Tag: finance

In yesterday’s most underreported story, which we noted first thing yesterday morning, China is on the verge of a second bond default just weeks after Solar cell maker, Chaori Solar, defaulted earlier this month, this time Zhejiang Xingrun (appropriately abbreviated ZX): a real-estate developer which just collapsed after its largest shareholder was arrested and which has some CNY3.5 billion in debt and furthermore the company was revealed to have been taking deposits from individuals offering interest rate between 18% and 36%.

But while Chaori was left to crash and burn, ZX may need a bailout for the same reason that we have always said China is desperate to keep kicking the can for as long as possible: any glimpse under the hood will reveal the true Chinese credit bubble nightmares, best summarized in the following: “CITIC Trust tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders.” Which is why overnight the FT reported that none other than the PBOC was scrambling to bail out the lender in order to avoid the inevitable liquidation avalanche that will begin as soon as the realization hits just how far China’s non-existent collateral is stretched out.

From the FT:

Officials from the government of Fenghua, a town in eastern China with a population of about 500,000, the People’s Bank of China and China Construction Bank, which was the main lender to the developer, were on Tuesday thrashing out ways to repay the company’s Rmb3.5bn ($566m) of debt.

Not surprisingly, local government officials were keen to downplay Xingrun’s fate, which quickly added fuel to jittery markets after Chaori defaulted previously. The “situation is not that serious yet”, said a Fenghua local government official to the FT who only gave her surname Wu. Failure of a small property developer is not unusual in China or even in Zhejiang Province, where Xingrun is based. Well, it is if people start asking questions.

One can see why the local governments and administrators are eager to downplay the potential impact. As Bloomberg reported overnight, “some 66 percent of new Chinese developer dollar-denominated bonds sold this year are trading below their issue price amid the collapse of a private real estate company and news the housing market is cooling.” In other words, the Chinese housing market is suddenly the perfect receptacle for a lit default match to lead to an all out panic.

About $6.3 billion of notes in the U.S. currency sold by property companies including Guangzhou R&F Properties Co., KWG Property Holding Ltd. and Shimao Property Holdings Ltd. (813) have fallen in secondary market trade, according to data compiled by Bloomberg. Prices on Kaisa Group Holdings Ltd. (1638)’s 2018 8.875 percent debentures dropped to a seven-month low yesterday while Shimao Property’s $600 million of 8.125 percent notes due 2021 and sold to investors at par in January were trading at 97.646 cents on the dollar.

 

Demand for developer debt is waning after government officials familiar with the matter said yesterday Zhejiang Xingrun Real Estate Co. doesn’t have enough cash to repay 3.5 billion yuan ($566 million) of debt. The value of home sales in the world’s second-biggest economy fell 5 percent in the first two months of the year after local governments stepped up measures to curb rising prices. The 7.5 percent economic expansion targeted by China this year would be the slowest since 1990.

 

“We’re cautious on property bonds short term, with the developers expected to report weaker year-on-year monthly sales data for March,” said Owen Gallimore, a Singapore-based credit analyst at Australia & New Zealand Banking Group Ltd. “For the majority of high yield property developers, January and February sales fell as tier three and four cities suffered from over supply and the smaller developers faced a credit squeeze.”

In other words, not only is the primary market frozen, but the secondary market is crashing further adding to the reflexive fuel that could be precisely the catalyst that unwinds the entire Chinese credit bubble:

China Resources Land Ltd. was the last company from China and Hong Kong to sell dollar debentures in Asia, adding $50 million to its existing 4.375 percent bonds due February 2019 on March 13.

 

The collapse in secondary prices comes less than two weeks after Shanghai Chaori Solar Energy Science & Technology Co. became the first company in China to default on its onshore corporate bonds.

All of this is happening as China is doing all it can (and has been for the past two years, without success) to cool its red hot housing market bubble, which unlike the US where the bubble is in the stock market, in China it is all about housing:

At least 10 Chinese cities stepped up measures to cool local property markets at the end of last year with Shenzhen, Shanghai and Guangzhou raising the minimum down payments for second homes to 70 percent from 60 percent.

 

New-home price growth slowed last month led by Beijing, Shenzhen, Shanghai and Guangzhou, the four cities the government defines as first tier, the National Bureau of Statistics said today. Prices in Beijing and Shenzhen each rose 0.2 percent in February from a month earlier while they added 0.4 percent in Shanghai, the smallest increase since November 2012, and gained 0.5 percent in Guangzhou. Prices advanced in 57 of the 70 cities the government tracks, versus 62 in January.

Visually:

So all of the above would suggest the FT’s account of an imminent, if quiet, bailout of ZX is true. Turns out isn’t, and in fact the PBOC was so pissed it took to its Weibo microblog site to explain what really happened. As Bloomberg summarized, the Chinese central bank says it didn’t participate in an “emergency meeting held Tuesday” to discuss Zhejiang Xingrun Real Estate as reported by some unidentified media  according to a statement posted on PBOC’s official microblog account. PBOC is not involved in dealing with risks from the developer, according to the statement.

For the purists, here is the official statement via Weibo:

[Condemned individual foreign media untrue] March 18, individual foreign media reports, “China’s central bank to discuss emergency aid small real estate company,” inconsistent with the facts: First, the People’s Bank did not participate in the text referred to “convene an emergency meeting on Tuesday.” . Second, the People’s Bank of Zhejiang Xingrun not involved in the disposition of property-related risks. False reports to the media release behavior in unverified cases, the People’s Bank strongly condemned.

Well, it was google-translated, but the gist is clear.

So which is it: will China really let ZX fail and allow the second bond default in under a month to further slam the secondary bond (and much less relevant equity) market, while grinding the all important primary issuance market to a halt at precisely the time when credit creation in China is absolutely critical, or will the PBOC have been exposed as a liar once again.

Since the PBOC is merely a central bank, and thus lying is its bread and butter, our money is on the former, but one can only hope that in a world in which the Bernanke global put is now ubiquitous and perpetual, and the only investment calculus depends on the return/return analysis, that it will be “communist” China that finally allows risk back into the global investment equation.

And finally, putting it all into perspective, is our favorite chart showing bank asset creation in China and the US over the past five years. It needs no commentary.

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

It seems the blatant unveiling of the HFT market’s Holy Grail trading – Virtu (1 loss in 1238 days) – has raised some attention as Bloomberg reports, NY AG Eric Schneiderman has opened a broad investigation into whether U.S. stock exchanges and alternative venues provide high-frequency traders with improper advantages. As one European lawmaker noted, “the area of high-frequency trading is lacking suitable regulation,” and Schneiderman warned “this new breed of predatory behavior gives a small segment of the industry an enormous advantage over all other competitors.”  We wonder how this will affect Virtu’s IPO given regulation is risk factor #1!

 

Via Bloomberg,

New York’s top law enforcer has opened a broad investigation into whether U.S. stock exchanges and alternative venues provide high-frequency traders with improper advantages, a person with direct knowledge of the matter said.

 

Attorney General Eric Schneiderman is examining the sale of products and services that offer faster access to data and richer information on trades than what’s typically available to the public, according to the person. Wall Street banks and rapid-fire trading firms pay thousands of dollars a month for these services from firms including Nasdaq OMX Group Inc. and IntercontinentalExchange Group Inc.’s New York Stock Exchange.

 

The attorney general’s staff has discussed his concerns with executives of Nasdaq and NYSE and requested more information, said the person, who asked not to be named because the inquiry hasn’t been announced. Schneiderman’s office is also looking into private trading venues, known as dark pools, and the strategies deployed by the high-speed traders themselves.

 

“This new breed of predatory behavior gives a small segment of the industry an enormous advantage over all other competitors and allows them to use new technologies to reap huge profits based on unfair advantages,” according to a draft of Schneiderman’s speech delivered today at New York Law School.

 

…

 

The investigation threatens to disrupt a model that market regulators have openly permitted for years as high-speed trading and concerns about its influence have grown. Trading firms pay to place their systems in the same data centers as the exchanges, a practice known as co-location that lets them directly plug in their companies’ servers and shave millionths of a second off transactions. They also purchase proprietary data feeds, which are faster and more detailed than the stock-trading information available on the public ticker.

 

…

 

Schneiderman has previously voiced disapproval of services that cater to high-speed traders and give them a potential edge. When Business Wire, the distributor of press releases owned by Warren Buffett’s Berkshire Hathaway Inc., said last month it would stop sending the statements directly to high-frequency firms, Schneiderman called it “a tremendous victory.”

 

Taking his concerns public may help Schneiderman push the exchanges to alter practices, as Business Wire did, even without enforcement action. Among the powerful tools at his disposal is the Martin Act, an almost century-old law that gives him broad powers to target financial fraud in the state.

 

…

 

Targeting the exchanges could be the most straightforward way to deal with any ill effects of speedy trading, said James D. Cox, a securities law professor at Duke University in Durham, North Carolina…“They have a broad statute to maintain orderly markets and to do so in an ethical manner.”

 

“The SEC wants to protect investors, but also strengthen and promote U.S. capital markets,” Cox said. “These twin functions conflict with each other, which is why they have so far turned a blind eye on this issue.”

Of course, the big headline will be the effect this has on Virtu’s “Holy Grail” IPO – their #1 Risk Factor is…

In addition, certain market participants have requested that the U.S. Congress and the SEC propose and adopt additional laws and rules, including rules relating to restrictions on co-location, order-to-execution ratios, minimum quote life for orders, incremental messaging fees to be imposed by exchanges for “excessive” order placements and/or cancellations, further transaction taxes, tick sizes and other market structure proposals. The SEC recently proposed Regulation SCI, which could impose significant compliance and other costs on market centers that may have to pass such costs on to their users, including us, and could impact our future business plans of establishing a market center to avoid or reduce market center costs for certain of our transactions. Similarly, the consolidated audit trail, which the SEC is requiring SROs to propose a plan for and implement, is expected to entail significant costs both on market centers, which may pass these costs along to their users, and broker-dealers directly.

 

Any or all of these proposals or additional proposals may be adopted by the SEC, CFTC or other U.S. or foreign legislative or regulatory bodies. These potential market structure and regulatory changes could cause a change in the manner in which we make markets, impose additional costs and expenses on our business or otherwise have a material adverse effect on our business, financial condition and results of operations.

Seems “lobbying costs” might be about to become a much bigger line item…

It appears Virtu really does have a problem!

Schneiderman will focus on 1 HFT firm that said last week it made money every day over 4 years, except 1. He says that's risk-free trading.

— Eamon Javers (@EamonJavers) March 18, 2014

via Zero Hedge http://ift.tt/1lKV6jZ Tyler Durden

Goldman Sachs is bearish on TSLA with a $200 price target (currently trading at $236) but… provides bulls with all the hope they need to justify stock prices rising to at least $478. Laying out 5 scenarios on the company’s path to 2025, the analyst shies from his base-case and downside-risk perspective to reflect on the possibility that TSLA is truly disruptive. Depending on whether Elon Musk is Steve Jobs (iPhone projections), Henry Ford (Model T projections), or a Maytag Repairman (Consumer Durable projections), TSLA’s upside is enormous as all of our three “disruptive outcomes” imply meaningful upside to the current share price. Of course, the probability assocoated with each of these scenarios is why Goldman’s overall target is 15% below current prices – but that won’t stop the dreamers.

 

Adding rigor to the upside analysis
We quantify the option value of Tesla shares through a deep dive into the lessons learned from past disruptive technologies as well as the opportunity from stationary storage. Our new 6-month price target rises to $200.

Automotive business worth $180
If Tesla’s auto business were to be truly disruptive (to the whole auto industry, not just luxury vehicles), then there would be considerable upside.

Keying off the history of the iPhone, (adjusting for the replacement cycle) would imply 3.1mn units by 2025 and a PV of $442 per share.

The Model-T trajectory implies 3.3mn units and $478 per share;

and the volume implied by a basket of transformative durable goods (laundry appliances/dishwashers/refrigerators) gets us 1.8mn units and $329 per share.

However, this is offset by our base case (broadly unchanged from our previous forecast) and a downside case where Tesla’s present value is lower and hence we arrive at probability weighted share price of $180 for the auto business alone.

 

 

Full Goldman Sachs research note below:

Tsla Goldman

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

On the heels of reports that:

• *UKRAINE WON’T RECOGNIZE CRIMEA JOINING RUSSIA: INTERFAX

The Eastern Ukraine Kharkiv region’s governor Baluta warns:

• *RUSSIAN ARMY CONCENTRATED NEAR ROADS FOR QUICK INVASION: BALUTA
• *RUSSIA BOOSTS ARMY PRESENCE AT UKRAINE BORDER: KHARKIV GOVERNOR

And all of this after Putin confirmed that West’s sanctions are “irresponsible and aggressive and we will respond properly.”

 

Baluta warns about Russian troops amassing: (Via Bloomberg,)

Russian military presence has grown in last 5 days, Ihor Baluta, governor of eastern Ukrainian region, says in interview.

 

Baluta also says:

 

Russian forces concentrated along highways for rapid invasion, ~15km from border

 

57 Russians denied crossing into Kharkiv region today as of 10am

 

No resistance to Ukraine’s troop deployment in Kharkiv

 

10 Russians involved in attempt to storm govt building March 16

 

Russia “is trying to create the situation unfolding now in the south here in eastern regions”

 

~25% of Kharkiv residents sympathize with separatists

An Ukraine’s foreign minister makes it clear that they will not accept Crimea’s annexation (via Interfax,)

Ukraine will not recognize the Autonomous Republic of Crimea’s and Sevastopol’s accession to the Russian Federation, nor will it recognize independence of the self-proclaimed Republic of Crimea, the Ukrainian Foreign Ministry said.

 

“We do not recognize and will never recognize either Crimea’s so-called independence or the so-called agreement on its accession to the Russian Federation,” Ukrainian Foreign Ministry spokesman Yevhen Perebyinis said at a news conference on Tuesday.

via Zero Hedge http://ift.tt/Oy9wZq Tyler Durden

If there is one main theme in the just released February housing starts and permits data, it is that while total starts continued declining, missing expectations of a 910K print, instead dropping from an upward revised 910K to 907K, the third month in a row of declines after peaking at 1,101K in November, with single-family unit starts of 583K, virtually unchanged from the 591K level first seen in September 2012, it was the epic bifurcation in Housing Permits between single-family housing and rental (or multi-family units) that is the highlight. Yes, the headline Permit number of 1,018K beat expectations of 960K rising from January’s revised 945K, but it was the composition that was the story – to wit, single-family permits dropped from 599K to 588K which just happens to be the lowest number since January of 2013, but this ongoing drop in single family was more than offset by multi-family permits, which soared to 407K – the highest number since the 540K peak recorded in June of 2008!

In other words, builders and investors appear to have given up on any growth in single-family demand, made obvious by the decade-low collapse in mortgage applications, and instead everyone is betting that the last vestige of a “housing recovery” will focus merely on rental properties. We can only hope that Americans have enough disposable income to validate this thesis.

Total Housing Starts and sequential change:

 

Broken down by Single and Multi-Family units:

 

And Total Permits, seasonally adjusted and actual:

 

… and finally broken down by Single and Multi-family. Not the surge in rental permits.

 

via Zero Hedge http://ift.tt/1l01yGK Tyler Durden

As long you don’t eat, sleep under a roof, or use energy, things are positive for you as Core CPI dropped to its lowest in 10 years. Overall CPI dropped to 1.1% YoY – missing Bloomberg’s estimate by the most since August. Thanks to the drought in California, food prices jumped; but energy costs overall fell despite fuel oil and other fuels rose 7% MoM (thanks to Winter storm demand). The heavily-weighted ‘Shelter’ index rose as did Healthcare costs.

 

CPI missed by the most in 6 months…

 

As Core CPI (es food energy and shelter)… dropped to 10 year lows…

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1l01w1l Tyler Durden

It's deja vu all over again in markets this morning as the fact that Vladmiti Putin did not use the words "we're gonna nuke 'em all" and, just as he did 2 weeks ago, confirmed "Russia would not seek confrontation in West and East" and did not announce sanctions (which last time ended with the referendum and annexation of Crimea); has left algos believing that the world is calm once again and the buying spree can continue. Stocks, thanks to the helping momo-sparking hand of EURJPY, have jerked another 12 points higher on the news; gold and silver are limping lower; there is dollar weakness (EUR strength); and Treasury yields are up 3-4bps. However, Russian stocks and the Ruble continue to strengthen (in a nothing can hurt us now manner).

The instant reaction…

 

Which has lifted the S&P to pre-crimea levels…

 

And Gold, Bonds, and the Ruble are moving back to pre-Putin levels…

 

Charts: Bloomberg

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

One of the things that Putin failed to mention in his nearly hour-long annexation speech, was the topic of retaliation to Western sanctions, leading many to assume he wouldn’t even bother. Moments ago Reuters provided some clarity on this issue:

President Vladimir Putin said on Tuesday that Western attempts to frighten Russia with sanctions over its takeover of Ukraine’s Crimea region would be viewed as an act of aggression, and that Moscow would retaliate.

We expect details wil be forthcoming, and that the west, whose every bluff has been called, and every gambit has failed, will need another teleprompted conference by the leader of the “Free world” Obama, explaining – once again – just what the costs, red lines, and escalating sanctions against Russia will be.

Obama may want to wait until a little later though: a mass rally planned in two hours from now on Moscow’s Red Square to celebrate the Crimea annexation and the first step in restoring the USSR.

via Zero Hedge http://ift.tt/1eg3LcH Tyler Durden

And there it is:

• PUTIN ASKS FOR CRIMEA, CITY OF SEVASTOPOL TO BE ADDED TO RUSSIA
• PUTIN SAYS WILL SUBMIT DRAFT LAW ON BRINGING CRIMEA INTO RUSSIA TO PARLIAMENT ON TUESDAY
• PUTIN CALLS FOR RATIFICATION OF TREATY ON CRIMEA, SEVASTOPOL

And futures, stocks, and risk in general is soaring, sending the Kremlin precisely the message it needs to know that there is absolutely nothing wrong with this. Perhaps if Russia had annexed all of Ukraine, or the Baltics, or maybe even Poland, the S&P would have soared over 2000 already?

via Zero Hedge http://ift.tt/1gJuWK5 Tyler Durden

• Lost Jet’s Path Seen as Altered via Computer (NYT)
• Fed Links Low Rates to “Persistent Headwinds” in Economy (Hilsenrath)
• Top German Court Clears Euro-Zone Bailout Fund (WSJ)
• U.S., EU set sanctions as Putin recognizes Crimea “sovereignty” (Reuters)
• Indian wealth effect: Sensex, Nifty hit life highs as domestic-focused firms rally (Reuters)
• China bond default has positive effect on local government groups (FT) – unless it’s negative
• Russia tensions  risk higher gas prices (FT)
• China Home-Price Growth Slows in Big Cities on Tight Credit (BBG)
• ECB’s Weidmann says German surpluses “here to stay” (Reuters)
• Microsoft Office for iPad (AAPL) to be introduced this month (The Verge)
• Walmart to Offer Customers Credit for Used Video Games (NYT)
• BlackRock Hires JPMorgan’s Jones as Stock Investment Chief (BBG)
• Xbox chief Marc Whitten leaves Microsoft for Sonos (Verge)
• Hertz Spinning off Its Equipment Rental Business (AP)
• Renzi Wins Merkel Confidence Vote for Economic Change in Italy (BBG)

 

Overnight Media Digest

WSJ

* Surging prices for food staples from coffee to meat to vegetables are driving up the cost of groceries in the United States, pinching consumers and companies that are still grappling with a sluggish economic recovery.

* General Motors said it recalled 1.7 million more vehicles as Chief Executive Mary Barra stepped up her response to the company’s vehicle-defect problem, announcing three new safety recalls and vowing to change the way the auto maker handles recalls.

* A feud has erupted among distillers Brown-Forman Corp and Diageo Plc over a seemingly simple question: When is a whiskey “Tennessee Whiskey”?

* WhatsApp will soon belong to Facebook but the messaging app maker says it won’t approach privacy the same way as its soon-to-be-parent company. On Monday, WhatsApp updated its app, rolling out a new user settings screen dedicated to privacy. It also published a blog post promising not to change what data it collects from users, and how it collects it.

* General Electric Co’s retail credit business is facing a pair of probes from federal regulators over possible violations of consumer financial laws, disclosures that were released in paperwork for a planned initial public offering of the business.

* Langham Hospitality Group tapped on Monday a Ritz Carlton veteran as its new chief executive, part of the Hong Kong-based company’s plan to expand its brands worldwide.

* Amazon.com Inc will begin shipping its long-awaited video-streaming device in early April, through its website as well as retailers including Best Buy Co and Staples Inc, said people familiar with the company’s plans.

 

FT

General Motors Co’s new chief executive on Monday recalled more than 1.5 million vehicles, including some current models, acknowledging the Detroit automaker fell short in catching faulty ignition switches linked to 12 deaths.

The Bank of England is likely to announce an overhaul of its top officials as soon as Tuesday, as Governor Mark Carney prepares to unveil major reforms to the way Britain’s central bank is managed.

Barclays Plc will try to take the sting out of a heated debate over bankers’ bonuses on Tuesday by pointing to a drop in the value of shares given to its top executives even as the lender’s Chief Executive Antony Jenkins is awarded a 4 million pound ($6.66 million) payout.

Irish brewer Guinness, owned by Diageo Plc, dropped sponsorship of New York City’s St. Patrick’s Day celebrations amid growing criticism of organizers’ exclusion of gay and lesbian groups from the event.

Nigeria’s suspended central bank Governor Lamido Sanusi has released a 27-page rebuttal to allegations of “gross misconduct”, calling on President Goodluck Jonathan to reinstate him as the outrage grows over his accusations about missing oil revenues.

 

NYT

* Mary T. Barra, General Motors’ chief executive, announced another round of wide-ranging recalls on Monday, a sign that the company was moving with a new sense of urgency on safety problems after it disclosed a decade-long failure to fix a defect tied to 12 deaths.

* Tesla Motors, the maker of high-end all-electric cars, has time till April 1 to comply with New Jersey’s restrictive dealership laws that prevent the company from making any direct sales to customers. After Texas, Arizona and New Jersey, Ohio too is considering passing a similar legislation that protects the interests of car dealers and franchises.

* About 10 days after being identified by Newsweek magazine as the mysterious creator of the digital currency bitcoin, Dorian Nakamoto, a 64-year-old semi-employed engineer, has hired a lawyer and issued a statement unconditionally denying that he had any involvement in bitcoin.

* A bond insurer on Monday struck a blow against Detroit’s proposal to exit bankruptcy, arguing in a new lawsuit that Detroit’s approach would illegally discriminate against the city’s third-biggest group of creditors – the investors who provided $1.4 billion for its workers’ pensions nearly a decade ago.

* American manufacturing output recorded its largest increase in six months in February and factory activity in New York State expanded early this month, the latest signs that the economy is gaining momentum after being dampened by severe weather.

 

Canada

THE GLOBE AND MAIL

* Russia’s quick recognition of Crimea as an independent state is risking a second round of more damaging sanctions by the United States and the European Union that could unleash a new Cold War.

* Canada is joining the European Union and the United States in slapping additional sanctions on those it blames for threatening Ukraine’s sovereignty, retaliating against what Prime Minister Stephen Harper has branded the “Putin regime.”

Reports in the business section:

* Whitecap Resources Inc said on Monday that it was buying Western Canadian oil and gas properties from Imperial Oil Ltd for C$855 million ($773.65 million). The deal pushes the energy industry’s tally for merger and acquisition activity for the quarter to C$7 billion.

NATIONAL POST

* Zach Paikin, a rising star in the Liberal party, has decided not to run in the next election because leader Justin Trudeau has broken a “key promise” to hold open nominations in federal ridings across the country.

* Donna Kennedy-Glans became the second MLA to announce she would sit as an independent, further imperilling Alberta premier Alison Redford’s already-shaky long-term leadership prospects.

FINANCIAL POST

* Canada and the European Union have reached an agreement in principle on a free-trade deal that will give Canadian businesses preferential access to an EU market of 500 million consumers and lead to what the federal government says are cost savings for consumers.

* BlackBerry Ltd has laid off 120 employees in its product development and wireless technology divisions as part of an ongoing cost-cutting plan, the company said.

 

Hong Kong

SOUTH CHINA MORNING POST

— Hutchison Whampoa has put on hold plans to build a luxury house at a government-owned green-belt site on The Peak after neighbours voiced their opposition and district councillors demanded a rethink.

— The People’s Bank of China has issued two drafts for consultation aimed at cracking down further on internet finance by limiting online shopping and money transfers for online-payment service providers, according to mainland media reports.

— Hong Kong exporters are much more confident about their prospects in the first quarter of 2014, driven by machinery product orders as manufacturers gear up for a rebound in demand, a quarterly survey by the Hong Kong Trade Development Council showed.

THE STANDARD

— Mainland police have handed over the two men alleged to have brutally hacked former Ming Pao chief editor Kevin Lau Chun-to in Sai Wan Ho last month.

— MTR Corp will invite developers to submit expressions of interest for the Lohas Park phase four project in Tseung Kwan O on Tuesday, sources said. The development is expected to fetch as much as HK$2.5 billion ($321.93 million).

— Mainland industrial park developer Optics Valley Union opens its retail book to raise up to HK$1.09 billion in its Hong Kong initial public offering. Trading debut is scheduled for March 28.

HONG KONG ECONOMIC JOURNAL

— Tencent on Wednesday and Thursday sold an aggregate 563 million shares of ChinaVision Media for HK$1.01 billion ($130.06 million), reducing its stake to 1.23 percent from 8 percent, according to a stock exchange disclosure. The share sale came a day after Alibaba announced the acquisition of 60 percent of ChinaVision for HK$6.2 billion.

HONG KONG ECONOMIC TIMES

— Lee & Man Paper Manufacturing, which registered HK$1.95 billion net profit for 2013, expects its paper sales to achieve double digit growth this year as a new machine commences production, according to chief executive officer Lee Man Bun.

APPLE DAILY

— China Resources Power has no intention of participating in the Hong Kong power supply business and the suggestion from two of its executives to “nationalise” the city power supply assets was their personal view only, said executive vice chairman Zhang Shenwen.

 

Britain

The Telegraph

MONEYSUPERMARKET CO-FOUNDER BANKS 100 MLN STG

Simon Nixon, the businessman who founded the price comparison site Moneysupermarket.com after dropping out of university, has landed another 100 million pound ($166.44 million) windfall after selling a further 10 percent stake in the company.

DIAGEO TAKES ON JACK DANIEL’S IN ROW OVER HOW WHISKY CAN BE MADE

Diageo wants distilleries to be allowed to make Tennessee whiskey in reusable barrels, much to the horror of Jack Daniel’s maker Brown-Forman Corp.

The Guardian

BANK OF ENGLAND REFORM ANNOUNCEMENT EXPECTED FROM MARK CARNEY

A major overhaul of the Bank of England is expected to be signalled today alongside the appointment of a new deputy governor.

VODAFONE’S PURCHASE OF ONO FUELS TALK THAT BIG UK ACQUISITION MIGHT BE NEXT

Vodafone has sparked speculation that it might be on the verge of a big UK acquisition after confirming it has used 6 billion pounds of its cash warchest to buy Ono, Spain’s largest cable operator.

MORRISONS EMPLOYEE ARRESTED AS PART OF SALARY LEAK INVESTIGATION

A Morrisons employee has been arrested in connection with the theft and publication of personal details of thousands of the supermarket’s staff last week.

JUST EAT AIMS TO RAISE 100 MLN STG IN FLOTATION

Just Eat, which uses the slogan “give hunger the finger”, has announced plans for stock market listing that could value the online takeaway service at as much as 900 million pounds.

DYSON RECALLS ‘FIRE-RISK’ HEATERS

Dyson is recalling more than 1 million hot and cool fans over fears they could pose a fire risk. The recall was issued by the company on Monday after “a small number” short-circuited, causing a small internal fire.

The Times

ROYAL MAIL TURNS CLOCK BACK WITH CAPITAL CONTRACT

The pleasure of delivering many Londoners their council tax bills, parking fines and other local bureaucratic paperwork is to revert to the Royal Mail.

CUTTING HS2 COST WOULD BE IRRESPONSIBLE, SAYS NEW BOSS

Crewe should become the centre of transport for the North, David Higgins, the new boss of the HS2 high-speed railway, said in a report that argues in favour of accelerating the project.

CAPITA LANDS 90 MLN STG CALL CENTRE DEAL WITH JOHN LEWIS

John Lewis has chosen Capita to manage one of its online operations in a contract worth more than 90 million pounds. The outsourcing company will manage the retailer’s call centre for its internet shopping service.

The Independent

SIR JON CUNLIFFE WARNS GLOBAL BANKS ‘STILL TOO BIG TO FAIL’

Bank of England deputy governor Jon Cunliffe has warned there are still global banks which could not be wound up successfully without causing damage.

 

 

Fly on the Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Consumer Price Index for February at 8:30–consensus up 0.1% from prior month
Housing starts for February at 8:30–consensus up 3.4% from prior month
Building permits for February at 8:30–consensus up 1.6% from prior month

ANALYST RESEARCH

Upgrades

21Vianet (VNET) upgraded to Outperform from Neutral at Credit Suisse
Alliance Fiber Optic (AFOP) upgraded to Buy from Neutral at B. Riley
CACI International (CACI) upgraded to Sector Perform from Underperform at RBC Capital
CM Finance (CMFN) upgraded to Outperform from Market Perform at Raymond James
Flowers Foods (FLO) upgraded to Outperform from Market Perform at BMO Capital
Fortress (FIG) upgraded to Outperform from Market Perform at JMP Securities
HP (HPQ) upgraded to Overweight from Equal Weight at Barclays
L-3 Communications (LLL) upgraded to Sector Perform from Underperform at RBC Capital
Marketo (MKTO) upgraded to Neutral from Sell at UBS
Nabors Industries (NBR) upgraded to Neutral from Underperform at Credit Suisse
North American Energy (NOA) upgraded to Buy from Hold at Jefferies
Pan American Silver (PAAS) upgraded to Sector Performer from Underperformer at CIBC
Universal Health (UHS) upgraded to Buy from Hold at KeyBanc

Downgrades

Astoria Financial (AF) downgraded to Market Perform at Keefe Bruyette
Cisco (CSCO) downgraded to Equal Weight from Overweight at Barclays
E-House (EJ) downgraded to Buy from Conviction Buy at Goldman
Fortuna Silver Mines (FSM) downgraded to Sector Performer from Outperformer at CIBC
Umpqua Holdings (UMPQ) downgraded to Sector Perform from Outperform at RBC Capital

Initiations

Chicago Bridge & Iron (CBI) initiated with an Outperform at Cowen
Coach (COH) initiated with an Equal Weight at Barclays
Community Bank System (CBU) initiated with a Neutral at Sterne Agee
EP Energy (EPE) initiated with a Buy at Topeka
Fluor (FLR) initiated with an Outperform at Cowen
Foster Wheeler (FWLT) initiated with a Market Perform at Cowen
G-III Apparel (GIII) initiated with an Overweight at Barclays
Kate Spade (KATE) initiated with an Overweight at Barclays
M/I Homes (MHO) initiated with a Neutral at Citigroup
Michael Kors (KORS) initiated with an Underweight at Barclays
NCI Building Systems (NCS) initiated with a Neutral at Citigroup
Nordstrom (JWN) initiated with an Equal Weight at Barclays
PVH Corp. (PVH) initiated with an Overweight at Barclays
Popular (BPOP) initiated with a Buy at BTIG
Ralph Lauren (RL) initiated with an Overweight at Barclays
Sequential Brands (SQBG) initiated with an Overweight at Piper Jaffray
Vince Holding (VNCE) initiated with an Equal Weight at Barclays
Wynn Resorts (WYNN) initiated with a Hold at Ascendiant

COMPANY NEWS

Hertz (HTZ) announced a new $1B share repurchase program, says board approved separation of equipment rental business; Hertz CEO Mark Frissora will continue as CEO of Hertz after HERC separation
Wal-Mart (WMT) to accept used video games for store credit
Microsoft (MSFT) says Marc Whitten, Chief Product Officer of Xbox, to leave company
American Express (AXP) announced plans to spin off its business travel unit and form a joint venture with an investor group led by Certares; the joint venture investor group will invest $900M for a 50% stake
Prosensa Holding (RNA) reported “encouraging” results from a Phase II trial of drisapersen for the treatment of Duchenne Muscular Dystrophy
Galena Biopharma (GALE) disclosed an SEC investigation into the company related to an outside investor relations firm retained by Galena in 2013
Alphatec (ATEC) announced an agreement with OrthoTec to settle its ongoing litigation, with Alphatec agreeing to pay OrthoTec $49M over the next seven years in cash

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Global Power Equipment (GLPW), Kythera (KYTH), Apricus Biosciences (APRI), Trovagene (TROV)

Companies that missed consensus earnings expectations include:
Hertz (HTZ), Fortuna Silver Mines (FSM), Synergy Pharmaceuticals (SGYP), Galena (GALE), Health Insurance Innovations (HIIQ), Acorn Energy (ACFN), DTS, Inc. (DTSI), Fate Therapeutics (FATE), Intrawest Resorts (SNOW), Connecticut Water (CTWS), Mirati Therapeutics (MRTX)

Companies that matched consensus earnings expectations include:
Alphatec (ATEC)

NEWSPAPERS/WEBSITES

Amazon (AMZN) to ship video-streaming device in April, WSJ says
Amazon’s (AMZN) set-top box will have Chromecast-like form factor, TechCrunch says
Comcast (CMCSA) may be pushing into new digital home market, DigiTimes says
General Electric’s (GE) retail credit unit facing federal probes, WSJ reports
Microsoft (MSFT) to discuss cloud, mobile computing at event on March 27, Re/code says
Microsoft Office (MSFT) for iPad (AAPL) to be introduced this month, The Verge says
BlackRock (BLK) hires JPMorgan’s (JPM) Christopher Jones as chief investor officer for stocks in the Americas, Bloomberg reports
Caterpillar (CAT) protests rail contract awarded to Siemens (SI), Cummins (CMI), WSJ reports

SYNDICATE
Choice Hotels (CHH) files to sell 3M shares of common stock for holders
Criteo (CRTO) files to sell 5.25M American Depositary Shares
First Republic Bank (FRC) files to sell 3.5M shares of common stock
Golub Capital (GBDC) files to sell 3.5M shares of common stock
Sprouts Farmers Markets (SFM) files to sell 15M shares of common stock for holders
Tompkins Financial (TMP) files to sell $70M of common, preferred stock
Veeva (VEEV) files to sell $300M in common stock for holders

via Zero Hedge http://ift.tt/PLuS6Y Tyler Durden