SOW Morning Update

Updated on

Every morning the Street of Walls team puts out an update on market levels, today’s top stories, and active M&A deals.

Morning Market Levels:

  • S&P futures are up 2 points to 1,249
  • Europe: DJ Euro Stoxx -0.1%, FTSE 0.0%, CAC -0.5%, DAX 1.2%, Spain -0.6%, Italy -0.3%
  • Asia: Japan -0.9%, Hong Kong 1.0%, India 1.9%, Australia -0.6%
  • USD (DXY) down -0.04%
  • Gold up 0.16% to $1,655.5
  • Silver down -0.13% to $31.7
  • Copper down -0.12% to $344.4
  • Crude up 3.40% to $94.4
  • Corn up 0.73% to 655.8
  • Wheat up 0.43% to $645.3
  • 10yr Treasury yields are up, trading at 2.25%
  • S&P current trading at 12.62x current year P/E

Today’s Top Stories:

  • Another U.S. Downgrade: Wall Street is growing nervous about the congressional supercommittee amid warnings from major banks that failure to reach a deal could lead to another downgrade of U.S. debthttp://bit.ly/vXqCq3
  • EU Bailout may top $1.4trn: German opposition leaders said that the Eurozone’s bailout fund may top $1.4 trillion, following a meeting with Chancellor Angela Merkel http://bit.ly/rt3EBg
  • States face $4 trillion in total debt: The total of U.S. state debt, including pension liabilities, could surpass $4 trillion, with California owing the most and Vermont owing the least, a new analysis sayshttp://bit.ly/vUObii
  • NFLX Misses on Guidance: “the 4Q11 guidance was lower than expected and initial 2012 earnings expectations were much lower than previously expected. The root cause for the domestic sub issues, zero sub growth in 2H11 following 5M+ net adds in 1H11 is likely mis-execution on pricing changes” (Credit Suisse Research)
  • UBS NFLX Estimates: “We are reducing 2012 EPS down from $6.24 to $2.78”
  • BAC loses key advisor to PNC: Bank of America Corp. Chief Executive Officer Brian Moynihan lost a key member of his inner circle Monday when rival PNC Financial Services Group Inc. announced the hiring of Mike Lyons as its head of corporate and institutional bankinghttp://on.wsj.com/tMuYVZ
  • UBS Investment Banking Results: Equity sales & trading revenues fell -40% Q/Q and 30% Y/Y (excluding the trading loss), in line with US IBs down ~30% Y/Y
  • Morgan Stanley Layoffs: MS announced the sale of Saxon Mortgage Services to OCN, the WSJ says the sale of Saxon will cut MS’ headcount by 1,200 people (WSJ)
  • Private Equity Deal Activity: So far in 4Q 2011 there have been 339 Global PE deals with an average premium of 9.3%.  YTD precedent transactions are running at valuations of 9.9x EBITDA and 1.5x Revenue
  • Icahn/Soros Buy WedMD: Icahn and Soros disclosed a 7.94% and 5.59% ownership of the outstanding common stock of WebMD Health Corp. (Nasdaq:WBMD) http://bit.ly/w1r4aa
  • European Vote Tomorrow: “All quiet ahead of the EFSF meeting in Europe tomorrow with S&P futures trading at yesterday’s highs.  Der Spiegel article this morning notes that Germany will put the vote on EFSF/Greek haircuts/Bank Recap in front of the entire parliament, not just the Budget Committee, a big step that will cause increased volatility on the final vote.  Our strategy team feels this would be a much needed step in the right direction if the German parliament votes yes with EFSF $1T, 60% Greek haircuts and $100B in bank recap” (Citi Research)

M&A Watch:

  • Morgan Stanley announced the sale of Saxon Mortgage Services to OCN
  • Yesterday Cigna accounted they would buy HS for $3.8bn or $55/sharehttp://bit.ly/u5Sxu1
  • Oracle to buy RightNow for $1.5bn (BBG)
  • Uranium takeovers  offering investors biggest potential payoffs, less than yr after partial meltdown of Japan’s Fukushima nuclear plant (BBG)

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