Opening Bell: 7.24.07

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GM's Allison Hits a Financing Snag (WSJ)
So, like, money really isn't cheap anymore. Yet another plan, this time the pending LBO of GM's Allison Transmission unit, has hid a snag, as the buyer has been delayed in getting financing. At the moment, the deal is just delayed, and it's expected that it will go through without too much of a delay. But it's yet another sign that it's no longer so easy to just walk into the Money Store, er, money store, and walk out with a fat loan. And people wonder why shares of Blackstone aren't doing so hot.
Expedia slashes buyback plan over debt concerns (Bloomberg)
And in more news, the cost of debt matters to buybacks too. Yesterday, online travel site Expedia announced that it would suspend share buyback plans, citing the rising cost of debt, which it had been using to fund the buybacks. Seeing as buybacks have been a driver of at least some of this bull market, this might be taken as bad news. There's a plus side though -- buybacks aren't always a good thing. In fact, buybacks near the top of a bull market are a total waste of money. So if we're anywhere near the market's highs, then the debt market is sending an important signal to slow down.
UAW talks start with GM, Ford (AP)
Finally, the union and the automakers are set to bury the hatchet. After years and years of a contentious relationship, which has seen both sides accuse the other of undermining, the parties are finally set to break bread, speak honestly and resolve their differences. It's about time. The US automakers have enough to be worried without having to think about labor issues.
Oil prices slide on Opec remarks (BBC)
Oil buyers will receive a temporary, moderate reprieve, as an OPEC minister has indicated that the cartel may be inclined to increase production, if only by a smidgen. But, when your thirsty a smidgen is better than nothing. Heck, even if the extra oil were a mirage or an illusion, it might be temporarily satisfactory. The minister is quotes as saying that a fair price for a barrel might be between $60-$65, although he added that current supplies should be adequate.


American Standard to sell bath, kitchen lines (MarketWatch)
Ah, the fall of another iconic brand into the clutches of private equity. American Standard, which is just about the only brand name associated with toilets, will be selling its bath and kitchen lines to private equity firm Bain. Following the sale, it will reduce its debt, buy back stock and concentrate on its Trane division, which does air conditioning. Probably only a matter of time before that gets taken out as well.
Expand, contract, repeat (Oligopoly Watch)
As with the aforementioned American Standard, it would seem that we're heading into "pare back" mode. Instead of looking to add units, products and SKUs, there are more stories about companies looking to shed non-performing units, focusing on "core competencies", stuff like that. There are exceptions though. There's tons of M&A in software right now, as tech companies look to be able to offer everything under the sun. And the major beverage makers are still on their quest to find the ultimate non-carbonated beverage, even though it's non-sugar beverages that will be the real killer. So, perhaps to early to make broad generalizations.
News-DJ: Major Bancroft Member Opposes Offer; Decision By Friday; Sales Team Likes It (PaidContent)
So yeah, those jerks the Bancrofts are going to make us wait until the end of the week until we get a decision. It would still seem that the deal is a go, but there are some cracks. There are "key members" who oppose the deal still, and with a few more turncoats, nothing is certain. Meanwhile, those in charge of Dow Jones sales are said to be bullish on the deal, as they believe Murdoch will do a fresh push to bring in more business, perhaps related to some sort of Fox Business tie-in.
Demand Grows for All-Business-Class Flights (NYT)
Supposedly, there's increasing demand for all-business-class flights, i.e. no coach. Both established firms and startup airlines are catering to this market, and they claim that bookings are strong. Our prediction; it ain't gonna last. Sure, in theory, they can offer a slightly cheaper price than a typical business ticket and this may attract some fliers. But isn't part of the thrill of business class or first class getting to sit down first and watching all of the plebes file past you with looks of jealousy? After all, if everyone's business class, isn't that just saying that everyone is flying coach?

Related

Opening Bell: 12.19.12

UBS In $1.5 Billion Libor Fine (WSJ) As part of the deal, UBS acknowledged that dozens of its employees were involved in widespread efforts to manipulate the London interbank offered rate, or Libor, as well as other benchmark rates, which together serve as the basis for interest rates on hundreds of trillions of dollars of financial contracts around the world. UBS's unit in Japan, where much of the attempted manipulation took place, pleaded guilty to one U.S. count of fraud. Authorities on Wednesday painted a picture of "routine and widespread" attempts by UBS employees to rig Libor and the euro interbank offered rate, or Euribor. The U.K. Financial Services Authority said it had identified more than 2,000 such attempts between 2005 and 2010 with the participation or awareness of at least 45 UBS traders and executives. Regulators on Wednesday released a trove of internal UBS emails and other communications—many of them colorful and expletive-laden—in which bank traders, sometimes with the knowledge of their managers, sought to manipulate the rates in order to boost their trading profits or mask the Swiss bank's mounting financial problems in 2008. UBS Traders' 'Humongous' Libor-Fixing Boasts (CNBC) The FSA documents suggest a macho trading culture on the UBS trading floor. Trader A also said: "if you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today ... I will ****ing do one humongous deal with you ... Like a 50,000 buck deal." Traders and brokers implicated in the scandal referred to each other as "the three muscateers [sic]" and "captain caos [sic]." SAC's top consumer trader draws scrutiny from U.S. authorities (Reuters) U.S. authorities are examining trading by one of SAC Capital Advisors' most successful portfolio managers, Gabriel Plotkin, as part of a probe into the $14 billion hedge fund firm's investment in Weight Watchers International Inc last year, according to a person familiar with the investigation. Plotkin, a specialist in consumer and retail stocks who makes investment decisions for more than $1.2 billion worth of assets, is among several SAC portfolio managers whose trades are being investigated, said the source, who did not want to be identified. The source would not name the other managers. Federal authorities are trying to determine whether any of SAC Capital's retail and consumer portfolio managers traded Weight Watchers shares based on non-public confidential information about the diet company, said the source and another person familiar with the investigation. The two sources said it is too soon to conclude if there was any insider trading. Authorities have not charged Plotkin with any wrongdoing. Banks See Biggest Returns Since ’03 as Employees Suffer (Bloomberg) Shareholders, impatient for the industry to boost profit, were rewarded as Wall Street firms cut jobs and pay, and exited businesses. The shrinking unnerved employees, who watched the chiefs of two big banks lose their jobs and others contend with a drop in deal making and stock trading, stiffer regulations, trading losses, rating downgrades and scandals involving interest-rate manipulation and money laundering. “There’s always grumbling on Wall Street, which is pathetic given how overpaid we all are, but there is a level of angst this year that is just unprecedented,” Gordon Dean, who left a 26-year career at Morgan Stanley (MS) to co-found a San Francisco boutique advisory firm this year, said in a telephone interview. “It’s just a profound sadness and dissatisfaction.” Greek Bond Bet Pays Off for Hedge Fund (FT) One of the world's most prominent hedge funds is sitting on a $500 million profit after making a bet that Greece would not be forced to leave the euro zone, bucking the trend in a difficult year for the industry. Third Point, headed by the billionaire US investor Dan Loeb, tendered the majority of a $1 billion position in Greek government bonds, built up only months earlier, as part of a landmark debt buyback deal by Athens on Monday, according to people familiar with the firm. The windfall marks out the New York-based firm as one of the few hedge fund managers to have profited from the eurozone crisis. Standard and Poor's, the rating agency, raised its assessment of Greece's sovereign debt by several notches on Tuesday, citing the euro zone's"strong determination" to keep the country inside the common currency area. Fitch Warns US Could Lose AAA If 'Fiscal Cliff' Hits (Reuters) "Failure to avoid the fiscal cliff.. would exacerbate rather than diminish the uncertainty over fiscal policy, and tip the US into an avoidable and unnecessary recession," Fitch said in its 2013 global outlook published on Wednesday. "That could erode medium-term growth potential and financial stability. In such a scenario, there would be an increased likelihood that the U.S. would lose its AAA status." Science explains Rudolph's red reindeer nose (CNET) A collection of Dutch scientists contributed to a paper titled "Microcirculatory investigations of nasal mucosa in reindeer Rangifer tarandus (Mammalia, Artiodactyla, Cervidae): Rudolph's nose was overheated." According to the paper, "The exceptional physical burden of flying with a sleigh with Santa Claus as a heavy load could have caused cerebral and bodily hyperthermia, resulting in an overworked nasal cooling mechanism that resembles an overheated cooling radiator in a car: Rudolph suffered from hyperemia of the nasal mucosa (a red nose) under more extreme heat loads during flight with a sleigh." Of course, scientists don't like to put all their scientific eggs into just one basket of science. The paper's authors acknowledge other theories for the red nose, including the common cold, alcoholic intoxication, or a parasitic infection of the nostrils. GM To Buy Back Stock From Treasury (WSJ) GM said it will purchase 200 million shares of stock held by the U.S. Treasury Department in the first step of the government's eventual exit from the auto maker within the next 12 to 15 months. The auto maker will pay $5.5 billion for the shares in a deal that is expected to close by the end of the year. The repurchase price of $27.50 a share represents a 7.9% premium over the closing price on Dec. 18. Berlusconi Says Italy May Be Forced to Leave the Euro Zone (Reuters) "If Germany doesn't accept that the ECB must be a real central bank, if interest rates don't come down, we will be forced to leave the euro and return to our own currency in order to be competitive," Berlusconi said in comments reported by Italian news agencies Ansa and Agi. Knight, Getco Confirm Merger (WSJ) The $1.8 billion deal for Knight, which values the firm at $1.4 billion plus $400 million in debt held by Getco, will create a trading powerhouse ranking as one of the largest players on U.S. exchanges and the main trading partner of online brokerage firms that service everyday investors. Porsche Executives Charged Over VW Bid (WSJ) Prosecutors have charged the former top executives of Porsche Automobil Holding SE with allegedly manipulating financial markets during the company's attempt to take over Volkswagen AG in 2008, lawyers representing the executives said Wednesday. A court in Stuttgart must now decide whether to open criminal proceedings against Porsche's former chief executive Wendelin Wiedeking and former finance chief Holger Härter, who are suspected of misleading investors when they denied trying to take over VW in 2008. Market manipulation in Germany can be punished with up to five years' imprisonment. From early March to October of 2008, Porsche issued at least five statements denying it was trying to raise its stake in Volkswagen to 75%, but the prosecutors allege that Messrs. Wiedeking and Härter had already decided to try to raise the stake and were preparing for the move by purchasing buy options on ordinary and preference shares of Volkswagen. The denials induced investors to sell or make bets the shares would fall by so-called short selling, the prosecutors said, which benefited Porsche by lowering the share price ahead of the planned takeover. Spanx Bandit On The Loose After JCPenney Heist (TSG) An unknown thief (or thieves) stole a whopping $4182 worth of the popular body shapers from a JCPenney in Vero Beach, according to an Indian River County Sheriff’s Office report. The Spanx theft was reported Friday afternoon after a JCPenney employee noticed “the empty rack in the women’s undergarment section.” The worker noted that the Spanx stock had been there the prior evening. A subsequent search of the store revealed that about 100 Spanx “were taken along with their plastic hangers.” The purloined undergarments--tan and black tops and bottoms--were from Spanx’s Assets Red Hot Label line, police reported. A JCPenney store manager gave cops an itemized list of the boosted body shapers, but it appears the Spanx Bandit will escape unscathed. Due to a lack of witnesses, evidence, or store surveillance video, no further investigative activity could be undertaken by a sheriff’s deputy.

Opening Bell: 4.17.15

Greece "is moving ever closer to the abyss"; Bloomberg terminals go down for hours; Hank Greenberg faces fraud trial; "Office manager at Bronx dental practice operated on patients behind real dentist's back"; and more.

Opening Bell: 2.10.16

Morgan Stanley trading exec says run for lives; Big firms raise debt funds; Yellen to talk rate hikes with congress; Man Accused Of Tossing Gator Into Wendy's Drive-Thru Window; and more.

Third Point LLC

Opening Bell: 6.26.17

Dan Loeb takes a bite out of Nestle; stress test results aren't as tidy as you think; Sports Illustrated stretches the definition of "swimsuit"; and more.