HALISTER1: U.S. ECO PREVIEW: Fed Beige Book Due in 5 Minutes

U.S. ECO PREVIEW: Fed Beige Book Due in 5 Minutes

(Bloomberg) -- Prior Beige Book, which was issued Oct. 19, said job market was tight with modest employment and wage growth.
  • Beige Book based on anecdotal evidence from Fed’s 12 district banks; will help form basis for deliberations when Fed policy panel next meets Dec. 13-14
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283

HALISTER: Gestamp Said Close to Picking JPMorgan, Morgan Stanley for IPO

Gestamp Said Close to Picking JPMorgan, Morgan Stanley for IPO

(Bloomberg) -- UBS also a frontrunner to be a global coordinator for the sale, which could value company at over EU4B, according to people familiar with the matter.
  • Deutsche Bank, Societe Generale and Santander expected to be selected as bookrunners for the IPO, people say
  • Sale of shares in Spain could raise about EU1.5b
  • Representatives for JPMorgan, UBS, Morgan Stanley, Deutsche Bank and SocGen declined to comment
  • A spokesman for Gestamp didn’t have an immediate comment. A representative for Santander didn’t immediately respond to a request for comment
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
MS US (Morgan Stanley)
495294Z SM (Gestamp Automocion SA)
SAN SM (Banco Santander SA)
JPM US (JPMorgan Chase & Co)
GLE FP (Societe Generale SA)

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UUID: 7947283

HALISTER1: UST 10Y Yield Could Rise to 3% on MBS Convexity Flows, TD Says

UST 10Y Yield Could Rise to 3% on MBS Convexity Flows, TD Says

(Bloomberg) -- If fair value argues for 10Y yield to reach 2.75%, it may “very well overshoot” to 3% as convexity hedging tends to exacerbate selloffs, TD strategists Priya Misra, Gennadiy Goldberg and Cheng Chen say in note.
  • A “significant move” in rates in one direction over a short period of time “would tend to create greater hedging needs”
  • Any convexity paying may push rates higher, led by 5-7yr sector
  • Every 10bp rise in interest rates may create est. $10b in 10yr equivalents of MBS convexity paying
    • Post-election has seen an est. $46b in 10yr equivalents in MBS convexity paying needs amid 50bp rise in yields
  • Estimate based on assumption of hedging by most originator pipelines, 50% of MSR portfolios and 35% of MBS holders
  • Any further selloff in rates, which would spark “more convexity paying needs,” may be accompanied by more talk of deficit increases, so swap spreads could find it “more difficult to widen”
    • Spreads tend to widen when there are convexity flows
  • Recommend 5s30s spread curve flatteners since convexity paying may occur in the belly of the curve and deficit impact will be felt “more in the long end”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Cheng Cheng (Pacific Crest Securities LLC)
Gennadiy Goldberg (TD Securities USA LLC)
Priya Misra (TD Securities USA LLC)

Topics
To Be Announced Securities

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UUID: 7947283

HALISTER1: PREVIEW U.S. NOV. AUTO SALES: ATPs Robust Despite Black Friday

PREVIEW U.S. NOV. AUTO SALES: ATPs Robust Despite Black Friday

(Bloomberg) -- U.S. Nov. light vehicle SAAR est. 17.7m vs 18.2m y/y. Most automakers report tomorrow pre-mkt.
  • See Bloomberg estimate chart
    • GM supply chain; Ford supply chain; FCAU supply chain
    • Bloomberg Intelligence primers for GM, Ford, Fiat Chrysler
      • BI credit primers for GM, Ford, Fiat Chrysler
  • 3Q results for GM, Ford, Fiat Chrysler
ANALYST COMMENTARY
  • Goldman Sachs (David Tamberrino): Sees Black Friday sales events carrying on until month end to sustain a high pace to retail SAAR, driving only a slight y/y decline
    • Sees incentives to be up y/y, beyond +$490/vehicle seen through mid-month
  • CLSA (Emmanuel Rosner): Incentives rose sequentially in Nov., likely due to heavily promotional Black Friday, but the industry continued to generate robust average transaction prices amid high truck mix
    • Continues to worry about cyclical risk of new car price declines and volume downturn at some point over next few years, as used car prices come under pressure and interest rates rise
  • JPMorgan (Ryan Brinkman): Sees ATPs continuing to climb despite higher incentives, given a richer segment mix
  • Barclays (Brian Johnson): Says baseline SAAR expectation an “eroding plateau;” volume erosion outlook based on observation that SAAR quality has gotten weaker with more incentives, more fleet, and “at some point OEMs will choose quality over volume”
ESTIMATES NOTE: Nov. had 25 selling days, two more than in 2015; estimates below are not adjusted for selling day differential
  • Big 3 ests.:
    • GM: +9.1%
    • Ford: +0.5%
    • Fiat Chrysler: -9.0%
  • Other ests.:
    • Toyota: +3.4%
    • Honda: +8.4%
    • Nissan: +4.6%
    • Hyundai/Kia: +6.8%
    • Volkswagen: +8.8%
RELATED:
  • Earlier, GM’s Ready to Lose $9,000 a Pop and Chase the Electric Car Boom
  • Nov. 29, Nov. New Auto Sales Rose 3.6% Y/y, TrueCar Estimates
  • Nov. 15, Full Fleet of Driverless Cars Remains Decades Away: NHTSA Chief
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
005380 KS (Hyundai Motor Co)
F US (Ford Motor Co)
FCAU US (Fiat Chrysler Automobiles NV)
GM US (General Motors Co)
7267 JP (Honda Motor Co Ltd)

People
Brian Johnson (Barclays PLC)
David Tamberrino (Goldman Sachs & Co)
Emmanuel Rosner (CLSA Ltd)
Ryan Brinkman (JPMorgan Chase & Co)
Ryan Sees (JPMorgan Chase Bank NA)

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UUID: 7947283

HALISTER1: Global Automotive Industry Study: As the Automotive World Turns

Global Automotive Industry Study: As the Automotive World Turns

Alert: HALISTER1
Source: DBR (Dominion Bond Rating Service)

People
Kam Hon (DBRS Ltd)
Robert Streda (DBRS Ltd)

Topics
Fixed Income Research
Industry & Sector Research
Reports
Credit Analysis Research
Credit Research

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UUID: 7947283