Tuesday Pre-Market News (11/22/11)


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

Today’s Top Stories:

  • Gov’t Supercommittee Failed: The Supercommittee confirmed after the close Mon what many already suspected: they failed to strike a deficit dealhttp://politi.co/tHe4OB
  • Supercommittee Cuts: a big chunk of that $1.2T will be imposed on the Pentagon, something several members of Congress are going to try and fight
  • Citi on Supercommittee: “$1.5tn of deficit cuts will have to wait but partial success should be achieved.  If there is a Greek failure, investors believe the market will be down 2-3%.  Failure of Super Committee solidifies fears that Political action is not a certainty.  Real impact of the failure will put downside pressure on growth in 2012.  Payroll tax cut and extension of unemployment insurance roll offs could take 1% off growth.  We think growth expectations for 2012 could be cut in half.  Ratings agency downgrades?  There is an increased likely hood in the next 6 mths” (Citi Research)
  • Economic Recession Estimates: The finds say 65% of people expect Europe to slump into a recession next year. Only 24% expect the U.S. toohttp://bit.ly/uMiEX0
  • US Credit Rating: S&P says it has no plans to cut the US credit rating but warns this is based on the expectation for the $1.2T in automatic spending cuts to kick in starting Jan ’13 as planned (AP)
  • Wall Street Layoffs Hurting the Young: The number of investment bank and brokerage firm employees between the ages 20 and 34 fell by 25 percent from the third quarter of 2008 to the same period of 2011, a loss of 110,000 jobs from layoffs http://nyti.ms/vvio8x
  • US Private Equity Stats: Private equity firms headquartered in US: 2,300 firms http://bit.ly/tnl6zA
  • NFLX Hitting Capital Markets: selling $400M in stock, converts
  • HPQ Earnings: EPS headline had a small beat but the IPG business had a large shortfall on both margins and revs (mgmt on the call talked about weakness in pretty much every area of that business).  Software came in much better than St forecasts although this was helped by Autonomy (that deal closed on 10/3 so HPQ had nearly 1 month contribution from the company).  The outlook was weaker than expected and mgmt is only providing EPS guidance (no longer guiding for revs for the time being).  They talk about revs being a bit higher than they would like in some regions
  • Glenview Capital Adds URS: Larry Robbins’ hedge fund Glenview Capital filed a 13D with the SEC regarding its position in URS Corporation (NYSE:URS). As of November 10th, Glenview owns 5.21% of URS with 4,150,448 shares http://bit.ly/snfN3C
  • Goldman Application Process: Almost 300,000 individuals applied for full-time positions at Goldman Sachs for 2010 and 2011http://bit.ly/ucjK7M

Economic Calendar:

This Top Energy And Infrastructure Fund Is Bullish On U.S. Utilities

UtilitiesThe Electron Global Fund was up 2% for September, bringing its third-quarter return to -1.7% and its year-to-date return to 8.5%. Meanwhile, the MSCI World Utilities Index was down 7.2% for September, 1.7% for the third quarter and 3.3% year to date. The S&P 500 was down 4.8% for September, up 0.2% for the third Read More

  • Tuesday: 3Q GDP, Personal Consumption, Richmond Fed, FOMC Meeting Minutes
  • Wednesday: Durable/Cap Goods Order, Personal Income, PCE Deflator, Initial Jobless Claims, U. of Mich Confidence Sentiment, Kansas Fed Survey
  • Thursday: US Market closed
  • Friday: N/A

M&A Watch:

  • FFastFill Plc entered into an agreement to acquire WTD Consulting Inc for US$12 million in stock and contingent payout
  • Eurazeo PME SAS, a unit of Eurazeo SA acquired a 74.3% majority stake in FDS Group SA for an enterprise value of EUR190 million
Disclosure: I do not have a position in any stocks mentioned in this article, do not have a plan to initiate a position within the next 72 hours.
Disclaimer:  The information, opinions, material, and any other content provided in this article is for informational purposes only and is not to be used or considered an offer or solicitation to buy or sell securities, investment products, financial instruments, or to participate in any particular investment strategy. The information, opinions, material, and any other content provided in this article does not constitute as a recommendation or as advice to buy or sell securities, investment products,  financial instruments, or to participate in any particular investment strategy.

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