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Broken commitment ruined vascular biogenics ipo

Of population trade forex

Wednesday, August 20, 2014

Top News

Walgreen Shakeup Followed Bad Projection
A billion-dollar forecasting error in Walgreen's Medicare-related business has cost the jobs of two top executives and alarmed big investors.

 

BHP Billiton Plans Massive Restructuring
BHP Billiton said it would spin off nickel, aluminum and other properties into a new company, in what would be one of the biggest asset sales in mining history.

 

Broken Commitment Ruined Vascular Biogenics IPO
Cancellation of the IPO was a major setback for the company seeking money to pay for clinical trials to complete its work on treatments for cancer and other diseases.

For executives, it also raised questions about the role of underwriters in an offering.

 

BOE Officials Break Ranks on Rates
Two officials at the Bank of England pushed for an immediate rise in interest rates in August, minutes showed, marking the first dissent on policy faced by Gov.

Mark Carney since he took office in July 2013.

 

Ballmer Steps Down From Microsoft Board
Former Microsoft Chief Executive Steve Ballmer quit his post as a company director after 14 years, giving new CEO Satya Nadella an even freer hand to reshape the company.

 

Libya's Largest Terminal Resumes Oil Exports
Libya said it was resuming oil exports from its largest terminal after a year-long stoppage, as its oil industry manages to recover despite intense fighting in large cities.

 

Dutch MH17 Team Seek Return to Ukraine
Air accident investigators probing the downing of Malaysia Airlines Flight 17 said they will try to return to the crash site if the security situation in eastern Ukraine were to improve again.

 

RBA Keeps Currency Intervention as Option
Australia's central bank Gov.

Glenn Stevens said intervention in currency markets to help drive the Aussie dollar lower remained a real option.

 

China Fines 12 Japanese Auto-Part Makers
China levied $202 million in fines against 12 Japanese auto-part makers for alleged price manipulation in the latest effort to wield its power against multinational companies.

 

German PPI Decreases on Month
Factory-gate prices in Germany fell more than expected in July as energy prices continued to depress the index, suggesting further downside risks to the inflation outlook.

 

Allergan, Seeking to Fend Off Hostile Bid
Allergan is said to have approached Salix Pharmaceuticals about a potential acquisition that could thwart a $53 billion hostile bid for Allergan by Valeant Pharmaceuticals.

 

Coca-Cola Amatil Faces Challenges in Indonesia
When Coca-Cola Amatil sold its first soda in Indonesia, it reckoned that rising incomes in Southeast Asia's most populous nation would help build a thirst for soft drinks.

Now, the Australian company's profits there are rapidly losing their fizz.

 

Japan Exports Log Modest Rise in July
Japan's exports rose in July for the first time in three months amid a gradual pickup in global economic growth, but the gain was muted by the continuing shift of production facilities to overseas.

 

Missing Chairman Complicates IPO
Investment bank China International Capital has dropped CCB International as an underwriter of its planned $500 million initial public offering in Hong Kong, people familiar with the matter said, after a company CCB floated early this year recently said its chairman has gone missing.

 

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Markets & Economy

Housing May Play a Bit Part in Fed Rate Thinking
The Federal Reserve has long focused on housing, in large part because home buying is extremely sensitive to interest rates.

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After its July 29-30 meeting, the central bank said "the recovery in the housing sector remains slow."

Given policy makers' spotlight on housing, Tuesday's report on residential construction was welcome news.

The Commerce Department reported housing starts jumped 15.7% in July, with both single-family homes and multiunit projects enjoying gains.

In addition, building permits increased a better-than-expected 8.1% in July, a sign construction will advance further in coming months.

Despite the gains in starts and permits, however, the outlook for home building remains uncertain, and that cloudiness could filter into Fed policy discussions next year.

The problem is that demand for new homes is being held back as stagnant incomes run up against rising home prices.

True, the uptrend in home values have slowed this year.

In the 12 months ended in June, the average price of a new house was up 8.3% versus the 12.6% increase posted in June 2013. Prices for existing homes, as measured by the S&P Case-Shiller indexes, are also growing at a slower pace now than they did in 2013.

By either measure, though, home values are increasing far faster than the 2% yearly gain in the average hourly wage.

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Even a broader measure of paychecks, the employment cost index for wages and salaries, grew just 1.8% in the year ended in the second quarter.

Up until last summer, falling mortgage rates helped to mitigate the affordability problem.

But mortgage rates, while volatile week to week, are set to rise, especially with financial markets anticipating both higher inflation and a Fed move to increase short-term rates in early 2015.

Stronger labor markets suggest wage growth will pick up next year.

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But so will mortgage rates, and unless the pay acceleration is substantial, more potential home buyers will be priced out of the market.

The result is that--while housing will not be a major factor in how the Fed views interest rates in 2015--Fed Chairwoman Janet Yellen and other officials will have to consider the drag on housing that will come from a policy-triggered increase in mortgage rates.

The consequence to housing doesn't mean the Fed will not raise the fed-funds rate at some point in the first half of 2015.

But the impact on housing demand will have to be one of the factors Yellen & Company consider.

 

U.S.

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Home Size Levels Off, for Now at Least
The two-year trend of big, new houses getting even bigger appears to have peaked--at least for now--as more buyers seeking modest homes enter the market.

The median size of a newly built home in the U.S.

registered 2,478 square feet in the second quarter, unchanged from the first quarter but still close to the all-time high of 2,491 set in last year's third quarter, according to Commerce Department data released Tuesday.

Median new-home sizes generally have increased since 2012 as the market--substantially diminished in the wake of the housing crash--has been dominated by better-heeled, move-up buyers with the capital and credit to buy larger houses.

Entry-level and first-time buyers, who tend to buy smaller homes, have largely remained sidelined due to strict mortgage-qualification standards and tepid wage and job growth.

The National Association of Home Builders forecasts that first-time buyers will account for 16% of new-home sales this year, down from 25% to 28% between 2001 and 2007.

Yet executives at builders KB Home, PulteGroup, D.R.

Horton and Century Communities report that they're seeing early signs of entry-level buyers returning to the market as mortgage standards ease slightly and job gains take hold.

Sales of Pulte's entry-level Centex homes, priced at an average of $202,000, increased by 26% in the second quarter from a year earlier on a per-community basis, and by 29% in the first.

"The expectation will be, whenever we see an increase in first-time buyers, that will put downward pressure on the trend" of new-home sizes, said Robert Dietz, an economist with the home builders group.

"Then it will be a question of whether we'll see some actual decreases in the median as the market mix [of buyers] changes over the next two years."

Other figures indicate that new-home sizes are nearing a peak.

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Mr. Dietz calculates home size on a four-quarter moving average, finding that the median for the past four quarters is 2,478 square feet, essentially unchanged from 2,470 in the four quarters ended in this year's first.

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Meanwhile, Commerce data show that the average size of a newly built home in the second quarter, which is more volatile than the median, declined by 2.7% to 2,653 square feet from the all-time high set in the first quarter of 2,727.

Miami builder Fernando Martinez moved his construction activity this summer to the far-flung suburb of Homestead from towns closer to beachfront city, to target entry-level buyers and capitalize on cheaper land prices.

He intends to start construction this month in Homestead of 15 homes averaging 2,100 square feet at roughly $200,000 apiece.

"We're starting [construction of] homes because we already have them sold," Mr.

Martinez said. "I believe it's [buyer confidence] and affordability.

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Homestead is probably the only area left in Miami-Dade County where you can buy a house for under $200,000."

To be sure, economists and builders don't predict that median new-home sizes will drop sharply. That's mainly because the return of entry-level buyers is expected to be gradual as move-up buyers continue to account for the majority of sales in the next year or two.

Factors driving the rise in median sizes since 2012, in addition to move-up buyers' greater financial clout, include buyer preferences for more rooms, bigger garages, basements and wide-open living spaces like great rooms.

A 2012 survey by the builders group of new-home buyers found that 47% of respondents wanted three bedrooms, 66% wanted a basement, 53% wanted a two-car garage and 19% wanted a three-car garage.

 

Housing Escapes the Summertime Blues
Home building has come in from the cold.

Home builders broke ground on 101,000 new projects in July, for a seasonally adjusted annual rate of 1.093 million units, according to the Commerce Department.

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That is a 16% improvement over June's housing starts.

Those impressive numbers indicate the housing recovery is still on solid ground. That was thrown into doubt earlier this year by a startling plunge in housing starts.

The decline took January's starts down all the way to where they were a year earlier.

That was a break from the recovery's pattern in which each year's midwinter lows were significantly higher than the previous year's. The fear was that we may have come to the end of the herky-jerky upward housing market cycle.

But the fact that July saw more new home starts than June and May suggests the plunge wasn't the end of the recovery cycle but the result of the harsh winter.

Since the end of the recession in 2009, July's starts have never before been higher than both May and June's.

The typical pattern is a rise from the winter low throughout spring, a peak in May or June, and then a decline or plateau for the dog days of summer.

The likely explanation can be found in the severe weather that afflicted much of the country this past winter.

That appears to have suppressed home building, along with a lot of other economic activity, but only temporarily.

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Some of that building got pushed back to later in the year, so the appearance of winter's missing starts pumped up July to the level since the summer of 2008.

So despite starting from a very low level of activity, 9.1% more homes have been built in this year's first seven months than in the same period last year.

The housing recovery has shaken off the winter chill.

 

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New Issues

SEC to Scrutinize Municipal Advisers
U.S.

securities regulators plan to scrutinize advisers who help states and localities raise cash in the $3.7 trillion municipal-bond market.

The Securities and Exchange Commission on Tuesday unveiled a two-year initiative to examine a "significant percentage" of the roughly 1,000 firms registered with the SEC as municipal advisers, according to a release.

The advisers, often small firms with one or two employees, are unaffiliated with banks and hired to work with states and localities to time, market and price municipal-bond transactions.

The muni examinations, which are set to begin in the fall, come as the SEC grapples with a host of problems in the muni market, including what it sees as poor disclosures for investors.

...that TIGHTENED

The SEC has cracked down on municipalities for failing to keep investors apprised of their financial health, and the agency has turned to Congress to boost its limited authority in the market. Muni issuers currently are exempt from the types of disclosure requirements corporations must make when they sell securities, such as prior review of prospectuses by SEC staff.

Kevin Goodman, national associate director of the SEC's broker-dealer examination program, said the exams "will focus on the areas that are most important to protecting issuers, investors and municipal taxpayers."

The SEC plans to scrutinize whether municipal advisers are adhering to a fiduciary duty, as set by the 2010 Dodd-Frank law, requiring them to put their clients' interests ahead of their own.

Still, the bulk of the regulations for municipal advisers, such as pay-to-play restrictions and professional qualifications, are still being developed by the Municipal Securities Rulemaking Board, which oversees banks and advisory firms involved in the muni market.

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The MSRB is overseen by the SEC.

Under Dodd-Frank, municipal advisers must register with the SEC and adhere to a series of forthcoming MSRB rules. The new SEC registration requirements went into effect July 1. Only bank-affiliated municipal advisers were previously subject to any federal oversight.

Lawmakers pushed to increase oversight of municipal advisers in the wake of financial debacles in localities like Jefferson County, Ala., where officials and Wall Street firms repeatedly used complex payment arrangements known as interest-rate swaps as a vehicle for kickbacks and other types of fraud.

 

Pimco Makes New Hires to Its Global Equities Team
At the world's biggest bond firm, equities specialists are in demand.

Pacific Investment Management, or Pimco, made a clutch of new hires Tuesday to its global equities team, the first senior recruits by the firm's global head of equities Virginie Maisonneuve who joined from Schroders in January.

The new hires collectively bring "more than 40 years of additional investment management experience" to the firm, Ms.

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Maisonneuve said in a statement.

The spate of recruits follows a turbulent few months at Pimco, featuring lackluster fund performance, a steady tide of client outflows and a shake-up in the management ranks.

Pimco, with about $2 trillion under management, has seen billions of dollars in redemptions across its funds.

In July, the flagship Total Return Fund suffered an $830 million net outflow, the 15th straight month of withdrawals. Earlier this year, Mohamed El-Erian quit as Pimco's chief executive following tension with the firm's founder, Bill Gross.

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Executives at Pimco's parent company, German insurer Allianz, have backed the U.S. firm, while also stressing the importance of improved performance and fund inflows.

Ms. Maisonneuve, who is charged with building out Pimco's equities division, also announced that Melissa Tuttle has been promoted to the role of global head of equity trading. Ms. Tuttle joined Pimco in August 2010 from Goldman Sachs Asset Management. She was previously head of equities trading in Europe, the Middle East and Africa.

The new recruits include Iain McNaught and Simon Peters, who join as senior vice presidents within the global equities team, based in London.

Mr. McNaught was previously a global equity analyst at Sarasin & Partners, while Mr. Peters was head of financial specialist sales at Nomura in London.

Sean Heymann, previously of Neuberger Berman, and Aylon Ben-Shlomo, a former analyst at Ivory Investment Management, both join as analysts for Pimco's dividend strategies, based at the firm's headquarters in Newport Beach, Calif.

Pimco, a fixed-income behemoth founded by Mr.

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Gross in 1971, began expanding into equities more than four years ago because of concerns that the 30-year bond rally would come to an end. Its equities coverage remains a fraction of the size of its bond business. The equities platform currently boasts 44 investment professionals while equity investments total $55 billion in assets under management.

The company's major equity strategies are centered on four areas: deep value, dividends, long/short and emerging markets.

Ms. Maisonneuve has previously said she is keen to add different strategies. In particular she has cited a growth product, as well as a small-cap product.

The investment firm's recent senior hires aren't just limited to equities.

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On Monday, Pimco also said it had hired Mohsen Fahmi, formerly of Moore Capital Management, as managing director and generalist portfolio manager focusing on global fixed income. In May, Pimco also said it had rehired Paul McCulley, a former senior executive, for the newly created role of chief economist. The firm announced another senior hire in June with the appointment of Geraldine Sundstrom, formerly a partner at hedge fund Brevan Howard Asset Management, as a managing director and portfolio manager.

 

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Top Ten High Grade Issues Spread....

...that TIGHTENED

CLF

3.950

1/15/2018

101.125

202

(20)

3.594

8,194,000

NNA

8.125

11/15/2021

103.000

502

(15)

7.418

3,814,000

C

6.000

8/15/2017

113.131

59

(14)

1.480

2,340,000

PPL

4.600

12/15/2021

95.625

293

(14)

5.329

9,479,000

BACR

7.625

11/21/2022

112.625

328

(13)

5.684

30,807,000

DAIGR

2.250

9/3/2019

101.000

46

(12)

2.039

27,384,000

DG

4.125

7/15/2017

104.300

168

(12)

2.574

67,980,000

XOM

0.921

3/15/2017

100.560

-18

(12)

0.700

4,505,000

KMP

5.625

9/1/2041

106.021

199

(11)

5.207

5,940,000

WFC

3.450

2/13/2023

100.335

100

(11)

3.404

8,568,000

...that WIDENED

XIDE

8.625

2/1/2018

45.750

3666

204

38.233

4,271,000

TWC

5.850

5/1/2017

111.600

56

19

1.440

6,054,000

DG

3.250

4/15/2023

90.000

226

14

4.668

102,609,000

COF

4.750

7/15/2021

110.075

71

10

3.115

10,864,000

VZ

2.450

11/1/2022

94.354

86

8

3.240

1,691,000

AMT

3.450

9/15/2021

100.257

140

6

3.408

9,794,000

AVP

6.500

3/1/2019

108.800

276

6

4.337

5,289,000

BNP

1.375

3/17/2017

100.239

40

6

1.280

11,552,000

HCP

2.625

2/1/2020

99.853

111

6

2.654

1,949,000

LH

2.200

8/23/2017

101.667

76

6

1.629

1,371,000


To view the previous trading day's most 50 active HG and HY bonds by volume, download the PDF version of Axess Daily here.

Source: MarketAxess BondTicker; for a comprehensive daily summary of HG and HY trading for TRACE-eligible bonds, see the Corporate Trade Summary on BondTicker.

 

Top Ten High Yield Price....

...INCREASES

ALGT

5.500

7/15/2019

105.570

2.570

266

4.227

6,312,000

KWK

7.125

4/1/2016

65.500

2.500

3713

37.559

10,368,000

APXSEC

8.750

12/1/2020

100.250

1.500

710

8.672

13,068,000

CBSOAM

5.250

2/15/2022

102.500

1.250

234

4.727

3,814,000

NAVI

5.500

1/25/2023

100.250

1.250

306

5.462

8,805,000

NSM

6.500

8/1/2018

101.000

1.250

454

6.121

5,762,000

SD

7.500

3/15/2021

106.000

1.250

335

5.755

16,306,000

AFFINI

13.500

8/15/2018

97.563

1.063

1275

14.322

2,000,000

RSH

6.750

5/15/2019

41.000

1.063

2997

31.545

3,978,000

ACI

7.250

10/1/2020

69.000

1.000

1364

15.216

26,446,000

...DECREASES

NIHD

11.375

8/15/2019

68.000

(3.000)

2077

22.340

9,628,000

JCP

5.750

2/15/2018

95.125

(0.875)

578

7.363

13,941,000

PGN

7.250

8/15/2024

94.500

(0.875)

566

8.059

3,814,000

QEP

5.375

10/1/2022

102.500

(0.875)

259

4.987

4,231,000

EROC

8.375

6/1/2019

105.100

(0.838)

476

6.336

1,880,000

AIG

4.500

7/16/2044

100.240

(0.785)

128

4.485

18,500,000

ACI

7.250

6/15/2021

66.500

(0.750)

1295

15.338

2,609,000

LPNT

5.500

12/1/2021

103.875

(0.625)

229

4.661

1,050,000

RCL

5.250

11/15/2022

105.125

(0.575)

210

4.497

11,362,000

ARGID

6.000

6/30/2021

99.500

(0.500)

369

6.089

1,500,000


To view the previous trading day's 50 most active HG and HY bonds by volume, download the PDF version of Axess Daily here.

Source: MarketAxess BondTicker; for a comprehensive daily summary of HG and HY trading for TRACE-eligible bonds, see the Corporate Trade Summary on BondTicker.

 

 

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Copyright MarketAxess Corp.


Axess Daily is made available as a complimentary service to MarketAxess BondTicker and Bulk Data paying subscribers. No further redistribution is permitted without written permission from MarketAxess Corp.

Broken commitment ruined vascular biogenics ipo

and Dow Jones. Axess Daily is intended to provide factual information, but its accuracy cannot be guaranteed. Neither MarketAxess Corp. nor Dow Jones is a registered investment adviser and under no circumstances shall any of the information provided be construed as a buy or sell recommendation or investment advice of any kind.

 

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