Euro takes a hit on S&P’s two-notch downgrade of Spain’s debt.
It’s IPO Week
Four IPOs are expected to start trading on Thursday.
As of 7 p.m. ET, 3 have priced.
Realogy Holdings priced 40M shares at $27 each
Intercept priced at top of $13-$15
Kythera sells 4.4M shares (up from 4M) at top of $14-$16
Details on the four:
Garrison Capital
Ticker: GARS
Underwriters: J.P. Morgan, Deutsche Bank Securities
Price Range $15.00 - $17.00
Shares offered: 5.0 mil
Intercept Pharmaceuticals
Ticker: ICPT
Underwriters: BofA Merrill Lynch, Needham & Co.
Price Range: $13.00 - $15.00
Shares offered: 4.3 mil
KYTHERA Biopharmaceuticals
Ticker: KYTH
Underwriters: J.P. Morgan, Goldman Sachs
Price Range: $14.00 - $16.00
Shares offered: 4.0 mil
Realogy Holdings
Ticker: RLGY
Underwriters: Goldman Sachs, J.P. Morgan
Price Range: $23.00 - $27.00
Shares offered: 40.0 mil
The Word on the Street Tonight
'Downward Spiral' If Obama Re-Elected: Westgate CEO/CNBC – Justin Menza: “David Siegel, who threatened to fire all of his employees and close his company if President Obama is re-elected, told CNBC Wednesday that “I don’t want to go through another four years under the Obama administration where I have to downsize my company again.” Siegel, the founder and CEO of Westgate Resorts, sent an email Monday to his employees warning that “if any new taxes are levied on me, or my company, as our current president plans, I will have no choice but to reduce the size of his company.” In a telephone interview on "Closing Bell," Siegel said his email was for his employees and not meant to be made public.”
JPMorgan Took a Bath on Bear Stearns Sale: Dimon/Reuters: “JPMorgan Chase Chief Executive Jamie Dimon said his company has lost up to $10 billion as a result of the government asking him to buy teetering Wall Street firm Bear Stearns during the financial crisis. "I'm going to say we've lost $5 billion to $10 billion on various things related to Bear Stearns now. And yes, I put it in the unfair category," Dimon said, speaking at a Council on Foreign Relations event.”
Spain Downgraded by S&P for a Third Time This Year/Reuters with CNBC.com: “Credit ratings agency Standard & Poor's downgraded Spanish debt on Wednesday for a third time this year citing a severe recession that is limiting the government's policy options. S&P lowered Spain's long-term credit rating to 'BBB-' from 'BBB+' and cut its short-term credit rating to 'A-3' from 'A-2'. The long-term credit rating downgrade comes with a negative outlook reflecting the firm's view that there are significant risks to economic growth and budgetary performance, plus a lack of a clear direction in euro zone policies.”
PC Sales Go Into a Tailspin/WSJ – Ben Worthen & Ian Sherr: “A slowdown in personal-computer sales has turned into a tailspin. Reports from research firms Wednesday provided new details about the industry's worsening condition, triggered by factors that include cannibalization by tablet computers, sluggish economic conditions and slowing PC sales in emerging countries. The grim signs come as Microsoft Corp. and its allies are hoping to generate excitement in late October with a new version of Windows and new devices designed to run the software. Researchers IDC and Gartner Inc. said PC shipments in the third quarter fell more than 8% from a year earlier, the steepest drop since at least 2001. A third report, from IHS iSuppli, projected PC shipments for the full year would decline for the first time in 11 years. "This is definitively a crossroads" for the computer industry, said David Daoud, an analyst at IDC. "It could be a make or break moment."
Lenovo Overtakes HP as World’s Top PC Maker in Q3/All Things D – Arik Hesseldahl: “…In numbers just released, Gartner Group confirmed that HP , which took the crown away from Dell some years back, is now the No. 2 PC maker, behind China’s Lenovo . … Frankly HP is probably happy to let Lenovo have the title. For months there’s been grumbling about how aggressive Lenovo, which is about one-third owned by a Chinese state-controlled entity, has been on pricing. It wouldn’t surprise anyone if Lenovo was willing to take little to no profit and even lose money on some models in order to seize worldwide bragging rights. But it’s sort of a phyrric victory. The PC market has never contracted quite like this in its entire history, with the possible exception of the 2002-2003 recession period. And isn’t the era of the personal computer over anyway? Yeah, actually it is, by one of many metrics.”
Tarullo Calls for Cap on Bank Size/WSJ - Victoria McGrane & Alan Zibel: “The U.S. government should cap the size of big banks, putting limits on growth of existing banks and blocking large mergers, a top Federal Reserve official said Wednesday. The statements, by Federal Reserve Gov. Daniel Tarullo in remarks prepared for a speech in Philadelphia Wednesday afternoon, highlight lingering worries about the size of the largest U.S. financial institutions after the financial crisis. Mr. Tarullo is one of the most senior regulators to publicly endorse limiting the size of banks."
U.S. Sets Tariffs on Chinese Solar Panels/NY Times – Diane Campbell & Keith Bradsher: “The Commerce Department issued its final ruling Wednesday in a long-simmering trade dispute with China, imposing tariffs ranging from about 34 percent to nearly 47 percent on most manufacturers of solar panels and cells imported from the country. For most of the Chinese manufacturers, the penalties are somewhat higher than those announced by the Obama administration earlier this year, when the government determined that Chinese companies were benefiting from unfair government subsidies and were selling their products below the cost of production, a practice known as dumping, on the American market. For the biggest panel maker, Suntech , the duties are significantly higher, moving to almost 47 percent from about 33 percent.”
H&R Block Plots Fed Escape/WSJ – Matthias Rieker & Ben Fox Rubin: “H&R Block Inc. is exploring how to escape the burden of being regulated by the Federal Reserve without giving up on financial services. The likely result is the sale of its banking business in a deal that would give H&R Block and its customers access to banking services, loans and MasterCard Inc.'s payment cards through third-party agreements, lawyers and analysts said. … H&R Block said in a Securities and Exchange Commission filing late Tuesday that it hired Goldman Sachs Group Inc. to explore strategic alternatives for H&R Block Bank. It wants to avoid new capital requirements under the Dodd-Frank financial overhaul that don't mesh with H&R Block's "strategic plans and growth objectives," it said."
Second Pharmacy Plans Voluntary Shutdown Amid Outbreak/WSJ – Mark Maremont: “A second Massachusetts compounding pharmacy, which shared ownership with the pharmacy linked to a deadly meningitis outbreak, voluntarily stopped operating Wednesday, state officials said. The second pharmacy, Ameridose LLC of Westborough, Mass., ceased manufacturing and compounding operations immediately, pending an inspection of its facilities by Massachusetts health officials. Madeleine Biondolillo, a top Massachusetts health official, said the state said it had seen no evidence of any "direct concern" tied to Ameridose products, and said it hadn't requested a recall.”
Housing Is Bright Spot In Update on Economy/WSJ – Kristina Peterson & Jeffrey Sparshot: “The housing market showed broad improvement as the economy continued to expand modestly in late August and September, the Federal Reserve said Wednesday. The Fed's "beige book" report reinforced a host of recent data suggesting the housing market's recovery is picking up steam. The report, which is based on anecdotes from business contacts and economists, said existing-home sales strengthened in all 12 Fed districts, while selling prices rose or held steady. In general, the Fed noted that economic activity "generally expanded modestly" since its last report, with consumer spending inching up or staying level.”
Fast Food Aspires to Move Up the Food Chain/WSJ – Julie Jargon: “The move is driven by a growing foodie culture as well as the success of chains like Chipotle Mexican Grill Inc. and Panera Bread Co. , a category known as "fast casual," where customers still order at a counter but are paying for something up a notch from a burger, fries and a shake. Both Chipotle and Panera did well during the economic downturn by attracting customers who were trading down from full-service restaurants but still wanted freshly prepared food at affordable prices."
Worker's Injury Casts Harsh New Light on Foxconn and China/Reuters: “Apple Inc's largest contract manufacturer has been pushing for a Chinese worker left brain-damaged in a factory accident to be removed from hospital in a case that throws a harsh new spotlight on labor rights in China. Zhang Tingzhen, 26, an employee of Taiwan firm Foxconn, had nearly half his brain surgically removed after surviving an electric shock at a plant in southern China a year ago. He remains in hospital under close observation by doctors, unable to speak or walk properly.”
Groupon eyes restaurants with nationwide POS offering/Reuters – Alistair Barr: “Groupon Inc launched a point-of-sale service called Breadcrumb across the United States on Wednesday as the world's largest daily deal company tries to win more restaurants as clients. Breadcrumb is a sales, order management and reporting system for restaurants, bars and cafes that runs on Apple Inc's iPad. It was designed a start-up founded by Seth Harris. Groupon acquired the business in May.”
Branson on American Airlines: "We don't normally buy other companies or merge with other companies, because you take on a lot of history. Having said that, it would be quite fun to do something with American Airlines. And so, yeah, if anybody from American Airlines is listening, we'd be happy to get your call." (Of course, federal foreign ownership laws that limit foreign stakes in U.S. airlines to no more than 25%.)
Exotic Dancers Get $13 Million Payback from Clubs/Business Insider – Aleksi Tzatzev: “…A federal judge has approved a $12.9 million settlement for strippers who claimed their employers helped themselves to their tips and paid less than minimum wage, among other indignities, the Courthouse News Service reports. Under the settlement, a number of nightclubs will have to treat strippers as either employees or even as shareholders or partners in their ventures.”
Economic Data
830 (w/e 10/6) Initial Claims
830 Aug International Trade
830 Sep Import Prices
1300 30-Yr Bond Auction
1600 Fed Balance Sheet
1600 Money Supply
*Sept 2011 reading
Earnings
Before the Bell:
Burberry (trading update, NOT earnings), Fastenal, Safeway, Winnebago
After the Bell:
JB Hunt Transport (expected)
Key Guests
Cotter Cunningham, Shark Media CEO (615a)
Roger Altman, Evercore Partners Chairman (700a)
Reince Priebus, RNC Chairman (720a)
Ted Kaufman, Former Senator (800a)
Brent Saunders, Bausch & Lomb CEO (800a)
Richard Smith, Realogy CEO (950a)
Sean Egan, Egan-Jones Ratings Company (1000a)
Leigh Gallagher, FORTUNE Asst. Managing Editor (1045a)
Jeb Hensarling, R-TX (1100a)
Jason Goldberg, Fab.com CEO (1100a)
Mahbod Moghadam, Rap Genius Co-Founder (1100a)
Tom Lehman, Rap Genius Co-Founder (1100a)
Ilan Zechory, Rap Genius Co-Founder (1100a)
Stephen Urguhart, Omega CEO (110p)
Donald Trump, Trump Organization Chairman (410p)
Ice T, Musician (500p)
Newt Gingrich, Gingrich Group Founder (700p)
Grover Norquist, Americans for Tax Reform (700p)
Aaron Schock, R-IL (700p)
Dennis Strigl, Former Verizon President (800p)
John Engler, Business Roundtable President (800p)
David Stockman, Former OMD Director (810p)
David Walker, Comeback America Initiative CEO (1030p)
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