Closing Market Summary: Health Care Leads as Indices Pull BackThe major averages began the week on a lower note as the broader market pulled back from its impressive finish to the first quarter. Additional factors to today's decline included a slide in crude oil prices, hawkish remarks Boston Fed President Eric Rosengren (an FOMC voter), and the underperformance of the heavily-weighted technology (-0.5%), financial (-0.5%), and industrial (-1.0%) sectors. The Nasdaq Composite (-0.5%) finished the day behind the Dow Jones Industrial Average (-0.3%), and the S&P 500 (-0.3%).
The equity market drifted lower to begin the day as a slump in the oil patch outweighed a quiet overnight session. Meanwhile, hawkish commentary from Boston Fed President Rosengren pushed the major averages to fresh morning lows as he alluded to a rate hike taking place before the financial markets expect to see one. Furthermore, President Rosengren stated that expectations of one or zero interest rate hikes in 2016 might be "too pessimistic."
Equity indices recovered to their flat lines by the early-afternoon, but were unable to hold these levels as the heavyweight technology (-0.5%), financial (-0.5%), and industrial (-1.0%) sectors extended their losses. Additionally, crude oil spent most of the afternoon drifting towards fresh session lows. WTI crude ended its day lower by 2.8% at $35.72/bbl.
Eight sectors finished their day beneath their flat lines as industrials (-1.0%), materials (-1.0%), and consumer discretionary (-0.9%) led to the downside while health care (+1.0%) and telecom services (+0.7%) sported the only gains of the day.
In the industrial space (-1.0%), heavyweight constituents General Electric (GE 31.23, -0.70) and Danaher (DHR 93.78, -1.1.88) demonstrated relative weakness after both were downgraded from "Outperform" to "Market Perform" at Bernstein.
Meanwhile, the Dow Jones Transportation Average (-0.9%) underperformed as rail names and JetBlue (JBLU 20.41, -0.92) weighed on the index. JetBlue was initially reported to be in contention to acquire Virgin America (VA 55.11, +16.21), but Alaska Air (ALK 78.92, -3.09) won its bid for the company with its offer of $57/share in an all cash transaction.
In the influential technology space (-0.5%), Facebook (FB 112.55, -3.51) weighed on the broader sector after cautious commentary from Deutsche Bank warned against the company's first quarter earnings. Elsewhere, the high-beta chipmakers underperformed, evidenced by the 0.9% decline in the PHLX Semiconductor Index. The index slipped as Intel (INTC 32.00, -0.45) declined 1.4% in response to a downgrade at Exane BNP Paribas.
On top of the leaderboard, the health care space (+1.0%) outperformed to continue its recent rebound effort. The sector has gained 2.3% since the beginning of April, but remains down 3.8% since the beginning of 2016. The iShares Nasdaq Biotechnology ETF (IBB 270.65, +2.34) underperformed the broader sector, but trimmed its 2016 loss to 18.3%. Meanwhile, positive results from Edwards Lifesciences' (EW 105.08, +15.16) PARTNER II Trial of its SAPIEN 3 valve helped boost the broader sector.
The U.S. Dollar Index (94.57, -0.05) ended its session above its session low as the greenback fell against the euro and the yen. The euro ended unchanged against the dollar at 1.1391. Meanwhile, the dollar/yen lost 0.3%, slipping to 111.34.
The retreat in the equities was enough to cause a momentary uptick in the Treasury complex, but the yield on the 10-yr note ended its day unchanged at 1.77%.
Today's participation fell beneath the recent average as fewer than 801 million shares changed hands at the NYSE floor.
Today's economic data was limited to Factory Orders for February:
- New orders for manufactured goods in February declined 1.7%, as expected, marking the third time in the last four months that they have been down.
- January was the exception in that string, yet it was shown today as well that factory orders for January were up only 1.2% versus a previously reported 1.6% increase.
- Excluding transportation, factory orders declined 0.8% on top of a downwardly revised 0.6% decline in January (from -0.2%) and are down 3.4% year-over-year.
- The downturn in orders in February, coupled with the downward revisions for January, underscore an economy that has failed to gain any excitable momentum in the first quarter after growing at an annualized rate of just 1.4% in the fourth quarter.
- The inventories-to-shipments ratio was unchanged at 1.37.
Tomorrow's economic data will include the February Trade Balance (Briefing.com consensus -$46.20 billion) and the ISM Service Index for March (Briefing.com consensus 54.0), which will be released at 8:30 ET and 10:00 ET, respectively.
- Russell 2000 -2.4% YTD
- Nasdaq Composite -2.3% YTD
- S&P 500 +1.1% YTD
- Dow Jones +1.8% YTD
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MergerMarket
Baker Hughes/Halliburton divestiture package has more than one buyer, sources say
* Weatherford no longer in the running
* Engagement with DoJ called constructive
Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) continue to see more than one buyer interested in acquiring a package of assets they plan to divest to secure antitrust clearance, people familiar with the matter said.
The people familiar said the other potential buyers are “big enough” to complete a deal. They added that the Department of Justice (DoJ) has not asked for a single buyer for the entire asset package, which has changed in composition over time.
General Electric (NYSE:GE) has been the lead bidder to purchase the assets, which the Houston-based oilfield services companies have been shopping since last summer, this news service previously reported.
Antitrust regulators in the US, Europe and Asia have been scrutinizing the proposed USD 35bn Halliburton and Baker Hughes merger for several months. GE has been widely considered the only buyer able to resolve antitrust regulators’ concerns about the transaction, offering the industrials giant an opportunity to drive a hard bargain.
Weatherford International (NYSE:WFT), a smaller oilfield services group, has abandoned its pursuit of the Halliburton divestiture assets, two separate sources briefed on the matter said. These sources said they are skeptical that any viable buyer other than GE exists.
Antitrust regulators should even be concerned about a GE deal, one of the sources briefed said. He noted the conglomerate may not be competitive right away, even with its already sizable energy business, and may lose market share. GE will be a distant third in size to worldwide leader Schlumberger (NYSE:SLB) and second place Halliburton.
The New York Post reported this month that the DoJ could decide as soon as this week to file suit to challenge the deal in connection with the American Bar Association’s annual antitrust conference in Washington DC. The companies’ merger agreement terminates on 30 April unless they agree to an extension.
Halliburton and Baker Hughes have not asked regulators to reach a decision on the deal by a certain date, the people familiar said. The DoJ and European Commission (EC) are aware of the contractual provisions, but the contract is between the companies and not the agencies, these people said.
The timing agreement between the DoJ and Halliburton and Baker Hughes lapsed in December.
The DoJ informed the companies that it did not believe that the remedies offered to date were sufficient to address the DoJ’s concerns, but that they would assess further proposals. The transaction remains subject to antitrust clearance in the European Union.
The EC stopped the clock on its in-depth investigation in March. The people familiar said stopping the clock is sometimes beneficial to drafting a final remedy with regulators. There is a chance that the DoJ and the EC, who have been in continuous dialogue, come to the same conclusions about remedies for the merger.
The situation between the DoJ and companies has not changed much since December except that they have put more assets on the table for divestiture, addressed more of the government’s concerns, and eliminated some concerns that were raised initially, the people familiar said.
Baker Hughes and Halliburton are engaged in very constructive talks with the DoJ and have been continuously providing the agency with detailed information on all the issues that have been raised, the people familiar with the matter said.
If DoJ had wanted to challenge the transaction, it could have filed a lawsuit after the waiting period expired in December, these people familiar said. This suggests the government may be exploring scenarios around a settlement, they added.
Since the DoJ is not facing a time constraint due to the EC review, it is able to entertain various offers, one of the sources briefed said. He said at this point, more than negotiations with the agencies, it is about remedies that are being offered by the parties.
While the ultimate decision by the DoJ cannot be predicted, the companies have good reason to be positive given the broad range of assets they have offered to divest and buyers’ interest in the assets, the people familiar said. The asset package is “substantial,” these people familiar said.
The DoJ has asked for more divestitures than the USD 7.5bn of assets earmarked by Halliburton in late 2014, when the deal was announced.
The sources briefed on the matter said from their vantage point it appears that Halliburton and Baker Hughes have backed down from an aggressive approach to dealing with the DoJ.
The people familiar with the matter disagreed with the aggressive characterization, noting that both companies have made it known to regulators around the world that the situation is best resolved with an amicable settlement given the complex nature of the deal.
Both companies have taken a transparent and open approach toward understanding concerns of the regulators across the board, and, as a result, the DoJ and the EC have an “incredible” amount of information at their disposal, they said.
Adopting an aggressive approach has never been a strategy of the parties as it would defeat the purpose of finding an amicable solution, the people familiar said.
Halliburton and Baker Hughes have put substantial asset divestitures on the table since early on in the DoJ investigation and have aspired for a solution that is a win for the regulators who want to preserve competition, the customers and the merging parties, the people familiar said.
They described this merger to be heavily fact-intensive compared to many other deals that DoJ has reviewed and the parties have had many meetings with the agency to answer their queries and provide as much information as is possible to ease their concerns.
The review has taken as long as it has given that the divestments for this complex deal have to be made in the US and overseas and the buyers vetted carefully by the DoJ and the EC, these people pointed out.
Halliburton and Baker Hughes declined to comment. Weatherford did not respond to requests for comment.
U.S. Judge OKs $20 Billion Settlement From 2010 BP Oil Spill
Agreement includes $5.5 billion in Clean Water Act penalties and billions to cover environmental damage
NEW ORLEANS—A federal judge in New Orleans has granted final approval to an estimated $20 billion settlement, resolving years of litigation over the 2010 BP oil spill in the Gulf of Mexico.
U.S. District Judge Carl Barbier’s final order on the settlement was released Monday.
The settlement, first announced in July, includes $5.5 billion in civil Clean Water Act penalties and billions more to cover environmental damage and other claims by the five Gulf states and local governments. The money is to be paid out over a 16-year period.
Mr. Barbier had set the stage for the settlement with an earlier ruling that BP had been “grossly negligent” in the offshore rig explosion that killed 11 workers and caused a 134-million-gallon spill.
Private equity groups are facing an increasingly tough market for offloading their portfolio companies, according to new figures from data provider Preqin.
The total number of so-called exits from businesses bought by private equity firms fell last quarter: just 343 portfolio companies were sold in the first quarter, a figure which is 19 per cent lower than the prior quarter and 15 per cent less than the same period a year ago, reports Mary Childs in New York.
The value of those exits — $62bn last quarter — has fallen for three straight quarters, from $72bn in the prior quarter and the recent peak of $125bn seen during the second quarter of last year.
“The rate of exits from buyout-backed companies has been slower this quarter, with fewer companies going public as market participants take a more cautious approach,” Christopher Elvin, Preqin’s head of private equity products, wrote in a press release, citing weaker public equity markets.
Trade sales, when a private equity firm sells a portfolio company to another company operating in the same industry, made up 63 per cent of the total buyout-backed exits in the first quarter — including all ten of the biggest exits in the period. That proportion, which Preqin says is a “long-term high,” is up from 51 per cent in the prior quarter.
Private equity struck 874 buyout deals in the first quarter, for a total $44bn, sliding from the post-crisis record of $137bn via 962 deals in the previous quarter, according to Preqin’s preliminary numbers.
Recent data from Dealogic showed that just nine initial public offerings priced in the first quarter, the worst quarter since the first quarter of 2009. No technology IPOs priced, for the first time that period.
L'Etat s'engage à racheter les licences des taxis qui le souhaitent
Le gouvernement se propose de reprendre la proposition du médiateur dans le dossier du conflit entre taxis et VTC, à savoir le rachat des licences cessibles de chauffeurs de taxis volontaires.
Le secrétaire d'Etat aux Transports a présenté ce lundi sa feuille de route pour sortir de la crise qui oppose les taxis aux VTC. Il retient notamment pour la première fois le principe d'un fonds de garantie pour les taxis.
La création d'un fonds de garantie financé par l'ensemble du secteur, qui reprend une proposition du médiateur Laurent Grandguillaume, doit permettre "le rachat par l'Etat des licences cessibles, pour les chauffeurs de taxis volontaires", souligne la feuille de route.
note this article is from the 3rd of June 2015
From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: Apr 4 2016 17:01:50
Subject: >>> FT Article on Orange possible target in Europe TIT, KPN & Belgacom
Orange eyes Telecom Italia, KPN and Belgacom as possible targetsOrange’s senior management has said that Telecom Italia could be among its targets in a future round of consolidation in the European telecoms business.Gervais Pellissier, who heads the French group’s European operations, said it would be among the possible buyers of several of the continent’s smaller operators — a list that might include Telecom Italia, KPN of the Netherlands and Belgacom of Belgium.“In the next five years, there will be inter-country or intra-European consolidation,” he told a small group of journalists on Tuesday. “Players who are today playing on a single market or near to a single market, might be purchased by those who are bigger.”He added: “For sure, one of those might be a target for us.”Mr Pellissier’s comments come amid rising expectations that Europe will see a reduction in the number of telecoms operators. Like many of the continent’s groups, Orange, Europe’s second-largest service provider by number of subscribers, favours consolidation as a path towards ending falling prices.Unlike in the US, where revenue per subscriber has risen in recent years, European operators have been battling with falling prices. In its home market, Orange, the market leader, has endured a painful price war since January 2012 when low-cost operator Free burst on to the scene, drastically undercutting competitors.The comments also come barely two months after Stephane Richard, Orange’s chief executive, said that an alliance with Telecom Italia “would be an attractive European consolidation opportunity” — remarks that he later played down.Even so, Mr Pellissier said that there was still some way to go before regulators fully supported the idea of consolidation. “The official political speech that the new executive body in Brussels of the Union will be more in favour of consolidation is not completely true,” he said.“I think the view of the commission on the number of players, at least for most of the market, has not completely changed that four is better than three.”Yet Mr Pellissier said that consolidation from four providers to three was inevitable in his home market of France. “The situation with four players is not sustainable in the long term,” he said.For more than a year, industry analysts have been predicting that Bouygues Telecom would eventually be sold. The country’s third-largest operator by subscribers has been hit by the price war harder than its competitors, and free cash flow has fallen to almost zero compared with €406m in 2010.But Mr Pellissier said that the country’s other groups had vulnerabilities of their own, with fourth-placed Iliad weak on network and spectrum capacity, and second-placed SFR losing market share on mobile customers.“The only one that is not for sale in the French market is us,” said Mr Pellissier. But he added that Orange would not take a leading role when the consolidation finally came. “The choice is not in our hands,” he said. “It is up to others to decide what to do.”
Orange eyes Telecom Italia, KPN and Belgacom as possible targets
Orange’s senior management has said that Telecom Italia could be among its targets in a future round of consolidation in the European telecoms business.
Gervais Pellissier, who heads the French group’s European operations, said it would be among the possible buyers of several of the continent’s smaller operators — a list that might include Telecom Italia, KPN of the Netherlands and Belgacom of Belgium.
“In the next five years, there will be inter-country or intra-European consolidation,” he told a small group of journalists on Tuesday. “Players who are today playing on a single market or near to a single market, might be purchased by those who are bigger.”
He added: “For sure, one of those might be a target for us.”
Mr Pellissier’s comments come amid rising expectations that Europe will see a reduction in the number of telecoms operators. Like many of the continent’s groups, Orange, Europe’s second-largest service provider by number of subscribers, favours consolidation as a path towards ending falling prices.
Unlike in the US, where revenue per subscriber has risen in recent years, European operators have been battling with falling prices. In its home market, Orange, the market leader, has endured a painful price war since January 2012 when low-cost operator Free burst on to the scene, drastically undercutting competitors.
The comments also come barely two months after Stephane Richard, Orange’s chief executive, said that an alliance with Telecom Italia “would be an attractive European consolidation opportunity” — remarks that he later played down.
Even so, Mr Pellissier said that there was still some way to go before regulators fully supported the idea of consolidation. “The official political speech that the new executive body in Brussels of the Union will be more in favour of consolidation is not completely true,” he said.
“I think the view of the commission on the number of players, at least for most of the market, has not completely changed that four is better than three.”
Yet Mr Pellissier said that consolidation from four providers to three was inevitable in his home market of France. “The situation with four players is not sustainable in the long term,” he said.
For more than a year, industry analysts have been predicting that Bouygues Telecom would eventually be sold. The country’s third-largest operator by subscribers has been hit by the price war harder than its competitors, and free cash flow has fallen to almost zero compared with €406m in 2010.
But Mr Pellissier said that the country’s other groups had vulnerabilities of their own, with fourth-placed Iliad weak on network and spectrum capacity, and second-placed SFR losing market share on mobile customers.
“The only one that is not for sale in the French market is us,” said Mr Pellissier. But he added that Orange would not take a leading role when the consolidation finally came. “The choice is not in our hands,” he said. “It is up to others to decide what to do.”
*ORANGE TO SEEK DEALS TO EXPAND, CONSOLIDATE IN EUROPE: CEO
