>>> US Close Dow +0,32% S&P +0,37% Nasdaq +0,75% Russel +0,57%

Closing Market Summary: Technology Leads Stocks Higher

The stock market ended the midweek session on an upbeat note with the Nasdaq Composite providing leadership. The tech-heavy index advanced 0.8%, while the S&P 500 added 0.4% with seven sectors posting gains.

Equities were driven into the red shortly after the open due to notable weakness in the energy sector. The growth-sensitive group was down in excess of 1.0% during the first hour of action, but narrowed its loss to 0.3% by the close. For its part, crude oil fell 1.1% to $91.71/bbl, ending the pit session at its lowest level since early January.

While the continued weakness in crude prices weighed on the sector, which is now down 4.1% for the month, the persistence of dollar strength also contributed negatively to earnings prospects of multinational companies like Chevron (CVX 124.28, -0.90) and ExxonMobil (XOM 96.81, -0.58). The Dollar Index (84.22, -0.06) climbed to its best level in 14 months before slipping in the early afternoon. The greenback retreated against the British pound after latest poll results from Scotland indicated majority support for staying in the UK (weekend YouGov poll gave a slight edge to the pro-independence movement). The pound/dollar pair climbed to 1.6210 after trading at 1.6070 in the early morning.

Despite the early weakness in the energy sector, equity indices were able to climb off their lows with help from top-weighted financials (+0.4%), health care (+0.7%), and technology (+0.8%). The three groups began the day ahead of the broader market and their strength pulled dip-buyers into the fray.

The technology sector finished in the lead with Apple (AAPL 101.00, +3.01) fueling the strength. The top-weighted sector component jumped 3.1%, while social media names also did some heavy lifting. Twitter (TWTR 52.91, +2.30) rallied 4.5% following an upgrade at UBS, while Facebook (FB 77.43, +0.76) and Yelp (YELP 82.64, +1.76) gained 1.0% and 2.2%, respectively.

Elsewhere, health care received significant support from biotechnology as the iShares Nasdaq Biotechnology ETF (IBB 274.41, +4.93) jumped 1.8%, which factored into the strong showing for the Nasdaq Composite.

Also of note, the industrial sector (+0.1%) was pushed into the green during afternoon action by the relative strength of defense contractors. The PHLX Defense Index added 0.7%, while transport stocks could not keep up with the broader market. The Dow Jones Transportation Average added 0.1%.

Treasuries slumped overnight and spent the duration of the session near their lows. The 10-yr note shed eight ticks to send its yield higher by three basis points to 2.54%.

Participation was a bit light with fewer than 600 million shares changing hands at the NYSE floor.

Economic data was limited to just two data points:
  • The weekly MBA Mortgage Index fell 7.2% to follow last week's uptick of 0.2% 
  • Wholesale inventories increased 0.1% in July following a downwardly revised 0.2% (from 0.3%) increase in June 
    • The consensus expected an increase of 0.5% 
    • Overall, wholesale sales increased 0.7% in July after increasing by 0.4% in June 
Tomorrow, weekly initial claims (consensus 300K) will be released at 8:30 ET, while the Treasury Budget for August (expected deficit of $129 billion) will cross the wires at 14:00 ET.
  • Nasdaq Composite +9.8% YTD 
  • S&P 500 +8.0% YTD 
  • Dow Jones Industrial Average +3.0% YTD 
  • Russell 2000 +0.1% YTD

>>> JDSU : To separate into two separate public companies; Reaffirms Q1 $0.08-0.

To separate into two separate public companies; Reaffirms Q1 $0.08-0.12 v $0.10e, R$405-425M v $416Me- filing 

- Two Companies:
An optical components and commercial lasers company (CCOP) consisting of JDSUs current Communications and Commercial Optical Products segment. The CCOP company, with its long-standing reputation for optical innovation and quality, serves a $7.4 billion optical communications market expected to grow at a compounded rate of 11% over the next four yearsi. It also addresses an approximate $2.5 billion commercial lasers market, growing at a forecasted 7% annually. 
A network and service enablement company (NSE) consisting of JDSUs current Network Enablement, Service Enablement and Optical Security and Performance Products (OSP) segments. The stand-alone NSE company will be a leader in its core businesses, addressing an approximate $7 billion network and service enablement market expected to grow at 6-8% annuallyiii. The NSE company will primarily focus its investments in higher growth markets, particularly software supporting virtualized and software-defined networks. The optical security business addresses an approximate $1.1 billion market growing at an expected 6-8%.

- JDSU shareholders will receive a pro rata distribution of shares in the stand-alone CCOP company via a tax-free spinoff. The separation of the two companies and the distribution of the new CCOP companys shares to JDSU shareholders is expected to be completed in the third calendar quarter of 2015.- expects to incur significant one-time charges related to the separation and to achieving the expense savings referenced in the highlights. Cash expenditures to obtain the cost savings are expected to be between $75 and $100 million.

>>> US Unusual Options Activity

Unusual Options Activity

The following options are exhibiting notable trading, potentially indicating changing sentiment toward the underlying stocks, and/or potentially representing positioning for increased volatility.

Bullish Call Activity:
  • POT Sep 34.5 calls (volume: 17.4K, open int: 210, implied vol: ~23%, prev day implied vol: 18%)  --  peer MON was targeted in cautious OTR note (spokesperson subsequently refuted suggestions).  POT is scheduled to present at two conferences this month -- on September 17 and 23.
  • NOV Nov 90 calls (volume: 11.6K, open int: 9.4K, implied vol: ~22%, prev day implied vol: 20%)  -- nearly 10K traded in single transaction at 0.50 with a 0.43/0.52 bid/ask spread. Co is scheduled to present Sept 18 at MorningStar conference and is confirmed to report earnings Oct 30 before the open.
  • BBT Sep 38 calls are seeing interest ahead of investor day tomorrow September 11 -- starts at 9am ET  (volume: 2120, open int: 3600, implied vol: ~16%, prev day implied vol: 15%)  -- co reported earnings mid-July.
Bearish Put Activity:
  • JBHT Oct 75 puts are seeing interest with relative weakness in the underlying stock -- scheduled to present today at a Longbow conference (volume: 4300, open int: 40, implied vol: ~22%, prev day implied vol: 20%)  -- majority of today's volume occurred in single transaction -- 3.4K traded on the offer. Co is confirmed to report earnings Oct 14 before the open, which falls within Oct expiration. 
  • EMC Weekly Oct03 28.5 puts are seeing interest ahead of Deutsche Bank Conference after the close -- starts at 17:40 ET  (volume: 2720, open int: 50, implied vol: ~20%, prev day implied vol: 18%)  -- co is confirmed to report earnings Oct 22 before the open.

>>> Japan Business Federation (Keidanren) calls for corporate tax below 30% in F

Japan Business Federation (Keidanren) calls for corporate tax below 30% in FY17 from 35% - Kyodo News 
- The country's largest business lobby proposed Wed a cut in the effective corporate tax rate to below 30% percent from the current roughly 35% in FY17; cites for improvement of international competitiveness of domestic businesses; this is in line with govt plan (**PM Abe pledged to lower the effective tax rate to below 30% within a few years from FY15 starting April).

Telefonica to Issue EU1.5B of Mandatory Convertible Bonds

GS is doing it

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BN 09/10 15:51 *TELEFONICA TO ISSUE EU1.5B OF CONVERTIBLE BONDS

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Telefonica to Issue EU1.5B of Mandatory Convertible Bonds 2014-09-10 15:54:11.38 GMT

By Esteban Duarte Sept. 10 (Bloomberg) -- Co. says Goldman Sachs International, Morgan Stanley, UBS and Bank of America Merrill Lynch to manage transaction. * Co. comments in regulatory filing

Link to Company News:{TEF SM <Equity> CN <GO>}

For Related News and Information: First Word scrolling panel: {FIRST<GO>} First Word newswire: {NH BFW<GO>}

To contact the reporter on this story: Esteban Duarte in Madrid at +34-91-700-9606 or eduarterubia@bloomberg.net

To contact the editor responsible for this story: Angeline Benoit at +34-91-700-9617 or abenoit4@bloomberg.net

Telecom Italia Said to Brace for Failed Sale of Argentine Stake

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Telecom Italia Said to Brace for Failed Sale of Argentine Stake 2014-09-10 16:12:19.8 GMT

By Daniele Lepido Sept. 10 (Bloomberg) -- Telecom Italia is considering a new unit to oversee its Latin American business because regulatory approval of its Argentine assets is unlikely, according to people with knowledge of the matter. * Co. preparing a back-up plan for its Latin American business if the $960m disposal of its 22.7% stake in Telecom Argentina to Fintech fails, according to the people, who declined to be identified because the talks are private Story link: {NSN NBP0ZU6K50YI <go>}

Link to Company News:{TIT IM <Equity> CN <GO>}

For Related News and Information: First Word scrolling panel: {FIRST<GO>} First Word newswire: {NH BFW<GO>}

To contact the reporter on this story: Daniele Lepido in Milan at +39-02-8064-4266 or dlepido1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at +44-20-7073-3722 or arummer@bloomberg.net

>>> US Rumor Round up

  • There were reports that Microsoft (MSFT) to purchase Mojang, maker of Minecraft for $2 bln.
  • Bloomberg real M&A column discussed that Lions Gate Entertainment (LGF) and Akamai (AKAM) may be possible takeover targets by Alibaba (BABA).
  • Bloomberg real M&A column discussed that IMPV, TIBX, TDC among possible takeover targets by HP (HPQ).
  • There were reports that América Movil (AMX) and Telefonica (TEF) among cos that are close to bid for Telecom Italia's (TI) Brazil operations; there was also reports that TIM Participacoes (TSU) CEO has indicated Telecom Italia (TI) did not give a price for Brazil unit amid speculation of sale.
    • Related Stocks: AMOV, TEF, TI, VIV, OIBR, TSU
  • 3D Systems (DDD) strength attributed to SAP (SAP) for DDD takeover chatter.
  • Visteon (VC) strength attributed to potential unit sale/break up Bloomberg report.
  • Euro Tech Holdings (CLWT) strength attributed to reports suggesting China crackdown on pollution concerns.

(Challenges) En s'alliant, Auchan et Système U passent devant Carrefour et Lecle

Pour résister à la guerre des prix, les deux groupes de distribution mettent en commun leur centrale d'achats. De quoi rebattre les cartes?

La guerre des prix est en train de dynamiter le paysage de la distribution. Jeudi 11 septembre, Système U et Auchan doivent annoncer le rapprochement de leur centrale d’achat respective selon le magazine LSA. Ce pas de deux inattendu entre le charismatique Serge Papin et l’austère Vianney Mulliez, leurs patrons respectifs, s’explique aisément. Ensemble, le groupement coopératif et l’entreprise familiale donneront naissance au numéro un français avec 21,5% de part de marché contre 21% pour Carrefour et 20% à Leclerc alors que Casino ou Intermarché risquent d’être distancés.

Ce mouvement défensif intervient alors que l’encéphalogramme du secteur est quasiment plat. L’an dernier, selon LSA, le chiffre d’affaires des 100 premières enseignes en France n’a progressé que de 0,7 % à 290 milliards d’euros. Deux explications à cela: d’une part, la déflation des produits de grande consommation est enclenchée depuis plusieurs mois ; d’autre part, la guerre des prix fait rage entre les enseignes.

Lutter contre la progression de Leclerc

Très à son aise sur ce terrain, Leclerc ne cesse de gagner des parts de marché quand tous ses poursuivants cherchent la parade. Le groupement coopératif n’hésite pas à rogner ses marges pour recruter de nouveaux clients quand ses concurrents privés pensent d’abord à servir leurs actionnaires. Mieux, Michel-Edouard Leclerc a parié très tôt et très fort sur le drive qui représente la moitié de sa croissance. Entre 2008 et 2013, son chiffre d’affaires a progressé de … 10 milliards d’euros en France pour atteindre 42 milliards.

Convaincu qu’un leader ne peut pas se contenter d’être suiveur sur le plan commercial, Georges Plassat, le PDG de Carrefour, a sonné le tocsin dès sa nomination en 2012. Depuis, l’enseigne rend coup pour coup au groupement breton et maintient ses positions sur le territoire national. En juin, il a racheté 800 magasins Dia en France, une enseigne dont il s’était séparé en 2011, gonflant son chiffre d’affaires de 2,3 milliards d’euros.

Jean-Charles Naouri, le PDG du groupe Casino, a lui aussi regardé le dossier. Pour grossir en France, il a surtout avalé les 50% du capital de Monoprix qui lui manquaient, soit 1,6 milliard de chiffre d’affaires en plus dans ses comptes en 2013. Parallèlement, il a lancé une offensive commerciale spectaculaire. L’effondrement des ventes et la désertion des consommateurs dans ses hypermarchés et supermarchés en France devenaient mortifères pour l’enseigne. L’an dernier, Casino aurait donc rétrocédé … 700 millions d’euros de chiffre d’affaires pour retrouver des couleurs en baissant ses prix. Et ça marche ! Au deuxième trimestre, les ventes des hypermarchés Géant étaient en hausse de 2,1 % soutenues par une croissance en volume de 6,3 % dans l’alimentaire et une augmentation du trafic en magasin de 2,1 %.

Auchan fut lent à la réaction

Quant à Auchan, et ses énormes hypermarchés en périphérie des villes, il a tardé à réagir. Moins sous pression de ses rivaux cotés en Bourse, l’enseigne de la famille Mulliez a dévoilé seulement fin août sa stratégie à l’occasion de la publication de ses résultats semestriels. Un chiffre d’affaires en France qui baisse de 1,9% sur six mois après un recul de 2,4% l’an dernier. "On ne pouvait pas rester en dehors de la course", a consenti Philippe Baroukh, le DG d’Auchan. Pour répondre à la concurrence, la direction a donc décidé de se lancer à son tour dans la guerre des prix. Depuis la fin avril, ils ont reculé de 2,3% en moyenne.

Cette spirale déflationniste a cependant ses limites. L’alliance entre Auchan et Système U en est la preuve. Pour être compétitif sans laminer ses marges, les deux enseignes parient sur le volume: être plus gros pour obtenir les meilleurs tarifs. Ainsi, les nouveaux mariés représentent plus de 42 milliards d’euros de ventes. Par ailleurs, Système U s’est associé à quatre enseignes européennes au printemps dernier : Colruyt en Belgique, Conad en Italie, Coop Suisse et Rewe en Allemagne. Ensemble, ils pèsent … 106 milliards. Une taille XXL qui ne laisse rien présager de bon pour les industriels fournisseurs de la grande distribution.