Data Feed

Gapping up: OPSW +34.7%, TLAB +19.8%, ARRO +16.9%, TASR +11.7%, EFUT +11.4%, EVVV +11.0%, CALM +10.2%, FOXH +8.2%, GSF +7.4%, RIG +6.4%, AXL +4.8%, MRK +4.6%, NCST +4.5%, SGP +4.3%… Gapping down: GPCB -16.9%, NFLX -8.1%, SPPI -6.4%, FRPT -4.1%, BBI -1.9%.

Financial Times reports Ford will next week say whether it will proceed with selling Jaguar and Land Rover after receiving a surprise offer for the British luxury carmakers from TPG Capital, the private equity firm, along with several other approaches. The cash Ford is seeking to recoup from the sale of the two carmakers is said to have dropped from its initial target above $5 bln to a level closer to $3 bln, according to auto execs. Bidders are thought to have been disappointed by the conditions placed on the sale by Ford, including its insistence that any buyer must keep the brands’ three factories open for a considerable period of time. Cerberus Capital Mgmt, Ripplewood Holdings and One Equity Partners are among private equity groups understood to have made indicative bids on Thursday. At least one trade buyer is thought to have made an indicative bid. Tata Motors of India is seen as a likely contender, while Mahindra & Mahindra of India, and Gaz, the vehicle maker majority owned by Russian tycoon Oleg Deripaska, have also been linked with the auction. TPG’s decision to throw its hat into the ring for Jaguar and Land Rover is a surprise because the U.S. co has never owned automobile assets.

Bond Watch: Chopping Around Unchanged
The market is mixed, with direction a little uncertain after scaling to fresh new highs that have now erased more than half of mid-May’s meltdown. With equities looking to right themselves & last week’s surge higher, prices may back off a little on profit taking & squaring up some flight to quality positions that helped fuel the run. The 2-10-yr yield spread continues to troll around 17.5 as curve trade has settled firmly in to its comfort zone just below 20 Bond prices in the EuroZone & Japan were bid as equities stumbled & investors sought safety. Treasuries may suffer in the absence of data, drivers & liquidity today. Ripening longs that were patiently waiting for last week’s break higher may take the opportunity to grab profits & look for better levels to get back in. Despite the headwinds the daily trickle of subprime wreckage may aid prices while renewed upside momentum should bring out dip buyers. The yen was swung hard overnight over election concerns while the dollar gained ground against the both the euro & yen euro knocking back down through 1.38 & tracking a tight range. Gold slid some overnight as the buck did better, with spot now 683.08 (-0.32) while crude slipped on potentially increased output now 75.35 (-0.44). There are no official releases & no Fed-speak lined up. The euro is at 1.3821 & the yen is at 121.2600 while the 10-yr yield is at 4.948%

S&P futures vs fair value: +5.8. Nasdaq futures vs fair value: +4.3.
After selling off across the board Friday, stocks look poised to bounce back this morning. Per usual for a Monday morning, there is some M&A news of note. Transocean (RIG) and GlobalSantaFe (GSF) agreed to a merger of equals valued at nearly $53 bln while United Rentals (URI) agreed to be taken private for $6.6 bln, including the assumption of debt. S&P 500 futures recently touched their best levels of the morning, though, after Merck (MRK) topped Wall Street expectations and boosted its full-year forecasts. The Dow component is up 4% in pre-market action.

Oil options show $100/barrel price by 2008, sooner than even Goldman saw - Bloomberg.com
Bloomberg.com reports that “The $100-a-barrel oil that Goldman Sachs said would prevail by 2009 may be only a few months away. Jeffrey Currie, a London-based commodity analyst at the world’s biggest securities firm, says $95 crude is likely this year unless OPEC unexpectedly increases production, and declining inventories are raising the chances for $100 oil. CIBC World Markets predicts $100 a barrel as soon as next year… Higher prices will increase revenue for energy producers from Exxon Mobil (XOM) to PetroChina (PTR), while eroding profit at airlines and railroads, such as Union Pacific (UNP). Benchmark crude oil futures ended last week at $75.57 a barrel on the New York Mercantile Exchange, up 51% since mid-Jan and twice the level of early 2003. A record number of options have been sold that give the buyer the right to buy crude oil at $100. The contracts, covering 50 mln barrels, only pay off should oil go above the target price…”

Susquehanna discusses the possibility of a private equity buyout or major share repurchase at Build-A-Bear (BBW 24.06)… JMP Securities notes that on July 20, Fitch Ratings announced that it had downgraded two classes of mortgage securities issued by Luminent Mortgage (LUM 9.24) Trust 2006-3. They note the previously BB rated Class II B-4 was downgraded by a half-notch to B+ and the previously B rated Class II B-5 was downgraded to CCC. Fitch affirmed its investment grade ratings on LUM 2006-3, including the BBB rated Class II B-3. They say this development was not surprising as they previously highlighted 2006-3 in their July 6 Luminent monthly credit update as one of three securitizations that would require close monitoring for future credit losses… ThinkEquity is expecting strong 2Q07 results from Crocs (CROX 45.19) as they think sales should benefit from the introduction of new products, especially those featuring licensed brands, and from significant retail distribution growth, especially internationally. The firm says increased global manufacturing capacity, and an expanding lineup of Jibbitz, should help support high gross margins… JMP Securities says their lifestyle retailing top picks going into reporting season are Shutterfly (SFLY 24.45) and Sotheby’s (BID 50.85). They believe BID has the greatest earnings upside potential. They also expect potential earnings upside from 1- 800-FLOWERS (FLWS 9.75), Blue Nile (NILE 78.36), SFLY, and Steiner Leisure (STNR 46.79).

Filings: Perry Ellis (PERY) files for a $200 mln mixed shelf offering… Antares Pharma (AIS) files for a 13.8 mln share common stock offering by selling shareholders… Double-Take Software (DBTK) files for a 3.79 mln share common stock offering, 1 mln by the co and 2.79 mln by selling shareholders… Offerings: Global Industries (GLBL) announces a $325 mln private placement convertible notes offering.

Financial Times reports Merrill Lynch (MER), Lehman Brothers (LEH), Morgan Stanley (MS) and Citigroup (C) are among a group of investment banks developing an electronic trading platform for unregistered securities to compete with existing systems such as the one created by Goldman Sachs. The move comes after Goldman signed up Oaktree Capital, the hedge fund group, and Apollo Mgmt, the private equity firm, to sell unregistered shares through its GSTrUE private trading system. Apollo shares will also trade on a platform created by JPMorgan Chase (JPM). The system being developed by the group of banks is intended to ensure that Goldman, JPMorgan or others do not come to dominate the electronic mkt for unregistered shares, people close to the matter said. Such shares, known as 144A issues, are expected to become an increasingly popular way for alternative asset managers, such as hedge funds and private equity groups, to raise permanent capital without submitting to the public disclosure required when selling stock to the general public through an IPO.

WMT Wal-Mart announces it will drop the price on more than 16,000 products across all stores (48.06 )
Co announces it will drop the price on more than 16,000 products across all stores, with a focus on top brands for back-to-school needs. “We’ll continue to be more aggressive on pricing, and already are working with key suppliers on upcoming plans for fall and holiday.”

Upgrades: Citigroup upgrades Eastman Chemical (EMN 69.05) to Buy from Hold… RBC upgrades CoBiz (COBZ 17.03) to Outperform from Sector Perform. Downgrades: Citigroup downgrades EOG Resources (EOG 75.03) to Sell from Hold… Citigroup downgrades Quicksilver (KWK 44.8 to Sell from Hold… CIBC downgrades TranAlta Corp (TAC 30.41) to Sector Perform from Outperform based on valuation… CIBC downgrades The Great Atlantic & Pacific Tea Company (GAP 34.00) to Sector Perform from Outperform saying they believe A&P has made tremendous progress as a co, but the next few quarters will likely be highly transitional, as the co absorbs Pathmark, drives out costs and blends the best of both businesses. The firm says material results will not be apparent until mid-2008… Miscellaneous: J.P Morgan initiates BWAY Holding (BWY 14.75) with an Overweight… RBC initiates Thomson (TOC 43.01) with an Outperform… Friedman Billings raises their tgt on B/E Aerospace (BEAV 42.96) to $55 from $45 saying despite the 67% year-to-date price increase in BEAV, the underlying fundamentals of the global commercial aerospace sector leads the firm to conclude that there remains significant upside to the current cycle and BEAV remains extremely well positioned to benefit from that global growth….

WSJ reports hoping to slow the quickening pace of home foreclosures, about a half-dozen states are setting up funds to help homeowners with high-risk subprime mortgages refinance to more-affordable loans. The states — which include Maryland, Massachusetts, New Jersey, New York, Ohio and Pennsylvania — are expected to invest a total of more than $500 mln in the effort. That isn’t much, given the size of the problem, but state officials hope it will be enough to keep some vulnerable low- and moderate-income neighborhoods from sliding into decline. Some of the programs will be similar to existing govt-lending programs, in which the state extends mortgages to homeowners and then sells those home loans. The state then recycles the proceeds from the sales to make additional loans.

Upgrades: UBS upgrades Prudential (PUK 30.01) to Buy from Neutral… Lehman Bros. upgrades AFLAC (AFL 51.26) to Overweight from Underweight… Citigroup upgrades Amgen (AMGN 56.1 to Hold from Sell… Citigroup upgrades Anheuser-Busch (BUD 49.63) to Hold from Sell… Baird upgrades FPL Group (FPL 58.62) to Outperform from Neutral and maintains their $68 tgt, based on valuation… Baird upgrades Piedmont Natural Gas (PNY 24.66) to Outperform from Neutral, based on valuation… Baird upgrades Progress Energy (PGN 44.97) to Outperform from Neutral and maintains their $53 tgt, based on valuation… UBS upgrades NAVTEQ (NVT 48.3 to Buy from Neutral… Lehman Bros. upgrades HSBC (HBC 92.17) to Overweight from Equal-weight. Downgrades: Lehman Bros. resumes Huntington Bancshares (HBAN 20.1 with an Underweight… RBC downgrades Ventana Medical Systems (VMSI 83.69) to Sector Perform from Outperform… Lehman Bros. downgrades Associated Banc-Corp (ASBC 31.32) to Underweight from Equal-weight. Miscellaneous: UBS initiates Valero (VLO 73.13) with a Buy and sets a $95 tgt… UBS initiates Frontier Oil (FTO 46.24) with a Neutral… UBS initiates Sunoco (SUN 76.24) with a Neutral… UBS initiates Western Refining (WNR 58.09) with a Reduce…. UBS initiates Tesoro (TSO 54.3 with a Neutral and a $62 tgt… JP Morgan initiates CKE Restaurants (CKR 19.33) with a Neutral… BofA initiates BWAY Holding (BWY 14.75) with a Neutral.

Sensex ends up 167pts at 15,732 - The Business-Standard.com
The Business-Standard.com reports the Sensex began the day on a hesitant note, with the index slipping 87 points to 15,478 in opening trades owing to weak global cues. The index, however, shrugged off the losses and soon rebounded into the positive zone led by buying in Hindustan Unilever and capital goods stocks like BHEL and Larsen & Toubro. As buying spread to select other stocks the index continued to nudge higher as the day progressed. Aggressive buying towards the closing bell saw the index soar to a high of 15,766 -up 288 points from the day’s low. The Sensex finally ended with a smart gain of 167 points at 15,732.

Asian stocks fall from a record; Honda leads exporters lower - Bloomberg.com
Bloomberg.com reports Asian stocks fell, led by Japanese exporters, after the dollar declined to a six-week-low against the yen amid concern the U.S. economy is slowing. China’s CSI 300 Index rounded out its biggest two-day gain after the central bank raised interest rates for the third time this year, reducing the risk of excessive investment in factories and housing. The Nikkei 225 Stock Average lost 1.1%… Benchmarks also fell in Australia, Singapore and New Zealand, while those in the Philippines and Malaysia were little changed. Elsewhere in the region markets rose.

European stocks gain; Depfa, Friends Provident, Barclays climb - Bloomberg.com
Bloomberg.com reports European stocks rose after Hypo Real Estate Holding AG agreed to buy Depfa Bank Plc for 5.7 bln euros ($7.9 bln) and merger talks between two U.K. insurers revived speculation that takeovers in the region will continue. National benchmarks fell in 12 of the 17 western European markets that were open. The U.K.’s FTSE 100 gained 0.4%. France’s CAC 40 added 0.1% and Germany’s DAX fell 0.1%.

Miscellaneous: Montgomery resumes Zoran (ZRAN 20.02) with a Buy and sets a $25 tgt, as they believe that Zoran represents a significant growth opportunity in the consumer semiconductor market, as the co is capitalizing on penetration and share gains in several markets and expect the co to report an in-line quarter when it announces Q207 earnings after the market close today… Montgomery resumes Techwell (TWLL 13.71) with a Buy and sets an $18 tgt, as they believe the co is poised for growth in a number of value-added mixed-signal segments, including security surveillance, automotive, and consumer electronics and multimedia PCs… Montgomery resumes Sigma Designs (SIGM 31.37) with a Buy and sets a $39 tgt, as they believe Sigma will benefit from favorable trends in the emerging PMP and next-generation DVD markets, particularly in Blu-ray, which they expect to drive strong revenue and earnings growth over their investment horizon… Montgomery resumes Vimicro Int’l (VIMC 5.40) with a Buy and sets a $8 tgt, as they believe the co is transitioning through a tough period and look for a stronger 2H07 as they execute in the large and growing multimedia processor segment for the PC camera and mobile phone markets… JMP Securities initiates BFC Financial (BFF 3.3 with a Market Outperform and sets a $5 tgt, as they believe the co’s Florida-based assets are attractive long-term investments despite deeply depressed current market conditions.