>>> France government to announce 2015 budget on Oct 1st, to detail around €21B


France government to announce 2015 budget on Oct 1st, to detail around €21B in spending cuts - press 
- Reportedly the 2015 budget will be seen as a roadmap for another €29 billion in cuts President Hollande has vowed to make in 2016 and 2017.
- PM Valls won a confidence vote last week by only 25 votes, as the defection of 31 Socialist MPs caused the government to lose its absolute majority.

>>> US Early premarket gappers

Early premarket gappers
Gapping up: RNN +14.5%, CYBR +11.9%, RLGT +11.5%, MHR +10.1%, XGTI +7.8%, JBL +5.9%, VOD +2.6%, WOR +2.6%, RKUS +1.1%, MU +0.9%, FLEX +0.6%, SCHL +0.5%

Gapping down: FUL -5.1%, NBG -4%, GFI -3.4%, AU -2.7%, BHP -2.4%, STO -2.2%, ARCW -1.9%, GOLD -1.7%, RIO -1.3%, BP -1.2%, SDRL -1.2%, SLV -1.1%, GDX -0.9%, RDS.A -0.8%, RIG -0.8%, AUY -0.8%, IAG -0.7%, TOT -0.6%, OFIX -0.6%

>>> Airbus - comments

Airbus announced in the next 20 years passenger traffic will grow annually at 4.7% driving a need for around 31,400 new passenger and freighter aircraft

In the next 20 years (2014-2033), according to Airbus' Global Market Forecast, passenger traffic will grow annually at 4.7% driving a need for around 31,400 new passenger and freighter aircraft (100 seats and above) worth $4.6 trillion. The passenger and freighter fleet will increase from today's 18,500 aircraft to 37,500 by 2033, an increase of nearly 19,000 aircraft. Some 12,400 older less fuel efficient passenger and freighter aircraft will be retired.
The economic growth rates in emerging markets such as Asia, Latin America, Africa and the Middle East, are outstripping more economically developed regions.
"We see especially strong growth in widebody twins such as our A350 XWB and A330neo. Demand exceeds supply for these new generation aircraft, especially in the 2017 to 2022 time period and beyond, so naturally we are studying production increases on both models."

(Makor) Relative Value: Italian luxury long/short trades

Trade action flash – Luxury merry-go-round continues: Italian fashion:   Long Tod’s / Short LVMH; Long Prada / Short Kering, Ferragamo

September 25, 2014

MRPT© mean reverting pair trading strategies

TOD IM: Eur 81.85; SFER IM: Eur22.32; BC IM: Eur 16.94; MONC IM: Eur 11.60; 1913 HK: HK$48.20; KER FP: Eur 160.50

The European luxury sector has had a very difficult time performance wise in the last 1-2 years with most stocks having peaked relative to the Eurostoxx in 2012-2013. Not one stock is in an uptrend, whether in relative or absolute terms.  This is for a sector where analysts were universally bullish.  We had been bearish on this sector on valuation grounds for quite some time, and with some of the strongest stocks clearly topping-out and in clear relative downtrends (Richemont, LVMH, Kering), our view is becoming well vindicated.  In this environment, we regularly come-up with long/short ideas in what is generally an extremely mean reverting sector, playing on the over/under performance of companies against each others, mainly based on stock performances post earnings announcements.  It seems that in the sector, earning estimates go one quarter to the next from being over estimated to under estimated.  This has been a very profitable merry-go-round for the MRPT strategies.  As of now, two stocks appear conspicuously undervalued in the Italian fashion sector: TOD’s and Prada.  On the other hand, Ferragamo, Kering (Gucci), and especially Bruno Cucinelli appear overvalued.  Cucinelli has already collapsed from its recent highs and we would wait for the stock to hopefully rally to re-recommend shorting the stock.  Tod’s/LVMH and Prada/Kering, Prada/Ferragamo are three very mean reverting pair trades, justified by relative value and the recent price/value dislocation.  Moreover, as we have argued before, we believe that in time, Tod’s will be acquired by LVMH given the close relationship between Diego Della Valle and Bernard Arnault.  Mr. Della Valle is on LVMH’s board, while LVMH owns over 2% of Tod’s.  As such, we are always buyers of Tod’s on significant underperformance within the sector, which is the case right now. 

FULL REPORT ATTACHED

(BN) Trujillo Is Said to Seek $9.6 Billion for Telecom Italia Bid

Trujillo Is Said to Seek $9.6 Billion for Telecom Italia Bid
2014-09-25 09:39:38.104 GMT


By Daniele Lepido and Jeffrey McCracken
Sept. 25 (Bloomberg) -- Former Telstra Corp. Chief
Executive Officer Sol Trujillo is seeking to raise as much as
7.5 billion euros ($9.6 billion) to bid for a stake in Telecom
Italia SpA, according to people familiar with the matter.
Trujillo has discussed the plan with New York-based
financial advisers, and sovereign-wealth funds in Qatar and Abu
Dhabi are among investors that have expressed interest, said the
people, asking not to be named because the proposal is private.
Trujillo hasn’t approached Telecom Italia’s board or executives
because the plan isn’t fully funded and he wants to secure
support from Italy’s government before making a move, they said.
The proposal would foresee 62-year-old Trujillo, who
previously led US West Communications, France’s Orange SA and
Telstra of Australia, taking over as chief executive officer and
bringing in managers to Milan-based Telecom Italia, according to
confidential documents seen by Bloomberg News detailing the
project, dubbed “Adriano.”
An investment of $9.6 billion would be equivalent to almost
half of Telecom Italia’s market value. Telecom Italia had net
debt of $35 billion as of June 30. While financial details of
the plan are still being worked on, Trujillo’s investment could
take the form of a proposed capital increase or buying Telecom
Italia shares on the market, the people said.

Project ‘Adriano’

Trujillo views the proposed investment as a way to benefit
from a Telecom Italia turnaround over time, rather than a short-
term financial gain, the people said.
Telefonica SA and three Italian financial investors --
Mediobanca SA, Intesa Sanpaolo SpA and Assicurazioni Generali
SpA -- are currently winding down the holding company that owns
22.4 percent of Telecom Italia.
Trujillo declined to comment when reached by Bloomberg
News. Representatives of sovereign-wealth funds in Abu Dhabi and
Qatar declined to comment or didn’t immediately respond to
requests for comment.
A spokesman for Telecom Italia declined to comment.
Senior Italian officials are aware of Project “Adriano”
and the government is open to the idea of a foreign investor in
Telecom Italia, the people said. A government representative
couldn’t immediately be reached for comment.
While Italy’s government doesn’t own a stake in Telecom
Italia, state support is seen as crucial because it could veto
deals involving industries it considers to be of national
interest.

GVT Bid

Acquiring a stake in Italy’s largest phone company would
follow the company’s failed bid for Brazilian broadband provider
GVT. Under Trujillo’s plan, which calls for expanding an ultra-
high-speed fiber network in Italy, Telecom Italia’s revenue
would reach 26 billion euros by 2018, with earnings before
interest, taxes, depreciation and amortization rising to about
11 billion euros and net debt falling to less than 16 billion
euros, according to the documents.
Trujillo’s attempt to return to telecommunications wouldn’t
be his first after running phone companies on three continents.
In 2012, he engineered a takeover bid for U.S. mobile carrier T-
Mobile USA, but failed to garner enough interest from private-
equity firms, people familiar with the matter said at the time.
Trujillo got his start at AT&T Corp., then known as Ma
Bell, before its 1984 breakup. He eventually became CEO of US
West, one of the seven Bell operating companies, and later ran
French mobile-phone operator Orange for a year.
After Orange’s takeover by France Telecom SA, Trujillo in
2005 became the CEO of Melbourne-based Telstra, from which he
resigned in 2009 after a tenure marked by clashes with the
Australian government over telecommunications regulation.
Representatives of Trujillo’s group and Italian government
officials have held confidential meetings since May over Project
“Adriano,” the name of a Roman emperor, said one of the
people.

--With assistance from Robert Tuttle in Doha, Ville Heiskanen in
Helsinki and Matthew Martin in Dubai.

To contact the reporters on this story:
Daniele Lepido in Milan at +39-02-8064-4266 or
dlepido1@bloomberg.net;
Jeffrey McCracken in New York at +1-212-617-8517 or
jmccracken3@bloomberg.net
To contact the editors responsible for this story:
Kenneth Wong at +49-30-70010-6215 or
kwong11@bloomberg.net
Kenneth Wong, Jacqueline Simmons

(BFW) *SOL TRUJILLO SAID TO SEEK $9.6 BILLION FOR TELECOM ITALIA BID

BN 09/25 09:40 *TELECOM ITALIA SHARES JUMP AFTER TRUJILLO BID REPORT
BN 09/25 09:39 *TRUJILLO SAID TO SEEK ITALY GOVT BACKING FOR PROJECT `ADRIANO'
BN 09/25 09:39 *TRUJILLO HASN'T APPROACHED TELECOM ITALIA BOARD, PEOPLE SAY
BN 09/25 09:39 *QATAR, ABU DHABI FUNDS SAID TO BE INTERESTED IN `ADRIANO' PLAN
BN 09/25 09:39 *TRUJILLO SAID TO DISCUSS `ADRIANO' PLAN WITH NEW YORK ADVISERS
*SOL TRUJILLO SAID TO SEEK $9.6 BILLION FOR TELECOM ITALIA BID
2014-09-25 09:39:27.685 GMT

--KENNETH WONG

-0- Sep/25/2014 09:39 GMT

FT : Sports Direct’s Mike Ashley takes bet on Tesco with options deal

Sports Direct’s Mike Ashley takes bet on Tesco with options deal

Mike Ashley’s Sports Direct has made a dramatic intervention in the turmoil surrounding Tesco, taking a bet that shares in Britain’s biggest retailer will rally.
The sportswear chain controlled by the billionaire owner of Newcastle United football club said on Thursday that it had agreed a deal with Goldman Sachs that will see it benefit from any rise in Tesco’s share price from its current decade lows.

The arrangement – known as a put option – gives Goldman the right to sell 23m Tesco shares to Sports Direct if they fall below a certain undisclosed exercise price, or receive a payment. If the shares are trading above the agreed price on the contract’s expiry, Sports Direct collects the difference; if they are below, the retailer will have to pay out the difference.
Sports Direct said its maximum exposure under the deal was £43m.
People close to the situation said investing in this way, rather than simply buying the shares, means Sports Direct obtains access to a bigger stake, and ties up a smaller proportion of its balance sheet until the option matures.
They said the arrangement reflected Sports Direct’s growing relationship with Tesco, and its belief in the supermarket group’s long-term future.
Sports Direct has already taken space in Tesco stores in central Europe and has is looking at similar arrangements in Asia. The FT reported last year that Sports Direct was in talks with Tesco to take surplus space in some of its big UK stores.
Earlier this this year, Sports Direct entered into a similar arrangement with Debenhams that could result in it taking an almost 7 per cent stake in the department store chain in 2015, if shares in Debenhams fall.

Sports Direct has since begun a trial selling its goods in two Debenhams stores.
The UK Listing Authority forced Sports Direct’s statement on Thursday. Goldman is the counterparty to both the Debenhams and the Tesco deals, and therefore Sports Direct had a listing obligation to disclose the arrangement over the Tesco shares.
Tesco said on Monday that in a profit warning less than a month ago, it had overstated expected first-half profit by £250m. It asked four senior managers, including UK managing director Chris Bush, to step aside during an investigation by Deloitte and Freshfields.