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Jul 1, 2015

DealBook P.M. Edition - July 1, 2015: Top Story: Ace to Buy Chubb for $28.3 Billion.

 
TOP STORY
Ace to Buy Chubb for $28.3 Billion The deal will combine two large providers of property and casualty insurance and comes as insurers are looking to increase their scale and product mix.

U.S. stocks finish higher as data trumps Greece drama: Wall Street at Close Report on July 1, 2015:

marketwatch.com

U.S. stocks finish higher as data trumps Greece drama

Anora Mahmudova, Carla Mozee
 
U.S. stocks finished higher Wednesday as investors looked beyond the latest developments in Greece and focused on economic data.
The main indexes pared early morning gains, aided by a sharp drop in energy stocks. The S&P 500 SPX, +0.69%  closed up 14.31 points, or 0.7%, at 2,077.42. Financials led the gains on the benchmark index, while energy stocks—the only sector trading lower—fell following a sharp drop in oil prices.
The Dow Jones Industrial Average DJIA, +0.79% finished up 138.40 points, or 0.8%, at 17,757.91. The Nasdaq Composite COMP, +0.53%  gained 26.26 points, or 0.7% to close at 5,013.12. All three indexes, however, are still down about 1% for the week to date.
Greece is going ahead with a referendum on Sunday to decide whether to accept the austerity demands of its creditors. Talks over the past few weeks to negotiate a bailout deal ended without a deal, and Greece is now in arrears on its IMF loan payment.
Meanwhile, investors assessed economic reports as well as monthly car sales.
Earlier, futures got a lift after the Financial Times reported Greek Prime Minister Alexis Tsipras is ready to accept nearly all of the conditions to a new bailout deal that its international lenders proposed over the weekend. But subsequent reports on the debt talks threw cold water on the idea of a new deal being accepted.
Follow the latest news in the Greek debt crisis.
Albert Brenner, director of asset allocation strategy at People’s United Wealth, commenting on rising prices, said that it appeared investors changed their minds about what impact Greece’s leaving of the eurozone will have on the rest of the continent.
“Investors observed the higher degree of unity among eurozone ministers when dealing with Greece and are betting that Grexit will not be followed by other peripheral states,” Brenner said.
He also noted that while Greece has a terrible debt problem, IMF’s austerity prescriptions are counterproductive and unlikely to help the country’s economy.
Signs the market thinks a Greece deal is probable
ECB’s dilemma: To keep Greek banks alive, or not?

SEC Charges Former Stockbroker With Conducting Ponzi Scheme: SEC Enforcement Ations - July 1, 2015.

07/01/2015 11:55 AM EDT

The Securities and Exchange Commission today charged a former stockbroker in Pennsylvania with conducting a Ponzi scheme and stealing investor money to purchase a condominium in Florida and afford his own vacations and other luxuries.
The SEC alleges that Malcolm Segal fraudulently sold so-called certificates of deposits (CDs) to his brokerage customers by falsely claiming that he could get them higher interest rates of return on FDIC-insured CDs than otherwise available to the general public.  In some instances, Segal purchased CDs on behalf of investors but secretly redeemed them early and took the proceeds.  Other times, Segal did not purchase CDs at all despite telling customers he had.  He raised approximately $15.5 million from at least 50 investors.  Besides spending investor money on himself, Segal used it in Ponzi scheme fashion for purported interest payments and principal repayments to earlier investors.
The SEC further alleges that Segal eventually started stealing directly from his customers’ brokerage accounts in a last-ditch effort to keep funding the Ponzi payments.  He forged letters of authorization to facilitate the transfer of customer funds to accounts he controlled, notably forging the signature of one customer’s wife who had died before the date of the transfer.  The scheme collapsed in July 2014.
In a parallel action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania today announced criminal charges against Segal.
“As alleged in our complaint, Segal duped investors by pretending to sell them safe investments while stealing their money for his own benefit and making Ponzi payments to earlier investors,”  said Sharon B. Binger, Director of the SEC’s Philadelphia Regional Office.  “Segal put his own greed above his obligations to customers and violated the law.”
The SEC’s complaint filed in federal court in Philadelphia charges Segal with violations of Section 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  The SEC seeks disgorgement plus prejudgment interest and penalties as well as a permanent injunction.
The SEC’s continuing investigation is being conducted by Michael F. McGraw and Brendan P. McGlynn in the Philadelphia Regional Office.  The SEC’s litigation will be led by David L. Axelrod and Michael J. Rinaldi, and the case is being supervised by G. Jeffrey Boujoukos.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Federal Bureau of Investigation.

European Markets at Close Report on July 1, 2015: E. ON shares light up, Vodafone slumps: European stock moves.

marketwatch.com

E. ON shares light up, Vodafone slumps: European stock moves

Carla Mozee
LONDON (MarketWatch) — Here are some companies whose shares made notable moves in European trade Monday.
Advancers
Balfour Beatty PLC BBY, +2.69%  shares gained 4.2% after the company’s board said it “remains open to value-creation opportunities across the group,” with the statement coming after John Laing Infrastructure Fund Ltd. JLIF, -0.43%  made a £1 billion bid ($1.57 billion) for the construction company’s investment arm. John Laing’s shares fell 2.6%.
TimeE.ON SESep 14Nov 14Jan 15Mar 15May 15Jul 15
€11€12€13€14€15€16
Aberdeen Asset Management PLC ADN, +1.04%  said assets under management rose 62 % in fiscal 2014, aided by the fund manager’s purchase of Scottish Widows Investment Partnership. Net revenue rose 4% to £1.12 billion. Shares of Aberdeen climbed 1.7%.
E. ON SE EOAN, -0.10%  plans to split into two companies: one focused on renewables and a new entity focused on conventional energy. Shares of the Germany utility jumped 4.2%.
Decliners

SEC Charges Hedge Fund Advisory Firm With Conducting Fraudulent Fund Valuation Scheme: SEC Enforcement Action - July 1, 2015.

 SEC Seal
07/01/2015 10:30 AM EDT

The Securities and Exchange Commission today charged a Greenwich, Conn.-based investment advisory firm and its two owners with fraudulently inflating the prices of securities in hedge fund portfolios they managed.
An SEC investigation found that AlphaBridge Capital Management told investors and its auditor that it obtained independent price quotes from broker-dealers for certain unlisted, thinly-traded residential mortgage-backed securities.  AlphaBridge instead gave internally-derived valuations to broker-dealer representatives to pass off as their own.  The inflated valuation of these assets caused the funds to pay higher management and performance fees to AlphaBridge.
AlphaBridge and its owners Thomas T. Kutzen and Michael J. Carino agreed to pay $5 million combined to settle the charges.
“The integrity of the portfolio valuation process is critical to fund investors, especially when it involves illiquid securities,” said Julie M. Riewe, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.  “AlphaBridge claimed to use market-grounded price quotes from brokers when in fact it relied on its own rosy view of market conditions to price its portfolio.”

Real personal income across all regions rose by an average of 0.8 percent in 2013: BEA Press Release - July 1, 2015.


The U.S. Bureau of Economic Analysis (BEA) has issued the following news release today:

Real personal income across all regions rose by an average of 0.8 percent in 2013. This growth rate reflects the year-over-year change in nominal personal income across all regions adjusted by the change in the national personal consumption expenditures (PCE) price index. On a nominal basis, personal income across all regions grew an average of 2.0 percent in 2013. In 2013, the U.S. PCE price index grew 1.2 percent.

The full text of the release on BEA's Web site can be found at www.bea.gov/newsreleases/regional/rpp/rpp_newsrelease.htm

DealBook Today's Top Headlines on July 1, 2015: Tsipras Signals Acceptance of Creditors' Terms | How Puerto Rico's Debt Got Out of Control | Cautious Optimism as Merger Deals Near Peak Level





Wednesday, July 1, 2015
TODAY'S TOP HEADLINES
 
By DEALBOOK
TSIPRAS SIGNALS ACCEPTANCE OF CREDITORS' TERMS The Greek prime minister, Alexis Tsipras, is ready to accept the bailout terms set by Greece's creditors, with a few changes, if they are part of a broader deal to address the country's funding needs for the next two years, officials said on Wednesday, Suzanne Daley and Niki Kitsantonis write in The New York Times. In a letter sent to the heads of the European Commission, International Monetary Fund and European Central Bank on Tuesday, Mr. Tsipras said Greece was "prepared to accept" a deal set out publicly over the weekend by the creditors, with small modifications to some of the key points of contention on issues like pension cuts and tax increases. Mr. Tsipras linked Greece's acceptance of the terms to a new package of bailout aid that would need to be negotiated, Ms. Daley and Ms. Kitsantonis write.

The letter from Mr. Tsipras was first reported by The Financial Times. Stock markets in Europe surged after The Financial Times report.

There was no immediate response to the letter, but finance ministers of the eurozone countries will hold a teleconference on Wednesday at 5:30 p.m. (11:30 a.m. E.D.T.) to discuss the "state of play" on Greece, James Kanter reports in The New York Times.

NYT First Draft on Politics - July 1, 2015: Clinton Trove Shows Troublesome Fax Machine, but No Smoking Gun

7/1/2015 nytimes.com/firstdraft »
First Draft

Clinton Trove Shows Troublesome Fax Machine, but No Smoking Gun

Hillary Rodham Clinton at a news conference in March about her use of personal email while she was secretary of state. Todd Heisler/The New York Times
7/1/2015
By Maggie Haberman
Good Wednesday morning from Washington, where Republicans are declaring a legislative victory even while in recess, candidates are sending urgent appeals for money, and Gov. Chris Christie of New Jersey is officially running. But it’s another release of Hillary Rodham Clinton emails from her time at the State Department that is driving the bus.

U.S. Stock Market Future Indications - July 1, 2015: U.S. stock futures rally as Greece appears ready to accept bailout terms

marketwatch.com

U.S. stock futures rally as Greece appears ready to accept bailout terms

Carla Mozee
 
U.S. stock futures jumped Wednesday, following a report that Greece’s prime minister is prepared to agree to most bailout terms set by the debt-burdened country’s creditors.
At the same time, Chubb Corp. rallied in premarket trade as the property & casualty insurer agreed to be bought by Ace Ltd.
Futures for the Dow Jones Industrial Average YMU5, +0.94%  leapt 144 points, or 0.8%, to 17,667.00, and those for the S&P 500 ESU5, +0.82%  rallied 14.60 points, or 0.7%, to 2,069.00. Nasdaq 100 futures NQU5, +0.88%  picked up 34.50 points, or 0.8%, to 4,424.75.
Futures were propelled higher after the Financial Times reported Greek Prime Minister Alexis Tsipras is ready to accept nearly all of the conditions to a new bailout deal that its international lenders proposed over the weekend. Tsipras due to address his nation later Wednesday. Follow the latest news in the Greek debt crisis.

Asian Markets at Close Report on July 1, 2015: Chinese stocks return to bear market

marketwatch.com

Chinese stocks return to bear market

Gregor Stuart Hunter
Reuters
HONG KONG—China’s main market fell sharply after a stretch of calm earlier Wednesday, reviving the choppy trade that dominated the past two weeks and erased some gains from a yearlong bull market.
The Shanghai Composite Index SHCOMP, -5.23%  closed down 5.2% after trading largely flat earlier. While the index is off nearly 22% from its mid-June high, pushing it back into bear territory, values have still doubled over the past year. A bear market is defined as a fall of 20% from a high.
The smaller Shenzhen market 399106, -4.79%  ended 4.8% lower, after being up 2.4% earlier Wednesday. The ChiNext board 399006, -3.47%  fell 3.5% after being up as much as 5.2% in earlier trade. Both have lost more than a quarter of their value from highs reached in June.
Late in the trading session, China Financial Futures Exchange issued a statement on its official microblog account, denying rumors that have been circulating on Chinese social media over the past few days that “foreign institutions” had engaged in “massive” short selling of mainland A-shares using index futures. The exchange named Goldman Sachs Group Inc. and China Southern Asset Management, a Shenzhen-headquartered company with an asset-management subsidiary in Hong Kong, adding the latter didn’t have a registered account with the exchange.
“CFFEX will continue to strengthen market monitoring, effectively protecting market order, and will severely punish and crack down on market manipulation,” the statement said.
Goldman Sachs declined to comment, and China Southern couldn’t be reached for comment.
Lofty valuations make mainland-listed shares a tempting target for short selling, a practice when investors sell borrowed shares in hopes of buying them back later at a lower price and pocketing the difference. Still there are limits for foreigners seeking to short China-focused exchange-traded funds or derivatives listed outside the country, and Chinese regulators remain wary of the practice.
Over the past few days, Beijing announced a raft of policies aimed at soothing market tensions, including plans to allow the state pension fund to invest in stocks and lower the stamp duty on share purchases. The central bank cut interest rates over the weekend, its fourth such move since November. China’s main index rallied 5.5% on Tuesday, which some market participants put down to state entities buying blue-chip stocks.
Still, market sentiment remains weighed down by expectations that investors who have taken on huge amount of debt to fund stock purchases during the rally will be forced to sell stocks in coming weeks to pay back loans to brokers, exacerbating market weakness.
“We don’t think that the deleveraging process in the stock market has run its course and the market may stay volatile in coming weeks,” said analysts from Bank of America Merrill Lynch.
Weakness in China’s economy is another drag on the market. A private sector gauge of Chinese manufacturing conditions compiled by HSBC and Markit released Wednesday fell to 49.4 compared with 49.2 a month earlier, missing a preliminary estimate, and below the 50-mark that separates contraction from expansion.
Exports from the region have been dismal in recent months amid China’s slowdown, patchy demand in the U.S. and Europe’s fragile recovery. Nations that export heavily to China also are feeling pain: South Korea’s manufacturing purchasers index slipped to 46.1 in June from 47.8 in May, the deepest contraction since September 2012. Earlier Wednesday, South Korea reported its exports fell for a sixth straight month by 1.8% in June.
Elsewhere, global markets stabilized even as Greece ended up defaulting on its €1.55 billion loan ($1.73 billion) to the International Monetary Fund, with creditors rejecting a last-ditch effort to buy more time. The euro EURUSD, -0.4668%  was lower in Asia trade, down 0.3% to the U.S. dollar at $1.1101.
In Japan, the Nikkei 225 Stock Average NIK, +0.46%  closed up 0.5% after the Bank of Japan’s quarterly tankan survey showed improving confidence among big manufacturers in the second quarter.
“The default itself had been expected from last weekend and therefore should not result in any new shock to the stock market,” says Hideyuki Ishiguro, strategist at Okasan Securities. “Investors remain wary of taking on any new risk, however, and that should limit any gains today until Sunday’s Greek referendum, on whether or not to accept conditions for another bailout, is done.”
South Korea’s Kospi Composite SEU, +1.14%  gained 1.1%, while Australia’s S&P/ASX 200 XJO, +1.04%  rose 1%. Hong Kong’s market is closed for a holiday.

DealBook P.M. Edition on June 30, 2015: Top Story: Greece Seeks Emergency Bailout From Eurozone

TOP STORY
Newspapers were on display in central Athens on Tuesday, the deadline for Greece to make a debt payment of 1.6 billion euros to the International Monetary Fund.
Greece Seeks Emergency Bailout From Eurozone Hours before the deadline for a debt payment Greece cannot afford, Prime Minister Alexis Tsipras asked the other nations that use the euro to buy time for a renegotiation of Greece's debt load.

Wall Street at Close Report on June 30, 2015: U.S. stocks end choppy session higher

marketwatch.com

U.S. stocks end choppy session higher

Anora Mahmudova, Carla Mozee
 
The S&P 500 ended Tuesday’s volatile session slightly higher, as investors were whipsawed by the vagaries of Greece’s episodic debt negotiations.
However, Tuesday’s positive finish for stocks wasn’t enough to overcome Monday’s Greek-inspired rout, which has left most of the main stock indexes with quarterly and monthly losses.
The S&P 500 ended the quarter lower, snapping a nine-quarter winning streak. Monthly losses for both the S&P 500 and Dow industrials—2.1% and 2.2% respectively— were the worst since January. At the half-year mark, the S&P is 0.2% higher, while the Dow is 1.1% lower.
News from Greece dominated the trading day. Markets appeared to rise on reports that Greece proposed a two-year deal using the eurozone bailout fund, according to The Wall Street Journal.
Questions remain about the future of the southern European country as it heads toward a referendum set for July 5 that is being framed as a vote on whether the European country should stay in the eurozone. Greece missed a Tuesday deadline to repay 1.54 billion euro ($1.71 billion) to the International Monetary Fund, the same day its bailout program expired.
Europe’s headlines created a rocky ride for investors.
“Implied volatility levels are not that high, but certainly elevated from the low levels we have seen so far this year and we expect volatility to remain at those levels for the next few weeks,” said Marc Kepner managing director of sales and trading at Themis Trading.
Kepner noted today’s moves were due to market grasping for any good news.
“For a while markets were pricing in a resolution to the Greece debt crisis, but Monday’s turn of events brought a great deal of uncertainty,” Kepner said.
The S&P 500 SPX, +0.27%  ended 5.45 points, or 0.3%, higher at 2,063.0. Over the month, nine of 10 main sectors recorded losses, with utilities suffering the most. The sector declined more than 6% over the month.
Over the past quarter, utilities also led the losses, down 6.7%, while health-care stocks finished with a 2.4% gain. The Dow Jones Industrial Average DJIA, +0.13% added 22.82 points, or 0.1%, to 17,619.17.
Meanwhile, the Nasdaq Composite COMP, +0.57%  gained 28.40 points, or 0.7% to 4,958. The tech-heavy index booked a 1.6% monthly loss, but finished the quarter 1.8% higher and is up 5.3% so far this year.