(ZH) China Housing Bubble Bursts: Q3 Land Sales Crater 50%

China Housing Bubble Bursts: Q3 Land Sales Crater 50%
China may be doing everything in its power to divert attention from the simple fact that its housing bubble, the largest in the world in terms of both assets comprising it as well as divergence from fair value, has burst. But while there is no clear threshold of what constitutes a bursting bubble when it comes to housing, the latest data out of Soufun, China's largest real-estate website, which said that land sales have dropped a massive 22% to 1.7 trillion Yuan in 2014 so far, is likely as clear an indication as any that Beijing is about to panic.
And if that was not enough Bloomberg adds that land sales in 300 cites followed by Soufun fell almost 50% Y/Y to 415.9 billion yuan in 3Q, while residential land sales declined more than 50% to 265.3b yuan in 3Q.
So why, aside from the obvious, is this relevant? Because recall as we reported two weeks ago when looking at US household net worth, in the US it is all about (record) financial assets. So much so, in fact, that financial assets as a percentage of total household assets have never been higher at 70.3%, which also means that real estate as a percentage of total is as low as it has ever been.
Meanwhile, in China few households care as much about financial assets (the ones that do are largely a part of the Politburo or the ultra-rich oligrachy). Instead, the largest Chinese household asset is Real Estate, which at 74.7% of total household assets, is by far the most valuable asset that China's population has.

 

And once a few hundred million Chinese wake up and realize that the "wealth effect" portrayed by the blue bar above has been obliterated, the riots currently taking place in Hong Kong will be a gentle warm up for what the People's Liberation (sic) Army will be about to face.

Reuters : DreamWorks-SoftBank talks may augur Hollywood dealmaki

(Reuters) - DreamWorks Animation SKG Inc could soon have a new Japanese owner in a deal that highlights the challenges facing Hollywood's smaller studios in remaining independent and could prompt a string of other deals.

Over the weekend, a source said DreamWorks, the studio best known for movie franchises including "Shrek" and "Madagascar," was in talks about a possible sale to SoftBank Corp, the cash-rich Japanese communications and media company.

The development could make other independent studios the targets of larger players, or prompt them to seek outside buyers or investors.

Many smaller, independent studios produce only a handful of movies each year, making them especially vulnerable to box office disappointments, such as those that DreamWorks has produced lately with "Rise of the Guardians," "Mr. Peabody & Sherman" and "Turbo." And they don't have the other businesses like cable channels or theme parks to help ride out film flops.

Movie studios have almsg 4so faced a decline in DVD sales and increased competition from digital entertainment options like Netflix Inc.

The industrywide challenges make it harder for smaller studios without partnerships to tap the cash and distribution networks of larger companies, said Hal Vogel, the chief executive officer of Vogel Capital Management and an entertainment industry analyst.

"The movie business is capital intensive," he said. "You need a lot of cash just to stay in business."

Independent studios that are currently riding hot streaks could become targets for purchase or investment from larger media companies - some of them China-based - that want to acquire proven content.

"Other mid-tier Hollywood studios could become targets," B. Riley analyst Eric Wold wrote in a research note. "While any studio could be a target, we actually believe mid-tier standalone Hollywood studios that do not have a number of other divisions or businesses that could prove to be distractions or need to be divested would likely be preferred."

"Hunger Games" producer Lions Gate Entertainment Corp , the largest independent studio with more than a dozen films already released this year, could draw interest, Wold said, echoing other analysts.

Although analysts have mentioned China as a key source of potential buyers, French media group Vivendi SA may also be looking at a deal with Lions Gate as it seeks to bolster its own content offerings, sources have said.

Lions Gate shares were up 4 percent to $32.43 at midday, while DreamWorks surged 25 percent to $28.01.

A Lions Gate spokesman declined to comment.

Speculation about smaller content providers being targets was recently fueled by Twenty-First Century Fox Inc's attempt to acquire Time Warner Inc - both own movie studios - although Fox has dropped its pursuit for now.

Another company, MGM, the storied studio with the roaring lion logo, has found success co-financing the James Bond and "Hobbit" franchises after it emerged from bankruptcy in 2010.

Investors in MGM are waiting to see if the company will seek an initial public offering or a sale to a media conglomerate that wants to expand its television and movie properties and acquire its film library.

Both Lions Gate and MGM also produce television shows.

Reports of Softbank's interest in DreamWorks highlight the value of content to media players, said Steven Azarbad, chief investment officer of Maglan Capital, which owns about 1 percent of MGM.

"There aren't too many assets left with the scale of MGM Studios that can be acquired," he said.

An MGM spokeswoman declined to comment.

As for DreamWorks, which has recently stumbled after churning out hits including "Madagascar" and "Kung Fu Panda," an investment from or buyout by an Asian player like SoftBank could be a shot in the arm in a year when its shares have tumbled 37 percent through Friday.

>>> US CLose : Dow -0,25% S&P -0,25% Nasdaq -0,14% Russell -0,13%

Closing Market Summary: Cyclical Sectors Lead Stocks Lower

The stock market began the new week on a cautious note. The S&P 500 lost 0.3%, but managed to erase more than half of its opening decline. Thanks to the rebound, the benchmark index reclaimed its 50-day moving average (1976.78) after slipping below that level in the morning.

Equities slumped at the open amid a couple global developments that dampened the overall risk appetite. Continued student protests in Hong Kong and a potential response from China weighed on the Hang Seng index (-1.9%), while other regional indices held up relatively well with Japan's Nikkei (+0.5%) and the Shanghai Composite (+0.4%) posting gains.

Meanwhile in Europe, participants showed concerns about the Catalan independence referendum scheduled to take place on November 9. Over the weekend, the regional government outlined an official referendum plan despite pushback from national leaders. Spanish debt sold off on the developments with the 10-yr yield climbing four basis points to 2.22%. Another twist was introduced to the story during the afternoon when the Spanish Constitutional Court announced it will block the independence vote.

The overseas developments contributed to a lower start, but the key indices wasted little time in staging a rebound. The S&P 500 narrowed its loss to just five points during the initial 90 minutes of action and held its ground until the close.

In large part, the technology sector (-0.1%) was responsible for the rebound with chipmakers displaying relative strength. Intel (INTC 34.90, +0.64) surged 1.9% after announcing a partnership with Mitsubishi Electric to create next generation factory automation systems, while the PHLX Semiconductor Index climbed 0.1%.

Outside of Intel, most large cap sector components struggled to keep pace with the broader market. Facebook (FB 79.00, +0.21) and Microsoft (MSFT 46.44, +0.03) settled just above their flat lines, while Apple (AAPL 100.11, -0.64), Qualcomm (QCOM 74.82, -0.24), and Oracle (ORCL 38.44, -0.51) lagged.

The technology sector was the only group able to overtake the broader market, while the remaining five cyclical sectors ended behind the S&P 500. Notably, the energy space (-0.4%) widened its September loss to 6.5% and extended its Q3 decline to 8.0%.

Elsewhere, the consumer discretionary sector (-0.6%) lagged amid weakness in carmakers after Ford (F 15.11, -1.22) said it projects a pre-tax loss of $250 million for its European unit in 2015. The stock plunged 7.5%, while peer General Motors (GM 32.22, -0.95) lost 2.9%. Homebuilders also lagged despite lower Treasury yields. The iShares Dow Jones US Home Construction ETF (ITB 22.77, -0.16) lost 0.7%.

Although things were relatively quiet on the corporate front, M&A activity made some headlines. On that note, TIBCO Software (TIBX 23.65, +4.14) surged 21.2% after agreeing to be acquired by Vista Equity Partners for $24.00 per share, representing a 26.3% premium to the closing price on September 23. Separately, Athlon Energy (ATHL 58.32, +11.59) spiked 24.8% in reaction to news that Encana (ECA 21.59, +0.46) will acquire all of the issued and outstanding shares of ATHL for $58.50/share. Lastly, DreamWorks Animation (DWA 28.18, +5.82) jumped 26.0% amid speculation the company could be acquired by Softbank (SFTBY 35.24, -1.14).

Treasuries ended near their highs with the 10-yr yield falling six basis points to 2.48%.

Participation was below average with fewer than 640 million shares changing hands at the NYSE floor.

Economic data was limited to Personal Income/Spending and Pending Home Sales for August:
  • Personal income increased 0.3% in August, up from an unrevised 0.2% increase in July, while the consensus expected an increase of 0.3% 
    • The August employment report showed a 0.4% increase in aggregate earnings, which matched the 0.4% increase in wages and salaries 
  • Personal spending levels increased 0.5% in August after no change in spending (from -0.1%) in July, while the consensus expected an increase 0.4% 
    • Big gains in motor vehicle sales were a primary catalyst for a 0.4% increase in goods spending 
    • Services spending rose 0.5% after reporting no change in July 
  • Core PCE prices rose 0.1%, while the consensus expected an unchanged reading 
  • Pending home sales for August fell 1.0%, which was worse than the 0.2% decrease forecast by the consensus o The July reading was revised down to 3.2% from 3.3% 
Tomorrow, the Case-Shiller 20-city Index for July (consensus 7.4%) will be released at 9:00 ET, while the Chicago PMI for September (consensus 61.5) will cross the wires at 9:45 ET. The day's data will be topped off with the 10:00 ET release of the Consumer Confidence report for September (expected 92.0).
  • Nasdaq Composite +7.9% YTD 
  • S&P 500 +7.0% YTD 
  • Dow Jones Industrial Average +3.0% YTD 
  • Russell 2000 -3.9% YTD

WSJ : AbbVie Tell Shire Employees: The Merger Will Go On

AbbVie Tell Shire Employees: The Merger Will Go On

AbbVie Inc.’s chief executive has sought to quash any doubts that AbbVie would go through with its acquisition of Shire PLC in the wake of the Treasury’s proposed changes to U.S. inversion rules.

In recent days, AbbVie CEO Richard Gonzalez told Shire employees — or “colleague[s]” as he called them — that the $54 billion acquisition will proceed.

“I’m more energized than ever about our two companies coming together,” Mr. Gonzalez wrote in a memo released by AbbVie Monday. “I’m happy to say I’m more confident than ever about the potential of our combined organizations now that I’ve had a chance to meet with many of you.”

The memo said that Mr. Gonzalez had met with Shire employees in Chicago and Lexington, Mass. recently. He said in the letter that AbbVie and Shire will be busy in the next few months with “integration planning.”

Meanwhile, AbbVie’s vice president for enterprise strategies Chris Turek, sent a letter to its employees stating that the companies “aims for a fourth-quarter close.” He wrote about day one plans “so that we may begin implementing key tasks in order to ensure business continuity on Day One.”

Both AbbVie and Shire’s shares dropped 1% Monday. AbbVie’s shares are down slightly from their closing price ahead of the Treasury’s announcement, while Shire’s shares are up about 1.5% in the same time period.

Here’s a copy of the letter released to Shire employees:

Subject: An Inspiring Visit
Dear Shire Colleague,

I had the wonderful opportunity last week to sit down and meet with many of you – both in Chicago for the Integration Team Planning Kickoff Meeting, and in Lexington, when I was able to visit your offices.

I wanted to send a note saying that I’m more energized than ever about our two companies coming together, especially because I can already see many shared traits and values in the people at AbbVie and Shire. We have similar cultures that will strengthen the opportunities we have together.

Colleagues at both companies are focused on one thing – helping people. At AbbVie, we call that making a remarkable impact in people’s lives. We’re committed to science, to R&D and to increasing our knowledge of biology and the current standards of care. And it’s all for the same purpose – to advance those standards and improve the care of patients the world over.

When we first considered Shire joining together with AbbVie it was because we saw the opportunity to lead and grow in important therapeutic areas. It was also because we saw a complementary pipeline that would be positioned to enhance innovation.

But more than that, we saw people who shared our vision. I’m happy to say I’m more confident than ever about the potential of our combined organizations now that I’ve had a chance to meet with many of you.

We have a very busy few months ahead as we work on integration planning. It’s more important than ever to keep focused on our business priorities. Meeting our objectives as individual companies will only make our combined organization that much stronger.

Thank you for your continued support and commitment. I look forward to working with you much more closely in the near future. I will continue to keep you updated as events unfold during this very exciting time, and remember, you can always access the announcements and materials regarding the transaction by visiting our microsite.

Best regards,
Rick

Here’s AbbVie’s letter to its employees:

Dear Colleagues,

Last week AbbVie and Shire colleagues attended a joint integration planning meeting, as we aim for a fourth-quarter close.
The meeting was an opportunity for AbbVie and Shire counterparts to meet in person and learn more about each other’s organizations in preparation for a successful Day One. The key objectives of the meeting were to begin building relationships with one another and provide a common understanding of the integration planning strategy. Our focus right now is on high-priority items and Day One must-haves. Post-close, we will concentrate on remaining requirements in a coordinated manner until we are fully integrated.

At the meeting, participants heard from Rick Gonzalez and Flemming Ornskov, Shire’s chief executive officer, to learn more about each company. Functional team leads from both companies worked together to create Day One functional integration plans and identified potential issues, dependencies requiring coordination and additional areas of opportunity. These plans are the foundation to support all areas of integration planning needs and opportunities going forward. Teams will finalize Day One plans by mid-October so that we may begin implementing key tasks in order to ensure business continuity on Day One.

In addition, last week Rick Gonzalez, Tim Richmond and I had the opportunity to visit Shire’s offices in Lexington, Massachusetts to meet with many of our future colleagues and take a tour of one of their plants.
Following these meetings, it’s clear that we have many shared traits and values as well as similar cultures. Both companies have a strong commitment to the patient and both integration planning teams are committed to successful preparation for Day One.

We will continue to communicate key information and updates from the AbbVie Transition Office (ATO) as we move forward in the planning process and remember, you can always access the announcements and materials regarding the transaction by visiting the microsite. In the meantime, should you have any questions/comments, please contact your function’s team lead as your primary contact or from the ATO: Rachel Strick, director, program management, Kelly Ingold, controller, or Matt Johnson, vice president.

Best regards,

Chris Turek
Vice President, Enterprise Strategies

WSJ : Elon Musk Scores Again

Elon Musk Scores Again
Cuomo bans fracking but gives the billionaire's company $750 million.
Fresh from his $1.3 billion subsidy score in Nevada, billionaire Elon Musk hit it big again last week. New York Governor Andrew Cuomo announced free public housing and $750 million in government assistance for Mr. Musk's unprofitable SolarCity.

New York will spend $750 million over two years to build a new plant and buy manufacturing equipment for SolarCity, which already benefits from a federal investment tax credit and state solar-panel rebates. SolarCity leases and installs rooftop solar panels and this summer it bought Bay Area startup Silevo which manufactures high-efficiency solar panels on a small scale. Last year Mr. Cuomo pledged $225 million to refurbish a former steel plant in South Buffalo for Silevo and now he's sweetened the bargain.

ENLARGE
BLOOMBERG
SolarCity will lease the state-owned plant and equipment for $1 per month for 10 years. This will let the company avoid property taxes, which are among the nation's highest. SolarCity won't have to pay sales tax on the equipment, and the Governor's tax reforms this year zeroed out the corporate tax for manufacturers. So SolarCity will effectively operate in New York tax free.

In return SolarCity has agreed to employ 1,460 jobs at the facility for five years, which breaks down to a subsidy of $103,000 a year per head. That's more than three times Buffalo's median household income. SolarCity has also promised to spend $5 billion in "combined capital, operational expenses and other costs in the State of New York" over 10 years, if its operation last that long.

SolarCity and Silevo have racked up losses. Silevo reported an "accumulated deficit" of $61.2 million as of Dec. 28, 2013, while SolarCity ran net losses of $151.8 million in 2013 and $113.7 million in 2012, notwithstanding abundant subsidies. SolarCity warns investors that "Silevo's Triex technology is novel and involves proprietary and complex manufacturing techniques, which may result in undetected errors or defects in the solar cells produced."

SolarCity also notes that "successfully achieving volume manufacturing of solar cells at our projected yield, efficiency and quality levels will be difficult, and we have little experience in high-volume manufacturing." Translation: We're flying by the seat of our pants.

So Mr. Cuomo continues to ban natural gas fracking, which requires no subsidies and would increase jobs and tax revenue, yet he ponies up cash for a green-energy company that makes no money even with subsidies. Thus do liberals help the rich get richer.

WSJ : Netanyahu Says Iran Nukes, Islamic State Twin 'Militant' Threat

Netanyahu Says Iran Nukes, Islamic State Twin 'Militant' Threat
Israel's Prime Minister Warns Focus on Iran Nukes Blurred by Islamic State

NEW YORK—Israeli Prime Minister Benjamin Netanyahu said defeating Islamic State but allowing Iran to move to the brink of nuclear weapons would be to "lose the war" against what he called "militant Islam."

Speaking at the United Nations General Assembly, Mr. Netanyahu equated the Sunni extremist Islamic State group with Hamas, Boko Haram in Nigeria, the Iranian regime and al Qaeda. He argued there was a growing threat that came from Shiite as well as Sunni movements in the Middle East and beyond.

"The Islamic Republic is now trying to bamboozle its way to an agreement that will remove the sanctions it still faces and leave it with a capacity of thousands of…centrifuges to enrich uranium. This would effectively cement Iran's place as a threshold, military nuclear power," he said.

"Make no mistake ISIS must be defeated," he said, using the acronym for one of Islamic State's former names. "But to defeat ISIS and leave Iran as a threshold nuclear power is to win the battle but to lose the war."

Iran is negotiating a comprehensive nuclear agreement with six powers, which would see Tehran agree to concrete steps to constrain its nuclear activities in exchange for a phased lifting of sanctions. The deadline for those talks, which continued in New York this month, is November 24.

Iran, which has been supporting the Assad regime and the Iraqi government in their fight against Islamic State, denies it is seeking to develop nuclear weapons.

The six power group—the U.S., Germany, France, the U.K., Russia and China—have already accepted that Tehran should have some kind of future enrichment program. In recent weeks, they have floated "creative" solutions to Iran, according to western diplomats, which could leave some of Iran's centrifuges in place but remove the infrastructure that makes them work.

U.S. officials have insisted any agreement must significantly lengthen the time it would take Iran to obtain enough fissile material for a nuclear weapon. Israel has long demanded a solution that would leave Iran with no enrichment capacity and without the infrastructure of a nuclear program.

Mr. Netanyahu said the international community isn't to be "fooled by Iran's manipulative charm offensive."

"Once Iran produces atomic bombs, all the charms and all the smiles will suddenly disappear. And it's then that the Ayatollahs will show their true face," he said. "There's only one responsible course of action to address this threat: Iran's nuclear capabilities must be fully dismantled," he said.

With peace negotiations with the Palestinians moth balled since the breakdown of U.S. mediated talks in May, Mr. Netanyahu suggested that pushing rapprochement between Israel and pro-Western Arab states could serve as a new paradigm to advance what he said could be a "historic compromise" with the Palestinians.

"Many have long assumed that an Israeli Palestinian peace would facilitate a broader rapprochement between Israel and the Arab world. But these days I think it may work the other way around,'' Mr. Netanyahu said.

"Namely that a broader rapprochement between Israel and the Arab world may help facilitate an Israeli Palestinian peace. And that in order to achieve that peace, we must not only look to Jerusalem and Ramallah, but to Cairo, Amman, Abu Dhabi and Riyadh and elsewhere."

The overture to the Arab world echoed Mr. Netanyahu's remarks during Israel's war with Hamas that the conflict had opened new possibilities for cooperation and even a "diplomatic horizon" with other countries in the region opposed to the Islamic militant rules of Gaza.

However, such a development would require Saudi Arabia and the United Arab Emirates to depart from their long-standing practice of shunning open normalization of ties with Israel before progress is made with the Palestinians. Egypt was the only Arab state to make peace with Israeli with no progress on Israeli Palestinian ties.

Mr. Netanyahu's proposal to overhaul Israeli-Arab peacemaking efforts mirrors an initiative for a peacemaking overhaul by Palestinian President Mahmoud Abbas, who, during an address to the general assembly on Friday, called on the Security Council to impose a deadline for talks on the creation of a Palestinian state in the West Bank and Gaza—an effort to pressure Israel on withdrawal through international pressure and a step away from U.S.-led mediation.

Palestine Liberation Organization Executive Committee Member Hanan Ashrawi said Mr. Netanyahu's outreach to Arab countries was an effort to sidestep the need for an Israeli withdrawal from the West Bank. Ms. Ashrawi added such a move would mean "buying more time to create facts that will destroy the chances of peace for the foreseeable future."

On Friday, Mr. Abbas delivered a strongly worded speech at the U.N. General Assembly, accusing Israel of waging a "war of genocide" in Gaza. He said Israel had committed war crimes during the seven-week conflict and warned that without a clear timeline for talks in place, there was little point in resuming peace talks.

A U.S. State Department spokeswoman said Mr. Abbas' remarks were "counterproductive" and included "offensive characterizations" of Israel.

The remarks outraged Israelis and prompted many of Mr. Netanyahu's allies to rule him out as a partner for a peace deal. Netanyahu's comments were calibrated to address negative sentiment toward the Palestinian leader at home while also trying to show the international community that Israel would still look for peace, said Oded Eran, a former Ambassador to Jordan.

Mr. Netanyahu suggested cooperation between Israel and Arab states on security and infrastructure—an echo of the more optimistic years of Israel Palestinian peace making—but Mr. Eran said the Arab states were unlikely to take him up on his offer.

"The prime minister is correct in his assessment that there is some sort of commonality of interests which is based on fear: one fear from the Islamist extremists movements like the Nusra Front, and ISIS, the other fear is Iran. These are common concerns of several Arab regimes and Israel. But that is not sufficient for open cooperation,'' said Mr. Eran.

"He is obviously trying to reverse the logical order which was accepted until recently, or that still prevails and say we have common threat, let's make it lead to a peace between us and the Palestinians. My assessment is that it's overly optimistic."

>>> Ford (F US) -7,4% on Investor news, Vol. 65mil share vs 33mil ADV

- cautious margin guidance at investor day
- says it expects to incur $1 bln pre-tax loss in FY14 in South America region
- South America industry volume is expected to be flat at 5.0.5.5 mln units, sees long term South American overal margin of 7-9% by 2020
- expects 'Europe 20' industry volume to grow to 16-17 mln units by 2020
- says it projects Europe 2014 pre-tax loss of $1.2 bln
- says it projects Europe 2015 pre-tax loss of about $250 mln; sees FY15 industry volume in the 14.8-15.3 mln unit range; on a long term basis sees volume growth of 35-45% by 2020; sees operating margin of 3-5% by 2020

--> GM -2,4% DAI -1,24% (US), Nissan -0,86%

(BFW) Stars’ Nude Selfies Reveal Lack of Intelligence: EU’s Oettinger


Stars’ Nude Selfies Reveal Lack of Intelligence: EU’s Oettinger
2014-09-29 19:42:31.733 GMT


By Aoife White
Sept. 29 (Bloomberg) -- Celebrities who post naked photos
online show lack of intelligence, says Guenther Oettinger, the
EU’s designated commissioner for digital economy and society, at
a European Parliament hearing.
* “There was a big to-do about selfies made by celebrities”
who are “happy to put up nude selfies of themselves on the
internet,” he says; this is one example that intelligence
and human folly aren’t evenly spread out, he says
* Oettinger speaks of “dangers and pitfalls” of using
Internet
* EU lawmakers quiz Oettinger ahead of vote to confirm him and
other commissioners for five-year term
* Oettinger is Germany’s nominee to EU’s executive arm
* SEE: Apple Celebrity Nude-Photo Hack Shows Risk in Security
Questions NSN NBAUGX6KLVRY <GO>

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To contact the reporter on this story:
Aoife White in Brussels at +32-2-237-4329 or
awhite62@bloomberg.net

To contact the editor responsible for this story:
Peter Chapman at +32-2-285-4318 or
pchapman10@bloomberg.net