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Market Updates and Insights Team Theta August 29, 2012 1/23/2014.

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Presentation on theme: "Market Updates and Insights Team Theta August 29, 2012 1/23/2014."— Presentation transcript:

1 Market Updates and Insights Team Theta August 29, 2012 1/23/2014

2 Most global markets remained in a positive trend throughout August, despite a slew of negative fundamentals. S&P 500 earnings are forecast to decline in Q3. Europe is in recession, worsening trends in Germany Japanese government lowered economic forecasts Tuesday and most private economists are now forecasting a decline in Q3 real GDP for Japan Chinese growth is slowing dramatically (slide 6) Significant tax increases in the U.S for 2013 are likely in any compromise to the looming fiscal cliff issue Global Market Summary 1/23/2014

3 The positive market trend seems to revolve around the belief that the Fed will come to the rescue this Friday with another round of quantitative easing at the Federal Reserves annual economic symposium in Jackson Hole. BUT how will markets respond if the Fed does nothing? Global Market Summary 1/23/2014

4 Canadian Economic Data Wrap -Up Aug. 16 th : Manufacturing Shipments, -0.4% M/M, 0.2% Consensus Aug. 17 th : CPI All Items, 1.3% Y/Y, Consensus 1.5%. CPI Core: 1.7% Y/Y, Consensus 2%. Aug. 22 nd : Retail Sales M/M: -0.4%, 0.2% Consensus Aug. 23 rd : EI Numbers: Down to 507,600 in June from 512,100 in May. UPCOMING: Aug. 31 st : Monthly & Quarterly GDP Figures, Consensus 1.6% Quarterly SAAR & 0.1% in June Sept. 5 th : BOC Overnight Rate Announcement 1/23/2014

5 US Economic Data Wrap -Up Aug 16 th : Housing Starts, 0.746M, Consensus 0.753M Aug. 22 nd : Existing Home Sales, 4.47M, Consensus 4.5M Aug. 22 nd : FOMC Minutes for July 31 meeting (next slide) Aug. 23rd: Initial Jobless Claims, 372k, Consensus 365k. Aug. 24 th : Durable Orders, +4.2%, Consensus 1.5% Aug. 28 th : Consumer Confidence: 60.6= Lowest level in nine months, Consensus 66. UPCOMING: Aug. 30: Personal Income, Consensus 0.3% Sept. 7 th : Non-farm payrolls, Consensus 118k, Unemployment rate expected to stay at 8.3%. 1/23/2014

6 Release of FOMC Minutes Aug.22 More members were inclined towards further quantitative easing at the August 1 st meeting then at previous meetings. Many Fed officials felt support would be needed fairly soon unless the economy improved significantly. Bernankes comments on August 31 at the annual Fed conference in Jackson Hole will be a better indication of current Fed sentiment. 1/23/2014

7 Slowing Growth in China The purchasing managers survey in China fell to a scary- low 47.8 in Aug, the 10th straight month below 50 A number below 50 reflects contraction in manufacturing This is a clear signal that the Chinese economy is slowing down. The Shanghai Composite is down 15% since beginning of May. 1/23/2014

8 Eurozone - Update GDP of Eurozone fell by 0.2% German confidence index falls Greece avoids default... for now Bailout fund expected to exhaust mid 2013 Euro crisis Solution: Joint Policy Making Body 1/23/2014

9 Eurozone - Outlook Greece exits Eurozone? September 12, German constitutional court will rule on the legality of bailout ECB may set bond yield caps for Eurozone members 1/23/2014

10 Best Buy Takeover Talks Speculation whether Richard Schulze will be successful in his $9 billion takeover offer continued. This values the co at between $24 to $26 a share, currently around $18 On Monday, he was granted access by the company to certain due diligence info and received permission to form an investment group with private equity sponsors. Last week, the company reported disappointing 2Q profits due to weaker sales and gross margin pressures, and also suspended buybacks as the company transitions to a new CEO. 1/23/2014

11 Apple vs Samsung - Update Samsung to pay $1 billion in damages Potentially recall products from North American markets Apples next target, Google? 1/23/2014

12 Apple vs Samsung - Outlook Samsungs solution – Triangle tablet? 1/23/2014

13 Telus Corp. v Mason Capital Management Telus Corp. wants to give all of its shareholders equal voting rights –Non-voting shares trade at a lower price than voting shares (elimination of difference would result in ~$244M for current non- voting holders) Initial attempt made in spring-2012 –Different majority rules this time, which could facilitate transition Mason Capital Management owns ~20% of voting shares –Want to be compensated for sharing control of the business 1/23/2014

14 Agrium Inc. v Jana Partners Jana want to separate the retail division of Agrium into a standalone company –Agriums stock price is artificially low because of the poor performance of the retail division (less relevant with high price of grains) Agrium has indicated that they dont see value in the separation and that it could cause greater harm –Other investors have indicated support for Agrium Jana considering the possibility of private equity backers to support a leveraged buyout 1/23/2014

15 Other Hedge Funds in the News Doug Whitman (founder of Whitman Capital), convicted of insider trading charges – Made ~$1M from 2006-2009 related to Google Inc., Marvell Technology, Polycom Inc. Macro hedge funds are no longer experiencing the returns they once did Brookfield Asset Management v Bill Ackman (Pershing Square Capital Management) – Regarding creeping takeover of General Growth Properties (mall operator) 1/23/2014

16 Banks gone bad continuation Adding to the list of banks gone bad: – HSBC – Standard Chartered – Royal Bank of Scotland – UniCredit – BNP Paribas – Credit Agricole 1/23/2014

17 US sanction against Iran – Iranian financial institutions and banned to do business with US directly – Up until 2008, U-turn transactions with 3 rd party banks 1/23/2014

18 Thank You Closing Remarks ~ Comments ~ Questions 1/23/2014

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