>>> Fed Beige Book Summary

TICKER ALERT: ECONX
Fed Beige Book Summary

  • Reports from the twelve Federal Reserve Districts indicated that economic activity has expanded since the previous Beige Book report; however, none of the Districts pointed to a distinct shift in the overall pace of growth. The New York, Cleveland, Chicago, Minneapolis, Dallas, and San Francisco Districts characterized their growth rates as moderate; Philadelphia, Atlanta, St. Louis, and Kansas City reported modest growth. Boston reported that business activity appeared to be improving, and Richmond reported further strengthening. 
  • Philadelphia, Atlanta, Chicago, Kansas City, and Dallas explicitly reported that contacts in their Districts generally remained optimistic about future growth; most of the other Districts cited various examples of ongoing optimism from specific sectors.
  • General consumer spending grew in most Districts at rates ranging from slight to moderate, with few changes in the pace of growth compared with the last Beige Book. Most Districts reported a continued expansion of auto sales, noting record-high levels for several markets within the Philadelphia and Dallas Districts; however, in some parts of the New York and Philadelphia Districts sales began to fall back from their relatively high levels.
  • Activity among nonfinancial service sectors improved overall. 
  • District reports on manufacturing were mixed--divided almost evenly into one of three characterizations of the sector's activity: expanding, contracting, or unchanged. Among Districts reporting on their firms' near-term expectations, the manufacturing outlook remained generally upbeat, with New York, Philadelphia, Richmond, and Atlanta reporting increased optimism.
  • Since the previous Beige Book, residential real estate activity, particularly sales of existing homes and construction of new homes, generally expanded or held steady in about half of the Districts. About half of the Districts also reported some growth in construction and in sales or leasing of nonresidential properties.Overall, loan demand rose in eight Districts and held steady in one. Credit standards were largely unchanged. 
  • Reports regarding farm products were mixed; for some crops, high anticipated harvests have put downward pressure on prices and expected farm incomes. Generally, oil and gas production and demand for related activities continued to edge up from already high levels, while total coal production mostly held steady.Trends in employment, wages, and prices were relatively unchanged in the Federal Reserve Districts, with greater wage pressures reported in sectors where shortages of skilled labor persisted.


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>>> Icahn, Soros, Druckenmiller, And Now Zell: The Billionaires Are All Quie

Icahn, Soros, Druckenmiller, And Now Zell: The Billionaires Are All Quietly Preparing For The Market Drop
"The stock market is at an all-time, but economic activity is not at an all-time," explains billionaire investor Sam Zell to CNBC this morning, adding that, "every company that's missed has missed on the revenue side, which is a reflection that there's a demand issue; and when you got a demand issue it's hard to imagine the stock market at an all-time high." Zell said he is being very cautious adding to stocks and cutting some positions because "I don't remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people's thinking." Zell also discussed his view on Obama's Fed encouraging disparity and on tax inversions, but concludes, rather ominously, "this is the first time I ever remember where having cash isn't such a terrible thing." Zell's calls should not be shocking following George Soros. Stan Druckenmiller, and Carl Icahn's warnings that there is trouble ahead.

 

Billionaire 1: Sam Zell
On Stocks and reality...
"People have no place else to put their money, and the stock market is getting more than its share. It's very likely that something has to give here."

 

"I don't remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people's thinking," he said. "If there's a change in confidence or some international event that changes the dynamics, people could in effect take a different position with reference to the market."

 

"It's almost every company that's missed has missed on the revenue side, which is a reflection that there's a demand issue," he said. "When you got a demand issue it's hard to imagine the stock market at an all-time high."

 

He also lamented about how difficult it is to call a market top. "If you're wrong on when, that's a problem." His answer: "You got to tiptoe ... and find the right balance."

 

"This is the first time I ever remember where having cash isn't such a terrible thing, despite the fact that interest rates are as low as they are," he added.

 

On Obama and inequality...
"Part of the impact of these very, very low interest rates is that we've creating this disparity. The wealthy are benefiting from government policy and the nonwealthy aren't," he continued. "So we have a president who says we've got to fight this disparity and we have a Fed who's encouraging it everyday."
On Tax Inversion...
"This is both legal and accepted. If the government doesn't like the result, change the law," he said. "You have to have a rational tax policy." He said the top tax rate should be changed and the U.S. should not tax worldwide income.
Zell also said it's unfortunate that "this inversion thing has been captured as a political, electioneering item."
* * *
Soros has once again increased his total SPY Put to a new record high of $2.2 billion, or nearly double the previous all time high, and a whopping 17% of his total AUM.
*  *  *
Ironically, Carl Icahn - poster-child of the leveraged financial engineering that has overtaken US equity markets on the back of Central Bank largesse - told CNBC that he was "very nervous" about US equity markets. Reflecting on Yellen's apparent cluelessness of the consequences of her actions, and fearful of the build of derivative positions, Icahn says he's "worried" because if Yellen does not understand the end-game then "there's no argument - you have to worry about the excesssive printing of money!"

 

*  *  *
Simply put, Druckenmiller concludes, rather ominously, "I am fearful that today our obsession with what will happen to markets and the economy in the near term is causing us to misjudge the accumulation of much greater long term risks to our economy."
*  *  *
And here the BIS explains broken markets so easily, even a Janet Yellen can get it:
Financial markets have been exuberant over the past year, [...] dancing mainly to the tune of central bank decisions. Volatility in equity, fixed income and foreign exchange markets has sagged to historical lows. Obviously, market participants are pricing in hardly any risks.
Growth has picked up, but long-term prospects are not that bright. Financial markets are euphoric, but progress in strengthening banks’ balance sheets has been uneven and private debt keeps growing.Macroeconomic policy has little room for manoeuvre to deal with any untoward surprises that might be sprung, including a normal recession.
*  *  *
So now we have a quorum of billionaires and the BIS all flashing warning signals...

>>> Icahn exits stake in Family Dollar

Icahn exits stake in Family Dollar 

Carl Icahn has sold his entire stake in Family Dollar, according to a newswire report.

Reuters, citing sources familiar with the matter, noted that the billionaire investor pocketed an estimated USD 200m in profit from the transaction.

Icahn disclosed a 9.4% stake in the company in June and urged Family Dollar to move forward with a sale.

Family Dollar is currently being courted by Dollar General, which raised its offer for the retailer yesterday to USD 80 per share.

Reuters : Hospira talks with Danone on $5 billion tax inversion deal stall

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(Reuters) - U.S. drugmaker Hospira’s HSP.N talks to buy the medical nutrition unit of Danone DANO.PA and use the deal to move its tax domicile abroad have stalled, according to people familiar with the matter, as attempts by U.S. companies to relocate abroad and cut their tax bills draw growing criticism back home.

Hospira, a Midwestern pharmaceutical and medical device maker, had been discussing a so-called tax inversion deal under which it would pay roughly $5 billion in cash and stock for the French company's medical nutrition business. Such a transaction would have allowed Hospira, which has a market value of $9.15 billion, to lower its tax rate and free up its foreign cash.

But the discussions have for now been put on hold and it remains unclear if the proposed deal and its structure could be revived, people familiar with the matter said this week, asking not to be named because the matter is not public.

It was not immediately clear why the parties paused discussions, but the decision comes as U.S. companies considering tax inversions come under intense pressure from the government and politicians to rethink their plans.

When Hospira's interest in the Danone business first emerged in July, a senior U.S. senator wrote to the Lake Forest, Illinois-based company urging it not to move its tax base abroad.

Dick Durbin, the No. 2 Democrat in the Senate, represents Illinois and told Chief Executive Michael Ball that Hospira should not "turn its back on American taxpayers and consumers by taking advantage of a tax loophole called 'inversion'”.

Analysts also questioned the strategic fit between Hospira, the maker of injectable drugs, and the Danone unit, which makes feeding tubes, foods and drinks for people with special nutritional needs.

When Hospira was spun off from Abbott Laboratories ABT.N in 2004, Abbott retained a sizable and profitable medical nutrition business.

Reuters first reported in February that Danone, the world's biggest yogurt maker, was considering selling the business - even though it has a profit margin above the group average.

Hospira was among a field of bidders including German healthcare group Fresenius and Swiss food company Nestle that also held talks with Danone over the business.

It could not be ascertained if there was another bidder involved in the auction, but one person said the sale process was still ongoing.

While talks with Hospira have stalled for now, any potential deal with the U.S. company does not necessarily have to be predicated on a tax inversion, that person added. "All options are still open. Price, structure and bidder - those are uncertain.”

Spokesmen for Danone in Paris and Hospira in Illinois declined to comment.

TAX INVERSION MARKET SLOWING?

So far in 2014, ten corporate inversion transactions have been struck, the most in any given year. Dealmakers now say the market for inversions is slowing, with U.S. companies looking to buy overseas rivals primarily for tax benefits increasingly dismayed by rising prices, administrative hassles and fears of a U.S. government crackdown.

Last month, U.S. retailer Walgreen Co WAG.N bowed to political pressure and ditched attempts to reincorporate in Europe. The largest U.S. pharmacy chain operator was considering using its planned acquisition of European rival Alliance Boots ABN.UL to move its domicile, but has decided to keep its current Illinois tax address.

Danone has been grappling with falling earnings due to weak baby food sales in Asia as a result of a health scare and sluggish dairy sales in Europe due to slow consumption and a jump in milk prices.

On Tuesday it said that Chairman and Chief Executive Franck Riboud would split his role after 18 years at the helm of the world's largest yoghurt maker.

Riboud, 58, who took over from his late father, Antoine Riboud, in 1996, will remain as chairman and focus on the company's long-term strategy while Emmanuel Faber, 50, the chief operating officer, will become CEO, effective Oct. 1.

A sale could enable Danone to use the proceeds to fund an expansion of its faster-growing baby food and dairy businesses, targeting acquisitions in Asia and Africa, analysts say.

For the $30 billion medical nutrition market as a whole, about three-quarters consists of nutrition products delivered orally or through a feeding tube, according to analysts from Exane BNP Paribas.

That portion of the market is led by Abbott Laboratories ABT.N, with a 30 percent share, followed by Nestle NESN.VX with 25 percent and Danone with 16 percent. Smaller players include Fresenius FREG.DE and Mead Johnson Nutrition MJN.N.

The remainder is in nutrition delivered intravenously, and is dominated by Baxter International BAX.N, Fresenius, B Braun Melsungen BBRMG.UL and Hospira.

People familiar with the process have said Fresenius and Nestle would have almost certainly faced anti-trust problems were they to acquire the whole business. Danone could now attempt to either split the business among potential suitors or lower price expectations, which could entice private equity players.

If a deal with one of the strategic players failed, private equity funds would probably be interested in Danone Medical Nutrition, which offers appealing growth prospects and has exposure to emerging markets, said people familiar with the situation.

RTR - Permira plans to sell more Hugo Boss shares

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(Reuters) - European private equity firm Permira plans further sales of shares in German fashion retailer Hugo Boss after it sold an 11 percent stake on Wednesday, a source familiar with the matter said.

Shares in Hugo Boss were down 5.6 percent at 101.20 euros at 1257 GMT after Permira placed 7.9 million shares at 101.50 euros each in a deal run by Citigroup and BoA Merrill Lynch , according to two people familiar with the deal.

Depending on demand and the share price development, the remainder of Permira's shares - representing a 39.6 percent stake - will be placed in packets of around 10 percent, one of the sources said. The exact volume to be sold will depend on market conditions, the source added.

Permira declined to comment.

As part of the deal to sell the 11 percent stake on Wednesday, Permira agreed to a 90-day lockup period for its remaining shares, but this could be lifted if agreed with the banks.

Permira spent 5.3 billion euros ($7 billion) on a controlling stake in Hugo Boss in 2007, installing Claus-Dietrich Lahrs as chief executive and helping the Hugo Boss share price to quadruple since then.

The private equity firm's gradual disposal of Hugo Boss has weighed on the share price, although the stock quickly recovered after the firm cut its stake to slightly above 50 percent from 56 percent in May, to touch an all-time high of 115 euros.

Analysts do not expect Permira's sales to change the Hugo Boss strategy to expand its womenswear collection under New York designer Jason Wu, and open more of its own stores.

"We see the company as structurally well positioned given its apparel exposure combined with the continued benefits of the shift to retail," Barclays analysts wrote in a note as they upgraded the stock to "equal weight".

Marchionne Sells EU9.97m Fiat Shares To Pay Tax on Grant Plan

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BN 09/03 17:36 *FIAT CEO SOLD PORTION OF 4.66M FIAT SHARES IN STOCK GRANT PLAN BN 09/03 17:35 *FIAT CEO SELLS FIAT SHARES TO PAY TAXES ON STOCK GRANT PLAN BN 09/03 17:35 *FIAT CEO SELLS 1.32M FIAT SHARES PART OF STOCK GRANT PLAN

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Marchionne Sells EU9.97m Fiat Shares To Pay Tax on Grant Plan 2014-09-03 17:55:07.498 GMT

By Tommaso Ebhardt Sept. 3 (Bloomberg) -- Fiat CEO sold 1.32 million Fiat shares at average price EU7.55/shr * Sold portion of 4.66 millions Fiat shrs of his 2012 stock grant plan * Marchionne sold shares to pay part of tax liabilities associated with the allotment of the shares, Fiat says in statement

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

To contact the reporter on this story: Tommaso Ebhardt in Milan at +39-02-8064-4231 or tebhardt@bloomberg.net To contact the editors responsible for this story: Chris Reiter at +49-30-70010-6226 or creiter2@bloomberg.net John Simpson

>>> CRTO +5,5% - thoughts from our NY analyst

Criteo (CRTO US Equity)

The reason for the outperformance today is the rumours of a potential bid from Publicis, following the fall out from Omnicom. Even though these rumours have been squashed to dampen down some euphoria, it appears these have been ignored.

Our analyst at Oscar Gruss had a quick look at the valuation metrics and believes with potential cost savings for PUB a bid could be in the region of $40 - $45/sh and this is being generous! Using an 18x Ebitda multiple the upside is roughly $3-6/sh and the downside $7-9/sh. So the conclusion is this could move higher. But is unlikely to reach the $55 level we saw in march. Risk/reward its not a great trade here.