04Feb2019 Pre-Market Commentary: Wall Street To Open Lower, DOW Futures Flat, World Stocks Muted, Dollar Firms On Fading US Job’s Bounce

Here is the current market situation from CNN Money

European markets are mixed. The FTSE 100 is higher by 0.20%, while the CAC 40 is leading the DAX lower. They are down 0.62% and 0.26% respectively.

Starboard chief Smith steps in at Papa John’s

Hedge fund Starboard Value LP has picked up a $200 million stake in Papa John’s International Inc and its Chief Executive Officer Jeffrey Smith will take over as chairman of the No. 3 pizza chain in the United States, the company said on Monday.

Janus Henderson says bond manager Bill Gross to retire

Janus Henderson said on Monday veteran bond manager Bill Gross, who joined the firm in late 2014, will retire and has decided to focus on managing his personal assets and charitable foundation.

Merger partners need to look closer to home to win over EU regulators

As Siemens and Alstom face EU rejection of their plan to create a European rail champion to fight foreign rivals, the lesson for other companies is to play up the domestic benefits of their merger deals and be prepared to sell assets.

Euronext may sweeten offer for Oslo Bors as Nasdaq makes rival bid

Stock markets operator Euronext said on Monday it may increase its offer for Oslo Bors VPS after Nasdaq made a higher rival bid.

DSV’s $4 billion offer for Panalpina gets shareholder cold shoulder

Danish logistics company DSV’s $4-billion-plus bid for Panalpina hit a roadblock on Monday when the Swiss freight forwarder’s top shareholder rejected the offer, saying Panalpina should stick to its own “consolidator strategy”.

DNB maintains support for Nasdaq’s bid for Oslo Bors VPS

Norwegian bank DNB, the largest owner of Oslo Bors VPS, will continue to support Nasdaq’s bid for the stock market operator even if Euronext were to raise its rival offer, a spokesman said on Monday.

World stocks muted, dollar firms on fading U.S. job’s bounce

World stocks clung to near two-month highs on Monday, with the dollar strengthening and oil prices racing to a 2019 peak, though some European bourses struggled as momentum provided by U.S. employment and manufacturing data started to fade.

From cars to quakes: Italy’s banks take on insurance

An aging population and struggling state finances could turn into an unlikely boon for Italy’s banks, which have turned to a growing market for insurance to brighten their prospects.

Toyota reports fall in U.S. auto sales in January

(This Feb 1 story corrects headline to say only Toyota’s sales fell in January, not Fiat’s)

The Coming Global Financial Crisis: Debt Exhaustion

Authored by Charles Hugh Smith via OfTwoMinds blog,

The global economy is way past the point of maximum debt saturation, and so the next stop is debt exhaustion.

Just as generals fight the last war, central banks always fight the last financial crisis. The Global Financial Crisis (GFC) of 2008-09 was primarily one of liquidity as markets froze up as a result of the collapse of the highly leveraged subprime mortgage sector that had commoditized fraud (hat tip to Manoj S.) via liar loans and designed-to-implode mortgage backed securities.

The central bank “solution” to institutionalized, commoditized fraud was to lower interest rates to zero and enable tens of trillions in new debt. As a result, total debt in the U.S. has soared to $70 trillion, roughly 3.5 times GDP, and global debt has skyrocketed from $84 trillion to $250 trillion. Debt in China has blasted from $7 trillion 2008 to $40 trillion in 2018.

A funny thing happens when you depend on borrowing from the future (d …

Bill Gross Is Retiring

Perhaps it was the stress of stuffing his ex-wife’s air vents with dead fish, or simply the consistent inability to generate any alpha in his Janus Unconstrained Fund ever since departing Pimco in Oct 2014 in a scandal that rocked the asset management industry and led to a infamous schism between Gross and his former right hand man, Mohamed El-Erian, but whatever the reason, moments ago Janus announced that Bill Gross, who will be 75 in April, is finally retiring.

Gross had run the Janus Henderson Global Unconstrained Bond Fund since late 2014, however his annualized returns of less than 1% at Janus “failed to live up to his stellar long-term record from the Pimco era” as Bloomberg diplomatically put it.

And speaking of Bill’s reasons to retire, Bloomberg is quick to point out that Gross’ Janus Henderson Global Unconstrained Bond Fund had another $60 million of redemptions in December, dropping assets to under $1 billion, and marking the 10th consecutive month of outflows.

Worse, in 2018, the unconstrained fund lost almost 4%, sparking a waterfall of investor redemptions that drove assets below $1 billion, …

Rabobank: “In My Mind All I See Is The Little Dog In A Hat Drinking Coffee In A Burning Building”

Submitted by Michael Every of Rabobank

Queen Eliza-Brexit

Market comments: You know things are going well on Brexit when the media suggest that the government is preparing to evacuate Queen Elizabeth and the Royals in the case of No Deal happening at the end of March. I’m certain that whatever secret location is in mind to transport the Windsor family to will be incredibly safe, unless Philip is driving. However, it does bear considering that the Royals stayed in London for the entirety of WW2, including the Blitz. Is a Hard Brexit really on a larger scale of potential danger than that?

One also wonders how that kind of news is going to be taken by one of the major currencies with the Queen on it – Sterling. Likewise that Japan’s Nissan has just announced that it will be cancelling plans to build a new model in Sunderland, though this isn’t because anywhere in Europe is going to win the bid: that work is heading back to Japan, helping PM Abe to Make Japan Great Again.

That’s the backdrop for PM Theresa May to head boldly off to Brussels this week and explain to the EU that the Withdrawal Agreement they are already ratifying needs to be reopened and changed to suit the Tory Party. It’s also the backdrop to the Guardian reporting that rumours of a snap election on 6 June are being dismissed, with the Home Secretary saying: “The last thing we want is an election, the people will never forgive us.” That said, the latest opinion polls show the Tories pulling away from Labour as Leave voters drift over to them, while Remain voters switch to the Lib-Dems. So don’t necessarily rule an election out? Presumably this would be after an extension to Article 50, of course. Otherwise the only upside is that there are a wider range of nice place to hide the Queen in the summer.

Perhaps not France though, given we got another Yellow Vest crowd on Saturday to protest police violence, which was then …

Iconic Value Investing Hedge Fund To Take Over Papa John’s

Just days after Papa John’s revealed that it had failed to find a buyer for the struggling pizza delivery brand following a year of embarrassing racially-tinged scandals that ultimately led to its founder and chairman, John Schnatter, stepping down, the Wall Street Journal reported Monday morning that legendary activist hedge fund Starboard Value has invested $200 million. As a result, Starboard CEO Jeffrey Smith will become the company’s new chairman, a role which was swiftly confirmed by the company.

When the company’s board voted to accept the Starboard deal Sunday night, Schnatter was reportedly the only member to vote against it. Starboard will buy the stake through the purchase of new convertible preferred stock, which equates to a stake of approximately 11% to 15% of Papa John’s outstanding common stock on an as-converted basis.

Starboard will also have the option of investing another $50 million before the end of March, while the company also gives qualified franchisees the option to buy $10 million in stock under similar terms. Smith reportedly hasn’t spoken with Schnatter, who still owns 31% of the company, but says he would like to work with him.

London Markets: London markets edge up thanks to oil majors, but miners weigh

London markets were up on Monday, after heavyweight oil company’s Royal Dutch Shell and BP were lifted by a stronger oil price

The Moneyist: My uncle’s caregiver raided his Social Security to pay for her car payments and cell phone

‘His shoes were held together by insulating tape — he said he didn’t have any money.’

Cryptos: Bitcoin downside test of $3,000 is in play, says analyst

Bitcoin prices were mostly unchanged on Monday, extending the subdued period for major digital currencies and keeping $3,000 in sight.