Thank you very much;
you're only a step away from
downloading your reports.
News & Views: Wednesday, August 6
What you need to know for today's trading day.
Michael Sedacca    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

China anti-trust regulator conducts new raids on Microsoft, Accenture (Reuters)

Hedge Funds Betting Against Banco Espírito Santo in Line for Big Gains (WSJ)

China's Yuan Rises Beyond PBOC Fixing for First Time Since March (Bloomberg)

Fox Rationale for Time Warner Unraveled With Share Drop (Bloomberg)

Sprint drops bid to buy T-Mobile after regulatory resistance (Reuters)

Views
Firstly, the slew of economic data from Europe this morning is having a negative effect on all risk assets. German factory orders declined 3.2% (+0.9% expecte) and on a quarterly basis Italy's recession worsened. The Italian FTSEMIB (-2.53%) is the worst performing index this morning, risk adjusted or otherwise. Additionally, if the situation in Ukraine continues to escalate, the EUR should continue to come under additional pressure - Russia accounts for 30% of trade to the Eurozone.

Secondly, Poland increased its warning rhetoric this morning, saying that the invasion threat has increased in the last 12 hours. Poland's Prime Minister said that the invasion could be made under the guise of a peacekeeping mission - Russia would not be the first to use such an excuse. This tension seems to be the overriding theme. Similarly, NATO made similar comments this morning, saying that Russia may send troops over the border under a peaceful pretext and warns that the buildup of troops - 45,000 now including and more than 1,000 armored vehicles - is very dangerous. Still, we're a ways off from a full blown shooting war in Ukraine - this remains a regional conflict for the moment.

Thirdly, two major risk arb trades are unraveling overnight, and this will be a very large overhang for risk markets today as these trades will need to be hedged or they will drag down their respective sectors. One is the announcement that Sprint (S) is withdrawing its bid for T-Mobile (TMUS) due to regulatory pressure - presumably anti-trust. The other is 21st Century's Fox (FOX) withdrawal of its bid for Time Warner (TWX) due to resistance by the company. Instead, it's going to buyback $6bln in stock. Hey, if you can't do M&A, why not corporate engineering?

Interestingly, the Chinese Yuan (CNY) has strengthed beyond the PBOC's fixing for the first time since March. That is a very useful piece of information and underlines how the recent strength in local equities has been driven by outside investment. The 0.66% appreciation in the currency versus the USD comes in spite of a 2.16% rally in the trade-weighted dollar. The obvious thing to point out is that if US real interest rates begin to rise in the US, in conjuction with this rally in the dollar, it could reverse those flows. On the positive side, I noticed this morning that China is speeding up the creation of a deposit insurance system during the second half of this year.

Lastly, very strong buying flows were reported overnight in US Treasuries. Volume there is running at 183% of the 10-day average.

Overnight Data:
- Italy 2Q GDP (prelim) QoQ down -0.2% vs 0.1% expected, prior -0.1%
-- YoY down -0.3% vs 0.1% exp, prior -0.4%
- German factory orders MoM (June) down -3.2% vs 0.9% exp, prior -1.6%
- New Zealand 2Q unemployment rate down to 5.6% vs 5.8% exp, prior 5.9%
-- Average hourly earnings QoQ up 0.5% vs 0.6% exp, prior 0.7%
- UK manufacturing production MoM (June) up 0.3% vs 0.6% exp, prior -1.3%
-- industrial production up 0.3% vs 0.6% exp, prior -1.7%
- Swiss CPI YoY (July) unchanged at 0.0% vs 0.0% exp
-- MoM down -0.4% vs -0.4% exp, prior -0.1%

US Economics (Time Zone: EST)

07:00 MBA Mortgage Apps
08:30 Trade Balance (June) - expected -$45B, prior -$44.4B
2:00 Fed's Beige Book
11:00 Fed to purchase $1.4b-$1.7b notes in 4 to 5-year range

Earnings

Before:
Stifel (SF)
Molson Coors (TAP)
Time Warner (TWX)
HollyFrontier (HFC)
Chesapeake Energy (CHK)
NuSkin (NUS)
Apollo Global Management (APO)
Devon Energy (DVN)
Alpha Natural Resources (ANR)
Starwood Property Trust (STWD)
Nationstar Mortgage (NSM)
Parker Hannafin (PH)

After:
MBIA (MBI)
Symantec (SYMC)
Keurig Green Mountain (GMCR)
Prudential Financial (PRU)
Annaly Capital (NLY)
Gulfport Energy (GPOR)
CF Industries (CF)
MolyCorp (MCP)

Sotheby's (BID)
Dish Network (DISH)
Viacom (VIA)
AOL (AOL)

Twitter: @MichaelSedacca

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

News & Views: Wednesday, August 6
What you need to know for today's trading day.
Michael Sedacca    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

China anti-trust regulator conducts new raids on Microsoft, Accenture (Reuters)

Hedge Funds Betting Against Banco Espírito Santo in Line for Big Gains (WSJ)

China's Yuan Rises Beyond PBOC Fixing for First Time Since March (Bloomberg)

Fox Rationale for Time Warner Unraveled With Share Drop (Bloomberg)

Sprint drops bid to buy T-Mobile after regulatory resistance (Reuters)

Views
Firstly, the slew of economic data from Europe this morning is having a negative effect on all risk assets. German factory orders declined 3.2% (+0.9% expecte) and on a quarterly basis Italy's recession worsened. The Italian FTSEMIB (-2.53%) is the worst performing index this morning, risk adjusted or otherwise. Additionally, if the situation in Ukraine continues to escalate, the EUR should continue to come under additional pressure - Russia accounts for 30% of trade to the Eurozone.

Secondly, Poland increased its warning rhetoric this morning, saying that the invasion threat has increased in the last 12 hours. Poland's Prime Minister said that the invasion could be made under the guise of a peacekeeping mission - Russia would not be the first to use such an excuse. This tension seems to be the overriding theme. Similarly, NATO made similar comments this morning, saying that Russia may send troops over the border under a peaceful pretext and warns that the buildup of troops - 45,000 now including and more than 1,000 armored vehicles - is very dangerous. Still, we're a ways off from a full blown shooting war in Ukraine - this remains a regional conflict for the moment.

Thirdly, two major risk arb trades are unraveling overnight, and this will be a very large overhang for risk markets today as these trades will need to be hedged or they will drag down their respective sectors. One is the announcement that Sprint (S) is withdrawing its bid for T-Mobile (TMUS) due to regulatory pressure - presumably anti-trust. The other is 21st Century's Fox (FOX) withdrawal of its bid for Time Warner (TWX) due to resistance by the company. Instead, it's going to buyback $6bln in stock. Hey, if you can't do M&A, why not corporate engineering?

Interestingly, the Chinese Yuan (CNY) has strengthed beyond the PBOC's fixing for the first time since March. That is a very useful piece of information and underlines how the recent strength in local equities has been driven by outside investment. The 0.66% appreciation in the currency versus the USD comes in spite of a 2.16% rally in the trade-weighted dollar. The obvious thing to point out is that if US real interest rates begin to rise in the US, in conjuction with this rally in the dollar, it could reverse those flows. On the positive side, I noticed this morning that China is speeding up the creation of a deposit insurance system during the second half of this year.

Lastly, very strong buying flows were reported overnight in US Treasuries. Volume there is running at 183% of the 10-day average.

Overnight Data:
- Italy 2Q GDP (prelim) QoQ down -0.2% vs 0.1% expected, prior -0.1%
-- YoY down -0.3% vs 0.1% exp, prior -0.4%
- German factory orders MoM (June) down -3.2% vs 0.9% exp, prior -1.6%
- New Zealand 2Q unemployment rate down to 5.6% vs 5.8% exp, prior 5.9%
-- Average hourly earnings QoQ up 0.5% vs 0.6% exp, prior 0.7%
- UK manufacturing production MoM (June) up 0.3% vs 0.6% exp, prior -1.3%
-- industrial production up 0.3% vs 0.6% exp, prior -1.7%
- Swiss CPI YoY (July) unchanged at 0.0% vs 0.0% exp
-- MoM down -0.4% vs -0.4% exp, prior -0.1%

US Economics (Time Zone: EST)

07:00 MBA Mortgage Apps
08:30 Trade Balance (June) - expected -$45B, prior -$44.4B
2:00 Fed's Beige Book
11:00 Fed to purchase $1.4b-$1.7b notes in 4 to 5-year range

Earnings

Before:
Stifel (SF)
Molson Coors (TAP)
Time Warner (TWX)
HollyFrontier (HFC)
Chesapeake Energy (CHK)
NuSkin (NUS)
Apollo Global Management (APO)
Devon Energy (DVN)
Alpha Natural Resources (ANR)
Starwood Property Trust (STWD)
Nationstar Mortgage (NSM)
Parker Hannafin (PH)

After:
MBIA (MBI)
Symantec (SYMC)
Keurig Green Mountain (GMCR)
Prudential Financial (PRU)
Annaly Capital (NLY)
Gulfport Energy (GPOR)
CF Industries (CF)
MolyCorp (MCP)

Sotheby's (BID)
Dish Network (DISH)
Viacom (VIA)
AOL (AOL)

Twitter: @MichaelSedacca

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

More From Michael Sedacca
Daily Recap
News & Views: Wednesday, August 6
What you need to know for today's trading day.
Michael Sedacca    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

China anti-trust regulator conducts new raids on Microsoft, Accenture (Reuters)

Hedge Funds Betting Against Banco Espírito Santo in Line for Big Gains (WSJ)

China's Yuan Rises Beyond PBOC Fixing for First Time Since March (Bloomberg)

Fox Rationale for Time Warner Unraveled With Share Drop (Bloomberg)

Sprint drops bid to buy T-Mobile after regulatory resistance (Reuters)

Views
Firstly, the slew of economic data from Europe this morning is having a negative effect on all risk assets. German factory orders declined 3.2% (+0.9% expecte) and on a quarterly basis Italy's recession worsened. The Italian FTSEMIB (-2.53%) is the worst performing index this morning, risk adjusted or otherwise. Additionally, if the situation in Ukraine continues to escalate, the EUR should continue to come under additional pressure - Russia accounts for 30% of trade to the Eurozone.

Secondly, Poland increased its warning rhetoric this morning, saying that the invasion threat has increased in the last 12 hours. Poland's Prime Minister said that the invasion could be made under the guise of a peacekeeping mission - Russia would not be the first to use such an excuse. This tension seems to be the overriding theme. Similarly, NATO made similar comments this morning, saying that Russia may send troops over the border under a peaceful pretext and warns that the buildup of troops - 45,000 now including and more than 1,000 armored vehicles - is very dangerous. Still, we're a ways off from a full blown shooting war in Ukraine - this remains a regional conflict for the moment.

Thirdly, two major risk arb trades are unraveling overnight, and this will be a very large overhang for risk markets today as these trades will need to be hedged or they will drag down their respective sectors. One is the announcement that Sprint (S) is withdrawing its bid for T-Mobile (TMUS) due to regulatory pressure - presumably anti-trust. The other is 21st Century's Fox (FOX) withdrawal of its bid for Time Warner (TWX) due to resistance by the company. Instead, it's going to buyback $6bln in stock. Hey, if you can't do M&A, why not corporate engineering?

Interestingly, the Chinese Yuan (CNY) has strengthed beyond the PBOC's fixing for the first time since March. That is a very useful piece of information and underlines how the recent strength in local equities has been driven by outside investment. The 0.66% appreciation in the currency versus the USD comes in spite of a 2.16% rally in the trade-weighted dollar. The obvious thing to point out is that if US real interest rates begin to rise in the US, in conjuction with this rally in the dollar, it could reverse those flows. On the positive side, I noticed this morning that China is speeding up the creation of a deposit insurance system during the second half of this year.

Lastly, very strong buying flows were reported overnight in US Treasuries. Volume there is running at 183% of the 10-day average.

Overnight Data:
- Italy 2Q GDP (prelim) QoQ down -0.2% vs 0.1% expected, prior -0.1%
-- YoY down -0.3% vs 0.1% exp, prior -0.4%
- German factory orders MoM (June) down -3.2% vs 0.9% exp, prior -1.6%
- New Zealand 2Q unemployment rate down to 5.6% vs 5.8% exp, prior 5.9%
-- Average hourly earnings QoQ up 0.5% vs 0.6% exp, prior 0.7%
- UK manufacturing production MoM (June) up 0.3% vs 0.6% exp, prior -1.3%
-- industrial production up 0.3% vs 0.6% exp, prior -1.7%
- Swiss CPI YoY (July) unchanged at 0.0% vs 0.0% exp
-- MoM down -0.4% vs -0.4% exp, prior -0.1%

US Economics (Time Zone: EST)

07:00 MBA Mortgage Apps
08:30 Trade Balance (June) - expected -$45B, prior -$44.4B
2:00 Fed's Beige Book
11:00 Fed to purchase $1.4b-$1.7b notes in 4 to 5-year range

Earnings

Before:
Stifel (SF)
Molson Coors (TAP)
Time Warner (TWX)
HollyFrontier (HFC)
Chesapeake Energy (CHK)
NuSkin (NUS)
Apollo Global Management (APO)
Devon Energy (DVN)
Alpha Natural Resources (ANR)
Starwood Property Trust (STWD)
Nationstar Mortgage (NSM)
Parker Hannafin (PH)

After:
MBIA (MBI)
Symantec (SYMC)
Keurig Green Mountain (GMCR)
Prudential Financial (PRU)
Annaly Capital (NLY)
Gulfport Energy (GPOR)
CF Industries (CF)
MolyCorp (MCP)

Sotheby's (BID)
Dish Network (DISH)
Viacom (VIA)
AOL (AOL)

Twitter: @MichaelSedacca

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

EDITOR'S PICKS
 
WHAT'S POPULAR