FT : Investors bet on cyber security stocks

Investors bet on cyber security stocks

Investors have this year pumped more than $1bn into an exchange-traded fund that tracks cyber security stocks as they clamour to bet on a booming industry following high-profile hacks and data heists.
The passive investment vehicle, with the appropriate financial ticker HACK, was only launched in November but crossed the $1bn mark in size this month, according to ETF.com, a data provider, as investors ignored its relatively expensive fees and placed bets on the online security industry’s future.

Investors in the ETF have been rewarded with a 24 per cent gain this year, compared with the S&P 500 index’s 2.1 per cent rise.
High profile attacks including the breach at Sony Pictures, Anthem Healthcare and the US retailer Target have elevated cyber security from a back room IT issue to the boardroom.
The cyber security industry says it sees signs of increased budgets for cyber security, most of which will go to purchase technology. But one report from professional services firm PwC last year suggested the increases were uneven and that overall businesses were spending slightly less on security in 2014 than the year before.
The potential beneficiaries of increased security spending stretch from large listed technology companies with cyber security units such as Intel, which bought antivirus software maker McAfee in 2010, and IBM to small start-ups founded by ex-military people or former hackers.
Venture capital funding has been flooding into these smaller companies, which raised more than $1bn for the first time in a single quarter this year, according to data from private company research firm PrivCo.
The cyber security exchange-traded fund includes both large public companies such as Cisco, Juniper and Symantec, as well as a new generation of security companies.
In depth

Cyber warfare
Cyber security
As online threats race up national security agendas and governments look at ways of protecting their national infrastructures a cyber arms race is causing concern to the developed world

Further reading
Those that went public more recently include FireEye, which became known for its purchase of incident response company Mandiant, which has been called out for some of the most significant breaches, and Palo Alto Networks, a next generation firewall company.
Christian Magoon, consultant to ISE ETF Ventures and YieldShares founder, helped launch HACK last autumn, and has suggested the ETF could be used by hedge funds or others looking to offset against the risk of cyber attacks impacting other stocks they own.
It is little surprise that the sole Japanese stock in the HACK ETF is Trend Micro — the country’s most successful cyber security company, which has been raising red flags over Japan’s growing vulnerability to hacking before the dangers were widely appreciated.
Shares in the company have surged over the past two years, but particularly after their inclusion in the cyber security ETF.
Japan’s companies and government have become an increasingly juicy target for international hackers. There were 25.6bn attacks on Japan’s corporate and public sector websites in 2014, which was twice the 2013 total. The latest high-profile case, which was revealed last month, involved the theft of 1.25m files from the Japan Pension Service.

(BFW) Global M&A May Reach Record, Goldman Sachs’s Gnodde Tells Fas

Global M&A May Reach Record, Goldman Sachs’s Gnodde Tells Fas
2015-06-28 09:27:56.665 GMT


By Richard Weiss
(Bloomberg) -- With interest rates low, confidence among
cos. high, and prices for sellers attractive, it’s conceivable
that 2015 will see new records in global M&A, Richard Gnodde,
co-head of Goldman Sachs’s European division, tells Frankfurter
Allgemeine Sonntagszeitung in interview.

* Absence of external shocks is prerequisite for strong M&A
* ECB won’t raise interest rates this yr or next
* Greece remaining in EMU is preferable to Grexit; would be
“the best for all in Europe”
* Brexit not likely; if U.K. were to leave EU, Goldman would
move more resources to Frankfurt


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bkammel@bloomberg.net
Richard Weiss

(BFW) Varoufakis Says Merkel ‘Holds the Key’ to Greece’s Future: Bild

Varoufakis Says Merkel ‘Holds the Key’ to Greece’s Future: Bild
2015-06-28 11:40:41.357 GMT


By Rainer Buergin
(Bloomberg) -- EU govts must act to solve Greece’s debt
crisis and Chancellor Angela Merkel, as head of the region’s
“most important country” holds the key to a solution, Bild-
Zeitung cites Greek Finance Minister Yanis Varoufakis as saying
in an interview.

* Greece is open “to new proposals from the institutions”
* “Significantly better” proposals could become part of the
referendum
* Greek govt prepared to continue negotiations while Greek
voters make their assessments
* Greek govt won’t make new proposal
* NOTE: Running Out of Cash, Greece Counts on ECB to Avert
Black Monday Link


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FT : ECB freezes emergency loans to Greek banks at €89bn

ECB freezes emergency loans to Greek banks at €89bn

A visitor walks past the European Central Bank (ECB) logo, featuring a euro symbol, in Frankfurt, Germany, on Thursday, May, 20, 2010. Europe's debt crisis will depress the euro still further after it declined to the lowest level since 2006, according to UBS AG and BNP Paribas SA. Photographer: Hannelore Foerster/Bloomberg©Bloomberg
The European Central Bank has refused to grant more emergency loans for Greek banks, a drastic move that will pave the way for the introduction of capital controls or bank closures by the authorities in Athens.
The decision followed the surprise move by the Greek government to call a referendum on new bailout terms offered by the country’s international creditors, triggering a rupture with Athens’ eurozone partners and pushing the country closer to exiting the single currency.

Eurozone finance ministers on Saturday refused a Greek request to extend the current bailout programme beyond its scheduled expiry on Tuesday, leaving the fragile Greek financial system exposed.
The ECB’s policy making governing council said on Sunday that it could no longer provide additional vital funding to Greece’s troubled lenders as the bank pledged to work with Greece’s central bank to “maintain financial stability”.
“Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the governing council declared it will work closely with the Bank of Greece to maintain financial stability,” said the ECB statement.
It added that the ECB “stands ready to reconsider its decision” — leaving the door open to emergency intervention.
The Greek Financial Stability Council was due to meet at 4pm discuss the banking situation.
Without any new funds from the ECB, Greek banks are likely to struggle to honour the deposit withdrawals that are expected in the run-up to the July 5 referendum.
That increases the pressure on the Syriza-led government to enforce capital controls to limit withdrawals from the country’s lenders. Athens could also choose to close the banks tomorrow to stave off a run on deposits.

Asked by the BBC on Sunday before the ECB announcement whether capital controls or bank closures were inevitable, Yanis Varoufakis, the finance minister, said: “This is a matter that we’ll have to work on overnight with the appropriate authorities both here in Greece and in Frankfurt.”
Greek banks have relied on the emergency funding since February, when the eurozone’s central bankers cut off access to their regular loans.
Up to €89bn in emergency loans, dubbed Emergency Liquidity Assistance, had been approved by the council, made up of the heads of the national central banks and the ECB’s six top officials — led by president Mario Draghi. Two-thirds of the council’s voting members must vote down any request for ELA from the Bank of Greece.
People stand in a queue to use ATM machines to withdraw cash at a bank in Athens on June 27, 2015. Greece will hold a referendum on July 5 on the outcome of negotiations with its international creditors taking place in Brussels on June 27, Prime Minister Alexis Tsipras announced. AFP PHOTO/ ARIS MESSINISARIS MESSINIS/AFP/Getty Images©AFP
People stand in a queue to use ATM machines to withdraw cash at a bank in Athens
Billions of euros have left the Greek banking system in recent weeks as the relationship between Athens and its international creditors has deteriorated.
Mr Draghi said: “We continue to work closely with the Bank of Greece and we strongly endorse the commitment of member states in pledging to take action to address the fragilities of euro area economies.”
Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, tweeted that the door was still open for negotiations to keep Greece in the eurozone.
Yannis Stournaras, BoG governor, said: “The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.”
Hans-Werner Sinn, president of the German Ifo Institute, called on Greece to impose capital controls and introduce a new currency and said creditors should take a haircut following an orderly exit from the euro.
“The foreseeable insolvency of Greece is deeply regrettable. Greece now needs to immediately introduce a new electronic currency as legal tender and must stop all euro payment orders to other countries abroad and impose capital controls”, Mr Sinn said. “The new currency would devalue against the euro, which would make the country competitive again.”

>>>BofA-ML : Greferendum Conference Call - NOW see details attached

Topic
The Greek government has announced a referendum for July 5 on the creditors’ proposal for the adjustment programme. This was a surprise, as Prime Minister Tsipras had excluded the idea of such a referendum very recently. The two sides had finally started converging last week and the market had started hoping for a deal, but substantial differences remained. The Greek government has argued that the referendum is about the creditors’ proposals and not about the Euro. In contrast, the opposition parties have argued that the referendum is effectively about the euro.
Start Time
Sunday, June 28, 2015 4:00 PM London Time
Speakers
Athanasios Vamvakidis – Head of G10 FX Strategy Europe Gilles Moec – Chief Europe Economist
Athanasios Vamvakidis +44 20 7995 0790 FX Strategist
103

(BofA-ML) GREferendum - 28/06/2015

Greece: Referendum on 5 July – but on what?
The Greek government – in a surprise move – pulled out of on-going negotiations with its creditors and announced a referendum for 5 July on Thursday’s creditors’ proposal for the adjustment programme and the lending arrangement. In response, the Eurogroup has rejected an extension of the existing bail-out, thereby largely rendering Thursday’s offer moot, and raising the question what exactly the referendum question will actually address.

Let’s assume we know the question, what does the answer mean?
Assuming the question addressed in the referendum remains on the basis of Thursday’s creditors’ offer, it is not at all clear what either a “yes” or a “no” vote actually imply. Can a government that campaigned on a “no” vote deal with a “yes” result? How does Greece expect the creditors’ offer to change after a “no” result?

What is the ECB’s response?
How will the ECB react to the – now expected – expiry of the 2nd programme as well as the deteriorating funding situation of the Greek banks? Increased haircuts should be expected at the minimum, a cap to the ELA also seems likely. This in turn would result in either implicit (through closure of banks) or explicit capital controls.

Will Greek depositors render the ECB decision meaningless?
Irrespective of how lenient the ECB’s reaction, Greek depositors could render a continuation of ELA meaningless if deposit flight by stealth turns into bank runs as news reports seem to suggest. One surprise in the Greek saga so far has been how well behaved Greek deposit dynamics have been.

Market reaction likely to be very negative
We believe these latest developments will lead to a resumption of the trend decline in the EUR. Whilst we had been arguing for a strong policy response to a negative outcome in Greece, the timeline of the referendum is likely to introduce some delays to EU policymakers’ ability to act decisively. We therefore expect Bunds to rally, both outright and against swaps, and for the periphery to underperform, in line with our existing views.

(BFW) Germany Faces EU80b Greek Default Loss, Lawmaker Tells Leipziger


Germany Faces EU80b Greek Default Loss, Lawmaker Tells Leipziger
2015-06-28 10:02:54.799 GMT


By Rainer Buergin
(Bloomberg) -- German public coffers face loss of at least
EU80b from a Greek default, lawmaker Gunter Krichbaum, chairman
of European Affairs Committee in lower house of parliament,
tells Leipziger Volkszeitung newspaper.

* Amount includes exposure to bailout mechanisms, ECB measures
* Lower house of parliament may have to meet during summer
recess to vote on measures related to Greece
* German lawmakers may need to approve “humanitarian aid”
because a Greek default may ignite unrest
* NOTE: Running Out of Cash, Greece Counts on ECB to Avert
Black Monday


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FT : Greece closer to euro exit as bailout extension rejected

Greece took a major step towards exiting the EU’s common currency on Saturday after eurozone finance ministers rejected Athens’ request to extend its bailout programme through next week’s surprise referendum, a decision that officials acknowledged would unleash significant economic turmoil.
Jeroen Dijsselbloem, the Dutch finance minister who chaired the meeting, said the decision of Alexis Tsipras, Greece’s prime minister, to reject an offer from his country’s creditors and call the referendum on its contents had short-circuited talks aimed at finding a compromise on a set of economic reforms to unlock €15.3bn in desperately-needed aid.

Without an agreement, Greece’s EU bailout will expire on Tuesday, leaving it without enough money to meet a €1.5bn loan repayment due the International Monetary Fund the same day. It will also struggle to pay salaries and wages and face being cut-off from emergency central bank loans that have been keeping the country’s banking system running.
The prospect of losing that banking lifeline sent depositors to ATMs all over the country as account-holders scrambled to withdraw money before an anticipated bank holiday and capital controls, which officials believe will be needed to prevent a bank run.
The eurozone’s 18 finance ministers reconvened on Saturday evening without their Greek counterpart, Yanis Varoufakis, to discuss the fallout from the economic turmoil that is expected to grip the country. In an interview, Pierre Moscovici, the European Commission’s economic chief, acknowledged Brussels may need to assist the Greek authorities with implementing capital controls. But he insisted the eurozone was strong enough to survive any repercussions.
“We have all the tools needed to address any situation,” said Mr Moscovici. “The eurozone is much more stable than it was three years ago.”
“Monday could be a bank holiday,” said Michael Noonan, the Irish finance minister, after the evening session. “It is not a question of waiting to see what might happen on Monday in terms of a crisis. The crisis has commenced.”
Mr Tsipras stunned his nation and its international creditors by announcing the referendum, arguing only the Greek people should decide how to respond to what he called the creditors’ ultimatum. He urged a rejection at the polls, but two eurozone officials said Mr Varoufakis predicted a “yes” vote in the plebiscite during the eurogroup meeting.
Negotiators for the creditors had been preparing to present a new compromise offer to the Greek authorities that, according to one EU diplomat, included “lots of things they could sell”. But Mr Tsipras’s move dashed hopes of striking a deal at Saturday’s meeting, meaning there will be no programme in place when Greek voters go to the polls to offer a verdict on the creditors’ proposal.
Mr Dijsselbloem suggested even if Greece voted to approve the bailout plan it would be hard for its eurozone partners to continue to trust Mr Tsipras’s leftwing Syriza government to implement it — hinting a new government would be necessary.
Q&A: the options for Greece’s banking system?
People line up to withdraw cash from a National Bank ATM in Thessaloniki, Greece June 27, 2015. Greek Prime Minister Alexis Tsipras called a referendum on austerity demands from foreign creditors on Saturday, rejecting an "ultimatum" from lenders and putting a deal that could determine Greece's future in Europe to a risky popular vote. REUTERS/Alexandros Avramidis
Greek banks are on the edge of failure. Deposit flight is accelerating and Greece’s funding options are running out. Every euro withdrawn from cash machines is backed by emergency funding from the European Central Bank. Without an extension to Greece’s bailout, these ECB emergency loans are in doubt.
Continue reading
“If a government has spoken so negatively about the package and approach, then there is little credibility that even after a ‘yes’ [vote] that it would implement it in a right and conscientious way,” Mr Dijsselbloem told reporters after the Greek delegation left the meeting. “If a ‘yes’, who are we trusting, who are we working with to then implement that programme?”
In the clearest sign yet that eurozone officials are anticipating significant economic upheaval in Greece, Mr Dijsselbloem said “the situation in Greece will deteriorate very rapidly” without a bailout agreement in place.
At a post-meeting news conference, Mr Varoufakis appeared taken aback that his colleagues had cut off talks and allowed the programme to expire, saying he had anticipated negotiating up until the referendum vote so that his government could eventually campaign in favour of the deal.
“We didn’t have a mandate to sign a non-viable, unsustainable proposal,” he said. “If the Greek people wanted us to sign on the dotted line, we would — even if that meant a government reshuffle or some other kind of configuration at the level of government.”
A key issue now will be the continued functioning of the Greek financial system. The European Central Bank, which must approve emergency loans to keep Greek banks open, said its governing council would meet “in due course” to discuss the situation. “The ECB is closely monitoring developments,” it said.
One person familiar with the matter said a teleconference had been scheduled for Sunday morning between the Bank of Greece and the ECB to discuss options for possible capital controls to be imposed from Monday.
One option would be to declare a bank holiday, rather than formal restrictions on capital movements, until a referendum was held. But Mr Varoufakis told Reuters banks should stay open during the referendum period. The government has the final say on capital controls.

>>> Barron's Summary: Positive on DLR, CSAL, NEM, LM; Cautious on GCI

Barron's Summary: Positive on DLR, CSAL, NEM, LM; Cautious on GCI 

Cover story: Tech companies such as GOOG, FB, TWTR, CRM, QCOM, and AMZN encourage investors to ignore the large and very real cost of stock compensation when calculating expenses and earnings, a process that leads to inflated and distorted earnings numbers than dont meet GAAP standards, yet are widely cited and embraced by analysts.

Tech Trader: Cautious on AAPL: Companys music-streaming service will be an underdog compared to industry leader Spotify, but the stakes remain high as Apple seeks to strengthen its ecosystem at a time when rivals such as GOOG, AMZN, FB, and YHOO have put the cloud to better use.

Trader: Hospitals stocks should continue to get a lift following the Supreme Courts decision on the Affordable Care Act, which ensures patients will have ongoing access to healthcare services; Positive on DLR, CSAL, NEM, VRTV, CTXS, FTR, ALK, LDOS, ROVI, GAS: Stocks saw a significant increase in Buy ratings during the past two weeks; Cautious on RRC: Natural-gas producer has recently faced a number of problems, but is improving efficiencies in some areas and could benefit when the price of gas improves; 

Features: 1) Barrons list of the most respected companies is topped by AAPL, DIS, Berkshire Hathaway, V, and GOOG; 2) Cautious on GCI: After spinning off its broadcasting and digital segments into a new company, Tegna, newspaper company will be lucky to tread water as it seeks a new shareholder base; 3) Positive on LM: Firm is making a strong recovery from a long performance slowdown, and shares could return 20% or more during the next year.

Small Caps: Positive on MYCC: Owner and operator of golf and country clubs in the U.S. has seen memberships soar as it refurbishes some locations, and shares remain attractive for investors.

Profile: Peter Kolchinsky, portfolio manager, RA Capital Healthcare fund (top ten holdings: SGMO, ACHN, DYAX, BCRX, RGLS, DRNA, DVAX, TGTX, CHRS, TKMR).

Interview: William Eigen III, portfolio manager, JPMorgan Strategic Income Opportunities, says bond investors could be in for some real pain as the Fed gets closer to raising short-term interest rates, ending a 33-year bond bull market.

Follow-Up: Barrons argued in 2011 that Greeces total debt needed to be cut by 50% to avert societal and economic ruin, a situation the editors feel still holds true; Positive on BA: New chief executive Dennis Muilenburg is young and has 30 years at the company, a winning combination and one that should prompt investors to hold onto shares.

European Trader: Positive on Hella KGaA Hueck: Shares of German supplier of lighting technology and electronics components to the auto industry are undervalued and are likely to deliver further gains.

Asian Trader: With its decision to merger with Chinese healthcare firm Golden Meditech Holdings, CO will list on the Shanghai exchange, receiving a higher valuation but leaving U.S. investors high and dry. Emerging Markets: A rising number of strategists and asset managers predict that emerging markets will outperform in the next few years. 

Commodities: A potential work stoppage in South African gold mines probably wont do much to boost low prices, because of the stronger dollar and upcoming Fed interest-rate increase.

Streetwise: Spinning off a REIT is not easy most of the time, and DRIs announcement it would do so to pay down debt may give the shares a boost, tough the success of such efforts is never certain.