iftttwall

Congratulations America: after severing ties with Russia, crushing cordial relations with China (leading to this stunning announcement by China’s president), alienating France (which is now openly calling for an end to the petrodollar), the Obama administration – following not one, not two, but three spying scandals in just the past year – has managed to sour relations with Germany to a point where one wonders just who is a remaining US ally in Europe these days.

According to Bloomberg, the German chancellor’s office has issued instructions to national intelligence services to limit cooperation with U.S. following alleged U.S. spying case, Bild reports without saying where it got information.

The newspaper also says:

• Instructions cover all activities not related to the immediate security interests of Germany and the safety of German soliders in Afghanistan, other foreign missions and terrorism threats
• Decision to ask U.S. intelligence representative to leave taken July 9 after the regular cabinet meeting at special meeting at Chancellery attended by Chancellery Minister Peter Altmaier, Foreign Minister Frank-Walter Steinmeier, Defense Minister Ursula von der Leyen, Justice Minister Heiko Maas and Interior Thomas de Maiziere
• Main reason for decision was failure of U.S. to cooperate in investigation of operations following revelations by Edward Snowden
• Foreign office subsequently gave U.S. Ambassador John Emerson 72 hrs to have U.S. agent leave Germany voluntarily or formal expulsion proceedings would be started against him
• Only 3 of the 218 BND documents sold to CIA were related to Bundestag espionage investigation

That said, the US is hardly be too worried: after all it is a well-known “secret” that of all European leaders with a very checkered past, the NSA has all the goods on Merkel (and her proximity to the communist system in her DDR days), which can and will be disclosed using the proper channels at a moment’s notice, with an appropriate (pre-vetted by the State Department of course) replacement in place should relations with Germany truly sour. It certainly explains why despite loud demands for a “formal espionage investigation“, nobody in the German government has lifted a finger to find out just how deep the NSA rabbit hole goes.

Look for how big the upcoming DOJ fine levied on Deutsche Bank, will be to evaluate if US-German relations are indeed in any danger of collapse, or if this too is merely another public spectacle to appease the German public which is rightfully furious at Obama for being constantly caught spying on America’s biggest European ally.

via Zero Hedge http://ift.tt/1r3chTD Tyler Durden

Submitted by Charles Hugh Smith from Of Two Minds

A Reader Asks: How to Find Shelter from the Coming Storms?

Some basic suggestions for those who are seeking shelter from the coming storms of global financial crisis and recession.

Reader Andy recently wrote: “I look forward to your blog each day but am still waiting for your ideas for surviving the coming crisis.” Andy reports that he and his wife have small government and private pensions, are debt-free and have simplified their lifestyle to survive the eventual depreciation of their pensions. They currently split their time between a low-cost site in North America and Mexico. They are considering moving with the goal of establishing roots in a small community of life-minded people.

Though I have covered my own ideas in detail in my various books (Survival+: Structuring Prosperity for Yourself and the Nation, An Unconventional Guide to Investing in Troubled Times, Why Things Are Falling Apart and What We Can Do About It and Get a Job, Build a Real Career and Defy a Bewildering Economy, I am happy to toss a few basic strategies into the ring for your consideration.

Let’s start by applauding Andy for getting so much right.

1. Don’t count on pensions maintaining their current purchasing power as the promises issued in previous eras are not sustainable going forward. I’ve addressed the reasons for this ad nauseam, but we can summarize the whole mess in four basic points:

A. Demographics. Two workers cannot support one retiree’s pensions and healthcare costs (skyrocketing everywhere as costly treatments expand along with the cohort of Baby Boomer retirees). The U.S. is already at a ratio of two full-time workers to one retiree, and this is during a “recovery.” the ratio in some European nations is heading toward 1.5-to-1 and the next global financial meltdown hasn’t even begun.

B. The exhaustion of the debt-based consumption model. The only way you can sustain a debt-based model of ever-expanding consumption is to drop interest rates to zero. But alas, lenders go broke at 0%, so either the system implodes as debtors default or lenders go bankrupt. Take your pick, the end-game of financial crisis and collapse is the same in either case.

C. Printing money out of thin air does not increase wealth, it only increases claims on existing wealth. An honest government will eventually default on its unsustainable promises; a dishonest government (the default setting everywhere) will print money to fund the promises until its currency loses purchasing power as a result of either inflation or some other flavor of currency crisis.

In other words, the dishonest government will still issue pension checks for $2,000 a month but a cup of coffee will cost $500–if anyone will take the currency at all.

D. Pensions funds are assuming absurdly unrealistic returns on their investments. Many large public pension plans are assuming long-term yields of 7.5% even as the yield on “safe” government bonds has declined to 3% or 4%. As a result, the pension fund managers have taken on staggering amounts of systemic risk as they reach for higher yields.

When the whole rotten house of cards (shadow banking, subprime everything, etc.) collapses in a stinking heap, the yields will be negative. As John Hussman has noted, asset bubbles simply bring forward all the returns from future years. Once the bubble pops, yields are substandard/negative for years or even decades.

Pension funds that earn negative yields for a few years will soon burn through their remaining capital paying out unrealistic pensions.

2. Lowering the cost of one’s lifestyle. It’s much easier to cut expenses than it is to earn more money or squeeze more yield out of capital.

3. Establishing roots in a community of like-minded people. Though it’s rarely mentioned in a culture obsessed with financial security, day-to-day security is based more on community than on central-state-issued cash–though this is often lost on those who have surrendered all sense of community in their dependency on the state.

The core of community is reciprocity: before you take, you first have to give or share. Free-riders are soon identified and shunned.

My suggestions are derived from this week’s entries on the inevitable popping of credit bubbles, the unenviable role of tax donkeys in funding corrupt state Castes and the Great Game of Elites acquiring essential resources with unlimited credit issued by central banks, leaving the 99% debt-serfs and/or tax donkeys with neither the income nor the credit to compete with Elites for real resources.

4. Lessen your dependence on anything that requires debt and assets bubbles for its survival. Whatever depends on expanding debt and asset bubbles for its survival will go away when credit/asset bubbles pop, which they always do, despite adamant claims that “this time it’s different.” It never is.

5. Control as many real resources as you can. These include water rights, energy-producing or conserving assets (solar arrays, geothermal heating/cooling systems, etc.), farmland, orchards and gardens, rental housing, and tools that you know how to use to make/repair essential assets such as transport, housing, equipment, etc.

6. It’s easier to conserve/not use something than it is to acquire it or pay for it. As resources rise in price, those who consume little will be far less impacted than those whose lifestyles requires massive consumption of gasoline, heating oil, electricity, water, etc. It’s as simple as this: don’t waste food, or anything else.

7. The easiest way to conserve energy and time is to live close to your work and to essential services/transport hubs. Those who reside in liveable city neighborhoods and towns with public transport and multiple modes of transport who can walk/bike to work, farmers markets, cafes, etc. will need far less fossil fuel than those commuting to everything via vehicle.

8. If you can’t find work/establish a livelihood, move to a locale with a better infrastructure of opportunity. I explain this in Get a Job, Build a Real Career and Defy a Bewildering Economy, but John Kenneth Galbraith made much the same point in his 1979 book The Nature of Mass Poverty.

9. If you buy property, do so in a state with Prop 13-type limits on property tax increases. We have no choice about being tax donkeys, but choose a state where income and consumption (i.e. sales tax) are taxed rather than property tax. You can choose to earn less and buy less, but you can’t choose not to pay rising property taxes.

10. Be useful to others. That way, they’ll want you around and will welcome your presence. There are unlimited ways to be helpful/useful.

11. Trust the network, not the state or corporation. Centralized systems such as the government and global corporations are either bankrupt and don’t yet know it or are bankrupt and are well aware of it but loathe to let the rest of the world catch on.

12. Be trustworthy. Don’t be morally corrupt or work for corrupt/self-serving institutions. Many initially idealistic people think they can retain their integrity while working for morally bankrupt, self-serving bureaucracies, agencies and corporations; they are all eventually brought down to the level of the institution.

Lagniappe suggestion: lead by example. “Setting an example is not the main means of influencing others; it is the only means.” Albert Einstein

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

It took the SEC only a week (after we first reported on it) to get involved with a company that does not exist, and whose stock rose nearly 30,000% in a few days, on a few thousand shares traded, hitting a nearly $6 billion market cap before it was finally halted for trading as we reported earlier.

However, even in its halt, CYNK (“don’t be cynkal, be hopeful” perhaps Obama would say) continues to provide entertainment.

Case in point, this sad individual who on that bulletin board of epic retail investor comedy, Yahoo Finance, has explained their problem: it appears some brokers actually did allow shorting of CYNK, at a cost. A rather high and recurring cost it would appear.

Oops.

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

We promise to read BusinessWeek’s cover story on the Viagra-fueled rise and subsequent droop of American Apparel’s sleaze king, Dov Charney, just as soon as we are done admiring the cover.

via Zero Hedge http://ift.tt/1q3vrt0 Tyler Durden

There has been an informational overload this morning, when as we reported previously, one after another bank scrambled to issue reports, some full of typos and clearly unvetted by compliance, calming the market and desperate to see all important confidence return to the peripheral market. Most of these notes have been nothing short of outright propaganda and disinformation, or a confirmation the analysts had zero idea what they were doing (case in point Goldman which had the stock at a Buy rating until this morning, even as the stock was virtually wiped out in recent weeks). Some, actually, have done the work. Below we provide some of the less then insightful reports, as conveniently summarized by Bloomberg, and we conclude with perhaps the best piece so far – one written by Bank of America’s Richard Thomas who alone among the sell-side penguin circus, was as close as he could be, to predicting this week’s outcome.

First, the penguins, via Bloomberg, all of which are prayingf that the powers that be will simply step in and bail out the bank in case they are, as usual, wrong:

SocGen

• BES is “money-good” at senior and LT2 level, but confidence on T2 has to be lower than senior
• Expect the authorities to concentrate hard on avoiding the failure of a systemic bank
• Base case, with 70% probability, is BES writes down EU1.2b worth of loans and intra-group exposures, leading to a fully loaded CET1 dropping to 8.75% from 10.5%; manageable
• Investors who are long BES and concurring with our base case shouldn’t sell [ZH: and hence, those who don’t concur, should sell]
• Investors seeking a buying opportunity should take a closer look; don’t expect a quick snap back

Henderson

• Expect Portuguese authorities to intervene and protect senior BES bondholders if bank’s situation becomes systemic
• Situation at Banco Espirito Santo isn’t comparable with SNS in the Netherlands, or Austria’s Hypo Alpe

Cairn Capital

• Senior BES credit spreads in the 500bps-700bps area start to look interesting for long risk opportunities, based on known information
• Senior bonds remain protected by most regulators in Europe; losses at BES unlikely to exceed the layer of the capital structure sitting below senior bonds

Merrion

• Given BES’ systemic importance, believe that the bank will be kept as a going concern
• Fate of subordinated bonds likely to be determined by the magnitude of its parent losses and whether the Portuguese govt and/or the ESM are required to rescue the institution

BNP

• Estimates there’s a 70% chance of an ESFG orderly resolution and 20% for a forced liquidation; in both cases the subordinated debt would be completely  written off
• 10% chance of a “going concern” scenario with intervention of cash-rich investors

RBS

• Weakened family control and a clearer separation between the BES and the group is positive for BES; should help reduce contagion from the group’s problem
• Trading desk strategists remain negative on BES

Barclays

• ESI and Rioforte have been funding themselves with large placements of CP, which they are looking increasingly unlikely to be able to repay
• With Portugal under a 3-yr troika program until two months ago, investors wonder why this wasn’t detected and dealt with earlier; this event casts some doubt about other latent problems in the system
• Portuguese banks are relatively well positioned for AQR
• Sees limited systemic implications for the Portuguese sovereign and the rest of the periphery

SEB

• More negative news on European banks likely in the coming mos as the ECB presents the results of its comprehensive assessment in Oct.
• Portugal is wake-up call for mkts as asset pricing and positioning are vulnerable to negative shocks, especially in fundamentally weak countries
• Developments in Portugal shouldn’t cause L-T risk aversion; country may apply for a similar support program that Spain had for its banking sector

Finally, here is Bank of America with a piece that actually deserves a read:

Higher group exposure. Still UW30%

 

Some more information on group exposure

 

Our negative view on BES bonds has always been predicated on the information asymmetries relating to exposure to the Espirito Santo Group. The bank has now disclosed its direct credit exposure to the Group (see Table 1). The total credit exposure is €1.2bn which represents a substantial risk to a bank with core Tier 1 capital of about €7bn (we estimate following the recent capital increase) or 17% of core capital. New management has committed to not increase this exposure. The bank highlights that it has a buffer of €2.1bn above an 8% minimum common equity Tier 1 ratio. In our view, the exposure to the Group is likely to result in significant additional losses for a bank that was already on average providing for an annualized 2.2% of its €47bn loan book each quarter and already has a loan book impaired at a rate of 20.6%.

 

Indirect exposure still a potential contingency

 

Retail clients of the BES Group also own €853m of ES Group debt. ESFG has provided a guarantee of €700m but we continue to expect this amount will substantially prove to be a contingent liability for the bank. Institutional clients hold about €2bn in Group paper which also may prove to be a contingency for the bank, we believe, irrespective of these investors’ qualified status. See Table 2.

 

What’s not there

 

No details are given on BES’s exposure to its Angolan subsidiary, BESA. The Portuguese press (Negocios) had reported on Thursday morning that Angola was considering creating a development bank by combining BESA with two other banks. This provides an uncertain backdrop for the Group’s investment in BESA and for any investment or credit lines that the bank may have made available to BESA, on which concrete details appear to be lacking. We also have no details of any loans made to third parties then on-lent to the Group, the implications potentially being that there aren’t any. This may only be clarified when we finally see the losses from the ES Group restructuring plan apportioned and it comes through in higher impairments at the bank.

 

No worst outcomes now but no need to rush to buy

 

Though BES’s direct exposure to the ES Group is substantially more than previous disclosures, we are clearly not moving at this point towards the worst outcomes for senior and subordinated bondholders for BES which may be seen as a relief (though the more lurid scenarios were never our base case). However, in spite of the recent capital increase, recent events have underlined that capital remains weak at BES, in our view. For example, net of reserves, impairments are still equivalent to post-rights equity even before we factor in a cushion for dealing with the direct and indirect exposures to the stressed ES Group. All of which suggests a potentially harsh outcome from the AQR, we think. Bonds have recovered somewhat this morning but we maintain our Underweight-30% rating.

And now, feel free to BTFD on hopes the ECB will bail out the bank, or at least the BIS will provide a supporting bid in BES stock for at least the next few hours, when the Basel bank’s trading desk attention is once again redirected to smashing gold at regular intervals.

Source: Bloomberg, BofA

via Zero Hedge http://ift.tt/1m0d147 Tyler Durden

For all the drama and comedy surrounding the epic idiocy in which a bunch of “investors” took the price of non-existent company CYNK from essentially zero to a market cap of over $5 billion in under a week, most people missed the key message here: the stock is a harbinger of what is happening to the entire market. Because while those defending what is clear irrational exuberance, scratch that, irrational idiocy are quick to point out that CYNK’s epic surge took place on less than 0.1% of its outstanding shares, these are the same people to say precisely the opposite about the S&P 500. “Ignore the collapsing volumes sending the stock market to all time high – it’s perfectly normal” is an often repeated refrain by the permabullish crowd. Just not when it involves case studies in market insanity like CYNK apparently.

Perhaps ironically, it was the concurrent most recent crisis in Europe, that involving Portugal’s cryptic Espirito Santo group, whose top-most HoldCo is largely shrouded in secrecy yet which somehow is not a deterrent to the sellside community to issue one after another “all is clear; don’t pull your deposits please” note, that confirmed not only that nobody has any idea what the real situation of European banks is, but how the entire capital market has now become nothing more than one glorified CYNK penny-stock turning into a mid-cap.

Deutsche Bank’s Jim Reid explains:

Whatever one feels about financials and the wider financial system, credit markets did arguably get a small glimpse of what things will be like when this cycle does actually end as the structurally impaired liquidity that exists in credit caused a small amount of panic yesterday morning before markets recovered in the European afternoon session. Liquidity is really poor in credit these days which doesn’t matter when markets are in buy only mode as they have been for many quarters now, but it does matter on the days when you get a negative story.

In other words, just like the CEO of CYNK who promptly “made” a few billion in paper profits, it feels great to “make” money on virtually no volume. The problem arises when one tries to cash out of paper and into all too real profits.

And here is what happens when one does finally try to book profits: moments ago the OTC BB just announced that, finally, CYNK was finally halted.

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

• Carl Icahn says ‘time to be cautious’ on U.S. stocks (Reuters)
• Banco Espirito Santo Lifts Lid on Exposure to Group (BBG)
• Slowing Customer Traffic Worries U.S. Retailers (WSJ)
• Obama tells Israel U.S. ready to help end hostilities (Reuters)
• Japan economics minister warns of premature QE exit, sees room for more easing (Reuters)
• Greek Banks See Quadrupling of Housing Loans by Next Year (BBG) … to fund buybacks like in the US?
• Piggy Banks Being Raided Signal Swedish Housing Dilemma (BBG)
• London Seeks New Spenders as Russians Skip $719 Champagne (BBG)
• Reynolds American Confirms Talks to Buy Lorillard (WSJ)
• Draghi Replaces Kuroda as Banker Currency Bulls Dread (BBG)
• Obama, Corporate Giants Announce Plan to Boost Suppliers (Reuters)
• Obama administration warns money low to deal with migrant crisis (Reuters)
• Thirty Ukrainian troops possibly killed in rebel missile attack (Reuters)
• House to Sue Obama Over Health-Care Law’s Mandate Waiver (BBG)

 

Overnight Media Digest

WSJ

 Google’s rival Yelp Inc says the search giant is promoting its own content at the expense of users, as Google battles to protect a proposed deal in Europe over similar concerns. An internal Yelp presentation, claims that Google is showing results from its Google+ local listings ahead of links to Yelp even in cases when a Google user includes “yelp” in a search query. (http://on.wsj.com/1njCEC5)

* The Authors Guild sent an email to its 9,000 members describing as “highly disingenuous” Amazon.com Inc’s recent offer to give Hachette Book Group authors all the revenue from their e-book sales. (http://on.wsj.com/1jisFx4)

* The U.S. Federal Trade Commission sued Amazon.com Inc alleging that the online retailer allowed millions of dollars in unauthorized purchases by children through its app store. (http://on.wsj.com/1w72uK7)

* Microsoft Corp Chief Executive Satya Nadella signaled Thursday he won’t quickly reshape what Microsoft does, but is likely to cut the number of people doing it.(http://on.wsj.com/1oKOFjn)

* The Puerto Rico Electric Power Authority tapped reserve funds to pay investors last week in the latest sign the cash-strapped utility may soon restructure its debt. A trustee for the power authority withdrew about $41.6 million from a reserve fund to make payments on July 1. (http://on.wsj.com/1oLGDXv)

* A federal judge on Thursday ordered the Internal Revenue Service to explain how it lost two years’ worth of a former official’s emails, and tapped a magistrate judge to find out whether the documents can be obtained from other sources. (http://on.wsj.com/1qPtgXR)

 

FT

Portugal’s government ministers and central bank have come out saying that Banco Espirito Santo (BES), the country’s largest listed bank by assets, faces the threat of being affected by the problems plaguing its biggest shareholder, the Espirito Santo family group.

The U.S. government has sued e-commerce company Amazon.com over accusations that it allowed children to collectively make unauthorised purchases worth millions of dollars on the credit cards of their parents.

The Bank of England is reviewing how banks will deal with increasingly larger penalties relating to misconduct, amid concerns that accumulating fines are hampering lenders’ efforts to increase capital.

The world’s top two container shippers, Maersk Line and MSC Mediterranean Shipping Co, have struck a long-term deal to trim costs by sharing capacity, after a previous three-way pooling deal unravelled last month.

The sale of Royal Mail achieved poorer value for taxpayers than the government sell-offs of the 1980s and 1990s, according to research published by the UK government’s official historian David Parker.

Marketers have exposed themselves to risks such as fraud by automating, the method once cheered as a means for the advertising industry to reduce waste.

 

NYT

* The presence of at least three under-age workers at a Shinyang Electronics factory casts a cloud over the labor practices of Samsung Electronics and its suppliers. (http://nyti.ms/1njCsmr)

* Shares of Portugal’s second-largest bank, Banco Espírito Santo, were suspended from trading, prompting fears that the bank might need to be rescued. The move sent high-flying stocks and bonds in Portugal plummeting, forced two Spanish companies to suspend bond offerings and brought concerns over the health of Europe’s banking system. (http://nyti.ms/1zsSIXm)

* Questcor Pharmaceuticals, recipient of a $5.6 billion takeover bid, disclosed that the number of patients reporting a so-called adverse event while using its immune-system drug Acthar last year represented almost 5 percent of prescriptions dispensed. (http://nyti.ms/1qPsham)

* An essay sent to Microsoft Corp’s employees by the company’s chief executive appears to lay the groundwork for significant changes that will be revealed later this month. (http://nyti.ms/1ooKQ0l)

* With refining eroding into a money-losing area for most European players, Exxon Mobil is making a contrarian bet by expanding diesel production. (http://nyti.ms/TWg4DI)

* The Federal Trade Commission contended that Amazon improperly billed customers for “many millions of dollars” of charges that children made without their parents’ consent. (http://nyti.ms/TWg6eF)

* Lockheed Martin and two of its biggest suppliers agreed on Thursday to invest up to $170 million of their own money to help lower the high cost of the new F-35 fighter jets. The deal lets the Pentagon shift a small part of the risk to the contractors as it grapples with continuing problems on the giant program, which could cost nearly $400 billion for 2,400 planes.(http://nyti.ms/1rcUrv3)

 

Canada

THE GLOBE AND MAIL

** Canadian fighter jets will be patrolling the edge of Russian airspace starting in September, when Ottawa sends six CF-18s to join air defense missions over the Baltic states as part of the NATO response to Moscow’s efforts to destabilize Ukraine. (http://bit.ly/1ztkWRP)

** Canada is pushing for warmer ties with the United Arab Emirates in an effort to boost trade and security relations with a country it sees as a key partner in the Middle East. (http://bit.ly/1nkiCr8)

Reports in the business section:

** Enbridge Inc is turning its eyes north to Alaska, entering talks with the state to build an $8-billion natural gas pipeline there if a competing project falters. (http://bit.ly/1rdpTcH)

NATIONAL POST

** Canada’s billion-dollar TV and film business could be at risk because of the government’s new temporary foreign worker rules, industry insiders are warning. International actors and film and TV production crews are being classified as temporary foreign workers, and subject to a $1,000 fee and 15-day waiting period under Employment Minister Jason Kenney’s reform of the controversial program. (http://bit.ly/1ndRyFc)

** The biggest implosion in Ottawa’s history is set for this Sunday as a demolition team is expected to take down an aging, unloved federal office building. The 11-story Sir John Carling Building will be turned into about 40,000 tons of rubble on Sunday when Advanced Explosives Demolition Inc sets off about 400 kilograms of intricately-placed dynamite to take down the structure. (http://bit.ly/1tunnmw)

FINANCIAL POST

** Unionized employees at The Globe and Mail voted 85 percent in favor of ratifying a new contract on Thursday that would allow management the freedom to cut staff, but would not permit them to require newsroom staff work on paid “advertorial” articles. (http://bit.ly/1qQ3lPX)

** Ontario’s Finance Minister Charles Sousa said on Thursday that provinces pushing for a co-operative securities regulator in Canada want but don’t need Alberta. He acknowledged that the province, which so far opposes the co-operative initiative that includes the federal government, represents a significant part of Canada’s capital markets. (http://bit.ly/1jx6F1I)

 

China

CHINA SECURITIES JOURNAL

– The newspaper expected that a total of 30 cities could ease property rules on house buying this year, with rumours that Jinan, Xiamen have already eased policy.

SHANGHAI SECURITIES NEWS

– Chinese automaker Anhui Jianghuai Automobile Co said it plans to merge with its parent company JAC Group.

SECURITY TIMES

– The yearly demand for environment investment in China is likely to be 2 trillion yuan ($322.46 billion) in the coming years, said Ma Jun, chief economist of People’s Bank of China.

CHINA DAILY

– The effect of the second-child policy is limited and the policy is less likely to be further loosened in a short period of time, said experts at a news briefing held by the National Health and Family Planning Commission on Thursday.

SHANGHAI DAILY

– Guo Meimei, who caused national outrage in 2011 after flaunting her expensive handbags and sports cars on the Internet, has been detained for betting on 2014 World Cup matches, Beijing policy said.

Britain

The Times

FLIGHTS WILL DOUBLE BY 2033, BOEING PREDICTS

Five jetliners are to be built every day for the next 20 years as aircraft manufacturers gear up to handle 7 billion passengers a year by 2033, by which time the annual number of internal flights in China will have overtaken the domestic US market.

SMES WAITING ON 40 BLN STG IN LATE BILLS

Small and medium-sized companies are struggling under a record late payment burden of almost 40 billion pounds ($68.1 billion), payment provider Bacs has warned.

The Guardian

FORMER BRADFORD & BINGLEY FD FINED AGAIN OVER BOTCHED RIGHTS ISSUE

Britain’s accountancy watchdog has fined the former finance director of Bradford & Bingley for failing to alert his board to a serious worsening of the bank’s financial position during the financial crisis.

SURGE IN IMPORTS WIDENS UK TRADE DEFICIT

Britain’s trade deficit unexpectedly grew to 2.4 billion pounds in May, fuelling concerns that the strength of the pound is undermining efforts to increase exports.

The Telegraph

FCA CRACKS DOWN ON 3 BLN STG DEALER COMMISSION MARKET

Britain’s financial regulator has told asset managers that a 3 billion pounds market in charges for handling trades and publishing financial research must be cleaned up, warning that investors may be receiving an unfair deal.

WONGA RIVAL SUNNY ORDERED TO HALT TV ADVERTS

Britain’s advertising watchdog has banned two adverts for a payday lender after it failed to warn customers about how much it would cost to borrow money.

SSP FLOAT WORTH 15 MLN STG TO KATE SWANN

Kate Swann, the former boss of WH Smith, stands to gain as much as 15 million pounds from the flotation of catering company SSP <IPO-SSPG.L> less than a year after joining the business.

Sky News

FORMER MAXWELL PRINTER EYES PUBLISHING DEAL

A printing group once owned by Robert Maxwell, the disgraced newspaper tycoon, is looking to merge with one of the UK’s biggest independent customer content producers.

TAXPAYER SHORT-CHANGED ON ROYAL MAIL SALE, MPS SAY

The controversy over the 3.3 billion pound privatisation of Royal Mail has erupted again as an influential group of MPs has criticised Vince Cable over his handling of the sale.

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Treasury budget for June at 14:00–consensus $79.0B

ANALYST RESEARCH

Upgrades

Air France-KLM (AFLYY) upgraded to Hold from Underperform at Jefferies
ChannelAdvisor (ECOM) upgraded to Buy from Hold at Deutsche Bank
HollyFrontier (HFC) upgraded to Neutral from Sell at Citigroup
ITG (ITG) upgraded to Outperform from Market Perform at Keefe Bruyette
Joe’s Jeans (JOEZ) upgraded to Buy from Neutral at B. Riley
LogMeln (LOGM) upgraded to Outperform from Market Perform at Cowen
Marathon Petroleum (MPC) upgraded to Buy from Neutral at Citigroup
QLogic (QLGC) upgraded to Equal Weight from Underweight at Morgan Stanley
Royal Dutch Shell (RDS.A) upgraded to Overweight from Neutral at JPMorgan
Siemens (SIEGY) upgraded to Outperform from Sector Perform at RBC Capital

Downgrades

Alon USA Partners (ALDW) downgraded to Neutral from Buy at Citigroup
Brinker (EAT) downgraded to Hold from Buy at Wunderlich
Con-way (CNW) downgraded to Neutral from Buy at Citigroup
Finish Line (FINL) downgraded to Neutral from Buy at Sterne Agee
NovaGold (NG) resumed with a Neutral from Overweight at JPMorgan
Open Text (OTEX) downgraded to Sector Perform from Outperform at RBC Capital
Procter & Gamble (PG) downgraded to Market Perform from Outperform at Wells Fargo

Initiations

Altria Group (MO) initiated with an Outperform at Cowen
Berkshire Hills Bancorp (BHLB) initiated with a Hold at Jefferies
Halozyme (HALO) initiated with an Overweight at JPMorgan
Lorillard (LO) initiated with an Underperform at Cowen
MacroGenics (MGNX) initiated with an Outperform at Oppenheimer
Philip Morris (PM) initiated with a Market Perform at Cowen
Prothena (PRTA) initiated with an Outperform at Oppenheimer
Reynolds American (RAI) initiated with a Market Perform at Cowen
Seventy Seven Energy (SSE) initiated with a Buy at Wunderlich
Sprouts Farmers Markets (SFM) initiated with a Neutral at Longbow
Sprouts Farmers Markets (SFM) initiated with an In-Line at Imperial Capital
Sterling Bancorp (STL) initiated with a Buy at Jefferies
Xencor (XNCR) initiated with an Outperform at Oppenheimer
YPF (YPF) initiated with a Neutral at JPMorgan
iGATE (IGTE) initiated with an Outperform at William Blair

COMPANY NEWS

Imperial (ITYBY) confirmed talks with Reynolds (RAI), Lorillard (LO) over asset acquisition
Whirlpool (WHR) to acquire majority interest in Indesit for $15.06 per share
The FHFA said it is seeking input on draft requirements that would apply to private mortgage insurance companies that insure mortgage loans owned or guaranteed by Fannie Mae (FNMA) and Freddie Mac (FMCC). These requirements would apply only to private mortgage insurers that are currently approved to do business with Fannie Mae or Freddie Mac and those seeking approval in the future (MTG, RDN)
Chevron (CVX) forecast Q2 earnings higher than Q1
Baker Hughes (BHI) reports Q2 U.S. onshore well count up 428 from Q1 to 9,394
Isle of Capri (ISLE) names Eric Hausler as CFO

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Infosys (INFY), Barracuda Networks (CUDA), E2open (EOPN), PriceSmart (PSMT), Joe’s Jeans (JOEZ)

Companies that missed consensus earnings expectations include:
Rent-A-Center (RCII), VOXX International (VOXX), Zep Inc. (ZEP)

Infosys (INFY) reaffirms FY15 revenue growth outlook 7%-9%
Barracuda Networks (CUDA) sees FY15 EPS 14c-18c, consensus 14c
Barracuda Networks (CUDA) sees Q2 EPS 3c-4c, consensus 3c
Gap (GPS) reports June net sales up 1%, SSS down 2%

NEWSPAPERS/WEBSITES

Reynolds American (RAI), Lorillard (LO) close to merger agreement, FT reports
Alibaba (BABA) may begin IPO process by end of month, WSJ reports
Yelp (YELP) says Google (GOOG) results favoring Google+ local listings, WSJ reports
TSMC (TSM) begins shipping microprocessors to Apple (AAPL), WSJ reports
AbbVie (ABBV) encourages largest Shire (SHPG) shareholders to pursue talks, Bloomberg says
GameStop (GME) CEO says retailer won’t tamper with creative direction, CNet reports
Amazon (AMZN) urges FAA to allow increased drone development, CNet reports

SYNDICATE

Envision Healthcare (EVHC) 27.5M share Secondary priced at $34.00
Fifth Street Finance (FSC) files to sell 13.25M shares
Fox Factory (FOXF) 5M share Secondary priced at $15.50
Westmoreland Coal (WLB) 1.46M share Secondary priced at $35.50

via Zero Hedge http://ift.tt/1s2nhAO Tyler Durden