Friday, September 21, 2007

Morning Note...

Futures up slightly on the back of upbeat earnings from NKE and ORCL.  Very slow news outside of that.  No economic releases today.

MT initiated with overweight at LEHM.  NKE trading up on earnings and may spin off Bauer unit.  ORCL trading up on earnings. 

Icahn increases stake in BEAS to 9.88%.

Oil at $81.50, off from yesterday’s $83.32 record.  Ten year yields 4.69%. 

Announced Deals: 

Rockbay News:  Fortis plans on selling $18.8B in stock to help fund ABN Amro acquisition, QI 25mm secondary priced at 10.92, ATML suspected fraud in HK operations, WSJ reports KKR and GS souring on HAR deal, HUN to settle lawsuits seeking to stop its acquisition by Apollo

Enrico Fermi’s Trivia:  How many piano tuners are there in New York City?

Yesterday’s Answer:  The Great Wall of China is just over 4,000 miles long.

Thursday, September 20, 2007

Morning Note...

Futures looking lower on some profit taking after 2 strong post-Fed days.  

GS reported great numbers.  BSC reported well below expectations as a result of mortgage exposure.

Jobless claims came in lower (311,000) than last week’s 320,000.  Also worth nothing that during recessionary periods, jobless claims typically run at 450,000 per week…

Oil above $82.  Ten year yields 4.59%.  

Announced Deals: Nasdaq for OMX SS (Sweden) and Borse Dubai acquires 20% of Nasdaq and 28% of LSE.  

Rockbay News:  Mobile Satellite Ventures (SKYT) awarded 2 patents in Canada and 2 in Australia, ABN Amro CEO hints at preference for Barclays bid since it would keep ABN Amro intact, Harbinger Capital raises stake in Terrestar to 44.7%, Fortis to launch rights issue Friday to finance ABN Amro bid, dR reports FINL may face legal action from GCO, BEST expects approval on CCU vote, MI Developments reported a 58.3% stake in Magna Entertainment (MECA) and said it would consider the acquisitions of certain real estate assets of the company

Vito’s Advanced Trivia:  Best guess… How long is the Great Wall of China?

Yesterday’s Answer:  Ayers Rock, Australia   Lotus Temple, Delhi  Fountain of Trevi, Rome

Wednesday, September 19, 2007

Morning Note...

Futures looking higher this morning on the back of yesterday’s unexpected Fed cuts.  Many consider this a very pro-active cut, versus reactionary cuts in the past.  As a result, talk of further cuts may be unwarranted.

August housing starts fell 2.6% to a 12-year low. 

August CPI fell 0.1% versus expected unchanged.  Core rate was up 0.2% which was in line.

Oil at $82/barrel.  MSDW reports below expectations.  

SIRI/XMSR downgraded at UBS.  TWX and VIA.B initiated neutral at CSFB.  CCE downgraded at DBAB.  DJ reports BEAS not seeking sale of company.  DRI trading in line premkt following earnings.  WSJ reports CFC seeking to increase deposits to finance mortgage lending and plans to double its branches.  

FT reports that TWX may be spinning off cable business.  

Announced Deals: 

Rockbay News:  ATML initiated with outperform at RAJA, Kerkorian loses DaimlerChrysler appeal, NY NO exec VP steps down, ISS recommends shareholders back CCU deal, STO & NHY NO initiated outperform at BERN, AV deal expected to close by end of October.  

stock photo : Trevi Fountain - famous landmark in Rome (Italy).Vito’s Advanced Trivia:  Name the famous landmarks…      

Yesterday’s Answer:  Early during WW1 the British Army made the switch from cloth caps to metal helmets because of the number of head injuries reported.  From then on, all soldiers wore metal helmets.  However, soon after the switch the British War Office was shocked to discover that there were more soldiers hospitalized with head injuries than ever before.  Assuming the intensity of fighting was relatively constant, can you explain why?  It’s simply a matter of statistics… those soldiers who were reported hospitalized with head injuries would have otherwise been dead were it not for the helmets they now wore!

Tuesday, September 18, 2007

Morning Note...

Futures looking higher this morning ahead of the FOMC meeting and on the back of better-than-expected (although lower year-over-year) earnings from LEH.  August PPI down 1.4% and the energy component was off 6.6%.  However, with oil up over $80 of late, the energy number is a bit dated and is not sustainable.  Core PPI was in line with expectations at +0.2%. 

Fed policy statement due at 2:15pm – most pundits expect a ¼ point cut and a “cautious” approach to future cuts.  However, considering the lower PPI number, a surprise is certainly possible.  

GM downgraded at GSCO.  ETFC downgraded at GSCO.  AXP agreed to sell its American Express Bank to Standard Chartered for approximately $1.1B. The company expects the deal to be completed in Q108 and expects break-even impact to earnings from the deal.  EXC reaffirmed guidance for FY07 and sees FY07 EPS at the upper end of the $4.15-$4.30 range (Reuters consensus was $4.29) and expects "robust growth" over the next five years.  Breeden Capital (8%) and SAC (5%) report stakes in ZLC. 

Announced Deals: Standard Chartered for AXP Bank ($1.1B)

Rockbay News:  Debt sale road show begins for FDC financing lenders, FDC confirms Sept 25th as closing date, dR reports KKR may seek to divest some of FDC’s payment processing platforms, NY Post reports UBS is looking to escape funding GCO’s bid for FINL, Dutch minister clears RBS bid for ABN Amro, 3045 TT seeking strategic investor from US or Europe, Statoil/NHY NO merger effective October 1, 12 potential WEN bidders have signed confidentiality agreements,

Vito’s Advanced Trivia:   Early during WW1 the British Army made the switch from cloth caps to metal helmets because of the number of head injuries reported.  From then on, all soldiers wore metal helmets.  However, soon after the switch the British War Office was shocked to discover that there were more soldiers hospitalized with head injuries than ever before.  Assuming the intensity of fighting was relatively constant, can you explain why?

Yesterday’s Answer:  A French wooden peasant shoe is a “sabot.”  Thus, when French peasants in the 19th Century trampled crops to show their displeasure with the way they were being treated, they were performing “sabotage.” 

Monday, September 17, 2007

Morning Note...

Futures slightly lower as focus falls on tomorrow’s Fed meeting.  Most pundits agree we’ll see a ¼ point cut, but the debate continues as to what the Fed’s tone will be.  Some argue that sluggish economic growth, and corrections in the credit and housing markets, are exactly what the Fed wants and will indicate that further cuts are by no means certain. 

Oil down to $78.50 as tropical storms abate.  Ten year note yields 4.49%.   

TIN upgraded at UBS.  DB downgraded at CITI.  MAR upgraded at MSDW.  F upgraded at BEST.  APA added to conviction list at GSCO.

BOBJ hires GSCO and is looking for a buyer.  SNE to focus on consumer electronics, and may look to sell chip production to Toshiba or IBM.  

Barron’s positive on MO breakup.  MSFT appeal rejected by EU.  

Announced Deals: ITT for EDO ($56/share), T-Mobile (Deutsche Telekom AG) merger with SunCom Wireless Holdgings (TPC) for $2.4B in cash and debt

Rockbay News:  RTP extends expiry date for AL acquisition to Oct 23, Av announces that two proxy advisory firms recommend voting for acquisition by Silver Lake and TPG, Karsch Capital pressures CAO to explore strategic alternatives, FDC announces nearly $150mm in charges to implement cost-cutting strategies, ABN Amro to spin off ABN Amro Capital private equity arm, Plexus Holdings signs pack with NHY NO, ABN Amro projects earnings of EU2.3/share, ABN Amro CEO says Barclay’s bid likely to fail, MLCO initiates CP711 with Buy, BEST initiates DAI with Buy, IFX upgraded to overweight at LEHM, RTP Chairman does not expect issues with Australian regulators on AL takeover,

Vito’s Trivia:   During the 19th Century, French peasants sometimes went into the fields and trampled on all the tobacco plants to show their discontent or disdain for the way they were being treated and abused. They would trample the crops with their wooden peasant shoes. Out of this behavior a new word was born. It has entered not only the French vocabulary, but the English vocabulary as well and it's a very common word. A word you could hear nearly every day… what is it?  (hint:  if you know the word for “wooden shoe” in French, you’ll get it…)

Yesterday’s Answer:  Maine is the only of the “lower 48” that borders only one other state.

Friday, September 14, 2007

Morning Note...

Futures down this morning on the NRK LN bailout (re-raising credit concerns in the US) and general European weakness.  August retail sales also rose slightly less than expected (+0.3% vs +0.5% expected).  But the July gain was revised to +0.5% from 0.3%.   While consumer spending looks sluggish, it’s not yet indicating recession.  Thus far, all indications are consistent with the projected 2% GDP growth for Q2.  

AXP downgraded at MLCO.  UBS, CSFB, & DBAB downgraded at Soc Gen.  WY upgraded at BofA.  

LIZ reaches agreement with Li & Fung USA on sale of four brands under strategic review.  ALK $100mm shares buyback.  HRH acquires insurance agency from BAC.  Amalgamated Gadget reports 17.6% stake in ITWO and urges company to pursue strategic alternatives, including sale.

Fed watch continues as nearly everyone expects a ¼% cut on September 18th.  We’ll probably trade in a pretty narrow range until then.

Announced Deals: 

Rockbay News:  CBRY LN rejects bid for beverage division due to unfavorable financing, SUG declares quarterly dividend, CP711 forecasts 15% growth, Barclays shareholders approve bid for ABN Amro, Ess Dee Aluminum (India) interested in AL’s packaging unit, continued articles/commentary on KKR’s delay of debt sale until next week – probably post-Fed.

Vito’s Trivia:   Which US state (of the contiguous 48) borders only one other state?

Yesterday’s Answer:  Assess, Banana, Dresser, Grammar, Potato, Revive, Uneven, & Voodoo have the following in common – take the first letter of each word and move it to the end.  It then spells, backwards, the original word.

Thursday, September 13, 2007

Morning Note...

Futures up this morning as new claims for unemployment rose slightly from the week before but remain at historically low levels.  Again, there is hope last week’s job data stemmed from caution in hiring rather than recessionary forces.  

Alcatel-Lucent down 10% on lowered guidance.  STM downgraded at LEHM.  MRK upgraded at BofA.  MCD raises dividend by 50%.  MSFT raises dividend by 10%. TGT hires GSCO to review credit card biz.  FT reports that LUKOY plans to spend $9B in Europe.  FHN and WM announced layoffs in their mortgage areas.  NUE warns.  

Oil hits all time high of $80 and is now trading just below at $79.60ish.

10-year note yields 4.42%.

Fed meets Tuesday.  In a bit of a holding pattern until then, barring any sudden news regarding debt-financing for the major deals out there…

Announced Deals: 

Rockbay News:  Gazprom OAO denies interest in VK FP, EU extends review of Fortis-portion of RBS bid for ABN Amro by 10 days – deadline for RBS/Santander portion remains Sept 19th, CSFB neutral-to-positive on RTR LN, TOG CN initiated at outperform by CIBC, NHY NO announces capital reduction, TXU financing talks to begin early next week, FT Germany reports IFX can not afford new acquisitions with its most recent QI shares, IFX upgraded to overweight at LEHM, KKR may delay sale of FDC loans until next week as talks with bankers continue, CSFB reports WMB pipeline IPO is on track for year end,

Vito’s Advanced Trivia:   What unique trait do these words have in common:  Assess, Banana, Dresser, Grammar, Potato, Revive, Uneven,  Voodoo?

Yesterday’s Answer:  The landscaper says, “I planted 5 rows of 4 trees each.”  Bob says, “Ah, so 20 trees.”  “No,” says the landscaper, “it was 10 trees total.”  How is this possible?  Draw a star on a piece of paper… now count the points of the star along with the intersection of each line you drew.  There will be “5 rows” of “4 trees each” but you will only have 10 trees total.  Thus the landscaper planted the trees in the shape of a star. 

Wednesday, September 12, 2007

Morning Note...

Futures down slightly this morning and giving back some of yesterday’s gains.  Yesterday’s strength came in part from blow-out same-store-sales from McD’s, which perhaps indicated consumer spending is still healthy.

Japan’s PM Abe resigned and the NKY closed down 0.5%.

Very little corporate news today.  Ericsson gave strong guidance for Q3.  Texas Instruments lowered guidance.  INTC raised guidance.

Oil at record levels as it trades at $78.16.  Oil inventory at 10:30am.   

10-year note yields 4.34%.

Announced Deals: 

Rockbay News:  MLCO neutral on IFX reducing QI stake, DBAB largest Link REIT shareholder – at 22% from 6% - replacing TCI, AA to sell stake in Chalco for $2.1B, DAI GY expects double digit gain in productivity for 2007, NHY NO merger with Statoil expected to complete October 1, DBAB cuts CBRY LN price target on uncertain margins,  

Vito’s Advanced Trivia:  The landscaper says, “I planted 5 rows of 4 trees each.”  Bob says, “Ah, so 20 trees.”  “No,” says the landscaper, “it was 10 trees total.”  How is this possible?

Yesterday’s Answer:  WTC’s scrap metal was sent to India and China.

Tuesday, September 11, 2007

Morning Note...

Futures up this morning on the back of overseas strength following positive commentary by Fed Governor Mishkin at last night’s 8pm speech.  Interesting that futures are discounting China’s near 5% drop overnight on inflation fears (6.5%) and the Central Bank’s need to raise rates to stem inflation.  

Bernanke speaks in Berlin at 11am ET.  July trade deficit came in at $59.2B and was in-line with expectations.  

GSCO ups beverage sector to attractive from neutral.  TMA mortgage co. upgraded at UBS.  MAR & HOT upgraded at TWPT.  AA sees $10mm Hurricane Dean impact, mostly in Q3.  NY Post reports that CFC working with GSCO on a multi-billion dollar bailout plan.   Icahn raises TIN stake.

 Retail sales and industrial production numbers Friday.

Announced Deals: 

Rockbay News:  DJ quotes industry analysts who believe M&A will continue in the mining sector but are doubtful about mega-deals such as BHP/RIO for RTP, dR reports ADS FDIC decision due in October, AA estimates lowered at JPM to reflect aluminum pricing, RBC neutral on UFS day 1 presentation, MDT/KYPH announce early termination of waiting period by both the FTC and the DoJ, WEN target lowered at UBS to reflect “lower likely sale price,” DAI GY to up dividend and R&D spending, Toyota Prez denies interest in DAI or any other possible acquisition, TFX acquires NHY NO subsidiary

Vito’s Advanced Trivia:  In honor of September 11th… Most of the WTC steel (180,000 tons) was sold as scrap.  Where was it sent?  (For a very interesting and thought-provoking 9/11 quiz, go here:  http://www.funtrivia.com/playquiz/quiz124969e50840.html)

Yesterday’s Answer:  You’ll never look at JELL-O the same way again… Gelatin is made from boiling down animal bones and hides… Many strict vegetarians don’t eat it for that reason.

Monday, September 10, 2007

Morning Note...

Futures up slightly following Friday’s down 250pts on the back of the August payroll numbers.  

Several Fed speakers are on tap today – mkts may react to any commentary out of the norm.  Atlanta Fed prez at 8:40am, SF Fed Prez at 11am, Dallas Prez at 1pm, and Fed Govenor Mishkin at 7:30pm tonight.  

Oil just below $76.  10 year note yields 4.37%.

TMA mortgage upgraded at JEFF.  CFC to reduce workforce by 20%.  

BHI, HAL, SLB, WFT initiated buy at UBS.

WY to “balance supply with demand through closures and restricted operating postures at its Wood Product facilities.”

Announced Deals: BX for China National BlueStar Corp (Chemicals) for $600mm.

Rockbay News:  3045 TT August sales up 15%, continued speculation CBRY LN will opt for demerger of US bev biz, dR reports HUN deal to close no earlier than Q1 2008, Fortis denied rumors the RBS-led bidding consortium for ABN Amro is facing trouble, IFX CEO aims to be industry consolidator rather than takeover target, FINL hires Moelis Advisors, Enskilda positive on NHY NO balance sheet restructuring, RTP to sell Kintyre uranium project in Western Australia, CITI slightly raises BHP estimates, KKR agrees to covenant on bank debt for FDC deal – agree to “maintain a certain level of earnings before interest payments, depreciation, tax, and amortization in relation to the senior debt.”

Vito’s Advanced Trivia:  What is JELL-0 made of?  Or, asked another way, what is gelatin?

Yesterday’s Answer:  The Canary Islands are actually named for the dogs found on the islands when the Romans arrived there.  In Latin, Canis means dog. 

Friday, September 7, 2007

Morning Note...

Futures down this morning on the back of a negative jobs report.  August payrolls fell 4,000 and a 75k-110k gain had been expected.

Recession talk stemming from this data misses the mark.  It’s likely that companies were simply more cautious with hiring given the credit crunch and market turmoil we experienced over the past few weeks.  Or perhaps we are truly experiencing some level of slower payroll growth and thus lower economic growth.  Yet the data does not seem to support any “doomsday” recession theorists.

Regardless, the silver lining is that the likelihood of the Fed cutting rates Sept 18th has now increased.

BZH down 7% on 10Q delay.  BSC downgraded at BofA.  NOK trading higher overseas on “large buyback” speculation.

Announced Deals: 

Rockbay News:  Aussie paper reports the BHP/RIO for RTP speculation has no merit, Dutch finance minister makes pro-RBS comments indicating he would not favor the Barclay’s bid more in order to keep ABN headquartered in the Netherlands, MLCO positive on NHY NO, shareholder vote on TXU today, DAI GY August sales rose 8.7%, KKR and bankers met last night on FDC, CITI positive but calls on APL to execute, CIBC cautious on FINL

Vito’s Advanced Trivia:  What are the Canary Islands named for?

Yesterday’s Answer:  The world’s tallest mountain is Mauna Kea, Hawaii, the bulk of which is underwater.  

Thursday, September 6, 2007

Morning Note...

Futures slightly lower this morning as short-term volatility continues.  The S&P was up 15 points Tuesday and gave back 17 points Wednesday.  Obviously there is still fear of a recession stemming from credit market issues, but recent data suggests only a moderate slowdown.  While WalMart posted a 3.1% same store sales gain, Costco reported a lower-than-expected 2% gain only.  ANF and AEO posted good numbers, as did SKS and JWN.  Limited and Dillard’s were weak.  August auto sales – as previously reported – were also better than expected.  Initial jobless claims came in better than expected.  Thus it appears from the cursory evidence that Q3 real GDP will be somewhere in line with the 2.5% forecast rate.

ECB left benchmark interest rate unchanged at 4%.

August employment data due tomorrow.  Oil trading above $76/barrel.  10-year note yields 4.48%.

Announced Deals: 

Rockbay News:  Tata Tea may join PE consortium as bid partner for CBRY LN, WSJ article defends KKR’s stance to refuse to amend deal terms to assist banks, FINL same-store-sales +1.3%, IFX upped to Buy at Dresdner, ABN Amro CEO defends deal (vs. stand alone) as in best interest of shareholders, CEN urges shareholders to reelect board and not vote in Pershing Square nominees, LEHM ups RTR LN, MLCO reits Buy on NRG, dR reports on doubts surrounding RTP/AL deal, NHY NO to double investment and expand production to meet increased demand, ASTSF announces Aug revs of $44mm, CAO announces “strategic review” of itself

Vito’s Advanced Trivia:  Name the world’s tallest mountain.

Yesterday’s Answer:  The United States boasts the larger tiger population in the world.  Apparently, there are more tigers in captivity in Texas than the are in the wild anywhere in the world.

Wednesday, September 5, 2007

Morning Note...

Futures look down this morning in a reversal of yesterday’s action.  Not much news out there to justify the move… the Japanese mkt was down 1.6% overnight so that may be a contributing factor.  Mortgage apps were up 0.4% last week.  Auto sales were stronger than expected as reported yesterday.  Oil holds $75/barrel.  10-year note yields 4.52%.  

Announced Deals: 

Rockbay News:  RBC upgrades UFS on valuation, ISS recommends CEN shareholders vote for deal yet reject full slate of Pershing Square board nomimees, FT reports RBS unlikely to lower or escape bid for ABN Amro, TA started at outperform at MOKE, FT reports RIO and BHP may be working on break-up bid for RTP,  TheDeal reports investment banks offering debt at discount, MLCO raises AA to buy on recent pullback, WMB target raised to $43 at MSDW, CSFB raises IFX to outperform, UBS raises estimates for DAI GY, CVS Chairman sells $45mm in stock,

Vito’s Advanced Trivia:  Which country boasts the largest tiger population?

Yesterday’s Answer:  There are 46 states in American… and 4 Commonwealths (Ma., Ky., Pa., Va.)

Tuesday, September 4, 2007

Morning Note...

Futures looking slightly lower this morning after last Friday’s end-of-month strength.  

Light news…no earnings, no major deals announced, and the only economic report of note is the August ISM index at 10am.

Important events on the horizon include the FDC financing and the Fed’s Sept 18th meeting.  While many have called for a rate cut at this next meeting, others contend the overall economy remains on track and that a cut is unwarranted.  Expect that debate to take center stage as Sept 18th nears.  

MLCO cut numbers on many large-cap banks (BAC, WFC, PNC).

Oil trading just under $74/barrel.  10-year note yields 4.51%.


Announced Deals: ASX for ASTSF ($784mm or $14.78/share)

Rockbay News:  UK Times article speculates RBS could invoke MAC clause for ABN Amro if conditions worsen, DJ reports EU to rule on Thomson/Reuters deal Oct 8th, ASX to pay $14.78/share for remaining shares of ASTSF that it does not own, HCR shareholder meeting Oct 17th, KKR to cut price on $16B loans to finance FDC deal, TYC upgraded at DBAB, HOT names new CEO,  UK Times reports banks involved in underwriting TXU deal  have offered to pay the $1B breakup fee to convince KKR and TPG to back out, ATML in agreement with MeshNetics to bundle technology,

Vito’s Advanced Trivia:  How many states are there in America?

Yesterday’s Answer:  The top 5 coffee drinking countries, per capita, are Norway, Finland, Denmark, Sweden, and the Netherlands.  USA is #12.

Friday, August 31, 2007

Morning Note...

Futures up this morning as good things are expected from Bernanke’s speech on monetary policy today.  The rumor is that he’ll announce, again, that the Fed stands ready to address any and all liquidity or economic problems.  Following Bernanke at 10am, GWB speaks at 11am on “a number of initiatives and reforms intended to help homeowners with subprime mortgages keep their homes.”

Further, core PCE was up only 0.1% for July, which was lower than the expected 0.2% gain.  Thus the year-over-year increase in what amounts to the Fed’s favorite inflation measure is only at 1.9%.  

DELL reported good numbers.  Oil spiked up over $74.  10 year note yields 4.56%.

Announced Deals: 

Rockbay News: FDC deal could close as early as Tuesday according to dR, IFX reaches terms with CFO on termination,

Vito’s Trivia:  Last beverage question – Name the top 5 coffee drinking countries, per capita.  

Yesterday’s Answer:  Wine consumption, per capita – 1) Italy 2) France 3) Switzerland 4) Austria 5) Denmark.  USA is 14th

Thursday, August 30, 2007

Morning Note...

Futures looking lower this morning as the market swings continue to be slightly exaggerated by a lack of overall liquidity.  

This morning’s chatter includes speculation as to whether the Fed will cut at Sept 18th’s meeting.  Also, WSJ reports KKR is negotiating the terms of the $24B loans to finance FDC.  

Bernanke speaks tomorrow on monetary policy at a conference in Wyoming.  Supposedly the text will be released at 10am ET.

LEHM cut numbers on several brokers this morning (MS, MER, GS, BSC).  Freddie Mac reports 45% drop in earnings and posts $320mm loss on new mortgages.  H&R Block announced Q1 losses doubled.

Also there’s apparently a bankruptcy filing by an Aussie hedge fund that is prompting some Yen carry trade unwinding.  

Announced Deals: 

Rockbay News: WCHV positive on CVS, RTP completes $40B term loan to finance AL acq, HTH started at outperform at MOKE, GCO trading slightly lower premkt on earnings, SHLD trading lower premkt on earnings,

Vito’s Trivia:  How about wine consumption, per capita?  Top 5 countries?

Yesterday’s Answer:  Ireland is the largest consumer of beer, per capita, in the world.  Followed by Germany, Austria, Belgium, and Denmark.  USA ranks 8th

Wednesday, August 29, 2007

Morning Note...

Futures are up this morning and showing some life after yesterday’s slow downward slide.  News is light once again.

Yesterday’s slide represents a lack of liquidity more than anything.  It simply makes no sense that the Fed minutes had anything to do with the sell-off:  the Fed cut the discount rate on August 17th.  That is the relevant thinking and attitude.  August 7th’s minutes simply represent what the Fed used to think.  Thus there should have been minimal impact yesterday.  More likely that State Street selling off nearly 5% on asset-backed commercial paper exposure helped take us down.

Expect more choppiness in the mkts as “vacation week” continues.

Oil slightly above $72/barrel and the 10-year note yields 4.52%.  

Announced Deals: 

Rockbay News: DAI GY trading slightly lower on earnings, more talk of MO spinning off int’l arm

Vito’s Trivia:  Name the top 5 countries ranked by per capita beer consumption.  (Nota bene: data is from 2002)

Yesterday’s Answer:   Andorra (83.52 years) boasts the highest life expectancy at birth, followed by Macau (82.27), Japan (82.02), San Marino (81.8), and Singapore (81.79).  Swaziland suffers the lowest (32.23), most likely due to HIV-related deaths.

Tuesday, August 28, 2007

Morning Note...

Futures slightly lower this morning in a carry over from yesterday’s action.  Very light news.  FOMC minutes from August  7th  to be released at 2pm.  FOMC minutes probably not relevant at this point since the Fed’s discount rate cut was more recent…  Consumer confidence numbers released at 10am as well.

State Street reportedly faces $22 bln exposure to asset-backed commercial paper conduits; Barclays denies reports suggesting it may have several hundred million dollars of exposure to failed debt; Merrill Lynch downgrades Citigroup, Lehman Bros., & Bear Stearns

Oil rallied to top $72 yesterday but has drifted to $71.60 this morning.  10-year note yields 4.57%. 

Announced Deals:  MHS for PLMD ($53/share or $1.4B).

Rockbay News: TOG CN started at outperform at RAJA, Barron’s highlights BKD insider buying, ALC reiterated buy at JEFF -- $11 target, Trian signs confidentiality agreement with WEN,

Vito’s Trivia:  According to the CIA 2007 Factbook, which country boats the highest life expectancy at birth?  The lowest?  (Life expectancy at birth is defined as the average number of years to be lived by a group of people born in the same year, if mortality at each age remains constant in the future. Life expectancy at birth is also a measure of overall quality of life in a country and summarizes the mortality at all ages. It can also be thought of as indicating the potential return on investment in human capital and is necessary for the calculation of various actuarial measures.)

Yesterday’s Answer:   Columbia (.62 per 1000 people) has the highest per capita murder rate in the world, followed by South Africa (.5 per 1000), Jamaica (.32 per 1000), Venezuela (.31 per 1000), and Russia (.2 per 1000).  USA ranks 24th at .043 per 1000. 

Monday, August 27, 2007

Morning Note...

Futures looking slightly lower on a relatively slow “vacation-week” Monday.  

HD Supply sale terms lowered.  Spooking the LBO markets a bit.  

Existing home sales data at 10am.  Oil hanging just above $70. 

Announced Deals:  X acq STE CN for C$38.50/share ($1.1B).  Acer for Gateway ($710mm).

Rockbay News: NRG declares preferred tock dividends, NY Times reports Altria may spin-off int’l business, CON GY makes positive comments on synergies with Siemens VDO unit, Turkey’s Competition Board approves sale of Intergum to CBRY LN, BARD neutral on GCO – merger with FINL on schedule, Aussie paper reports incoming BHP CEO does not see AA acq as part of his strategy, Barron’s article on recent loose credit terms that helped lead to current credit crunch, RTP wins antitrust approval for AL deal, HD Supply unit priced for 18% less than original terms, RBS to lower ABN terms according to De Telegraaf, JEFF positive on ALC buyback, UBS positive on CEG restructuring

Vito’s Trivia:  What country has the highest (per capita) murder rate?

Yesterday’s Answer:   Closing movie lines… 1) Louis, I think this is the beginning of a beautiful friendship. (Casablanca)  2) Go – proclaim liberty throughout all the lands, and to all the inhabitants thereof. (The 10 Commandments)  3) Can you dig it? (Superfly)  4) I hope to see my friend and shake his hand. I hope the Pacific is as blue as it has been in my dreams. I hope. (Shawshank Redemption)

Thursday, August 23, 2007

Morning Note...

Futures up as BofA injects $2B into CFC.  Also, the Bank of Japan left its key rate unchanged at 0.50% and has given a boost to Asian markets.  

FT reports Home Depot’s sale of its wholesale supply division to PE firms is in doubt due to uncertainty over banks willingness to find the deal.  Ford also comments that US economic conditions make its turnaround plan very difficult.   

Several big banks made nominal use of the discount window to set an example for others to make use of the liquidity. 

CFC upgraded at WCHV.  TOL upgraded at JMP.   DB downgraded at GSCO.  

Oil remains below $70.  Ten year note yields 4.67%.

Announced Deals: 

Rockbay News: UBS upgrades MEE to buy on valuation, EXH initiated hold at CITI, JPMS expects PMI spin-off from MO to be announced Aug 29th at shareholder meeting, JOYG upgraded at UBS, UBS cut estimates and Px target following AKE FP earnings,

Vito’s Trivia:  Name the movie from its closing line… 1) Louis, I think this is the beginning of a beautiful friendship.  2) Go – proclaim liberty throughout all the lands, and to all the inhabitants thereof.  3) Can you dig it?  4) I hope to see my friend and shake his hand. I hope the Pacific is as blue as it has been in my dreams. I hope.

Yesterday’s Answer:   Name the bird…  Carmine Bee-eater  California Condor  Emu

Wednesday, August 22, 2007

Morning Note...

Futures are up again as the market continues its recent resilience and stabilization.  Negative news headlines regarding subprime, credit, and hedge fund blowups are slowing down, although the MBA reported a 5.5% decline in mortgage apps for the week ending Aug 17th.

WSJ reports AMTD and EFTC are talking merger.  NMX is still prominent in merger chatter.  TOL trading up slightly premkt on earnings.

10 year note yields 4.65% and Oil is below the psychological $70 level.   

Announced Deals:  Dubai World acq 9.5% stake in MGM Mirage for $5B

Rockbay News:  BEST sees CBRY LN beverage division demerger as worth GBP 6B, LYO investor sues over deal price, TOC initiated with a buy rating at DBAB – positive on RTR acq and upgrades RTR to buy, Dutch provinces look to block RBS bid for ABN Amro, Siemens AG and IFX to form joint-venture for development and production of semi-conductors, WSJ reports insider buying in AV, MIR reit buy at BofA – calls POM block sale an attractive entry point – second block of 6mm shares to follow next week, LEHM lowers ALC px tgt to “reflect the recent change in sentiment for the group and the absence of the real estate premium,”  LDHB MK shareholders approve spin-off and DBAB reiterates Buy

Vito’s Trivia:  Name the bird…   

Yesterday’s Answer:   300 Spartans led by King Leonidas defended a narrow pass and held off Xerxes The Great’s Persian Army at the Battle of Thermopylae in 480 BC, killing an estimated 25,000 men. 

Tuesday, August 21, 2007

Morning Note...

Futures looking slightly up this morning, despite continued bank and subprime worries.  Capital One announced yesterday that it would close GreenPoint Mortgage and take an $860mm charge.  German Bank West LB warns of a crisis in Germany’s banking sector.  Speculation of a UK insurer going under.  Despite the “feel,” futures are hanging in and the mkts are showing some resilience.   

China’s central bank raises lending rates.  Staples reported in-line.  BJ’s beat numbers. 

Oil trading with a $70-handle.  Ten-year note yields 4.59%. 

Announced Deals: 

Rockbay News: VMED CEO departs, DJO receives FDA approval for bone growth products, BEST positive on AA on recent pullback, BEST cuts CBRY LN on demerger assumption rather than sale of bev unit, London Times reports Barclays falling share price may cost it AB Amro bid,  UBS reduces MEH stake, GSCO reinstates FL with neutral rating and cautious outlook, Highland Capital discloses 22% stake in ICOG, Hanover and Universal Compression become EXH, EXH announces $200mm share buyback and completes debt refinancing, Taiwan Mobile (3045 TT) reiterated buy at CITI, NRG and RRI initiated with Buy rating at Calyon, THI downgraded to neutral at GSCO, MMI investments reduces DJO stake to 4.8% from 9.4%,

Vito’s Trivia:  What occurred at the Battle of Thermopylae in 480 BC?

Yesterday’s Answer:   Recently deceased Merv Griffin was the male actor who took part in the first open-mouthed kiss in cinematic history in 1953.

Monday, August 20, 2007

Morning Note...

Futures slightly up this morning on the back of Friday’s strength and Asia’s rebound.  Very little news as the markets continue to digest Friday’s Fed action.  Most agree that it seems to have been a very precise cut that specifically targeted troubled banks and perhaps supports the current markets rather than propels them.  In other words, the Fed’s action was not necessarily bullish, but rather reduces downside risk for the markets.  Further, had the Fed Funds rate been cut, the markets may not have reacted kindly to what could have been interpreted as a panic move.  In the current scenario, however, Bernanke has done something useful in the near-term while also buying time until Sept 18th’s Fed meeting.  He has tipped his hand slightly, and should he cut the Fed Funds rate then, the reaction will surely be more orderly and controlled.   

WSJ reports that CITI’s sale of $1.5B if bonds later today relative to GE’s plastics division will be closely watched to properly gauge the health of the credit markets.  

Lowe’s reported good earnings.  The Nasdaq announced exploration of alternatives to divest its 30% stake in LSE.  CFC begins lay-offs.  NY Times reports TRB deal could be in jeopardy. 

Barron’s reports BSC, CFC, and CIT may seek mergers with healthier banks.  Barron’s also reports stocks picked by CNBC's Jim Cramer have underperformed the Dow by 10% and the S&P 500 by 4% over the past two years, according to an analysis by Barron's, and over the past six months, Cramer's picks have been flat or down in relation to the market.  

Announced Deals: 

Rockbay News: TOG CN cut to mkt perform at BMO – new entity needs few months to prove itself,  DJO receives accreditation from Accreditation Commission for Health Care, UBS stake in CON GY falls to 1.36% from 3%, CON GY CFO calls VDO acq accretive,  Ruediger Grube names to Chrysler board, FINL hires Bain to integrate GCO, EQT started with Buy rating at DBAB – sees sum of the parts worth more than the “whole,” CNX amends dividend policy – increase in dividend expected Sept 30,

Vito’s Trivia:  Any guesses as to which recently deceased actor, entertainer & producer took part in the first open-mouthed kiss in cinematic history?  (1953)

Yesterday’s Answer:   Cashin said this on Friday morning on CNBC:  “Capitulation is when the fear of losing money finally outweighs the fear of looking stupid.” 

Friday, August 17, 2007

Morning Note...

Big news of the morning is the Fed announcement of 50bps Discount Window Rate cut.  It also said it stands ready to act “as needed.”  Lowering this particular rate does not have the effect on other rates that the Fed Funds rate would.  However, it DOES add much needed liquidity to the banking system.  This could be critical for those banks looking to manage mortgage exposure and those collared with the debt from PE deals.  The Fed’s action also helps bolster investor confidence.  Further, remember a Fed Funds rate cut still remains possible – the wording of the release hinted as much.

Futures up sharply off the lows of down nearly 100bps on last night’s Asian sell-off.  S&P futures currently up 2%.

Oil just over $72/barrel.  10 year note yields 4.72%.  

Announced Deals:  TPG to acq MEH for $450mm

Rockbay News: IP forms joint venture with Ilim Group in Russian forest area, CVS cleared by AG and SEC in options-granting investigation, UCO/HC shareholders approve merger – symbol change to EXH, Atlantic Investment reported 5.2% stake in JOYG, ARB signs a services deal with CDL, RBS raises stake in ABN Amro to 4%, FBR reiterates outperform for HCR, MHG NO upgraded at MSDW

Vito’s Trivia:  Art Cashin said this on CNBC this morning:  “…it’s when the fear of losing money finally outweighs the fear of looking stupid.”  What was he talking about?

Yesterday’s Answer:   California, by a wide margin, boasts the most fast food restaurants, followed by Texas, New York, and Florida.

Thursday, August 16, 2007

Morning Note...

Futures sharply lower this morning as overseas markets, particularly Asia, are much lower.  Japan -2%, HK -3.3%, Shanghai -2.2%, South Korea -7%, India -4.3%.  Somewhat circular, however, as many of these mkts were off due to our Wednesday performance…  Australian home loan group RHG AU (Ram Homes) also failed to roll over AU$5B in loans…  Plenty of chatter on the Carry trade again – reference the JPY, the NZD, and the TRYJPY for example.

So does the Fed cut?  The issue is, while the financial mkts are suffering, the economy itself seems to be hanging in.  Employment, production, and consumer spending are all up.  Citi is apparently calling for a rate cut today, but what the Fed does is anybody’s guess.

Housing data negative, however.  July housing starts dropped 6% to the lowest level since January 1997.  

Oil off $1.50 and is below $72/barrel.  10-year note yields 4.67%. 

Buckle up for another bumpy ride today.  Negative sentiment and emotion are dominant, and we could be in for an ugly day.   Also, it bears noting that the S&P is off more than 10% from its peak.  Officially sounds like a correction to me.  How much more downside from here??

Announced Deals:  FITB acq FCTR fot $1.09B ($31/share)

Rockbay News: WSJ article on AL remaining independent, DJO deal clears anti-trust, QI started outperform at CSFB, DBAB cautiously positive on CAO 2006 10Q filing, EU to rule on RBS bid for ABN Amro by Sept 19, MSDW positive on DAI GY pullback – thinks company would be buyers here, CITI cautious on CBRY LN – thinks demerger most likely with PE “paralyzed,” WSJ reports KFT seeking buyer for Post cereal biz

Vito’s Trivia:  What state boasts the most fast food restaurants?  

Yesterday’s Answer:   “Stat” is used in the ER because it means immediately.  And presumably has less syllables that saying “ASAP.”  From the latin “statim” for immediately.

Wednesday, August 15, 2007

Morning Note...

Futures looking lower on the back of AMAT’s earnings warning and general market nervousness.  Which hedge fund blow-up will be announced today?

July core CPI was up 0.2%, which was inline with expectations and has held relatively steady with a 2.2% gain year-over-year.  Thus inflation trends are pretty steady but whether or not this gives the Fed room to lower rates is anybody’s guess.

Oil up over $73/barrel.  10 year note yields 4.70%.  

Announced Deals: 

Rockbay News:  Far EasTone (4904 TT) denies merger with New Century InfoComm, NBF positive on TOG CN, DBAB rates LDHB MK Buy on weakness, CITI positive on TXU at these levels, TCI slightly raises stake in RTR LN, CSFB maintains Taiwan Mobile (3045 TT) outperform, CBRY LN spokeswoman says no decision on US beverage unit yet – the Times reports “demerger” most likely as sale of unit has garnered no PE interest, CEN downgraded to neutral on Pershing endorsement of deal at UBS, FDC debt to be held by banks according to Crain’s, FINL/GCO announce early termination of waiting period,

Vito’s Trivia:  Why do ER personnel use the word “Stat?”  What does it mean?

Yesterday’s Answer:   “His presentation was quite abecedarian.  There was a fair amount of oscitation in the room.”  Abecedarian -- 1a: of or relating to the alphabet. b: alphabetically arranged. 2: rudimentary.  Oscitation -- v. yawning or gaping from drowsiness. [from Latin oscitare "to open (like a mouth.)"]

Tuesday, August 14, 2007

Morning Note...

Futures up this morning on some positive economic news… Total PPI rose 0.6% in July but core PPI rose just 0.1%, which represents the smallest gain in 3 months.  Also, the US trade deficit unexpectedly narrowed to $58.1B in June.  

Most importantly, this morning, no news is good news in the sense that there is no talk of hedge fund blow-ups or subprime issues…  Rather, focus is back on earnings, at least for the moment.

WMT trading lower premkt on earnings, HD trading slightly higher premkt on earnings.  FIG trading lower premkt on earnings.  RFMD upgraded at Citi.  Q upgraded at LEHM.  STJ initiated with buy at THNK.  HOTT announces $40mm buyback. 

MEH seeing competing bid from TPG/Northwest.  Pequot has 8.8% stake and is not convinced TPG deal better than Airtran’s.

TMA is the lastest mortgage casualty – downgrades across the street.   

Announced Deals: 

Rockbay News: DAI initiated with outperform at CSFB, Mobile Satellite Ventures meets FCC standard for next-gen satellite, UFS removed from conviction list due to lack of near-tern catalyst but maintain buy at GSCO, TXU to split into 3 businesses if KKR/TPG takeout falters – begins roadshow to build support, CSFB cautious on CBRY LN – expects update on beverage biz soon, RBS increases stake in AABA NA to 3.25% to show commitment in takeover offer, GSCO raises estimates for HRZ following tender, UFS downgraded from strong buy at RAJA following earnings, German paper reports STM may be interested in IFX, DFS initiated with equal weight at MSDW, Motient changes name to TerreStar.

Vito’s Trivia:  Word trivia… define the bold words.  “His presentation was quite abecedarian.  There was a fair amount of oscitation in the room.”

Yesterday’s Answer:   The Bank of New York was the first company listed on the NYSE in 1792.