>>> Fed's Bullard (hawkish, non voter): See more than a 50% probability of rate

Fed's Bullard (hawkish, non voter): See more than a 50% probability of rate hike in September, would prefer to begin raising rates early and proceed gradually 
- Unemployment will go below 5% eventually, sees +3% GDP growth in 2H of 2015- Very bad for a central bank to be behind the curve
- Do not see China stock market gyrations as something that would impact the US substantially
- Worried about reach for yield, somewhat questionable investment decisions
- Have heard anecdotal reports of reaching for yield but do not think we are in a bubble situation yet

FT : Banks back rival to Bloomberg messaging system


A chat tool described as a WhatsApp for business is being launched by 15 Wall Street banks in a bid to challenge Bloomberg’s dominance of the market in financial messaging.
The service, Symphony, will debut two years after it emerged that Bloomberg’s reporters had used private terminal data to spy on bank employees.

Symphony, which is being launched in two weeks, sprang out of an in-house messaging project at Goldman Sachs.
Many Wall Street companies communicate internally and with clients via a mish-mash of unencrypted tools such as Instant Bloomberg, Eikon Messenger, AOL Instant Messenger and Skype for Business.
Now, if David Gurle, chief executive of Symphony Communication Services, gets his way, the banks will soon replace many of those services with his own encrypted tool, which allows users to share ideas and analysis in a secure, compliant environment.
The Palo Alto-based company has been testing a beta version since April and will start selling a repackaged product to big clients — who will be charged up to $30 per user per month — from the first week of August.
Symphony’s software is open source so customers can build their own features on top, unlike the closed Bloomberg system.
“We wanted a way for everybody in an organisation to have a rich communication and collaboration tool,” said Mr Gurle. At the moment, there are too many “silos of messaging islands”, he said, so people often “default to email, the only universal bridge. But [email] is not rich and powerful and does not build institutional knowledge and it is not social.”

Rival companies have tried for years to loosen Bloomberg’s grip on messaging, and it is unclear whether a tool backed by multiple banks will flourish where others have failed. At least 320,000 Bloomberg subscribers around the world use Instant Bloomberg, while Thomson Reuters has more than 240,000 users of Eikon Messenger.
Bloomberg could not be reached for comment. A Thomson Reuters spokesperson said the company would “look to work with any partners” who share its goal of “securely connecting the broader community across financial markets”.
According to Mr Gurle, the snooping scandal of May 2013 was a “trigger” for banks to review their reliance on Bloomberg terminals for functions including messaging. Then, following a complaint from Goldman, Bloomberg admitted that it had allowed reporters to access information from the terminal — including details of when clients last logged on, what dealings they had with the helpdesk and which of the terminal’s functions they were using. Such practices had ended, the company said.
About a year later, Goldman merged its in-house messaging product with a similar tool that Mr Gurle had been developing and rebranded it as Symphony. These days, Goldman has an “equal voice” with 14 other financial investors which have chipped in about $70m of funding, said Mr Gurle.

The full line-up consists of Bank of America Merrill Lynch, BNY Mellon, BlackRock, Citadel, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Jefferies, JPMorgan, Maverick Capital, Morgan Stanley, Nomura and Wells Fargo.
A free version of the Symphony platform will be offered to the public from mid-September, and a cheaper format for smaller companies should follow soon after, said Mr Gurle.
There was no reason that Symphony could not extend into other industries such as healthcare, said Salman Ullah, a partner at Merus Capital, a Palo Alto-based venture firm, and a former colleague of Mr Gurle’s at Microsoft. Merus backed Symphony’s seed-funding round and is now the only non-Wall Street investor, with about 5 per cent.
“We think this could be a WhatsApp for enterprises,” said Mr Ullah, citing the instant-messaging app owned by Facebook. “It is one thing being able to talk to people within a company, but it’s another thing to message outside the company, in a completely frictionless and secure way.”
He cited an email he had just received from his stockbroker at Fidelity, asking him to check the company’s own website for a reply to an inquiry.
“That is hardly state of the art,” he said.

(JPM) Strategy : Few intersting points...Don't Sell the Auto & Luxury

--> Don't sell consumer plays because of China concerns, but stay cautious on commodity sectors

* The recent selloff in Chinese A-shares and the consensus downgrades to EM Asia growth projections are prompting many to look for the second order of negative effects. In particular, consumer plays such as Autos and Luxury stocks appear to be fast becoming the “no brainer shorts” in the minds of many.

* Don’t sell consumer plays on China, though. Autos in particular have performed poorly over the past few months, with many bellwether names are down 20% from the highs. In our view, the big picture is one of oil price rolling over, euro weakening and resilient Eurozone PMIs. All these are positives. We note strong Eurozone car registrations in June and improving Cognac sales in Asia. One should be using the dip to re-enter, rather than to sell further, especially if Chinese activity momentum is indeed stabilizing. 
--> +ve for RCO

* More broadly, while the Eurozone equities are almost back to the ytd highs, many Cyclical stocks are trading 15% or more off the highs. We think that this is an opportunity. As the bottom chart shows, Cyclicals need to catch up with the bond yields. The DAX P/E discount to the MSCI Europe is at a 20-year high.

>>> US Early premarket gappers

Early premarket gappers
Gapping up: HCLP +10.3%, ACHN +10.2%, FRO +7.9%, NBG +3.5%, AMD +2.8%, ASML +1.7%, GPRO +1.7%, AMZN +1.7%, CLF +1.6%, STNG +1.6%, MT +1.6%, NVO +1.3%, JBLU +1.1%, STM +1.1%, EXAS +0.9%

Gapping down: CALM -5.2%, AU -5.1%, GDX -3.3%, ABX -3.3%, EGO -3.2%, RGLD -3.2%, AEM -3%, GG -3%, GOLD -2.9%, NEM -2.9%, AUY -2.9%, AG -2.8%, SLW -2.7%, SSRI -2.2%, GLD -1.6%, FCX -1.1%, SLV -1.1%

>>> VSLR - To be acquired by SunEdison and TerraForm Power for $2.2B or $16.50/s

To be acquired by SunEdison and TerraForm Power for $2.2B or $16.50/share 

SunEdison and Vivint Solar have signed a definitive merger agreement pursuant to which SunEdison will acquire Vivint Solar for approximately $2.2 billion, payable in a combination of cash, shares of SunEdison common stock and SunEdison convertible notes. In connection with SunEdison's proposed acquisition of Vivint Solar, SunEdison has entered into a definitive purchase agreement with a subsidiary of TerraForm Power which, concurrently with the completion of SunEdison's acquisition of Vivint Solar, will acquire Vivint Solar's rooftop solar portfolio, consisting of 523 megawatts (MW) expected to be installed by year-end 2015, for $922 million in cash (TERP Purchase Agreement). The 523 MW of residential solar projects are expected to provide a 10 year average unlevered CAFD of $81 million, and provide a ten-year average levered cash-on-cash yield of 9.5 percent. 

In addition, TerraForm Power will acquire future completed residential and small commercial projects from SunEdison's expanded residential and small commercial (RSC) business unit. The addition of residential and small commercial projects and cash available for distribution (CAFD) to TerraForm Power is expected to provide greater visibility and predictability to CAFD growth and dividend per share accretion at TerraForm Power. The rooftop solar portfolio is expected to add a growing, high-quality, long-term contracted and geographically diverse asset base to the SunEdison family of companies, strengthening one of the largest and highest-growth global renewable power platforms in the world.

Under the merger agreement, Vivint Solar stockholders will receive $16.50 per share, consisting of $9.89 per share in cash, $3.31 per share in SunEdison stock, and $3.30 per share in SunEdison convertible notes. The $2.2 billion acquisition price is based on approximately 115 million Vivint Solar shares outstanding after inclusion of employee stock options and restricted stock units that will vest upon the completion of the acquisition, the repayment of approximately $263 million of Vivint Solar debt and the payment of transaction costs. SunEdison expects that Vivint Solar will have approximately $100 million of cash on its balance sheet at the time of closing. SunEdison expects to issue approximately $370 million of its common stock and approximately $350 million of SunEdison convertible notes to Vivint Solar stockholders as merger consideration.

SunEdison Initiates 2016 Guidance
Concurrent with today's announcement, SunEdison initiated 2016 annual guidance of 4,200 MW to 4,500 MW, a 50 percent increase from its prior outlook of 2,800 MW to 3,000 MW.

TerraForm Power Raising 2016 Guidance and Initiating 2017 GuidanceConcurrent with today's announcement, TerraForm Power is raising its prior 2016 dividend per share guidance of $1.70 to $1.75, a 30 percent year-over-year increase compared to 2015 annual guidance. TerraForm Power is also initiating 2017 dividend per share guidance of $2.05, up from its prior target of $2.00.

WSJ : Yahoo’s Alibaba Spinoff Creates Unparallel Lines

Yahoo’s Alibaba Spinoff Creates Unparallel Lines
Holding Aabaco is a bet that Alibaba chooses to snap up its shadow sooner rather than later

Yahoo’s proposed Alibaba spinoff will be just a shadow of the real thing. Those hoping the Chinese e-commerce swoops into the situation might be waiting a long time.

Assuming the deal goes through—Yahoo says it doesn’t know yet if regulators will approve the tax treatment—the spinoff company, called Aabaco, will basically consist of the $32 billion worth of Alibaba shares Yahoo owns, plus a unit called Yahoo Small Business, which helps U.S. merchants setup websites. The stake in Alibaba will initially account for over 95% of Aabaco’s total assets, according to Yahoo’s filing.

The deal is an elaborate way to get around the massive capital-gains tax that Yahoo would face if it sold the Alibaba stake outright. Including the small-business unit allows the company to claim the transaction as a tax-free spinoff rather than a sale.

For Alibaba investors, this grand experiment in tax arbitrage could exert some downward pressure by effectively creating an alternate Alibaba shareholding. But this effect is likely to be slight, as Yahoo effectively already acts as an Alibaba tracker stock.

Aabaco will likely trade at a substantial discount to Alibaba, however, since it is in effect a less-direct means of investing in the Chinese e-commerce giant. That is, unless investors are particularly excited by the small-business unit’s prospects, which is unlikely. Yahoo’s initial filing gives no detail on this unit’s financials.

So why own Aabaco? The endgame for investors would be to wait for Alibaba to acquire Aabaco outright. It would be massively expensive to pay cash, but Alibaba could pay in its own shares. Because Aabaco would likely trade at a discount, Alibaba would be doing so at an advantageous ratio, thus picking up a net stake in itself virtually for free. The maneuver would have the effect of a stock buyback, without having to expend cash.

But for Alibaba, there’s little urgency. It just raised capital, so turning around and extinguishing shares seems unlikely.

Meanwhile, the worry for Alibaba management has always been that Yahoo could use its substantial stake to put pressure on them over business decisions. Having that stake parked at Aabaco, a closed-end fund with widely dispersed ownership, would greatly reduce this risk.

Holding Aabaco is a bet that Alibaba chooses to snap up its shadow sooner rather than later. In reality, that day could be years away, if it ever comes.

(BN) The $42 Billion Debt Trap That Putin Has Three Years to Escape

The $42 Billion Debt Trap That Putin Has Three Years to Escape
2015-07-20 07:11:06.260 GMT


(To be sent Russia Credit columns, click here. For more
credit-market news, TOP CM.)

By Anna Andrianova and Vladimir Kuznetsov
(Bloomberg) -- For the state of Russia’s finances, consider
places like Chukotka, the territory separated from Alaska by a
narrow strait.
The government there has racked up debt equal to 144
percent of its revenue, the highest in Russia, according to
Standard & Poor’s. Regions from Belgorod near Ukraine to three
North Caucasus republics are also prompting concern with ratios
topping 100 percent. The premium investors demand to hold
Russian municipal bonds over sovereign securities is the highest
in more than a month and 103 basis points more than last year’s
average, according to UralSib Capital data.
The clock is ticking for President Vladimir Putin to defuse
a situation he set off in 2012 with decrees to raise social
spending. That contributed to a doubling in the debt load of
Russia’s more than 80 regions to 2.4 trillion rubles ($42
billion) in the past five years. Strains on their finances will
grow critical in two or three years, raising the risk of
bailouts from a federal budget already running a deficit for the
first time since 2010, according to S&P.
“A default by a large region could block market access for
the Finance Ministry itself,” said Karen Vartapetov, associate
director of S&P’s Moscow office. “Right now the federal center
has an opportunity to help regions. In three years, there may be
fewer resources, while regional debt may be bigger, and that
will result in greater risks.”
The Finance Ministry in Moscow didn’t reply to a request
for comment on the risks facing regional governments.

Yawning Gap

Threats to municipal finances are snowballing as sanctions
over Ukraine choke access to capital markets, forcing local
governments to fund social outlays with costlier bank loans.
While regional debt sales are down 53 percent so far this
year, Moody’s Investors Service estimates borrowing will grow as
much as 25 percent in 2015, driven by spending on health care,
education and utilities.
The squeeze is putting regions in jeopardy. They’re facing
“an increasing likelihood of defaults,” S&P warned in June. At
least one non-rated local government delayed a principal
repayment on a bank loan in the first quarter, it said.
Local administrations are running a 625 billion-ruble
deficit, up 42 percent from 2014, according to S&P. Seventy-five
regions had a budget gap last year, the Higher School of
Economics in Moscow said in a May report.

Refinancing Issues

Belgorod, a region of 1.5 million people, is one of only
five municipal borrowers this year, placing 5.3 billion rubles
of sinkable five-year notes this month at a coupon of 12.65
percent. That compares with a 8.3 percent coupon on seven-year
bonds sold in 2013. The yield on Belgorod’s notes due June 2020
has risen eight basis points to 13.26 percent since trading
began July 8.
The authorities in Moscow want to ease the crisis by
helping regions replace bonds and commercial loans with
subsidized loans from the federal budget, offered at a 0.1
percent annual rate. Russia will allocate 310 billion rubles to
this in 2015, according to Prime Minister Dmitry Medvedev, who’s
backed converting some foreign-currency debt into rubles.
Even so, local governments continue to rely on commercial
loans, increasing bank debt by a quarter since the start of 2014
to 1 trillion rubles on March 1, central bank data show.
Risks of imbalances in regional budgets will probably grow
this year as the economy shrinks, the central bank said in June.
“Because of the high debt burden, access to market sources
of financing may be partly closed for some regions,” it said.
“In addition, these regions may have difficulties with
refinancing existing debt because banks are becoming more
selective in assessing regional risk.”

For Related News and Information:
Putin Takes Credit for Dodging ‘Deep Crisis’ as Slump Deepens
Moody’s Sees Russian Sanctions Entrenched in Blow to Rating
Russia Sanctions Show Bright Side as Companies Push to Cut Debt
Top Russia stories: TOP RUS <GO>
For Russian economic surveys: ECO RU <GO>
Russia country overview: COUN RU <GO>
Russian economic-data search: ECST RU <GO>
Economic data workbench: ECWB <GO>

--With assistance from Paul Abelsky in Prague.

To contact the reporters on this story:
Anna Andrianova in Moscow at +7-495-771-7738 or
aandrianova@bloomberg.net;
Vladimir Kuznetsov in Moscow at +7-499-271-3367 or
vkuznetsov2@bloomberg.net
To contact the editors responsible for this story:
Balazs Penz at +36-1-881-0227 or
bpenz@bloomberg.net;
Alex Nicholson at +7-495-771-7715 or
anicholson6@bloomberg.net
Paul Abelsky, Andrew Langley

>>> LafargeHolcim gets bids worth up to USD 789m from CRH, HeidelbergCement Indi

LafargeHolcim gets bids worth up to USD 789m from CRH, HeidelbergCement India, and Baring PE Asia for its cement assets at Chhattisgarh and Jharkhand in India

Newly created cement giant LafargeHolcim [EPA:LHN] has received binding offers from three suitors for buying its cement assets in Chhattisgarh and Jharkhand, India, mint reported. The three suitors were identified as Ireland's CRH [LON: CRH], HeidelbergCement India [BOM: 500292], and also Baring Private Equity Asia.

Two sources with knowledge of the development were cited for this information. According to one of the sources, offers ranged in price for INR 41bn (USD 647m) to INR 50bn (USD 789m), adding that the final round of talks with suitors has already been initiated.

Combined, the cement assets on the block have a capacity of five million tonnes per anum (mtpa), the paper added.

These assets were placed on the selling block to address the concerns raised by India's anti-competition watchdog, the Competition Commission of India (CCI), prior to the regulator's granting clearance for Lafarge and Holcim's USD 60bn global merger. The deadline for bid submission on LafargeHolcim's assets at Jharkhand and Chhattisgarh expired last week, the paper added.

As a pre-condition to the CCI's clearance for the deal, Lafarge was directed to sell its two assets at Jhardkhand and Chattisgarh to companies that currently have under 5% market share in the region. The sale includes the Sonadih cement plant at Chhattisgarh and also grinding unit in Jhardkhand, the paper added.

On 10 July, Lafarge and Holcim announced the completion of their merger into LafargeHolcim combined entity.

Mint