SAC May Find HUGE Upcoming Liquidations

“SAC Capital Advisors LP is bracing for investors to pull an estimated $3.5 billion from the firm, according to people briefed on the matter, as the hedge-fund giant continues to battle fallout from an intensifying insider-trading probe.

The anticipated withdrawals, which the people described as preliminary estimates that were still in flux, come in response to a quarterly deadline Monday for SAC clients to ask for money back. The firm received withdrawal requests for $1.7 billion in the first quarter.

If the estimates hold, the outflows would represent more than half of the firm’s remaining outside capital and bring the total that investors have sought back this year to more than $5 billion.

The withdrawals illustrate the worsening toll the government’s investigation is having on the Stamford, Conn., firm, which for 20 years has churned out huge gains. Its founder, Steven A. Cohen, is one of Wall Street’s most high-profile investors.

The majority of the firm’s roughly $14 billion in assets belong to Mr. Cohen or the firm’s employees….”

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“(Reuters) – Satellite operator DirecTV and two other bidders have offered more than $1 billion apiece to buy Hulu, a source with knowledge of the bidding process said on Friday, increasing the likelihood that owners News Corp and Walt Disney Co will be able to shed the video streaming service they failed to sell in 2011.

Hulu board members, who are being advised by Guggenheim Partners on the auction, fielded at least seven buyout offers last week, the source said.

It was unclear which two other bidders offered $1 billion for Hulu. The service has more than 4 million subscribers and generates revenue of about $700 million through subscriptions and a free ad-supported service.

The proposed price tag heightens the likelihood that News Corp and Disney will find an acceptable offer price, which was the sticking point of the 2011 round of buyout negotiations….”

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“UPDATE: Markit’s PMI survey results for the month of May are out.

The headline index rose to 52.3 from the flash estimate of 51.9 published earlier this month.

The consensus estimate was for a smaller tick up to 52.0….”

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On the Wires 

Upgrades – BBY, CPA, FCX, INTC, INFY, LNKD, LULU, MET, MPEL, PCL, ARPI

Downgrades  – ATU, FFIV, FLEX, GMLP, AWAY, TRIP

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“NEW YORK (AP) — Real estate investment trust Mid-America Apartment Communities Inc. is buying peer Colonial Properties Trust Inc. in an all-stock deal, expanding its presence in the South and Southwest portion of the U.S.

The combined company will include 285 properties and some of its biggest markets will include Atlanta, Houston and Orlando, Fla. The offer valued Colonial shares at about $2.15 billion at Friday’s closing prices.

MAA shareholders will own 56 percent of the combined company upon completion of the deal whileColonial Properties shareholders will get 44 percent.

The combined company will keep the MAA name and its corporate headquarters will remain in Memphis, Tenn.

Each Colonial share will be converted into 0.36 of a share of MAA. At Friday’s closing MAA price, that would be worth $24.46. That is an 11 percent premium over Colonial’s closing price of $22.11 on Friday….”

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“BERLIN (AP) — A global airline industry group says it expects carriers to generate $12.7 billion in profits this year thanks to packed planes.

The International Air Transport Association says it is revising its previous profit estimate of $10.6 billion upward by 20 percent for 2013. The new profit forecast is a 67 percent increase on the $7.6 billion major airlines earned in 2012…”

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“LONDON (Reuters) – European Union rules to curb abusive short-selling of shares and government bonds have made financial markets more transparent, but changes are needed to the seven-month old law, the bloc’s market watchdog said on Monday.

Short-selling is a bet on stock or bond prices falling. The seller borrows the securities first, sells them on loan and seeks to buy them back at a lower price to pocket a profit.

Critics say short-selling accelerates sharp swings in markets, worsening losses for ordinary investors in a bear market. Supporters argue it provides the market with additional trading volume.

Under the new rules, which apply to bank shares and some government bonds, short positions above a certain threshold must be reported to supervisors and markets.

The measures, the EU’s first set of bloc-wide rules to curb short-selling, were rushed through at the height of the euro zone debt crisis in an attempt to calm markets and took effect last November.

Politicians accused hedge funds at the time of exacerbating the debt crisis by betting on falls in Greek and other government debt prices.

The European Securities and Markets Authority (ESMA) said the rules have had some positive effects.

“However, ESMA is advising the European Commission to consider adjusting a number of aspects in the regulation that do not alter its main elements,” the watchdog’s chairman, Steven Maijoor, said in a statement….”

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“(Reuters) – American Realty Capital Trust IV (ARCT) said it would buy a portfolio of retail properties from General Electric Co’s financial arm for $1.45 billion as it looks to cut its dependence on its top 10 tenants.

ARCT, a U.S. real estate investment trust owned by the American Realty Capital group, said the purchase would reduce net operating income from its top 10 tenants to 39.5 percent of the total from 82.5 percent….”

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“Hedge funds raised bets on a gold rally by the most in two months as the U.S. economy expanded less than previously estimated, boosting speculation the Federal Reserve will maintain the pace of stimulus.

Speculators raised their net-long position by 35 percent to 48,096 futures and options by May 28, the biggest gain since March 19, U.S. Commodity Futures Trading Commission data show. Most of the gain came from a drop in short bets, which reached a record a week earlier. Net-bullish wagers across 18 U.S.-traded commodities climbed 13 percent to a nine-week high of 652,708 contracts, led by gains in corn and natural gas….”

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“The euro held a gain from last week versus the dollar after a report showed manufacturing in the 17-nation currency bloc contracted at a slower pace than initially estimated in May.

Europe’s shared currency pared an intraday advance after Federal Reserve Bank of San Francisco President John Williams said the central bank’s asset-purchase program has the potential to end this year. Norway’s krone, Sweden’s krona and South Africa’s rand rallied on data showing manufacturing in the three nations expanded last month. Turkey’s lira slid following a weekend of violent protests.

“The surprise in the euro-region data is lending support to the euro,” said Kasper Kirkegaard, a senior currency strategist at Danske Bank A/S (DANSKE) in Copenhagen. “At the moment it only takes little news to send the euro higher against the dollar because the market is very long dollars.” A long position is a bet that an asset will rise in price.

The euro was little changed at $1.30 at 7:34 a.m. New York time. It reached $1.3061 on May 30, the strongest level since May 9. Europe’s shared currency gained 0.4 percent to 1.2464 Swiss francs and was little changed at 130.53 yen. Japan’s currency traded at 100.50 per dollar.

The euro will trade at about $1.30 for the next three months, before dropping to $1.27 by the end of the year, Kirkegaard predicted.

Manufacturing Gauge…”

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“China’s new home prices jumped in May by the most since they reversed declines in December, as the government’s efforts to tighten property curbs this year fail to deter buyers.

Prices surged 6.9 percent from a year earlier to 10,180 yuan ($1,659) per square meter (10.76 square feet), SouFun Holdings Ltd. (SFUN), the country’s biggest real estate website owner, said in a statement today after a survey of 100 cities. The costs rose 0.81 percent from April, the 12th month of gains on a month-on-month basis.

China will widen property tax trials, which have only been imposed in Shanghai and Chongqing, the State Council said in a statement posted on the central government’s website on May 24. The government stepped up a three-year campaign to cool home prices in March, with only the capital city of Beijing issuing the toughest measures among 35 provincial-level cities, according to Centaline Property Agency Ltd., the country’s biggest real estate agency.

“Against the backdrop of rising land prices, supply shortages in key cities and expectations of looser monetary policy, the expectations for further home-price gains going forward remain relatively strong,” SouFun said in the statement.

The average price in the 10 biggest cities, including Beijing and Shanghai, jumped 9.7 percent from a year earlier to 17,202 yuan per square meter, up 1.1 percent from April, SouFun said….”

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“Chinese manufacturing indexes showed small businesses struggling, sapping momentum in the economy and underscoring the need for the government to shift support away from larger, state-backed companies.

The official Purchasing Managers’ Index for smaller companies fell to 47.3 in May from 47.6 the previous month, even as the broader gauge rose to 50.8 from 50.6, the government said June 1. A private manufacturing index today that includes small enterprises fell more than forecast to 49.2, an eight-month low, from 50.4. Levels below 50 signal contraction.

The reports illustrate Premier Li Keqiang’s challenges in achieving sustainable growth across the world’s second-biggest economy while increasing consumption and reducing reliance on exports and investment. Declines in manufacturing gauges today in India, South Korea, Vietnam and Taiwan add to risks that Asian and global expansion will slow.

“It is too early to conclude that an economic rebound has begun” in China, Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong, said in a report today. “There is still a strong bias towards larger enterprises and coastal areas in terms of fiscal and credit policy implementation,” and small and mid-sized companies appear to “operate with minimal policy support,” Shen wrote.

Divergences in the manufacturing indexes are common given their different focus and coverage, said Wang Tao, chief China economist at UBS AG in Hong Kong. The decline in the official PMI’s gauge for smaller companies is consistent with the HSBC index, Wang said before today’s release.

Stock Indexes…”

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“Building the $5.3 billion Keystone XL oil pipeline across the middle of the U.S. will require thousands of workers and millions of pounds of steel.

It will also require a lot of smelly dead rats.

The U.S. Fish & Wildlife Service this month said that Keystone’s proposed route across Nebraska put the endangered American burying beetle at risk. The agency said the black and orange-spotted insect could be spared, and the project move forward, if proper procedure is followed.

That means pipeline builder TransCanada Corp. (TRP) will have to trap and relocate the one-inch beetles, using frozen rats that have thawed for at least three days for maximum pungency, according to detailed protocols U.S. authorities have drawn up to protect the burrowing bug.

“It’s amazing that you have to go through all this time and effort to protect a beetle, but they do,” said Michael Whatley, executive vice president of the Consumer Energy Alliance, an industry-backed group based in Washington that promotes low energy costs and supports Keystone. “The take away is that no matter what t’s have to be crossed or i’s dotted, they are doing it.”

The State Department is still reviewing the Calgary-based TransCanada’s application to build the pipeline linking Alberta’s oil sands to refineries along the U.S. Gulf Coast, and a decision on whether it’s in the national interest is expected in the fall. The department has jurisdiction because Keystone would cross the border with Canada.

Birds, Squirrels…”

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“Australia’s dollar and government bond yields climbed amid signs that a slowdown in China is bottoming out, easing concern demand for commodities will decrease in Asia’s biggest economy.

The Aussie gained against all of its 16 major peers after official Chinese data over the weekend showed manufacturing accelerated and as a technical indicator signaled a recent decline in the currency was overdone. Local 10-year bond yields rose before a Reserve Bank of Australia policy meeting tomorrow, when the central bank will probably keep the benchmark rate at a record-low 2.75 percent, economists forecast.

The manufacturing report published June 1 was “the first seemingly positive bit of economic news that we’d had from China for some time,” said Ray Attrill, the global co-head of currency strategy at National Australia Bank Ltd. in Sydney. “There’s a chance that we can push a little bit higher,” he said, referring to the Aussie.

Australia’s dollar added 0.8 percent to 96.49 U.S. cents as of 4:36 p.m. in Sydney after posting a 7.7 percent tumble in May, the biggest monthly slump since September 2011. New Zealand’s dollar rose 0.4 percent to 79.75 U.S. cents following a 7.2 percent decline last month.

The 14-day relative-strength index for the Aussie against the U.S. dollar slid to as low as 19.5 last month, a level unseen since May 2010, and was at 25.5 on May 31. Readings below 30 indicate an asset’s price has fallen too rapidly and is set for a rebound.

Chinese Economy

The Purchasing Managers’ Index of Chinese manufacturing advanced to 50.8 in May from 50.6 the prior month, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on June 1. Economists in a Bloomberg News survey had forecast 50, which marks the dividing line between expansion and contraction….”

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“Rio Tinto Group (RIO) is pursuing an initial public offering of its gem unit, the world’s largest supplier of natural colored diamonds, after failing to find a buyer, according to a person familiar with the matter.

Rio hired Morgan Stanley (MS) to oversee an IPO in London, the person said, asking not to be identified because the process is private. The London-based company is still open to offers for the operations, the person said. Rio has been considering divesting the assets since March last year, saying they no longer fit with its strategy….”

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“Seven & I Holdings Co. (3382), the operator of 7-Eleven convenience stores, plans more acquisitions in the U.S. and may more than double North America outlets as consumer spending improves in the largest economy.

In North America the company “could increase our store number to 20,000 or even 30,000,” Chairman Toshifumi Suzuki said in a May 30 interview at the company’s Tokyo headquarters. It currently has more than 8,000 outlets in the region and Suzuki didn’t provide a timeframe for the planned expansion….”

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“Japanese companies’ capital spending fell 5.2 percent in the first quarter from a year earlier, underscoring the challenge the government faces in sustaining momentum in the world’s third-biggest economy.

The decline in spending excluding software compared with a 7.2 percent slide in the previous quarter, a Ministry of Finance report showed in Tokyo today. The median forecast of six economists surveyed by Bloomberg News was for a 5.5 percent decrease. Investment fell 0.9 percent from the prior quarter, according to the report.

Campaigning to boost company outlays and wages through fiscal and monetary stimulus and a loosening of business regulations, Prime Minister Shinzo Abe needs to sustain confidence amid weakness in the global economy and volatility in Japanese stock and bond markets. Abe has pledged to restore annual private investment to the 70 trillion yen ($695 billion) level before the 2008 financial crisis.

“Companies are not confident in the economic outlook as we haven’t seen a clear signal of a solid global recovery,” Daiju Aoki, a Tokyo-based economist at UBS AG. said. “This will pressure the Abe government to come up with measures to support businesses in the growth strategy” due this month, he said….”

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