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Europe Bailed-Out by Greek Voters: Today's Market Headline
Europe Bailed-Out by Greek Voters: Today's Market Headline
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Last
12,767.17 2,872.80 1,342.84 2,181.23 5,478.81 6,229.41 3,087.62 1,502.62 8,731.01
Change
0.91% 1.29% 1.03% 1.54% 0.22% 1.48% 1.82% 2.45% 1.89%
Commodities
Gol d Na tura l Ga s Crude Oi l 1,622.61 2.49 84.78 -0.28% 0.73% 0.89%
Currencies
EUR/USD 1.2714 1.5714 0.80906 1.20123 79.19 0.60% -0.01% -0.56% -0.02% 0.58% GBP/USD EUR/GBP EUR/CHF USD/JPY
Market Overview
Good Morning, equities ended Fridays trading session higher on the day and on the week. This was followed by a weaker USD in the FX market, by continuing range trading in Commodities which failed to join the risk-on environment and by a further strength in the so called safe haven assets, German bonds & US Treasuries. The Vix was down 2.63% to close at 21.11 (slightly higher on the week). The main trigger for last weeks positive price action was 1) market conviction that even if the Greek elections turn out the worse world central banks have already prepared a contingency plan they intend to use which will inject massive liquidity into the market and 2) the belief that the Fed is going to change its tone about QE3 in the upcoming meeting on Wednesday. Markets will get their first opportunity today to respond to the Greek election results which come ahead of todays G20 two day meeting in Mexico. Asian markets are all higher today, US Futures are higher (SPX Futures +0.50%) and European markets are set for a higher open on the day (Euro Stoxx Futures +2.0%). Greece Elections: Pro-Bailout Parties won enough Seats to Form a Majority; the results raise the odds for forming a Government which will try to stand up to the bailout
1
US Rates
US 2Y US 10Y 0.28 1.63 1.21% 3.39%
PROBE: a proprietary index measuring the break-even probability of a given deal. 18 June 2012
agreement and will likely keep global central banks on the sidelines for the time being. Once a new Government is formed EU & IMF members will return to Athens to decide how to continue from here. Antonis Samaras, leader of New Democracy, has pledged to honor Greece's commitments but says he wants to ease the terms of the multi-billion-dollar EU-IMF rescue package that has imposed harsh austerity on the Greeks. Overall, even though the Greek election results are to be viewed as positive for risk in the short term once the excitement is over leaders will still have to find an economic solution which involves more austerity. G20 Start their Two day Meeting in Mexico; leaders of the G20 will boost the $430bln firewall the IMF announced earlier in April. As far as for the European crisis, since most G20 countries are not part of the region and do not have the power to drive how the continent manages the crisis it is hard to expect anything specific in terms of a crisis solution. G20 leaders are also going to discuss the civil war in Syria and the nuclear threat from Iran which is going to highlight the tense between U.S & Russia around this matter. French Socialists Win Absolute Majority in Parliament; French President Francois Hollandes Socialist Party and its allies have won an absolute majority in the National Assembly, sparing it the need to rely on Communist- backed or Green members of parliament to pass legislation. The Socialist bloc won 320 seats, CSA said, with 289 needed for a majority. Former President Nicolas Sarkozys UMP will have 221 seats, it said, and the anti-euro National Front won two seats. Only 56% of Frances registered voters voted in todays second and decisive round of legislative elections. The results are likely to give President Hollande the mandate to fulfill his Agenda. ECBs Coeure Says ESM Should Recapitalize Banks Directly; If the European Stability Mechanism could inject capital directly into banks, with strong conditionality and control, this would also help to break the bank-sovereign loop. Coeure said the fundamental causes of a lack of trust in Europes banking sector need to be addressed if the functioning of money markets is to return to normal. It may take a long time before secured, and particularly unsecured, money-market segments begin to function normally again he said. Economic data today offers Euro Zone, Italian & UK Trade Balance, Euro Zone Employment, US Empire Manufacturing Index, Tic Flows Data, Industrial & Manufacturing Production, and Capacity Utilization & U. of Michigan Confidence Index and Good luck!
47.5 percent secured by his rival, ex-military man Ahmed Shafik, with almost all votes counted. Shafik's campaign challenged the result. He promised that as president he would not "seek revenge or settle scores." He pledges to serve both those who voted for him and those who did not and also vowed to seek justice for those killed in the uprising that toppled Hosni Mubarak last year. More than 850 people died in the uprising, and dozens more have in violence since then.
Risk Arbitrage
Reuters: General Electric Co aims to buy a medium-sized business in Germany in the next six months to expand its technological footprint, German daily Sueddeutsche Zeitung reported, citing a manager at the U.S. conglomerate. "We hope to have managed a takeover by the end of the year," the paper cited Christoph Reimnitz, in charge of strategy and M&A in Germany and eastern Europe, as saying in an article published on Saturday. He did not provide details on possible acquisition targets but said he preferred buying family-owned businesses to takeovers of stock-listed companies or assets put up for sale by private equity firms. News Wire: Elster Group SE confirmed that it is in discussions with Melrose PLC regarding a potential agreement pursuant to which, among other things, Melrose would make an all cash offer for all outstanding shares of Elster at US$20.50 per American Depositary Share, or approximately US$2.3 billion in aggregate on a fully diluted basis. Reuters: Italian oil and gas major Eni has received expressions of interest from sovereign funds for a 22.5 percent stake in Snam that it must sell to exit investment in the gas grid operator, an Eni source said on Sunday. "Several sovereign funds have expressed a preliminary interest that Eni will evaluate," the source said. The government in May gave Eni 18 months to sell its controlling 52.5 percent holding in Snam as part of plans to boost competition and reduce energy prices. Reuters: Swiss commodities trader Glencore International PLC said on Friday it has agreed to an extension of the Canadian government's review of its proposed takeover of Viterra Inc, Canada's biggest grain handler. The government's review will determine whether the takeover is of "net benefit" to the country, and is necessary before the C$6.1-billion ($6 billion) deal can close. The review period will be extended by 30 days past the initial review period, which will end on June 18, Glencore said in a statement. Reuters: The Hong Kong stock exchange agreed to pay 1.4 billion pounds ($2.2 billion) to buy the London Metal Exchange, a British institution and the world's biggest marketplace for industrial metals, underscoring the global shift in manufacturing to Asia. The deal on Friday - still subject to approval by LME shareholders, who may well reject it would give Asia's largest bourse a much-desired commodity trading platform and brings LME members closer to China, the world's biggest metals buyer. Reuters: Britain's Vodafone Group said on Friday it would not change the terms of its takeover offer for Cable & Wireless Worldwide and if it did not achieve the required support of the holders of 75 percent of the shares its bid would lapse. Vodafone's 38 pence-a-share bid has been criticised by CWW's largest shareholder Orbis, which holds a 19 percent stake. It said last week it would not decide whether to support the deal until just before Monday's shareholder meeting. The fundholder has said it would be willing to remain a minority shareholder in a Vodafone-controlled CWW, but that would require Vodafone switching the bid to a tender offer.
18 June 2012
Reuters: Royal Dutch Shell is believed to be considering making an improved offer of 1.4 billion pounds for Mozambiquefocused explored Cove Energy to see off a rival bid from Thai energy group PTT Exploration & Production. Bloomberg: Lion Pty., the Australian brewing unit of Kirin Holdings Co., agreed to pay A$220 million ($223 million) to buy the 64 percent of Little World Beverages Ltd. it doesnt already own to add faster growing boutique beers. Lion will pay A$5.30 a share, Fremantle, Western Australia- based Little World said in a statement today. After including debt and the 36 percent Lion already owns, the deal values the maker of Little Creatures beer at A$381.6 million. Bloomberg: Itau Unibanco Holding SA said its 11.8 billion-real ($5.75 billion) offer for Redecard SA, Brazils second-biggest card-payment company, is in line with an appraisal requested by a minority investor. Credit Suisse Group AG calculated shares of Barueri, Brazil-based Redecard to be worth from 34.66 reais to 38.12 reais, according to a regulatory filing after markets closed on June 15. Itaus offer of 35 reais is therefore accounted for by the appraisal, according to a June 16 emailed statement from the Sao Paulo-based bank. Itau, Latin Americas largest bank by market value, declined to comment on whether it would change its Feb. 7 offer to take Redecard private.
18 June 2012
interested in studying them," CSN chief executive officer Benjamin Steinbruch said on the sidelines of the Rio+20 conference in Rio de Janeiro on Saturday, according to newspaper O Estado de S. Paulo's website. Reuters: The former head of Britain's biggest mobile phone company Everything Everywhere approached private equity groups six months ago about an eight billion pound buyout but found no takers, investment banking sources said. Tom Alexander, who left the France Telecom-Deutsche Telekom joint venture a year after it was created, spoke to firms including KKR, CVC and Providence, the sources said. But he gained little traction for a bid. Reuters: French state-owned bank Caisse des Depots et Consignations is considering a bid for control of transport firm Veolia Transdev after blocking the sale of partner Veolia Environnement's stake, two newspapers reported. Veolia Environnement put up for sale its 50 percent stake in Veolia Transdev in December as part of a plan to shed 5 billion euros ($6.3 billion) in assets in order to cut debt and costs. The utility has since announced exclusive talks with a potential buyer, which media reports have said is infrastructure fund Cube, owned by investment bank Natixis
Broker Recommendations
Positive US: Negative US: U.S. Discretionary Cut to Market Weight vs Overweight at UBS Suedzucker Cut to Neutral vs Buy at Goldman Agrana Cut to Neutral vs Buy at Goldman Deutsche Bank Cuts Petrobras ADRs Target Price by 16% to $27.00 U.S. Energy Raised to Overweight vs Market Weight at UBS Groupon Raised to Overweight at Morgan Stanley Pioneer Natural Resources Raised to Buy vs Neutral at UBS EDF Upgraded to Outperform from Neutral at Exane Gas Natural Raised to 'Buy' at Societe Generale Premier Farnell Raised to Overweight at Barclays Nokia Raised to Buy at ABG Sundal
18 June 2012
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18 June 2012