Tuesday, July 19, 2011

Morning Note

July 19, 2011


Equity futures are trading above fair value as earnings season kicks into a higher gear, with a number of major companies due to report today.

Technology stocks are among today's best performers in Europe as IBM trades +1.5% in Germany after its Q2 report yesterday after the close.


Greece T-Bill auction: Sells €1.63B 3M T-Bills, average yield 4.58% vs prior auction 4.62%, bid-to-cover 3.08 vs prior 2.94

Spain T-Bill auction: Issues €3.79B 12M T-Bills, average yield 3.702% vs prior auction 2.695%, bid-to-cover 2.2 vs prior 2.9. Issues €661M 18M T-Bills, average yield 3.912% vs prior 3.260%, bid-to-cover 5.5 vs prior 3.9

Libor fixings 

Overnight Libor: Dollar: 0.122% vs prior 0.122% ; Sterling: 0.564% vs prior 0.566%; Euro: 1.376% vs prior 1.408%
1-month Libor: Dollar: 0.186% vs prior 0.186% ; Sterling: 0.631% vs prior 0.629%; Euro: 1.411% vs prior 1.414%
3-month Libor: Dollar: 0.252% vs prior 0.251% ; Sterling: 0.829% vs prior 0.828%; Euro: 1.554% vs prior 1.554%

Aug WTI crude +$0.91 to $96.84

Natural gas +$0.03 to $4.58

Gold ($2.94) to $1601.85

10-year yield 2.9531%
30-year yield 4.3315%


Asian Markets

Most Asian markets fell today, disappointed by the European debt crisis and politicians’ inability to reach a compromise to allow the US to avoid defaulting on its debt. On energy shares, Hong Kong rebounded in the final hour of trading to finish higher. Utilities rose 2% as investors sought safe havens. Chipmakers rebounded on hopes for good results in the coming weeks, but South Korea finished within 0.02% of where it started. Taiwandeclined slightly. Despite getting some support from domestic demand-led issues like retail and land transport, Japan fell as megabanks went down after a three-day weekend. Japan June department-store sales +0.3% y/y. Tokyo June department-store sales +0.4% y/y. The yen is trading at 79.03 to the US dollar.

European Markets

European equity markets rose, recovering part of yesterday's declines and rebounding from seven month lows, as constructive earnings reports from IBM (up +1.5% in Germany) and Novartis (NOVN.VX) buoyed sentiment and peripheral debt spreads tightened modestly. Reported that EU officials are looking at three options to secure private sector involvement in the second Greek bailout. Spain sells €4.4B of T-Bills at higher yields vs prior auction. Banks +2.4%, insurance +2.3% and technology +2.2% lead gainers whilst personal & household products (0.9%), food & beverage (0.6%) and real estate (0.3%) lead fallers. German July ZEW current conditions 90.6 vs consensus 85.0 and prior 87.6. The pound and the euro are trading at $1.6145 and $1.4178 respectively


Today's Economic Releases (Eastern Time)

05:00 Germany ZEW survey (Jul)
07:45 US ICSC-Goldman Chain Store (16-Jul); consensus n/a
08:30 US Housing Starts (Jun); consensus 575K
08:30 US Building Permits (Jun); consensus 603K
08:55 US Redbook Chain Store (16-Jul); consensus n/a
16:30 US API Crude Inventories (15-Jul); consensus n/a 

Today's Key Events (Eastern Time)

08:00 Zhongpin discusses recent stock price volatility: 866.549.1292 pc 326057#
19:30 Fed's Hoenig speaks on monetary policy and agriculture
—:— American Society for Virology - ASV
—:— FDA Panel: EMDAC discusses NDA for Bristol-Myers/AstraZeneca's dapagliflozin to treat type 2 diabetes mellitus
—:— FOSE Conference and Expo
—:— Global Hunter Securities Energy, Metals & Mining, and China Conference
—:— Needham with Standard Microsystems 


Company Specific News

Earnings
AVY (Avery Dennison lowers FY11 adjusted EPS to $2.45-2.75 from $3.00-3.30; vs Reuters $3.04. Company guides Q2: Adjusted EPS between $0.74-0.79 vs Reuters $0.88)
BAC (Bank of America reports Q2 EPS ($0.90) vs guidance of ($0.88)-($0.93) and Reuters ($0.90). Reports Q2: Ex-items, net income $0.33 vs. guidance of $0.28-0.33. Total revenues, net of interest expense $13.24B vs $26.88B in Q1)
BK (Bank of New York Mellon (BK) reports Q2 EPS $0.59 vs Reuters $0.55)
BRO (Brown & Brown reports Q2 EPS $0.26 vs Reuters $0.31. Reports Q2: Revenues $246.8M vs Reuters $257.9M)
CMA (Comerica reports Q2 EPS $0.53 vs Reuters $0.53)
IBM (IBM reports Q2 EPS $3.09 vs Reuters $3.03. Reports Q2: Revenues $26.67B vs Reuters $25.35B)
KEY (KeyCorp reports Q2 net EPS cont. ops. $0.26 vs Reuters $0.20)
LNCR (Lincare Holdings reports Q2 EPS $0.45 vs Reuters $0.51. Reports Q2:
Revenues $449.0M vs Reuters $447.1M)
MOS (Mosaic reports Q4 EPS $1.45 vs Reuters $1.39. Reports Q4: Revenues $2.86B vs Reuters $2.61B)
PKG (Packaging Corp reports Q2 EPS $0.39 ex-items vs Reuters $0.34. Reports Q2: Revenues of $665.5M vs Reuters $632.2M)
STLD (Steel Dynamics reports Q2 EPS $0.43 vs 16-Jun guidance of $0.35-0.40 and Reuters $0.39. Reports Q2: Revenues $2.08B vs Reuters $2.01B)
SWK (Stanley Black & Decker reports Q2 EPS $1.46 ex-items but includes a $0.28 benefit attributable to the favorable settlement of tax contingencies; it is unclear if reported EPS is comparable to Reuters $1.26; Revenues $2.62B vs Reuters $2.62B)
UNH (UnitedHealth reports Q2 EPS $1.16 vs Reuters $0.94; First Call $0.91)
WYNN (Wynn Resorts reports Q2 adjusted EPS $1.60. Reports Q2: It is unclear if reported EPS is comparable to Reuters $1.02 Revenues $1.37B vs Reuters $1.28B)

Offerings
DVAX (Dynavax Technologies files $150M mixed securities shelf)
FBP (First Bancorp Puerto Rico amends previously announced capital raise and rights offering)
NBS (NeoStem announces proposed public offering of common stock and warrants of indeterminate amount through Lazard and JMP)
PLOW (Douglas Dynamics files 5M share shelf; registers 3.1M shares for holders)
SBLK (Star Bulk Carriers announces 16.5M share offering through Deutsche Bank and RBC Capital)

M&A
PAG (Penske Auto Group acquires Mercedes-Benz of Greenwich)
XCO (Boone Pickens says he is no longer considering or pursuing a proposal with respect to Exco Resources)

Other News
Weekly USDA crop progress report says 66% of the corn crop is in good or excellent condition. Compares to 69% last week and compares to 72% in prior year.
Corn: 35% of the corn crop is silking vs 14% last week and a 47% average of 2006-10 period
Cotton: 31% of cotton crop is setting bolls vs. 20% last week and 34% average of 2006-10 period. 28% of the cotton crop cotton is in good or excellent condition compared to 28% last week and 68% y/y
Soybeans: 40% of soybean crop is blooming vs 21% last week and 52% average of 2006-10 period. 64% of the soybean crop is in good or excellent condition compared to 66% last week and 67% y/y
Rice: 24% of rice crop is headed vs 16% last week last year and 23% average of 2006-10 period. 60% of rice crop is in good or excellent condition compared to 61% last week and 75% y/y
Winter wheat: 68% of winter wheat crop has been harvested vs. 63% last week and 72% average of 2006-10 period
Spring wheat: 60% of spring wheat has headed vs. 27% last week and 88% average of 2006-10 period. 73% of spring wheat crop is in good or excellent condition compared to 73% last week and 82% y/y.


Newspaper Articles / Headlines

Financial Times
Banks still fight Dodd-Frank. The NYT reports that there are two dozen bills in Congress looking to remove parts of the law as businesses argue they are too restrictive. It is unclear whether Richard Cordray will be confirmed by the senate as head of the Consumer Financial Protection Bureau, a main part of the legislation.
- HNA Group, Kelso facing off to buy GE SeaCo. People familiar with the matter tell the FT that a sales decision is not likely to come imminently, and GE may still decide not to sell. The unit is thought to be going for $2.5-3.0B, including debt. HNA Group is the parent of Hainan Airlines (900945.CH).
Regulator asks for more information from TMX bidders. The FT reports that the antitrust regulator has asked for more information from the Maple Group but no more detail was given by the consortium.
Everything Everywhere CEO Tom Alexander resigns. The FT reports that he is resigning for personal reasons and will be replaced by Olaf Swantee, head of European operations ex-France for France Telecom (FTE.FP).
Tata Motors may pool engine production for all its brands. The FT, citing Rajan Tata in the annual report, reports that the company is examining a joint engine development programme which would have manufacturing both in India and the UK producing engines for the Jaguar Land Rover brand instesad of buying engines from Ford (F). StreetAccount notes the Sunday telegraph reported 8-May thatJaguar was in talsk with the government about an engine plant.
United Technologies develops supply chain. The FT reports that Executives are working on plans to avoid the errors of 2003-8 where they struggled to meet aircradft engine delivery schedules The company plans to double its revenue from engine unit Pratt & Whitney by the end of the decade, making it reliant on its component makers. The company has identified areas where supply is looking tight and needs closer supervision and the company has signed long-term contracts with those suppliers, developing dual sources and building buffer stocks.

Globe and Mail
Barrick Gold (ABX.CN) to buy 9% stake in Carpathian Gold for C$20M. The Globe and Mail reports that Barrick will buy 38.5M shares for C$0.52 each
Barrick has the right to participate in any future equity offerings and right of first refusal on the sale of the company’s Romanian assets, as long is its interest does not fall below 8.5 %. The deal is expected to close 1-Aug, subject to customary conditions and regulatory approvals.

Los Angeles Times
LA Times looks at Amazon.com's fight against state sales taxes. The article is a summary, breaking no news. It gives the status of efforts by both sides in the battle and notes that: Amazon is seeking a referendum to eliminate a new California law requiring it to collect sales taxes. Amazon is paying state sales taxes only in New York, and it is only doing that so that it can challenge the law in court. As of today, 11 states require internet-only retailers to collect state sales tax; a Texas bill imposing the condition only needs the governor's signature to become law.

New York Post
- Warner Music Group's (WMG) debt load may prevent it from buying EMI. An analyst tells the NY Post that Warner has put a provision on its new bonds preventing it from buying anything for more than $1B if its debt-to-earnings ratio is over 4.6:1. Since the Len Blavatnik takeover involves the company's borrowing $1B, the analyst thinks the condition rules it out of the race for EMI. However, a source close to the deal tells the Post that buying EMI would permit enough cost-cutting that Warner Music could still make the purchase.

Sueddeutsche Zeitung
Siemens to report disappointing results for Q3 (Jun). Without citing sources, Sueddeutsche Zeitung reports: Sales will be about €17.7B. Order intake is expected to be higher than Q2's €20.7B. The health care division will write down more than €300M

Techcrunch
American Express reaches discount deal with Facebook like the one it has with Foursquare. TechCrunch reports that "Link, Like, Love" does not require users to use coupons or pre-purchase anything, and it will use both national brands and local ones. The article also notes that unlike Groupon Now, the AmEx idea does not require shoppers or merchants to change their behavior.

The Australian IT
- Netflix looking to enter Australian market. The Australian IT , citing sources, reports that the company is speaking with potential partners to create alliances in Australia and some potential partners were told Netflix hoped to begin operations in the next 12-18 months the company is interested in partnering with ISPs.

Wall Street Journal
WSJ prefers Activision Blizzard to Electronic Arts (ERTS). A "Heard on the Street" column is positive on the purchase of PopCap, but says Electronic Arts has largely priced in its good news. Activision still has a lot to prove, as it attempts to deal with fading franchises, but the the column deems the stock a buy at its current price.
- WSJ feels Toyota Motor is dilly-dallying. A "Heard on the Street" column says that Toyota's moves last week to combine some production subsidiaries need to be followed up by addressing its system, which sees it with too many vehicle platforms, plants, suppliers, and dealerships. The column also thinks Toyota needs to raise the proportion of parts it gets from cheaper foreign suppliers. But most importantly, if the company is to maintain its production level in Japan, it needs to lobby the government for changes that will stimulate Japanese consumption.
WSJ looks at James Murdoch. Citing people familiar with the matter, the WSJ reports: James's fast rise within the company has led to his sometimes expressing opinions on things that were actually seen as being not in his domain. James thought, inappropriately, that Europe and Asia was his own fiefdom. Bringing James to New York this summer -- an idea he would have preferred to be delayed somewhat -- was seen as a way to get him experience under COO Chase Carey, as well as to address the concern that James was running his own show to the detriment of the team. James has refined his act as he has gotten more experience. James's management style focuses more on the trees than does that of Rupert Murdoch, who focuses on the forest.
WSJ is cautious on Philips Electronics. A "Heard on the Street" column says that while the company's underlying performance in results announced yesterday actually was actually decent, CEO Frans van Houten's sales-growth and margin goals for 2013 look a bit overreaching.
- WSJ is cautious on results of European bank stress tests. A "Heard on the Street" column says that while the official results said that eight banks would need to raise €2.5B in capital, the real story is that 27 banks will need to raise €82B if PIIGS bonds are written down to fall in line with the market. And it gets worse, since the €82B figure does not take account of healthy banks' exposure to stressed economies, and liquidity issues remain unaddressed.
AIG considering listing International Lease Finance Corp, possibly this fall. People familiar with the matter tell the WSJ that bankers are telling AIG that it could raise $1.5-2.0B from offering 25% of the airplane-leasing unit. Sources say that AIG has also considered selling all or part of ILFC, but private equity isn't guaranteed to be able to finance an $8B purchase these days. AIG CEO Robert Benmosche has previously raised the possibility of listing ILFC, but sources say the company is looking to be able to move quickly if it decides the idea would be desirable. AIG is also being enticed by the success of the recent Air Lease (AL) listing.
The WSJ discusses Apple's move into China. The article breaks no new but reports that the company is close to offering the phone through China Mobile (941.HK) which has 600M subscriber accounts. Challenges such as the unusual internet technology and grey market for real and fake Apple products still remain. Apple's late move into china puts it at a disadvantage with only a 8% smartphone market share and its high price may mean it is not a mass-market product.
- Johnson & Johnson creates regulatory and compliance committee in response to lawsuits. The WSJ, citing the board, reports that the panel has been created at the recommendation of independent directors in response to lawsuits bought because of a series of product recalls which has hurt the company's image.
- Eastman Kodak bonds showing signs of distress. The WSJ reports that Bonds due 2013 are now yielding more than 16%. The company has $50M in debt due this year and next, and $350M in 2013, while using $324M in cash in Q1. The company hopes to use its intellectual property to generate royalties.


Research

Bank of America Merrill Lynch: upgraded CHKP; downgraded OKS
FBR Capital: upgraded CSL
Janney Capital: upgraded TLB
Kaufman Brothers: upgraded AIXG
Morgan Keegan: upgraded CHKP
Rodman & Renshaw: downgraded END
RW Baird: upgraded NUVA; downgraded AVY
Standard & Poors: upgraded AN
UBS: upgraded IEX
Wells Fargo: downgraded AN
West LB Equity Markets: upgraded NOK


Options

A Minefield Laid with Nukes and Needles

The VIX is 20.95 up 7.3% on the session or the highest close thus far in the month of July. The market finds itself in the juxtaposition of “black swan” caliber macro-risks (“nukes”) with idiosyncratic earnings risk (“needles”) creating a type of investing minefield. The risk of macro risk being ‘somewhat’ alleviated and earnings possibly failing to satisfy expectations could lead to an environment where the common practice of stock picking overlaid with a short index/ETF hedge will back-fire.

Some tips on how to negotiate the investment landscape:

1) Look at the earnings-related moves being implied by the options market. For stocks that have particularly large implied moves, consider reducing positions, buying puts or employing collars (selling upside calls, buying downside puts) to reduce risk and volatility. Currently, stocks with large (>7%) implied one-day moves include:
ADS, ADSK, AGP, AIV, AKAM, APKT, ATML, BRCM, CNX, CREE, CRM, CTXS, CY, DB, DISH, EW, FFIV, FSL, FSLR, FTNT, GMCR, GNW, GPRO, GT, HANS, HAR, HBI, HOG, HS, ILMN, ISRG, JAH, LNKD, LVS, MGM, MYL, NFLX, NVDA, NWSA, OCR, PCLN, PCS, PII, PLCM, PPO, PPDI, RCL, REGN, RMD, RVBD, SHLD, SINA, SM, SNDK, SOHU, SPN, SWKS, UBS, VMW, WFM, WLT, WTW, YHOO.

2) Take advantage of negative skew by replacing short ETF/Index hedge positions with put spreads. While implied vol has increased of late, skew has also become increasingly negative. This sets up well for buying put spreads. Look at replacing short ETF positions with put spreads all of which cost < 2% of spot and a max payout better than 4x the initial outlay.

QQQ: Buy the Aug 57-52 put spread for $.94 (1.56% spot)
IWM: Buy the Aug 80-73 put spread for $1.34 (1.64% spot)
XLE: Buy the Aug 75-68 put spread for $1.31 (1.71% spot)
XLF: Buy the Aug 14-13 put spread for $.16 (1.09% spot)
XLI: Buy the Aug 35-32 put spread for $.50 (1.38% spot)
XLB: Buy the Aug 38-35 put spread for $.54 (1.38% spot)
IYR: Buy the Aug 60-55 put spread for $.99 (1.63% spot)
XRT: Buy the 52-47 put spread for $.83 (1.54% spot)
SMH: Buy the Aug 31-28 put spread for $.48 (1.49% spot)

3) The recent uptick in correlation is potentially deceiving. With the market falling, nearly everything looks more correlated. If the market rebounds, longer term correlations will likely be a better predictor of hedging efficacy. Consider running parallel correlation analyses exclusive of the past 6 weeks of data when looking for hedges.

4) Buy calendar spreads on gold to maintain upside exposure while protecting profits ahead of a potential short-term easing of European contagion/U.S. budget crises. Short-term GLD implied vol is closing in on its highs. At 17.71, 30 day implied vol in GLD now trades at a 38% premium to 30-day realized vol (12.82) and 277% premium to 10-day realized vol (4.69). Leverage this dynamic by selling GLD Aug 160 calls for $1.92 to buy Dec 160 calls for $6.45. This will mitigate losses from a potential short-term pull back while benefitting from the passage of time and/or a potential reversion/steepening of the vol term structure.

More News of Interest: 

IBM: Solid Beat & Raise (Ed Maguire)
IBM posted a solid beat-and-raise 2Q11 that benefited from strength in software and hardware, notably WebSphere, analytics and mainframe. Services billings improved from 1Q while positive trends in Growth Markets help offset lackluster services growth in Major Markets. IBM continues see success from key growth initiatives, while Americas (notably financial services) was the strongest region. Europe and Asia are a mixed bag, but modest growth suggests a stable corporate spending backdrop that bodes well for the sector as a whole. We continue to regard IBM as a helpful proxy for IT spending and view 2Q upside and raised 2011 EPS guidance as favorable indicators for our coverage universe. We reiterate our Outperform and raise our target to US$193 from US$180
  @ clsa

WHAT TO WATCH: U.S. housing starts probably rose 2.7 percent in June, economists said, 8:30 a.m. House Republicans today plan to defy President Obama�s promised veto by voting to slash spending and condition a $2.4 trillion debt-ceiling increase. The ECB may be willing to accept Greek bonds as collateral in the event of a short-term selective default, Governing Council member Nowotny suggested. 


Here's the link to today's MrTopStep Global Insights Report (PDF) for July 19, 2011:
http://docs.mrtopstep.com/gir/vol2/MrTopStepGlobalInsightsReport2-137.pdf

Netflix target raised to $360 from $280 at Oppenheimer - Oppenhei
mer raised its target on Netflix as the firm began f
Netflix target raised to $360 from $280 at Oppenheimer - Oppenheimer raised its
target on Netflix as the firm began f

Netflix target raised to $360 from $280  at Oppenheimer - Oppenheimer raised
its target on Netflix as the firm began factoring in estimates for the growth
of the company's international business. As a result ,the firm significantly
raised its overall estimates for the company and it maintains an Outperform
rating.



BAC-- Second-Quarter Loss of $0.90 per Share, in Line With Previous Estimates. Excluding Certain Mortgage-Related Items and Other Selected Items, Net Income Was $0.33 per Share
? C-- Citigroup Hiring Offensive Bets on Energy Bankers to Boost Fees
? BK�
1. BNY Mellon Second-Quarter Profit Rises as Market Lifts Assets
2. CVC Capital Said to Be Near $1.9 Billion Purchase of ConvergEx
? NORDEA-- Nordea Second-Quarter Profit Advances 30% on Fewer Bad Loans
? MERGER & DEAL NEWS�
1. NCR Flirts With Junk in Priciest Deal to Boost Margin
2. Hulu�s Owners Said to Offer Bidders Five-Year Program Extension
3. Merchants Bank to Raise Up to $5.4 Billion in Rights Offer
4. New York City Selling $600 Million as Yields Fall: Muni Credit
5. M&A Watch: CLX, CVGX, BGIQ, NCR, RADS, AWH, CHIHF, HNHPF, OZMLF
? COMMODITIES�
1. Oil Rises for First Day in Four
2. IEA Is Unlikely to Extend Emergency Fuel Release
3. Copper Reaches Three-Month High
4. Sugar Rises
5. Cocoa Drops
6. Corn Climbs
7. Booming Cotton No Boon to African Farmers
? HEALTH CARE� Drugmakers may face slower reviews for products under proposed updates to U.S. law while gaining more contact with regulators and a predictable system for reporting side effects.
? IBM� IBM Gains After Raising Profit Forecast on Software Demand
? AAPL-- Apple Profit Seen Rising as IPad Buying Makes Up for IPhone Lull
? NWS�
1. News Corp. Said to Consider Elevating Chase Carey to CEO News Corp.
2. Has Debt Rating Placed on CreditWatch Negative by S&P
? ELUXY-- Electrolux Plunges as Profit Misses Estimates on Slowing Demand
? KO� Coca-Cola 2Q Comparable EPS, Rev. Beat Est.
? CSCO� Cisco Cutting About 6,500 Jobs, Take Pretax Charge Up to $1.3b
? BIDU-- Baidu to Pay Record Labels for Beyonce, Lady Gaga Music in China
? UNH-- UnitedHealth Net Beats Analyst Estimates on Lower Costs
? LLY� Lilly Says Alzheimer Patients on Failed Drug Didn�t Improve
? FUTURES--
? NEW HIGHS: 78. AAPL, ATRI, WYNN, FOSL, ENR, DV, SWN, VRTS, RGLD, VRX, PTEN.
? NEW LOWS: 112. GS, AFL, NTRS, CSC, VMC, CMA, CREE, AIG, PJC, MS, JEF, WBMD, ARO, LL, STRI, ITG, LUV, BAC, SANM, JNS, AMCC, DAL, LCC, AMR, MTG.  More than 9 decliners on NYSE for every stock that rose
? OVERBOUGHT: 74.
? OVERSOLD: 331

GS - miss was largely in FICC which came in $1.5B light of consensus. Investing & Lending at $1B was better than $600 mill expected. Keep in mind, yesterday afternoon, buy-side investors were telling us they saw upside to $2.50 - $2.75 for GS 2Q EPS, with upside coming from better fixed income. BV $131.44, TBV $121.60, would not be surprised to see stock trade right twd TBV. - JPM


KB Home (KBH: Buy, PT $13.00, close $9.23) - We believe management has provided ample disclosure surrounding the potential impact to KBH�s liquidity position pro forma for South Edge and the August 2011 bond maturity and we find that the recent weakness in the capital structure is overdone at current levels (interesting to highlight that credit has underperformed the equity year-to-date). We are upgrading KBH Senior Unsecured Notes due 2015 to 2018 to a �BUY� recommendation from �SELL� as the spread widening over the past few months has exceeded our expectations and relative value metrics support tightening in our opinion. We are also upgrading the KBH 5.75% Senior Notes due 2014 to a �BUY� recommendation from �FAIR VALUE� and maintain our �FAIR VALUE� rating for the KBH 6.375% Senior Notes due 2011. We are downwardly revising our FY11 EPS estimate to a loss of ($2.36) per share from ($1.89) per share, which largely stems from the 2Q11 EPS loss. Our 4Q10 EPS estimate has been upwardly revised from a loss of ($0.05) per share to $0.09 per share. We are upwardly revising our FY12 EPS estimate to $0.31 per share from $0.21 per share. @ crt


WYNN Resorts, Ltd. (WYNN: Fair Value, PT $147, close $164.89) - Yesterday, Wynn Resorts, Ltd. reported stronger-than-expected 2Q11 operating results with adjusted EPS of $1.60 comparing with CRT�s $0.99 estimate and consensus estimate at $1.03. Stronger-than-expected 2Q11 results were driven by higher-than-expected Las Vegas table hold percentage, a higher Macau mass market hold percentage and non-casino revenues that exceeded our expectation at both WYNN Macau and WYNN Las Vegas. We are increasing our consolidated adjusted EBITDA estimate to $1,570.0 million in 2011, $1,694.0 million in 2012 and $1,857.3 million in 2013; and our adjusted EPS estimate to $5.72, $6.57 and $7.34 during 2011-13. We reiterate our �Fair Value� rating on WYNN�s Common Stock and WYNN Notes, but are raising our Common Stock price target to $147 from $136. At yesterday�s close of $164.89, WYNN is trading at 15.6x, 14.0x and 11.7x our 2011-13 consolidated adjusted EBITDA estimate; Our price target of $147.00 values the Company at 14.0x, 12.4x and 10.3x, respectively. We note that our price target does not include the potential $30 per share value of the Cotai Strip project @ crt


HOUSING STARTS IN U.S. ROSE 14.6% IN JUNE TO 629,000 PACE


BofA CEO Moynihan: Trading Operations Made Money On 97% of Days

Baidu launches landmark licensed music service; Ends outstanding
litigation - Baidu announced that it has signed a la
Baidu launches landmark licensed music service; Ends outstanding litigation - Ba
idu announced that it has signed a la

Baidu launches landmark licensed music service; Ends outstanding litigation
- Baidu announced that it has signed a landmark agreement for the
distribution of digital music with One-Stop China, or OSC, a joint venture
whose shareholders are three of the leading global record companies:
Universal Music, Warner Music, and Sony Music. OSC shareholders will license
to Baidu their catalogues and upcoming new releases, including Chinese songs
and international tracks, which can be streamed or downloaded from Baidu's
servers.Under the terms of the deal, Baidu will remunerate music content
owners on a per-play and per-download basis for all tracks delivered through
the Baidu MP3 Search service, as well as Baidu's newly launched social music
platform, ting!. The new product offers users the ability to discover and
share music and music-related content. The new partnership with OSC was
accompanied by a conciliation agreement, endorsed by the Beijing High
People's Court, that ended outstanding litigation between the three record
companies and Baidu.



Goldman Sachs (GS) brought trading risk down 26% from a
year earlier in 2Q, with the value at risk across its various trading desks
set at $101M on any given day in the period. That's the lowest VaR since 3Q
of 2006 and down 10% from 1Q. GS cited an uncertain market environment for
its rationale in taking money off the table. Meanwhile, net revenue at
institutional client services fell 29% on year and 47% sequentially, driven
lower by weak results in fixed income, currency and commodities trading. GS
down 3.3% premarket to $125.05 as overall results missed analysts'
estimates.





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 *Special thanks to Option Radar, BMO Capital, MEB Options, LiveVolPro, CBOE, Option Monster, T.O.P. group, and all of the options desks and traders we work with to provide the option flow! 


 No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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