Pre-Friday Morning Market Update (12/02/11)

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:

  • EU Deal Is Reached: European Central Bank President Mario Draghi signaled the bank could ramp up its role battling the debt crisis if euro-zone governments enforce tougher deficit cutting—suggesting outlines are emerging of a deal that investors have been clamoring to see happen
  • Icahn Interview at Yale: popular interview that intellectually summarizes the evolution of Corporate America
  • JPM on EU Mess: “pressure for a substantive policy response at the Dec 9 summit is intense.  Governance reforms look likely to be limited relative to those the region ultimately has to undertake.  The ECB is likely to support bilateral loans from national central banks to add to IMF resources, but w/no new commitments under the SMP” (JPM)
  • 20 Contrarian Stock Ideas: Credit Suisse recently put out their top 20 contrarian ideas, i.e. or ideas that are materially different from the Street’s current Buy/Hold/Sell distribution
  • European Banks: In addition to the ECB, the EBA is due to publish final bank stress trest results and capital shortfalls by institution (recall back in late Oct the EBA published preliminary results and aggregate capital shortfalls).  As things stand, Europe’s banks have until June ’12 to fix any capital deficit and most have decided to aggressively de-lever
  • Barlcays Upgrades YUM: “UPGRADING from 2-EW to 1-OW.  key points behind our upgrade are 1) Canada is not an issue, 2) new store productivity remains strong, 3) inventory is more closely aligned with sales than it appears, and 4) recent underperformance has created an attractive entry point” (Barclays Research)
  • Citi Layoffs Yesterday: Citigroup (NYSE:C) is laying off employees as we speak
  • Hedge Funds Pile Into Energy: Energy was another sector that saw a lot of out performance and M&A activity during the quarter. On average our hedge fund universe increased allocation to this sector by 2.1% during 3Q.   Funds most active in energy during the quarter included Appaloosa, Passport, Perry, Hayman, and Icahn
  • FED’s Bullard Says Wait on QE3: Bullard said at a Bloomberg hedge fund conference in New York Thursday that the Federal Reserve should get a read on the holiday season before making a decision on so-called third round of quantitative easing or QE3
  • Large Caps Outperform: Since the 2009 lows, there have been many large cap stocks that have outperformed the Dow and the S&P indices and these winners continue to enhance shareholder value
  • New Citi Japan CEO: co is said to be considering replacing its Japan Banking CEO (BBG)

Economic Calendar:

Coho Capital 2Q20 Commentary: Podcasts, The New Talk Radio

Coho Capital LogoCoho Capital commentary for the second quarter ended June 30, 2020. Q2 2020 hedge fund letters, conferences and more Dear Partners, Coho Capital returned 46.6% during the first half of the year compared to a loss of 3.1% in the S&P 500. Many of our holdings, such as Netflix, Amazon, and Spotify, were perceived beneficiaries Read More

  • Friday: Nonfarm Payrolls, Unemployment Rate

M&A Watch:

  • BNP Paribas is set to sell its private equity portfolio as part of the bank’s restructuring plan to boost regulatory capital (DJ)