Nonfarm Private Employment by Company Size

 

Change in Total Nonfarm Private Employment by Selected Industry

 

And the biggest ADP value added: an infographic.

 

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

Based on the ridiculous, seasonally-adjusted data released day after day by the various US “Departments of Truth”, also known as the BLS, the Census, the Dept of Commerce, UMichigan, ADP, the Conference Board and so on, the US economy is so strong and consumer confidence is so resurgent, America is on the verge of a second golden age. Sadly, for Obama, and last night’s epic rout for Democrats, it was all a lie – a lie perpetuated by a manipulated S&P500 which now hits daily record highs on unprecedented central bank liquidity injections which have now terminally disconnected the “markets” from the economy, and the welfare of the vast majority of the common “folk” – and said “folk” saw right through it.

Bloomberg’s take is just one of many observations on the historic cognitive dissonance that is plaguing the mainstream media this morning, which has been furiously pumping up US confidence by pitching the endless array of “fake data” (to use Paul Singer’s words), only to see it all blow up in its face today.

The economy was voters’ most pressing concern as they cast their ballots in the midterm election, with seven of 10 rating conditions poor, preliminary exit polls showed.

 

More than five years after the recession ended, ordinary Americans still feel pinched. Wages and incomes haven’t recovered even as corporate profits hit records, stocks have almost tripled and the nation’s output of goods and services grew more than $1 trillion from its pre-recession peak.

 

Obama’s Democratic allies took the hit, with Republicans gaining a majority in the Senate for the first time during his presidency and adding seats in the House, which they have controlled for four years. Yet Republicans could hardly claim a mandate from yesterday’s results, and they’ll be judged on their ability to govern.

Irony #1: Bloomberg, which has been one of the many outlets spinning the “great recovery” is confused:

The discontent simmered even as the economy showed signs of strengthening in the run-up to the election, posting its strongest six months of growth in more than a decade. Gross domestic product expanded at a 3.5 percent annualized rate in the three months that ended in September after a 4.6 percent gain in the second quarter, the best back-to-back showing since 2003.

Maybe, just maybe, the economy never really strengthened, and it was all even more of the same propaganda that has ordinary Americans finally seeing through the lies. Bloomberg at least admits that much: “Most Americans haven’t shared in the gains. Adjusted for inflation, the July median household income of $54,045 was $2,600 lower than in December 2007…. Voters by 65-31 percent said the country is on the wrong track. That’s 12 points more negative than two years ago and was the second-gloomiest exit-poll reading since 1990, trailing only the 2008 election, the preliminary numbers showed. Half of voters expect life to be worse for the next generation.”

Irony #2: even as America is increasingly seeing through the left-right lies, and realizes that the GOP has no magic bullet to fix the economy, the vote last night was not for Republicans as much as against a broken status quo.

Senator Bob Corker, a Tennessee Republican, attributed his party’s gains to “disappointment and disillusionment with the administration.” He added, “I don’t think on the other end it’s a major endorsement of the Republican Party, either.”

 

Fifty-eight percent of voters said they were dissatisfied or angry at the White House, according to the preliminary exit polls; 59 percent said the same about Republican congressional leaders.

Irony #3: nothing will change:

Senator Ted Cruz, a Tea Party-backed Texas Republican, said this week that his colleagues must fight Obama at every turn. His priority, he told the Washington Post, is “looking at the abuse of power, the executive abuse, the regulatory abuse, the lawlessness that sadly has pervaded this administration.”

 

Cruz also wants to line up votes to dismantle Obama’s health-care law, a mission that would require improbable two-thirds majorities in both chambers to overcome presidential vetoes.

 

Some Republican leaders also say an all-out confrontation with Democrats is a one-way ticket back to the minority. Already, there are a few issues, most notably the Trans-Pacific Partnership trade deal, where both sides say there is opportunity for Obama to come together with Republicans.

The problem is that Obama, increasingly focused only on the golf course, will have none of it.

Frustrated with gridlock in Congress, Obama declared earlier this year that he would use his executive power to circumvent lawmakers on climate change and the minimum wage paid to federal contractors, as well as on immigration. That didn’t help his party yesterday and some, including Vice President Joe Biden, have signaled a willingness to compromise with Republicans.

The irony does not stop there, because the biggest beneficiary of the Obama administration and the split Congress so far has been the 1%, by way of the S&P 500 rising relentlessly in the fact of bad or good news. That rise continued overnight.

U.S. equity-index futures rose, the dollar strengthened and precious metals fell. Standard & Poor’s 500 Index futures advanced 0.4 percent at 10:03 a.m. in London, signaling the gauge will approach a record. The Bloomberg Dollar Spot Index climbed to its highest level since April 2009. The Stoxx Europe 600 Index jumped 1 percent.

Well, the economy may not get better but at least the rich will get a little richer as the charade continues.

But even a world full of ironies needs some humor, and it got it with this WSJ story, “GOP Senate Takeover Puts Fed on Hot Seat”:

Republicans’ takeover of the U.S. Senate promises increased political turbulence for the Federal Reserve, which has already been under pressure from a GOP-controlled House.

 

Financial executives say a GOP-led Senate would ratchet up congressional scrutiny of the central bank’s interest-rate policies, as well as its regulatory duties as overseer of the nation’s largest financial firms. Republicans haven’t controlled the Senate since before the 2008 financial crisis and recession, which put a spotlight on the Fed and its powers.

 

“If the Republicans take control of the Senate and thus have control of both the House and the Senate—two words for the Federal Reserve: Watch out,” Camden Fine, president of the Independent Community Bankers of America, said before the Election Day results were final. His group represents the community-banking industry.

While we enjoy the humor that someone will dare to touch the goose that lays the golden market, but we wish to make a small correction: it’s not two words. It’s three: “get to work.” Because after a few days when the excitement and the drama wears off, the people will once again realize they have been fooled, the only winners are Wall Street, the wealthy and their political marionettes in D.C. As for everyone else, well there is 2016, and then 2018, and so on… because the lie must go on.

via Zero Hedge http://ift.tt/1x7AOZb Tyler Durden

Three companions enjoyed a midday meal.  The first says,”I’m satiated.  The food and drink have done the trick.   I’m ready to return to work.”  The second says he still has room for a dessert to top off the wonderful meal. They look to the third, who doesn’t know quite what to do.  She did not eat much to begin and needs her energy, but she is too disciplined to have dessert.  

 

The ECB meeting has gained extra significance given last week’s developments.  The Federal Reserve ended its asset purchase program, which it did not call quantitative easing, but rather credit easing.  It also offered a constructive assessment of the labor market.  Its concerns about the decline in inflation expectations, measured by the break-evens, was minimal.  There was no recognition of the elevated market volatility in the middle of the month, which had prompted at least one regional Fed president to opine about tapering the tapering.  

 

At the end of last week, Japan announced to bold steps that were more aggressive than anyone expected.   With cutting its growth and inflation forecasts, the BOJ announced an acceleration of its balance sheet expansion from JPY60-70 trillion to JPY80 trillion, which includes the tripling of equity ETF purchases.  At nearly the same time, the government’s largest pension fund (GPIF with roughly $1.15 trillion of assets) indicated it would diversify its portfolio more aggressively.  This involves purchasing more than $150 bln of foreign assets.   The government bonds that will be sold are largely made up for by the increase in BOJ purchases.  

 

Separately, reports indicate that a somewhat larger than expected supplemental budget is in the works.  Estimates in the press suggest JPY3-4 trillion (0.6%-0.8% of GDP).  Some observers see the supplemental budget as a sign that Abe intends to push ahead with the sale tax increase next year.  BOJ and MOF officials seem to agree.  Yet it remains a contested issue.  An adviser to Abe suggested postponing the tax until January or April 2017.  Our understanding is that it would require a vote in the Diet, which Abe wants to avoid.  The legislative process complicates matters and costs Abe scarce political capital.  

 

What it took the Federal Reserve several years to do through its three iterations of asset purchases, the Bank of Japan seeks to do in a year, in terms of balance sheet growth relative to GDP.   After these warm-up acts, the spotlight turns to the European Central Bank.  

 

Unlike the Fed and BOJ, which are designed to have a strong leader, the ECB is designed to preserve as much as possible the national interest of its members.  At the Fed, when fully staffed, the Board of Governors have a majority of votes on policy.  At the ECB, the executive board consists of only six people.   According to a Reuters report, Draghi is being accused by many of his colleagues as being Caesar.  Draghi is said to have a secretive management style, erratic communication, and weak on collegiality.  

 

The ECB is a house divided.  The Reuters report likely comes from information leaked by a partisan. The report makes it appear that contrary to conventional wisdom, Germany is not isolated. It claims that nearly half of the 24-person council is opposed to a sovereign bond purchase program. These leaks help explain the conditions under which Draghi is operating.   

 

The Bundesbank’s Weidmann testified before the German High Court seeking to overrule a decision made by a large majority of the ECB’s on the Outright Monetary Transactions (OMT).  What’s more, the German Chancellor Merkel also supported the ECB.  At the recent IMF meetings, Germany reportedly briefed against the ECB.  The leaked story on Reuters indicates that the meeting between Draghi and Weidmann, which Merkel insisted on, was held last week, but produced no resolution. 

 

It is true that Draghi has stretched his authority as President of the ECB.  There are three examples of this that Draghi’s critics cite.  The first was at Jackson Hole where Draghi recognized the decline in inflation expectations and seemed to promise a policy response.  The second is that apparently the ECB Governing Council explicitly agreed to avoid a specific figure for balance sheet expansion. Draghi indicated a desire to bring the balance sheet back to levels at the beginning of 2012.    This essentially put the price tag of around 1 trillion euros.  Third, Draghi may have over-stepped his authority again in reference to the release of minutes and, at least according to some, may have given the Governing Council a fait accompli.  

 

It could be as the leak suggests, flaws in Draghi’s management style.  However, to take it at face value is to ignore the political context.  It seems that it is the Bundesbank that is resisting the majority of the ECB.     It is not without sympathy we consider Weidmann’s position.  On Trichet’s SMP, and Draghi’s OMT and asset purchase program, the Bundesbank, the largest shareholder of the ECB, has been continuously overruled.  Moreover, starting next year, it will not vote at every ECB meeting.  It is fighting a rearguard action.  No wonder Draghi is frustrated.  

 

The BOJ’s decision was made by the slimmest of margins (5-4 vote).  This is not the ECB way. The ECB often has, especially in the early years, made decisions without formal votes, according to reports.  The collegiality that Draghi is said to lack is a product of simpler times.  It is much more difficult to be collegial when one is fighting an internecine struggle.  If one shares ideas, they are often leaked.   Circulating papers can be helpful, but this too can be used to obstruct.  

 

The Reuters report suggests  that at the traditional informal dinner the night before the ECB meeting, “some” of the national central bank heads will more openly discuss this criticism of Draghi.  This does not make for a convincing and credible backdrop for strong action at the ECB meeting itself. Perhaps the internecine fighting is the consequence of the uncertainty on how to deal with the disinflation/deflation risks.  Consider the large-scale operation of the BOJ over the past six months. During this time, inflation has fallen (core inflation excluding the sales tax hike) not risen.  

 

The ECB cannot neuter Draghi.  He needs to speak with authority.  That authority is terrible constricted, not only by mandate, but by the recalcitrance of the Bundesbank.  We have argued previously that Germany is not as isolated as it is often perceived, but it is the first among equals.  At the very least, Draghi needs to affirm that the ECB Council is unanimous in agreeing that additional unconventional measures will be deployed if necessary.  

 

A few weeks ago, it was leaked that the ECB was considering buying corporate bonds.  While it is possible, we noted that 1) there are only about 1 trillion euros of such eligible securities and 2) the issuers are highly concentrated (France 44%, Germany 12%, Italy 12% and Netherlands 10%).  There seems to be two other assets that may seem to fulfill the ECB criteria.  

 

The first is the supra-nationals.  These include the bonds issued by the EFSF and ESM, EU bonds and EIB bonds.  In fact, one promising path on the growth side, especially now that the German economy itself is faltering, is for the EIB to issue more bonds to fund stimulative infra-structure projects throughout much of the region.  There are almost 500 bln euros of outstanding paper from these supra-nationals.  

 

The second is bank bonds.  The ECB is already buying covered bank bonds.  Given the conclusion of Asset Quality Review and stress tests, the next logical step seems to be to buy uncovered bank bonds.  There are about 2.3 trillion euros of bank bonds.  About 12% are currently being used as collateral for borrowings from the ECB.  

 

It may be difficult for Draghi take fresh initiatives now.   The second TLTRO is a month away, and the take down is expected to be more than twice the first.  The covered bond purchase program is operational (it has even entered the new issue market) and the ABS purchases will soon begin.  There are some indications that the pace of contraction in bank lending is continuing to slow.  Both the supply of credit and the demand is improving according to the ECB’s own surveys.   The euro’s decline will also be helpful. 

 

It rarely is mentioned in mixed company, but there is an important subtext that may be lost on many observers.  Draghi’s term extends to October 2019.  It is not yet at its mid-point.  Weidmann is his most obvious successor.  In fact, Draghi’s ascension was a bit of a fluke.  The job appeared to have been Axel Weber’s (Wiedmann’s predecessor), but he had a temper tantrum, and quit the ECB when he was outvoted.  Wiedmann is more skillful at these machinations. 

 

Some bombastic talk by a few observers about a mutiny at the ECB is wide of the mark.  It accepts at face-value the Reuters report, without asking the motivation of the leaker.  It is taking one side of the debate and pretending it is the whole truth.  The criticisms in the Reuters report that are levied against Draghi are not the stuff of a mutiny.  That said, Draghi’s frustration is palpable and cannot be sustained for long.  One scenario that we have mentioned before continues to be worth considering, even though it may not be an odds-on favorite.  

 

In the middle of next year, Italy’s president turns 95 and wants to retire.  He has wanted to retire for some time, but Italian politics being what they are made it impossible. Under a scenario that in 6-8 months the euro zone economy is still wrestling with deflation, stagnant growth and weak lending, Draghi is desperate for the ECB to do more, but cannot overcome what he has called the ECB’s DNA (ordo-liberalism).  The only way Germany might be able to agree to a more aggressive asset purchase program is if it were to run it.  If Draghi could get such a guarantee from Weidmann, perhaps Draghi would step down and arrange to become the next Italian president.  And from that post, by helping implement structural reforms in Italy, could do more good the euro area than he can as head of the ECB, with the BBK trying to frustrate him at every turn.  

 

via Zero Hedge http://ift.tt/1x5OByD Marc To Market

• From Yes We Can to Probably Not (BBG)
• How Mitch McConnell did it (Politico)
• Tough road ahead for Obama after Republicans seize Senate (Reuters)
• Election 2014: Who were the big winners and losers? (USA Today)
• GOP Senate Takeover Puts Fed on Hot Seat (WSJ), and other fables
• GOP Won by Recruiting the Right Candidates (WSJ)
• McCain could shake up U.S. defense in powerful new Senate role (Reuters)
• Investors Pulled Record Amount From Pimco’s Flagship Fund in October (WSJ)
• Taliban group threatens to attack India following border blast (Reuters)
• Oil Import Decline to U.S. Revealed by Louisiana as Truth (BBG)
• Toyota raises FY profit forecast by nine percent on weak yen (Reuters)
• GM Could Face $2 Billion Tab If Bankruptcy Shield Falls (BBG)
• Buyout Firms Push to Keep Information Under Wraps (WSJ)
• Prepare for Gold Rally If Swiss Bullion Referendum Passes (BBG)
• U.S. Ebola researchers plead for access to virus samples (Reuters)
• Governments’ Requests for Facebook User Data Up 24% in 1H 2014, Restricted Content Up 19% (AllFaceBook)
• Russians Skip Switzerland Trips as Ukraine Crisis Hits Ruble (BBG)
• Pilot mystery at heart of Virgin Galactic spaceship crash probe (Reuters)

 

Overnight Media Digest

WSJ

* Republican Senate candidates won sweeping victories on Tuesday, capturing Democratic-held Senate seats and giving the party control of Congress for the first time in eight years. (http://on.wsj.com/1zvbcrI)

* BHP Billiton Ltd will soon sell U.S. oil abroad without explicit permission from the government in another sign that the decades-old federal ban on crude exports is crumbling. (http://on.wsj.com/1tYXHgt)

* Investors pulled an industry record $27.5 billion from Pacific Investment Management Co Ltd’s flagship fund last month as the surprise exit of co-founder Bill Gross took its toll on the firm he co-founded. (http://on.wsj.com/1tyaghr)

* The speedy acquittal of Raoul Weil, a former top UBS AG official accused of helping Americans evade U.S. taxes, could complicate government efforts to prosecute other high-level executives for criminal conduct. (http://on.wsj.com/1tGurvk)

* The European Union on Tuesday cut its growth forecasts for this year and next, citing a lack of internal investment and political tensions in Ukraine and the Middle East. (http://on.wsj.com/1xbG4ZY)

* Chinese e-commerce firm Alibaba Group Holding Ltd said on Tuesday that revenue for the quarter rose 54 percent to $2.74 billion, as more business flowed through the company’s online shopping sites while its earnings for the quarter ended in September fell 39 percent from a year earlier to $494 million, largely because of stock awards to employees and executives. (http://on.wsj.com/10TSqMr)

* Monster Worldwide Inc said Timothy Yates would take over as the company’s chief executive, effective immediately, following the resignation of Salvatore Iannuzzi, who left the role for personal reasons. (http://on.wsj.com/1oiYus2)

* Private-equity shops have been advising public pension funds to keep secret details about fees, interactions with regulators and other investment data, sometimes threatening to punish investors that do not heed the warnings. (http://on.wsj.com/1pjGVsw)

* A federal judge said Allergan Inc raised “serious questions” about the legality of Pershing Square Capital Management LP’s and Valeant Pharmaceuticals International Inc’s joint $53 billion takeover bid, but he stopped short of blocking them from voting a 9.7 percent Allergan stake at a shareholder meeting next month. (http://on.wsj.com/10TVwQD)

 

FT

John Rishton, chief executive of Rolls-Royce Holdings Plc announced that the company would downsize its 55,000 strong workforce by 2,600 to bring down annual costs by 80 million pounds ($128 million).

A consortium of German, South African and Russian businessmen led by a former lieutenant of Russian billionaire Oleg Deripaska has launched a rescue bid for Petropavlovsk , a London-listed Russian miner. The company is one of the biggest casualties of a global slump in gold prices. Gold is trading at its lowest in the past four years and gold miners are struggling to adapt to the slump.

UK pharma group AstraZeneca Plc announced two deals on Tuesday that strengthen its position in cancer drugs. The company said it bought Definiens, a German company that uses new ways of acquiring information from cancerous tissue using imaging and data analysis. The other deal was a collaboration with Johnson & Johnson and Pharmacyclics to experiment with combinations of drugs developed by AstraZeneca and cancer treatments developed by the U.S. companies.

Spirit Pub Co Plc has agreed to Greene King’s buyout offer of 774 million pounds ($1.24 billion). Greene King’s offer represents a premium of 52 pct to Spirit’s share price when the takeover was first reported in the FT on Sept. 22. Greene King has 1,900 pubs, while Spirit has 1,227, mainly in London and the southeast.

 

NYT

* Searching for a new way to attack Ebola, companies and academic researchers are now racing to develop faster and easier tests for determining whether someone has the disease. Medical companies are looking for a technology that takes only a little blood, and gives an answer in minutes instead of hours or days.(http://nyti.ms/10jZKjl)

* Regulators fear that the stampede into less conventional assets, including leveraged loans, could create bubbles that will later pop, harming banks and the wider economy. (http://nyti.ms/1tabPOO)

* With more than a million defective small cars still on the road, General Motors Co said on Tuesday that it was adding an incentive for owners to have them fixed: $25 gift cards to one of seven retailers, like Applebee’s and Bass Pro Shops. (http://nyti.ms/1Aely0o)

* Turner Broadcasting announced on Tuesday that Kevin Reilly will become president of the TNT and TBS cable networks and the chief creative officer of Turner Entertainment. (http://nyti.ms/1tYF4cL)

* SoundCloud Ltd, a streaming music service that attracts 175 million users each month, has signed a licensing deal with the Warner Music Group Corp, one of the three major global music companies, the two companies announced on Tuesday. (http://nyti.ms/10sAFTH)

* Apple Inc said it had issued a bond of 2.8 billion euros ($3.5 billion) in debt for the first time in Euros as 22 percent of the company’s revenue came from Europe in the fiscal fourth quarter. (http://nyti.ms/10TyZmR)

* The United States trade deficit rose 7.6 percent to $43 billion in September as exports slumped, a sign that the world’s biggest economy is starting to feel the impact of weakening global growth. (http://nyti.ms/1tGax3r)

* Time Inc, America’s largest magazine publisher, reported on Tuesday that its third-quarter revenue had increased slightly to $821 million in the third quarter, compared with $818 million in the same quarter of last year as it continued to suffer from declines in print advertising and circulation. (http://nyti.ms/1pjc4fQ)

* European Union officials on Tuesday sharply lowered growth forecasts to a meager 1.3 percent as member states like France, Germany and Italy showed weak economic performance, and as business confidence suffered from heightened geopolitical risks. (http://nyti.ms/1x2fCFB)

* A federal judge on Tuesday declined to block the hedge fund billionaire William Ackman from voting his firm’s shares in a fight for control of the board of Allergan, the maker of Botox, potentially bolstering his effort to force the company into a sale to Valeant Pharmaceuticals International Inc . (http://nyti.ms/1y14GES)

* Greene King, a British brewer and operator of pubs and hotels, said on Tuesday that it had reached an agreement to acquire the Spirit Pub Co Pcl of Britain for 773.6 million pounds, or about $1.2 billion, in cash and stock. (http://nyti.ms/1uszEZA)

* Virgin Money Plc, the British financial services company, partly owned by the billionaire Richard Branson, said on Tuesday that it planned to list its shares in London by the end of November and hoped to raise about 150 million pounds, or $240 million, in its offering. (http://nyti.ms/1vGd22s)

* Pimco Fund said on Tuesday that investors withdrew $27.5 billion from its flagship Total Return fund in October, shrinking the size of the bond fund to $171 billion, following the shock departure of its manager, Bill Gross. (http://nyti.ms/1oiUdon)

 

China

CHINA SECURITIES JOURNAL

– Supply and demand in China’s property market is relatively loose with oversupply in some cities, said Qin Hong, director of the policy research centre at the Ministry of Housing and Urban-Rural Development.

– The Chinese city of Shenzhen will launch a new power transmission and distribution price pilot scheme in 2015, according to the country’s top regulator. The scheme marks the start of wider power price reform throughout the country.

– A branch of China Construction Bank Corp has drafted a plan to launch a renminbi investment and loan fund worth 20 billion yuan ($3.27 billion) to allow firms to invest in countries within the Association of Southeast Asian Nations (ASEAN).

SHANGHAI SECURITIES NEWS

– China’s finance ministry and environmental protection ministry have created a draft proposal for an environmental protection tax law, which has already been submitted to the country’s State Council, the official paper said.

21st CENTURY BUSINESS HERALD

– Sixteen listed Chinese banks reported a total 1.5 trillion yuan ($245.30 billion) drop in deposits in the third quarter according to banks’ earnings reports, the paper said.

CHINA DAILY

– The burning of coal caused almost a third of China’s airborne PM2.5 pollution in 2012, according to a report from the prestigious Tsinghua University on Tuesday. PM2.5 is a key barometer of the country’s often hazardous smog.

SHANGHAI DAILY

– Authorities in Shanghai have arrested a 21-year-old Chinese man after he dressed up as a zombie around the recent Halloween festival and terrified passengers on the city’s metro.

 

 

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
ADP employment change for October at 8:15–consensus 230K
Markit services PMI for October at 9:45–consensus 57.1
ISM non-manufacturing index for October at 10:00–consensus 58.0

ANALYST RESEARCH

Upgrades

AmTrust (AFSI) upgraded to Buy from Neutral at Compass Point
Bloomin’ Brands (BLMN) upgraded to Strong Buy from Outperform at Raymond James
Brink’s (BCO) upgraded to Outperform from In-Line at Imperial Capital
Digital River (DRIV) upgraded to Neutral from Underperform at Credit Suisse
Discovery (DISCA) upgraded to Buy from Hold at Pivotal Research
Michael Kors (KORS) upgraded to Equal Weight from Underweight at Barclays
Time Inc. (TIME) upgraded to Outperform from Market Perform at FBR Capital

Downgrades

Chuy’s (CHUY) downgraded to Hold from Buy at Jefferies
Chuy’s (CHUY) downgraded to Hold from Buy at KeyBanc
Chuy’s (CHUY) downgraded to Market Perform from Outperform at Raymond James
Chuy’s (CHUY) downgraded to Neutral from Outperform at RW Baird
Covance (CVD) downgraded to Hold from Buy at KeyBanc
Discovery (DISCA) downgraded to Neutral from Buy at Sterne Agee
Domino’s Pizza (DPZ) downgraded to Hold from Buy at Miller Tabak
Estee Lauder (EL) downgraded to Market Perform from Outperform at Wells Fargo
Expeditors (EXPD) downgraded to Underperform from Neutral at Credit Suisse
Goodrich Petroleum (GDP) downgraded to Outperform from Strong Buy at Raymond James
Health Care REIT (HCN) downgraded to Hold from Buy at Evercore ISI
Impax (IPXL) downgraded to Neutral from Overweight at Piper Jaffray
Intel (INTC) downgraded to Underperform from Market Perform at Bernstein
LINN Energy (LINE) downgraded to Neutral from Outperform at Credit Suisse
MDU Resources (MDU) downgraded to Neutral from Outperform at RW Baird
MFA Financial (MFA) downgraded to Market Perform from Outperform at Keefe Bruyette
MFA Financial (MFA) downgraded to Neutral from Buy at Sterne Agee
Navigator Holdings (NVGS) downgraded to Market Perform from Outperform at Wells Fargo
Philippine Long Distance (PHI) downgraded to Underweight from Neutral at JPMorgan
Roper Industries (ROP) downgraded to Neutral from Overweight at JPMorgan
Safety Insurance (SAFT) downgraded to Neutral from Buy at Compass Point
Santander Consumer (SC) downgraded to Market Perform from Outperform at Wells Fargo
Santander Consumer (SC) downgraded to Neutral from Buy at BofA/Merrill
Sykes Enterprises (SYKE) downgraded to Market Perform from Outperform at Wells Fargo
TripAdvisor (TRIP) downgraded to Sector Perform from Outperform at Pacific Crest
Triple-S (GTS) downgraded to Neutral from Buy at Citigroup

Initiations

Arista Networks (ANET) initiated with an Outperform at Imperial Capital
Foresight Energy (FELP) initiated with a Buy at Deutsche Bank
TRI Pointe Homes (TPH) re-initiated with a Buy at Deutsche Bank
Yahoo (YHOO) coverage resumed with a Buy at SunTrust

COMPANY NEWS

Morgan Stanley (MS) said it will post tax benefit of $1.3B in Q4 related to MSSBH. The company also said it is continuing to respond to subpoenas, requests for information
Facebook (FB) said government requests for user data up 24% in 1H over the second half of last year
Jive Software (JIVE) said CEO Tony Zingale will retire
Exelixis (EXEL) said E1512 Phase 2 trial of cabozantinib and erlotinib met primary endpoint
Pioneer Natural (PXD) announced that it is pursuing divestment of Eagle Ford Shale Midstream business
Jamba (JMBA) announced a $25M share repurchase program and forecast FY15 company-owned SSS up 3%-5%

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
21st Century Fox (FOXA), Spectra Energy (SE), Actavis (ACT), Caesarstone (CSTE), American States Water (AWR), Hill-Rom (HRC), Rockwood (ROC), Memorial Production (MEMP), Quanta Services (PWR), Forestar Group (FOR), Cognizant (CTSH), Covidien (COV), Towers Watson (TW), Voya Financial (VOYA), NICE Systems (NICE), Magna (MGA), Wix.com (WIX), Axiall (AXLL), QR Energy (QRE), Sanchez Energy (SN), Brookfield Residential (BRP), Natural Resource Partners (NRP), EOG Resources (EOG), Papa John’s (PZZA), Brixmor (BRX), Information Services (III), Colony Financial (CLNY), Sequenom (SQNM), Neenah Paper (NP), Innospec (IOSP), ReachLocal (RLOC), Midstates Petroleum (MPO), Cimarex Energy (XEC), KAR Auction (KAR), Correction: Coupons.com (COUP), Potbelly (PBPB), RenaissanceRe (RNR), XenoPort (XNPT), zulily (ZU), Exelixis (EXEL), TriNet (TNET), Corcept Therapeutics (CORT), Paycom Software (PAYC), Jack Henry (JKHY), Actuate (BIRT), Devon Energy (DVN), Callidus Software (CALD), Ironwood (IRWD), BIOLASE (BIOL), Jazz Pharmaceuticals (JAZZ), Pharmacyclics (PCYC), Jive Software (JIVE), NanoString (NSTG), ExamWorks (EXAM), Celldex (CLDX), Rex Energy (REXX), Criteo (CRTO), Genomic Health (GHDX), Adept Technology (ADEP), TechTarget (TTGT), 2U (TWOU), Enphase Energy (ENPH), Renewable Energy (REGI), Coherent (COHR), Activision Blizzard (ATVI), HomeAway (AWAY), FireEye (FEYE), Evolving Systems (EVOL), Pioneer Natural (PXD), Kopin (KOPN), AmSurg (AMSG), Itron (ITRI), Fiesta Restaurant (FRGI)

Companies that missed consensus earnings expectations include:
OCI Resources (OCIR), WellCare (WCG), Gray Television (GTN), FairPoint (FRP), Dynavax (DVAX), Cincinnati Bell (CBB), Chuy’s (CHUY), Era Group (ERA), Delek Logistics (DKL), Park-Ohio (PKOH), Pembina Pipeline (PBA), Xenith Bankshares (XBKS), Oasis Petroleum (OAS), PHH Corp. (PHH), Aeterna Zentaris (AEZS), Bio-Rad (BIO), Essex Rental (ESSX), Sparton (SPA), Hackett Group (HCKT), Solar Capital (SLRC), Commercial Vehicle Group (CVGI), Invesco Mortgage (IVR), UIL Holdings (UIL), Lexicon (LXRX), Coupons.com (COUP), Myriad Genetics (MYGN), Horizon Technology (HRZN), ZAGG (ZAGG), Safety Insurance (SAFT), Amdocs (DOX), Viper Energy (VNOM), Adamas Pharmaceuticals (ADMS), Pegasystems (PEGA), Carmike Cinemas (CKEC), Cerus (CERS), United Online (UNTD), Amyris (AMRS), T2 Biosystems (TTOO), MoSys (MOSY), CSG Systems (CSGS), Chuy’s (CHUY), TripAdvisor (TRIP), Jamba (JMBA), Ternium (TX)

Companies that matched consensus earnings expectations include:
Lamar Advertising (LAMR), Pacific Drilling (PACD), Capital Senior Living (CSU), Cardica (CRDC), Global Cash Access (GCA), RealPage (RP), Malibu Boats (MBUU), Bright Horizons (BFAM)

NEWSPAPERS/WEBSITES
BHP Billiton (BHP) to sell U.S. oil overseas without government permission, WSJ reports
Elliott could campaign for board seats at Interpublic (IPG), WSJ reports
Visa (V) to replace MasterCard (MA) in Best Buy card processing pact, Bloomberg reports
21st Century Fox (FOXA) COO says traditional cable bundle ‘fraying,’ FT reports
Website publishes hundreds of bent iPhone photos, Business Insider reports (AAPL)
France gives go-ahead on GE (GE)-Alstom (ALSMY) agreement, Reuters says

SYNDICATE
Antero Midstream (AM) 40M share IPO priced at $25.00
Federal Realty (FRT) files to sell 632,033 common shares of beneficial interest
Glu Mobile (GLUU) files to sell 9.9M shares for holders
Macquarie Infrastructure (MIC) files to sell 1.29M LLC interests for holders
NorthWestern (NWE) 6.77M share Secondary priced at $51.50
Pioneer Natural (PXD) files to sell 5.75M shares of common stock
QTS Realty Trust (QTS) files to sell 26.2M shares for holders
Quintiles (Q) files to sell 13.3M shares for holders
Xenon Pharmaceuticals (XENE) 4M share IPO priced at $9.00

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