Wednesday Pre-Market Morning Update: Citi Comments On More IB Cuts

Wednesday Pre-Market Morning Update: Citi Comments On More IB Cuts

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:

  • Obama’s State of the Union: “President Obama’s State of the Union Address included several new proposals, though the most significant among them would require legislation which seems unlikely to pass Congress prior to the upcoming November Presidential election. Despite anticipation that housing could feature prominently in the speech, the only major proposal mentioned–mortgage refinancing–seems likely to be blocked in Congress. Individual and corporate tax reforms are highly relevant, but seem unlikely to be addressed until late 2012 and 2013, respectively. Congress could consider the President’s proposal to boost infrastructure spending in the next couple of months, but at this point there does not appear to be support for such an increase.” (GS)
  • GS Morning Update: “Asian markets traded broadly higher overnight on the back of much better-than-expected results from Apple and help in Japan from a weaker yen following the third straight month that Japan has reported a trade deficit, driven by particular weakness in exports to Europe and Asia (see Chiwong Lee’s note, “Will Trade Remain in Deficit?”). Stocks in Europe, however, are shrugging off the strong Apple results and instead focusing on weak results from Ericsson and a reported decline in 4Q11 GDP in the UK.” (GS)
  • Barclays Initiation of ZNGA: “While execution is key and it might not be a linear ride, we believe the long-term opportunity is meaningful and that Zynga is the best operator in the sector. Balancing these factors and the valuation, we are initiating with a 1-Overweight rating and 12-month target of $11, which assumes a 27% bookings CAGR through CY13, a 35% adjusted EBITDA margin in CY13, and a 13x forward EV/EBITDA multiple.” (Barclays)
  • Ticonderoga Closing Doors: After failing to receive additional funding Ticonderoga Securities and its 75 employees will be back on the street soon
  • Apple Earnings Results: Blowout Holiday quarter driven by iPhone and iPad
  • Defense Cuts: The Pentagon on Thursday will announce a proposal to spend $525 billion in fiscal 2013, the second year of reductions as the administration moves to roll back the military budget, U.S. officials said
  • Romney Rethinks Taxes: the former MA governor may consider a tax break on “carried interest” according to an aid to the campaign (WSJ)
  • BAC Bonuses Down -25%: communicated to bankers that comp packages (salary + bonuses) will fall ~25% on average in ’11 vs. ’10 (BBG)
  • Icahn Buys More WebMD: Billionaire investor Carl Icahn has increased his position in WebMD Health Corp. (Nasdaq:WBMD) by 67,845 shares at a price of $25.74 on January 19, 2012
  • HSBC Selling Japanese Division: seeking buyers for its Japanese consumer banking unit four years after starting the business (BBG)
  • Blackstone RE Fund: Blackstone Group has raised more than $6bn for a real estate opportunity fund as many investors steer their money to veteran investors with proven track records (Reuters)
  • UBS Multiple Asset Class Strategy: UBS is out with really interesting commentary from multiple U.S. product groups providing a multi-asset class perspective
  • Expect Citi to Cut More IB: “We are not oblivious to the fact that our cost structure cannot be justified by our current revenue… While much of the current difficulty reflects market conditions, we equally have some management and execution challenges” (BBG)
  • GS on Homebuilders: “Our 4Q2011 survey echoes the more positive tone to recent housing sentiment. Improving sentiment around home prices, increasing desire for home-ownership and rent inflation are healthy signs for housing. While recent better data and expectations of government support for housing have buoyed shares, at 1.7X book value, we find the risk/reward increasingly out of favor for homebuilders.” (GS)

Economic Calendar:

Carlson Capital Thinks The SPAC Boom May Be Over [Q1 Letter]

Black DiamondCarlson Capital's Black Diamond Arbitrage Partners fund added 1.3% net fees in the first quarter of 2021, according to a copy of the firm's March 2021 investor update, which ValueWalk has been able to review. Q1 2021 hedge fund letters, conferences and more At the end of the quarter, merger arbitrage investments represented 89% of Read More

  • Wednesday: Federal Open Market Committee (FOMC) meeting

M&A Watch:

  • Weekly M&A Trends: Announced M&A volumes for the week rose +35% to $25.9 billion.  ECM volumes declined by -61% from a tough comparable last week
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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