>>> Asian Update

Asian Market Update: Uncertainty over Japan sales tax hike persists going into GDP release

***Economic Data*** - (CN) China Ministry of Finance (MoF): China Oct Fiscal Rev CNY1.33T, +9.4% y/y, Fiscal Spending CNY991B, -5.7% y/y - (NZ) NEW ZEALAND OCT NON RESIDENT BOND HOLDINGS: 64.8% V 65.9% PRIOR - (KR) South Korea Sept Conference Board Leading Economic Index (LEI) 122.1, +0.8% m/m - (US) NPD: Oct US video game sales $790.7M v $1.1B m/m, v $791.3M y/y - (PE) Peru Central Bank leaves Reference Rate unchanged at 3.50%, as expected

***Index Snapshot (as of 02:30 GMT)*** - Nikkei225 -0.4%, S&P/ASX +0.2%, Kospi -0.7%, Shanghai Composite -0.5%, Hang Seng -0.1%, Dec S&P500 flat at 2,034

***Commodities/Fixed Income*** - Dec gold -0.3% at $1,158, Dec crude oil +0.1% at $74.29/brl, Dec copper +0.3% at $3.00 - GLD: SPDR Gold Trust ETF daily holdings fall 2.1 tonnes to 720.6 tonnes; Lowest level since Sept 2008 - SLV: Shares Silver Trust ETF daily holdings rise to 10,789 tonnes from 10,727 tonnes prior - (CN) China NDRC: to increase natural gas imports and inventory during winter - financial press - (JP) BOJ offers to buy ¥550B in 1-3yr JGB, ¥550B in 3-5yr JGB, ¥240B in 10-25yr JGB, ¥160B in JGB over 25 years; Offers ¥1.25T in T-bills - (AU) Australia MoF (AOFM) sells A$500M in 2.75% bonds due 2019; Avg yield: 2.8270%; Bid-to-cover: 5.38x - (US) Weekly Fed Balance Sheet Total Assets for week ending Nov 12th: $4.49T v $4.49T prior; M1 y/y change: 9.8% (7-month low) v 9.9% w/w; M2 y/y change: 6.0% (7-month low) v 6.1% w/w

***Market Focal Points/Key Themes/FX*** - All week long, trading in Japanese Yen was heavily influenced by commentary related to the expected PM Abe decision on the next round of sales tax and the possibility of snap elections. Market bias should tilt much more heavily in one direction or another after the release of Q3 preliminary GDP this coming Sunday evening - a disappointing figure should seal the delay, while an upside surprise will support the case for a hike on schedule. Today's Nikkei report indicated Abe is close to make a decision, with primary factors being the GDP report and subsequent meetings with economic advisors - the last of which should be done by Tuesday. Today, USD/JPY retested 116 handle for a 7-year high after fiscally conservative Fin Min Aso acknowledged "stalling" private consumption in spite of improvement in employment and investment. Econ Min Amari also indicating a delay remains possible, warning that economic stimulus steps may be needed if the hike is pushed back. Adviser Honda reiterated his support for a delay, but also warned investors could question govt commitment to lower debt.

- China online media giant Sina was down nearly 4% afterhours following a miss on the bottom line and softer than expected top-line guidance for next quarter. In contrast, Weibo fared much better on strong sales growth and robust increase in active user metrics. Broader equity indices in the Far East were hampered by disappointing China economic data released overnight, showing multi-year low rates of growth in retail sales/fixed investment as well as below estimate print in industrial output. Nomura economists cut 2014 GDP projections to 7.3% from 7.6% after the report, however China premier Li remained optimistic of being able to achieve the 7.5% official target.

***Equities*** US markets: - GERN: Announces Global Strategic Collaboration with Janssen to Develop and Commercialize Imetelstat; To receive $35M initial payment; +38.1% afterhours - BONA: Reports Q3 $0.09 v $0.05 y/y, R$100M v $35M y/y; +11.2% afterhours - WB: Reports Q3 -$0.03 v -$0.04 y/y, R$84.1M v $53.4M y/y (no ests); +3.7% afterhours - BHI: Confirms prelimary talks with Halliburton +2.8% afterhours - JWN: Reports Q3 $0.73 v $0.71e, R$3.14B v $3.11Be; +2.8% afterhours - CNO: Increases repurchase program by $400M (9% of market cap); +0.2% afterhours

- AMAT: Reports Q4 $0.27 v $0.27e, R$2.26B v $2.26Be; -1.4% afterhours - SINA: Reports Q3 $0.19 v $0.20e, R$198.6M v $198Me; -3.8% afterhours - CVTI: Guides Q4 EPS materially higher than year ago Q4; -4.2% afterhours - YOKU: Reports Q3 -$0.08 (adj) v -$0.14e, R$180.3M v $190Me; -5.9% afterhours - DGLY: Reports Q3 -$0.23 v -$0.21 y/y, R$4.7M v $4.5M y/y; -14.5% afterhours

Notable movers by sector: - Consumer Discretionary: Nomura Research Institute 4307.JP +1.4% (analyst action) - Financials: China Galaxy Securities 6881.HK -2.2% (Oct Op results) - Energy: Caltex Australia Limited CTX.AU -1.9% (analyst action) - Industrials: Takata Corp 7312.JP -0.6% (Transport Min comments on air bags investigation) - Technology: NCsoft Corp 036570.KR -2.7% (Q3 results) - Healthcare: Shandong Weigao Group Medical Polymer 1066.HK +6.1% (analyst action) - Telecom: Ten Network TEN.AU +0.7% (Rupert Murdoch confirms Foxtel's interest in Company)

>>> US After Hours

After Hours Summary: CRRS +29.2%, TUBE +11.6%, JWN +2.5%, YOD -14.5%, YOKU -6.1% following earnings/guidance

After Hours Gainers: Companies trading higher in after hours in reaction to earnings: CRRS +29.2%, TUBE +11.6%, BONA +11.2%, SVM +7.8%, FRSH +7.3%, WB +3.7%, AAV +3.5%, REED +3%, IDCC +2.7%, INVE +2.65%, JWN +2.5%, ESE +2%, KIN +1.5%, LFL +1.3%, SBS +0.4%

Companies trading higher in after hours in reaction to news: GERN +34.2% (announced that it has entered into an exclusive worldwide license and collaboration agreement with Janssen Biotech; will receive an initial payment of $35 mln), P +4.0% (to conduct conference call on November 18 to discuss the current Web IV proceeding before the Copyright Royalty Board), BHI +2.6% (confirmed preliminary discussions with Haliburton (HAL); HAL shares up 1.3%), DOW +1.0% (responded to Third Point statement: 'The company fundamentally disagrees with the position outlined by Third Point')

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: YOD -14.5%, RCON -10.4%, DGLY -9.2%, FENG -8.4%, RTRX -7.9%, BIOC -7.5%, YOKU -6.1%, SYMX -6.1%, VJET -6.1%, MNDL -5.5%, TSE -5.4%, WYY -5.1%, CVTI -4.2%, SINA -3.4%, AMAT -2%, CCS -1.9%, XON -1.1%, CTLT -0.5%

Companies trading lower in after hours in reaction to news: BAXS -31.4% (announced the termination of its Nasdaq listing), PBYI -6.9% (announced top line results from PB272 (neratinib) Phase 2 trial in HER2 positive metastatic breast cancer; Trial did not achieve primary endpoint of progression free survival), OCN -6.7% (co and Wells Fargo (WFC) agreed to cancel the sale of mortgage servicing rights), MNDL -5.5% (to acquire Appia, an independent mobile user acquisition network; co also reported earnings), ENLK -4.8% (announced the commencement of an underwritten public offering of 10.5 mln common units representing limited partner interests of the Partnership), CVTI -4.2% (announced that it has commenced a public offering of 2.2 mln shares of its Class A common stock; co also reported earnings), CQH -3.8% (announced public offering of 10 mln common shares)

>>> US Close Dow +0,23% S&P +0,04% Nasdaq +0,11% Russell -0,92%

Closing Market Summary: Stocks Eke Out Slim Gains Despite Weakness in Energy

The major averages settled near the middle of their ranges after sliding from early highs. The S&P 500 gained a point while the Russell 2000 (-0.9%) underperformed throughout the trading day.

Equity indices started the day on an upbeat note with the S&P 500 rising into fresh record territory with help from three sectors that represent roughly 40% of the market. To that point, consumer discretionary (+0.6%), consumer staples (+0.5%), and technology (+0.6%) rallied at the start and displayed relative strength throughout the day.

However, the strength in the influential trio was not enough to keep the benchmark index near its high with the energy sector (-1.4%) acting as a big drag. The sector, and crude oil, spent the day in a steady retreat after China's Industrial Production growth slowed to 7.7% (expected 8.0%) and the ECB's Survey of Professional Forecasters lowered the region's 2014 harmonized inflation outlook to 0.5% from 0.7% and cut the 2015 forecast to 1.0% from 1.2%. Crude plunged 3.9% at $74.17/bbl after a daylong retreat that was capped with a $1.33 straight-line dive from the $75.50 level.

As for the energy sector, the group cut its loss in half in reaction to afternoon reports indicating Halliburton (HAL 53.79, +0.56) is in talks to buy Baker Hughes (BHI 58.75, +7.77). Baker Hughes surged 15.2%. The weakness in energy did not stop the Dow Jones Industrial Average (+0.2%) from registering a modest gain since the index contains just two members of the energy sector. Chevron (CVX 116.45, -1.20) and ExxonMobil (XOM 94.66, -0.72) lost 1.0% and 0.8%, respectively. Outside of the two names, Caterpillar (CAT 101.11, -1.88), which relies heavily on China, was the only other laggard of note within the Dow. Shares of CAT ended lower by 1.9%.

On the upside, the consumer discretionary sector received support from media names after the House Energy and Commerce Committee told the Federal Communications Commission that reclassifying the internet as a utility is outside of its authority. Time Warner Cable (TWC 141.05, +4.57) climbed 3.4% to underpin the sector after Comcast (CMCSA 54.30, +0.70) said its merger with TWC remains on track.

Meanwhile, the other consumer sector—staples—spent the day in the green thanks to a better than expected report from Wal-Mart (WMT 82.94, +3.74). The bottom-line beat overshadowed the company's guidance for flat comparable store sales in Q4.

Elsewhere, the technology sector advanced amid gains in top-weighted components. Apple (AAPL 112.82, +1.57), Intel (INTC 33.68, +0.30), and Microsoft (MSFT 49.61, +0.83) added between 0.9% and 1.7% while Cisco Systems (CSCO 25.68, +0.57) jumped 2.3% after beating earnings estimates on light guidance.

Treasuries climbed throughout the day, but backed away from highs into the close. The 10-yr yield fell three basis points to 2.35%.  

Participation was a bit below long-term average as 690 million shares changed hands at the NYSE floor.

Economic data included Initial Claims, JOLTs, and the Treasury Budget:
  • The initial claims level increased to 290,000 from an unrevised 278,000 while the consensus expected an increase to 280,000 
    • The Department of Labor said there were no special factors influencing the report 
  • The Job Openings and Labor Turnover Survey for September indicated job opening decreased to 4.735 million from 4.853 million 
  • The Treasury Budget for October showed a deficit of $121.70 billion, which followed the prior deficit of $90.60 billion while the consensus expected the deficit to hit $122.00 billion 
Tomorrow, the Retail Sales report for October (consensus 0.3%) and October Import/Export Prices will be released at 8:30 ET while the preliminary reading of the November Michigan Sentiment Index (consensus 87.5) and the September Business Inventories report (expected 0.2%) will cross the wires at 9:55 ET and 10:00 ET, respectively.
  • Nasdaq Composite +12.1% YTD 
  • S&P 500 +10.3% YTD 
  • Dow Jones Industrial Average +6.5% YTD 
  • Russell 2000 +1.1% YTD

WSJ : Halliburton in Talks to Buy Baker Hughes

Halliburton Co. is in talks to buy Baker Hughes Inc., according to people familiar with the matter.

Talks between the two oil-field-services companies are moving quickly, and they could reach an agreement soon, said two of the people.

The price being discussed couldn't be learned, but a deal for Baker Hughes would likely come at a premium to the Houston company’s market capitalization, which was $21.6 billion as of Thursday afternoon. Halliburton had a market value of $45.2 billion.

A deal of this size would be one of the largest energy deals in recent years and comes at a time when the industry is grappling with a sharp decline in oil prices.

Baker Hughes was formed in 1987 when Baker International and Hughes Tools Co. came together. The company has more than 60,000 employees, according to its website.

Oil-field services companies help energy producers find and extract hydrocarbons. They have had to deal with a glut of natural-gas supply in recent years that caused oil prices to plunge and pushed energy companies to shift operations to oil-rich shale, which is harder to tap.

WSJ : Hedge Fund Lonestar Capital to Shut Down

Hedge Fund Lonestar Capital to Shut Down
Founder Jerome Simon to Manage Own Family Office

The San Francisco hedge-fund firm Lonestar Capital Management LLC will shut down in one of the larger hedge-fund liquidations this year, according to people familiar with the firm.

Based in San Francisco, Lonestar manages about $1 billion, including funds from deep-pocketed investors like David Einhorn ’s Greenlight Capital Inc., the people said.

In a letter to investors, founder Jerome Simon called it a “bittersweet moment” and said he was disappointed that recently he could not “claim the very highest ground of perennial outperformance,” according to a person with knowledge of the letter. Its main fund was down more than 2% this year through the end of October, compared with a 1.6% gain for its peer event-driven hedge funds tracked by HFR Inc.

Mr. Simon will manage his own fortune in a so-called family office once the shutdown is complete, in mid 2015.