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:
- FED Commentary with Low Rates: As we expected, the Federal Open Market Committee (FOMC) decided to keep policy unchanged at its December meetinghttp://bit.ly/tX9jLZ
- Strong Spanish Auction: The FT discusses that demand at today’s Spanish auction may be been extra strong as the paper is pledgable to the 3yr LTRO coming next week (Wed 12/21) http://on.ft.com/sv6D6C
- Where Is S&P Downgrade: S&P continues to loom in the background as investors wait w/bated breath for the co to announce its AAA resolution. A one-notch France cut seems “priced in” although it has become very consensus to want to “buy the downgrade dip”
- New Bank Capital Guidelines (Basil III): A new study has concluded that Europe’s banks need to raise nearly EU200B in new capital or cut their balance sheets by 20% in order to hit new Basel III rules. The projected shortfall in the US and Asia is much less than in Europe
- Ackman Increases CP Stake: After market close on Tuesday, Ackman’s Pershing Square Capital disclosed that it now is the beneficial ownership of 14.2% of the outstanding common stock of Canadian Pacific Railway Limited (NYSE:CP) from purchases in Decemberhttp://bit.ly/vudhse
- JPM Gamma Hedging Update: “Current estimate of hedged S&P 500 Gamma exposure is short ~$6bn. This represents a significant short gamma exposure and can cause market intraday momentum into the close” (JPM Research)
- NYC Layoffs at Citi and CS: Over the last few days, the NYC Department of Labor has issued two notices on its WARN website that names Citigroup and Credit Suisse as two banks that are undergoing layoffs at their NYC locations http://bit.ly/stm69h
- Foreclosure Data Could Get Ugly Next Year: foreclosure filings were reported on 224,394 U.S. properties in November, a 3 percent decrease from the previous month and a 14 percent decrease from November 2010. “Despite a seasonal slowdown similar to what we’ve seen in each of the past four years, November’s numbers suggest a new set of incoming foreclosure waves, many of which may roll into the market as REOs or short sales sometime early next year,” (James Saccacio, co-founder of RealtyTrac)
- 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
- Paul Ryan Revises Medicare Plan: Republican Rep. Paul Ryan plans to unveil a new Medicare proposal Thursday that would give future seniors the choice of purchasing private insurance coverage or staying in the traditional federal plan http://on.wsj.com/vELzfY
- BAC Bonuses: Merrill IB bonuses to fall Y/Y; FI could be dwn 60%, equities dwn 40%, and private client dwn 17% (Dow Jones)
- Citi U.S. Equity Strategy: 1) Housing recovery (or lack thereof). Resi construction has gone from 6% of GDP to 2% of GDP. 2) American manufacturing renaissance appears to be taking place; 3) Fiscal responsibility could address rising risk premiums; 4) US being energy self-sufficient; 5) Tech innovation driven by mobility; 6) demographics of the baby boom “echo” should support a new cadre of investors (Citi Research)
- Sellside Targets GRPN at $25-27: For the most part initiations are shaking out around $25-27. CS at Neutral, Citi at Neutral, Barclays at Over Weight http://bit.ly/ua1Lf2
Economic Calendar:
- Thursday: PPI, Empire Manf., Philly Fed, Initial Jobless Claims, IP, Current Account Balance
- Friday: CPI
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
