Tuesday (12/20/11) Pre-Market News: RBS Shrinking iBanking Division


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:

  • 13D, Owl Creek Challenges Icahn: Owl Creek Asset Management has disclosed a 8.48% ownership of the common stock of Navistar International (NYSE:NAV) and noted recent conversations the hedge fund has had with Navistar’s management http://bit.ly/uDbNJN
  • GS on What Worries Markets: “As we head into 2012, markets are preoccupied with the same three global themes that have dominated macro sentiment since late 2008/early 2009: China growth, Europe sovereign debt, and US policy” (Goldman Research)
  • Another Strong Spanish Action: Demand for the 3- and 6-month Treasury bills was high, with more than 18 billion euros ($23.43 billion) offered for 5.6 billion euros sold, above the targeted amount of 3.5 billion to 4.5 billion euros
  • Why Bank Stocks are 5x P/E: Bank stock have been lagging today, Citi and Bank of America now both trade at ~5x 2012 earnings.   We’ve noticed the last few quarters that hedge funds have been puking financials from their portfolios http://bit.ly/vcxucU
  • Bill Gross on Ultra Cheap Money: “Zero-bound money – credit quality aside – creates no incentive to expand it…when the return on money becomes close to zero in nominal terms and substantially negative in real terms, then normal functionality may breakdown”  (FT)
  • Tech & Healthcare Most Attractive: Technology and Healthcare are discounting depressed profitability and growth vs. historical valuation ranges http://bit.ly/sdxqez
  • Best Stock Picks for 2012: Barclays is out with their best stock picks for 2012, top picks including Brasil, Kraft, PDG, Abercrombie, CVS, Macy’s and more http://bit.ly/rY5sLE
  • RBS Shrinking Their Investment Bank: another article talking about how RBS will be shrinking its investment bank.  ”RBS should significantly reduce its IB…scaling back risky activities that are heavy users of capital and funding” (FT)
  • AT&T Takes $4bn Hit on T-Mobile Deal: T and T-Mobile deal officially off. T will recognize $4B pretax accounting charge for Q4
  • Citi on AT&T/T-Mobile Fallout: “AT&T and DT announced yest that the co’s have ended their discussions on T’s proposed acq of T-Mobile USA and T will pay a cash break-up fee of $3bn and recognize an additional charge of $1bn for the transfer of spectrum assets during 4Q/11. We are surprised T didn’t negotiate longer for an alternative deal or a reduced break-up fee but  expect them to get back to focusing on using its recently built cash position to consider alternative sources for spectrum, possibly repo further stk.  S is a potential beneficiary and may revisit merger with T-Mobile USA in due course” (Citi Research)
  • Barclays Holiday Highlights: “1) online sales are tracking about 15% of total.  2) last weekend promotions averaged 40% of in stores. 3) trends have decelerated.  4) Three of the busiest holiday sales days are yet to come including 12/22, 12/23 and 12/26—expect promotions to intensify as we get closer to the Christmas weekend” (Barclays Research)

Economic Calendar:

SALT New York: Canyon, Mudrick, Fortress And Sculptor On Finding Distressed Value

At the 2021 SALT New York conference, which was held earlier this week, one of the panels on the main stage discussed the best macro shifts coming out of the pandemic and investing in value amid distress. The panel featured: Todd Lemkin, the chief investment officer of Canyon Partners; Peter Wallach, the managing director and Read More

  • Tuesday: Housing Starts, Building Permits
  • Wednesday: Existing Home Sales
  • Thursday: Chicago Fed Survey, GDP, Personal Consumption, Initial Jobless Claims, U. of Mich Confidence, Leading Indicators, House Price Index
  • Friday: Durable Goods Orders, Personal Income, New Home Sales

M&A Watch:

  • Weekly M&A Trends: M&A volumes declined by 13% to $25.7bn, so far 4Q 2011 M&A volumes are averaging 14% below 3Q 2011 volumeshttp://bit.ly/t5PKot
  • Bi-Lo buys Winn-Dixie: BI-LO and Winn-Dixie Stores (Nasdaq:WINN) announced today that the companies will merge to created a company of approximately 690 grocery stores in eight southeastern stateshttp://bit.ly/ujtK6s

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