>>> C US -3,5% on Richard Bove Dwg from Buy to sell at Rafferty Capital

Citigroup Inc Update: Citigroup downgraded at Rafferty Capital to Sell from Buy, price target cut to $44.50 from $57

- Firm no longer believes that Citigroups book value can be trusted. 
- Richard Bove notes issues arising in a number of foreign nations suggest that loan quality at Citigroup may erode. The bank was the only one he follows that showed weaker loan quality in the fourth quarter and believes the problems here may accelerate. > 

(Les Echos) Family crisis on the agreement with Dongfeng

Link to original article in French {http://bit.ly/MgPP7f }
Link to Google Translation : {http://bit.ly/1exEKps}

Open within the Peugeot family crisis on the agreement with Dongfeng

- Thierry Peugeot is not resigned to cede control to an input of Dongfeng and the French State.

Despite the decision of the Supervisory Board of PSA to validate the input of the State and capital Dongfeng , president, Thierry Peugeot has not given up. In a letter that "Les Echos" were procured, he exhibited his differences with his cousin Robert, president of holding FFP family (which owns 25% of PSA), which gave its support for the proposed recapitalization.
This scheme would equal the French State, the Chinese carmaker Peugeot family and capital of PSA with 14% stake, while the family enjoyed so far 25% of capital and 38% of voting rights I worry. "the exit strategy Peugeot that you seem to want to implement, Thierry Peugeot said Robert. I believe that the Peugeot family must continue to support Peugeot and not ignore it. "
He accused Robert his lack of involvement in the negotiations on the future of PSA . He said the discussions were "totally governed by boards without the involvement of the board of FFP and without direct contact with Dongfeng." Where a result judged as "very negative" for FFP. He points including certain financial aspects considered unfavorable to the family holding company. It would be the abandonment of double voting rights of the FFP, which was negotiated between Dongfeng and the French State.
The same applies to so-called "standstill", which would also be included in the negotiations clauses, thus limiting scalability to increase the participation of FFP in Peugeot. It also continues to defend an appeal to the market without the help of the state and Dongfeng. "Shareholders and the market are now able to fully support the capital increase which the group needs. "
JP Morgan ready to ensure the entire operation
According to our information, JP Morgan, the bank appointed by the Supervisory Board of PSA would be willing to guarantee the entire operation (€ 3 billion). This scenario does not necessarily preclude the State or Dongfeng, whose partnership with Peugeot is "fully supported" by Thierry Peugeot, who considers "essential and fundamental." The Chinese manufacturer could buy preferential subscription rights and weigh less in fine, with limited participation less than 10%.
Met on Tuesday, the Board of Directors of the FFP has maintained its positions. Las Thierry Peugeot has not resigned. Other shareholders warn against the mounting. "What value will two public actors in a society such as Peugeot, and why they would benefit from such a discount? The impact of the agreement on the interests of minority shareholders must be specified, "says Colette Neuville, president of the Association for the Defence of Minority Shareholders (Adam), which reflects to send a request to that effect to the Board of PSA.
Against this attack she is likely to lead? The scenario of a stake in the state and Dongfeng is already well advanced, and Thierry Peugeot seems to minority Supervisory Board of PSA. Moreover, opponents believe the call to unrealistic market and recall the urgent need for the manufacturer to provide a stable shareholder base and focused on Asia, the only region of high current growth.

WSJ : AT&T: Tough to Go With the Flow

AT&T: Tough to Go With the Flow

AT&T looks a bit pressed for cash. The company surprised analysts late Tuesday when it said it would generate free cash flow of around $11 billion in 2014, far short of the $15.5 billion Wall Street projected. With roughly $9.7 billion of dividends due to be paid out of that sum, AT&T is left with little room for error even as competition in U.S. wireless is intensifying. The primary reason for the shortfall: an increase of up to $3 billion in anticipated cash taxes this year. In addition, AT&T plans capital expenditure of about $21 billion as it institutes a new plan to streamline operations and moves into the peak year of its network investment program. Moreover, the $11 billion free-cash-flow figure excludes extra spending arising from the acquisition of Leap Wireless International. AT&T may start to feel the pinch with competition heating up. T-Mobile US has roiled the industry with a series of promotions aimed at taking market share. AT&T's average revenue per user showed little sign of that competitive pressure in the fourth quarter. But things could worsen in 2014 given the price cut to plans the company implemented late last year, New Street Research says. And T-Mobile's latest offer to cover the fees new subscribers pay for early termination of contracts with other carriers may have a sizeable effect. That doesn't even take into account what Sprint might do. AT&T's net debt stood at 1.73 times earnings before interest, tax, depreciation and amortization, adjusted for pension obligations, at the end of 2013. That is already close to the company's target level of 1.8 times, limiting the desirability of taking on more debt. How else to bridge any free-cash-flow shortfall? Share buybacks, which totaled a whopping $13 billion last year, are a likely casualty, especially as AT&T takes great pride in its dividend, and therefore is highly unlikely to cut that. Alternatively, it could slow capital spending or sell assets. Last month, it said it would sell its Connecticut wireline operations to Frontier Communications for $2 billion. But tighter cash-flow math presents difficulties for any plan to buy Vodafone. AT&T has said it doesn't want to risk its credit rating by borrowing a lot. Meanwhile, funding an acquisition with stock risks diluting shareholders and could present complications in a cross-border deal. Tighter cash flow could make 2014 a cold, hard year for AT&T.

>>> First thoughts from BOAML

First thoughts from BOAML describe few surprises but interestingly describe language on forward guidance as remaining "awkward" and they expect a change to this- likely in March.

This is still a data dependent Fed committed to tapering at a measured pace..

So very neutral.. no change in the Fed unless there is a significant and widespread deterioration in the data

>>> Fed to Further Cut Bond-Buying Program

Fed to Further Cut Bond-Buying Program Officials See Growth Pickup but Caution on Labor

The Federal Reserve said it would further pare its signature bond-buying program next month, a move that solidifies the central bank's strategy for winding down the program in small steps at each of its meetings as long as the economy continues to improve. The Fed's policy-making committee said in a statement Wednesday that it would trim its bond purchases to $65 billion per month in February, from a monthly pace of $75 billion in January. The decision to pull back on the bond program was unanimous, marking the first time there wasn't a dissent at a policy meeting since June 2011. Officials offered a mixed assessment of the economy's performance. On the positive side, the Fed said that "growth in economic activity picked up in recent quarters." The central bank also observed that household spending and business fixed investment both "advanced more quickly in recent months." But officials described labor market indicators as "mixed," likely in reference to a disappointing December jobs report, and observed that the housing recovery "slowed somewhat." The Fed said it would reduce its purchases of long-term Treasury bonds to $35 billion-per-month and cut its purchases of mortgage-backed securities to $30 billion-per-month, a reduction of $5 billion for each. This latest round of bond-buying, launched in September 2012, is aimed at pushing down long-term borrowing rates in a bid to spur more investing, spending and hiring. The central bank announced it would start scaling back the program following its Dec. 17-18 meeting, and made the first $10 billion cut in January. At the time, Fed Chairman Ben Bernanke strongly suggested the Fed's preference was to whittle down its bond buying by $10 billion at each of its policy meetings this year, wrapping up the program altogether near the end of the year. Wednesday's decision affirms that timeline. Officials reiterated, however, that their strategy continues to depend on incoming economic data. If data "broadly supports" the Fed's forecast for continued improvement in the labor market and inflation moving up to the central bank's 2% target, the Fed will likely reduce the bond program "in further measured steps at future meetings," the Fed said. "However, asset purchases are not on a present course." The meeting is Mr. Bernanke's last before he steps down Friday. His successor Janet Yellen is slated to take over on Saturday. Overall, the Fed changed very little in its statement from the previous month. Neither a disappointing December jobs report nor recent turmoil in emerging markets was enough to diminish their positive outlook for the U.S. economy. The Fed reiterated their view that "risks to the outlook for the economy and the labor market as having become more balanced," language they added to the statement for the first time in December. All ten members of the Fed's policy-making committee supported the decision to continue scaling back the bond-buying program. The Fed also voted to keep short-term interest rates pinned near zero, where they've been since late 2008. The Fed repeated its message that they will likely keep rates at that low level "well past" the unemployment rate reaching 6.5%. The Fed earlier set that as the threshold at which it will start considering raising rates, as long as inflation remains in check. The Fed also extended an experimental program which it could someday use to manage short-term interest rates. Known as a "reverse repo" facility, the program uses the Fed's portfolio of bonds as collateral for loans to market participants and uses the rate on those loans to influence market rates. The experiment was set to expire Wednesday, but the Fed extended it for a year until Jan. 2015. They increased caps on the size of trades the Fed can make to $5 billion per counterparty from $3 billion. All seven Fed governors vote at every policy meeting, as does the president of the Federal Reserve Bank of New York, William Dudley. Only five Fed governors attended this meeting. Governor Sarah Bloom Raskin is not participating in policy meetings in light of her pending nomination to be the next deputy Treasury secretary. The seat left empty by Elizabeth Duke in August has not been filled. The presidents of the 12 regional Fed banks vote on a rotating basis. This year, Cleveland Fed President Sandra Pianalto, Dallas Fed President Richard Fisher, Philadelphia Fed President Charles Plosser and Minneapolis Fed President Narayana Kocherlakota can vote.

>>> US Rumor Round Up

Rumor Round Up

Rumor Activity was very strong today. There were reports that Google (GOOG) may be near settlement of Eu antitrust probe. Questcor Pharma (QCOR) strength attributed to Sanofi-Aventis (SNY) for QCOR chatter making the rounds. Mitek Systems (MITK) strength followed mobile payment news; also hearing speculation that it could attract Apple (AAPL) interest. BlackBerry (BBRY) strength attributed to Icahn related chatter. Gevo (GEVO) strength attributed to story that Richard Branson's Butanol may be in U.S. pumps in the future. 3D Systems (DDD) strength attributed to Lenovo (LVNGY) for DDD M&A chatter. Alcoa (AA) strength attributed to chatter suggesting company may be taken private. Euro Tech Holdings (CLWT) strength attributed to positive blog mention. Violin Memory (VNEM) strength attributed to headlines suggesting M&A interest in the company.

>>> AT&T reportedly still interested in acquiring Vodafone (Rule 2.8...)

AT&T reportedly still interested in acquiring Vodafone

***Reminder: On Jan 27th, AT&T in a press release said it had no plans to make an offer for Vodafone. "At the request of the UK Takeover Panel, AT&T confirms that it does not intend to make an offer for Vodafone. Accordingly, AT&T is bound by the restrictions under Rule 2.8 of the UK Takeover Code. For the purposes of Rule 2.8 of the Code, AT&T reserves the right to announce or participate in an offer or possible offer for Vodafone and/or to take any other action which would otherwise be restricted under Rule 2.8 of the Code within 6 months after the date of this announcement."
=

>>> PC IM spiking... PIRELLI: According to usually well informed sources, the pr

PC IM spiking... PIRELLI: According to usually well informed sources, the private equity arm of Goldman Sachs and Pirelli’s chairman and chief executive Marco Tronchetti Provera are looking to unpick Pirelli’s complex ownership structure with a viewing to taking the €6bn company private. (FT)

FT : Burning rubber, Pirelli edition
Things are rarely straight-forward in corporate Italy, and what follows is no exception.

According to usually well informed sources, the private equity arm of Goldman Sachs and Pirelli’s chairman and chief executive Marco Tronchetti Provera are looking to unpick Pirelli’s complex ownership structure with a viewing to taking the €6bn company private.

Here’s the rather complicated back story.

Pirelli, the world’s fifth largest tyre maker by sales and also a publisher of sought-after calendars, is controlled by Tronchetti through an investment company called Camfin, which owns a 26 per cent stake in the tyre maker.

Camfin is also controlled and chaired by Tronchetti, one of Italy’s most influential businessmen, but has several other shareholders including Italian private equity fund Clessidra and two domestic banks.

Still with us? Good.

Now, Tronchetti has to find a buyer for the stake by 2017 or hand control of the Pirelli board to Clessidra and allow the private equity house to find a buyer for the 26 per cent stake.

This is because of an agreement struck last summer whereby Clessidra and the banks – Intesa Sanpaolo and Unicredit – backed a new Tronchetti holding company called Lauro 61.

Lauro bid for heavily indebted Camfin and swiftly took the investment company private, buying out some revolting shareholders on the way.

In return, the banks and Clessidra, run by Claudio Sposito, the former head of investment banking for Morgan Stanley in Italy, were offered a guaranteed exit in 2017 at a price that would earn them a profit.

Fast-forward to the New Year and local rag La Repubblica runs a story saying Goldman Sachs’ private equity arm could be interested in buying the investment company and the controlling stake in Pirelli. But the paper said the outlines of the deal were not clear, although discussions were continuing.

A day or two later, in a long interview with a German paper to mark his 66th birthday, Tronchetti talked of his intention to step down as chief executive and sell his stake in the company. The businessman said his three children are following their own paths and it was difficult to follow in the footsteps of a business entrepreneur. (Tronchetti took control of Pirelli in 1992 and rescued the tyre maker from the abyss).

Now, we can try and bring things here bang up to date.

Usually reliable sources tell us the discussions did continue and that Goldman with Tronchetti made an indicative offer for the whole company – Pirelli that is.

It was pitched at a significant premium to the current share price of around EURO 12 a share and was backed by Russian oil group Rosneft, which recently struck an agreement to sell Pirelli tyres across its network of petrol stations. Funding was also in place, with a leading bank saying it could provide ¢5bn in financing for deal.

However the approach, conditional on due diligence, was apparently knocked back by the board, who felt they could not recommend the terms.

Well, not at this stage anyway.

Sources say talks could resume in the coming weeks as Tronchetti attempts one final deal.