>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: CALX -13.2%, RLOC -10.1% (also ReachLocal confirmed Google agreement extended; downgraded to Neutral from Overweight at JPMorgan), JBT -9.5%, JIVE -7.6% (also downgraded to Equal-Weight from Overweight at Morgan Stanley), FEYE -5.2%, VSAT -5%, WCG -3.6%, CSOD -2.3%, BDE -2.3%, (begun to explore strategic alternatives to monetize the value of untapped markets for Gregory Mountain Products), MKTO -2.2%, ANDE -2.1% (light volume), TRI -2% (light volume), LO -1.9%, WU -1.8%, ANR -1.1%, PG -0.9%, INTU -0.3%.

A few Brazil related names are trading lower: GOL -3.3%, BBVA -2.6%, ITUB -1.6%, TSU -1.2%, VALE -0.9%, BSBR -0.8%, VIV -0.8%,

Other news: PRGN -10.9% (announces public offering of common stock), GPK -3.5% ( announces secondary offering of 30 mln shares of common stock by selling stockholders), NOK -2.8% (Nokia has suffered a reversal in India tax dispute, according to reports), HZNP -2.1% (announced that the FDA joint Arthritis Advisory Committee and Drug Safety and Risk Management Advisory Committee was split on whether the data show adequate differences in cardiovascular risk among NSAIDs to support labeling change for NSAIDs due to cardiovascular risk), SNY -1.4% and NVO -1.4% (still checking), BCS -1.1% (still checking), PANW -1% (following FEYE results), DOW -1% (Dow Chemical finds that after review, a break-up of the company in a significant manner created no productivity or capital allocation improvements), ATO -1% ( prices offering of 8 mln shares of common stock at $44 per share ), ALU -0.9% (still checking), TM -0.8% (Toyota Motor plans to recall 1.9 Prius hybrids, according to reports).

Analyst comments: CLNE -3.3% (downgraded to Underperform from Neutral at Macquarie), AMZN -2.1% (downgraded to Neutral from Buy at UBS; tgt lowered to $375 from $450; removed from US Key Call list; Creates 2,500 Full-Time Jobs with Comprehensive Benefits Across its U.S. Fulfillment Network), GMCR -2% (downgraded to Neutral from Buy at Longbow), SDRL -1% (downgraded to Underperform from Market Perform at Wells Fargo), CB -0.5% (initiated with a Sell at Citigroup)

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: CUTR +14% (light volume), MRIN +12.6%, CNVR +10.6%, GIG +9.9% (also GigOptix and CPqD announce signing of definitive agreements to incept BrPhotonics Produtos Optoeletrônicos LTDA., a new joint venture company in Brazil ), ETRM +7.9%, PHH +7.3%, ( Considering separating or selling fleet business or mortgage business), OC +6.7% (light volume), DVA +6.5%, CSTE +6.2%, TRMB +5.8%, CNO +4.6%, (light volume), MGIC +4.5%, ING +4%, CRTO +3.7% (light volume), PKG +3.6%, FOSL +3.5%, (also tgt to $150 from $145 at Jefferies following earnings), VICL +2.9%, CTRL +2.7%, (light volume), DE +2.6%, AAWW +2.5% (light volume), SGEN +2% (light volume), SPW +1.2% (light volume), TOT +0.6%.

M&A news: ACO +12% (Amcol to be acquired by IMERYS for $41 per share).

Select financial related names showing strength: NBG +1.6%, HSBC +1.1% (Barron's profiles positive view), IBN +1%, CS +0.8%, DB +0.7%, 

Metals/mining stocks trading higher: AU +2.4%, RIO +1.2%, GOLD +1.1%, BBL +1%, SLV +0.4%, ABX +0.4%.

A few oil/gas related names showing strength: STO +0.9%, BP +0.8%, PTR +0.5%.

Other news: EMMS +13% (announces acquisition of WBLS-FM and WLIB-AM in New York for $133 mln in cash), STV +7.7% (continued strength), STEM +7.1% (announces completion of the First of Two Cohorts in its Dry Age-Related Macular Degeneration Trial), NNVC +2.4% (following 24% drop yesterday on cautious blog story; CEO subsequently interviewed on radio yesterday afternoon), CLF +2.2% (announces significant reduction in 2014 capital expenditures: expects $375-425 mln vs $862 mln in prior year), SFLY +2.1% (authorizes $100m share repurchase program), BLRX +1.7% (announces positive preclinical results for novel treatment for chronic myeloid leukemia; BL-8040 study published in Molecular Cancer Therapeutics ), ARNA +1.5% (announces filing for Marketing Authorization of BELVIQ in Brazil; Eisai's filing for approval of BELVIQ as a treatment for chronic weight management triggers $500,000 milestone payment), VRNG +1.1% (late move higher ahead of update on recent Court rulings), IDTI +1.1% (CEO disclosed buying 100K shares at $10.31-10.62 on 2/7-2/10 worth ~$1.0 mln), TWTR +1.1% (Twitter considering redesign similar to Facebook, according to reports), GAIN +0.4% (COO discloses buying 80K shares at $7.41 on 2/7, worth ~$600K ), BTU +0.4% (reaffirms production guidance in 8-K; targeting 185-195 mln tons of production in 2014; revenue per ton expected to be 5.8% below 2013 levels), CSIQ +1.2% ( prices offering of 2,778,000 common shares at $36.00 per common share; also prices concurrent offering of $130 mln in aggregate principal amount of 4.25% convertible senior notes due 2019 ), CAT +0.4% (following DE results).

Analyst comments: CROX +3.5% (upgraded to Overweight from Neutral at Piper Jaffray), S +2.5% (upgraded to Buy from Hold at Deutsche Bank), DDD +1.8% (tgt to $78 from $68 at Citigroup), ECOM +1.2% (initiated with a Outperform at Robert W. Baird), REGN +0.4% (re-initiated with a Buy at BofA/Merrill).

>>> US Early premarket gappers

Early premarket gappers

Gapping up: CUTR +14%, EMMS +13%, CNVR +12.7%, MRIN +12.6%, STV +8.4%, DVA +8%, GIG +7.4%, PHH +7.3%, TRMB +7%, CNO +4.6%, MGIC +4.5%, ING +4%, CRTO +3.7%, PKG +3.6%, FOSL +3.4%, YELP +2.8%, NNVC +2.4%, AU +2.4%, SFLY +2.1%, SGEN +2%, RIO +1.2%, VRNG +1.1%, IDTI +1.1%, GOLD +1.1%, HSBC +1.1%, TWTR +1.1%, TOT +1.1%, BBL+1%, STO +0.9%, JIVE +0.8%

Gapping down: RLOC -10.1%, JBT -9.5%, PRGN -9.4%, FEYE -6.9%, VSAT -5%, ANDE -3.7%, NOK -2.8%, CSOD -2.3%, BDE -2.3%, GPK -2.2%, MKTO -2.2%, HZNP -2.1%, APO -1.8%, TRIP -1.7%, AMZN -1.6%, NVO -1.4%, DOW -1%, ATO -1%, ALU -0.9%, PG -0.9%, TM -0.8%, RDS.A -0.8%

>>> US Early premarket gappers

Early premarket gappers

Gapping up: CUTR +14%, EMMS +13%, CNVR +12.7%, MRIN +12.6%, STV +8.4%, DVA +8%, GIG +7.4%, PHH +7.3%, TRMB +7%, CNO +4.6%, MGIC +4.5%, ING +4%, CRTO +3.7%, PKG +3.6%, FOSL +3.4%, YELP +2.8%, NNVC +2.4%, AU +2.4%, SFLY +2.1%, SGEN +2%, RIO +1.2%, VRNG +1.1%, IDTI +1.1%, GOLD +1.1%, HSBC +1.1%, TWTR +1.1%, TOT +1.1%, BBL +1%, STO +0.9%, JIVE +0.8%

Gapping down: RLOC -10.1%, JBT -9.5%, PRGN -9.4%, FEYE -6.9%, VSAT -5%, ANDE -3.7%, NOK -2.8%, CSOD -2.3%, BDE -2.3%, GPK -2.2%, MKTO -2.2%, HZNP -2.1%, APO -1.8%, TRIP -1.7%, AMZN -1.6%, NVO -1.4%, DOW -1%, ATO -1%, ALU -0.9%, PG -0.9%, TM -0.8%, RDS.A -0.8%

(BFW) Kazakhstan Said to Weigh $1.2b Fine for Kashagan Partners

--> -ve for Total

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Kazakhstan Said to Weigh $1.2b Fine for Kashagan Partners 2014-02-12 10:04:13.958 GMT

By Nariman Gizitdinov and Torrey Clark Feb. 12 (Bloomberg) -- Partners in offshore Caspian Sea project may be fined for pollution following unexpected shutdown last year, according to people familiar. * Partners violated permit when they flared gas at both offshore production center, onshore processing plant, according to sources * See story here

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

--Editor: Benjamin Dow

To contact the reporters on this story: Nariman Gizitdinov in Almaty at +7-727-244-7977 or ngizitdinov@bloomberg.net; Torrey Clark in Moscow at +7-495-771-7709 or tclark8@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at +44-20-7073-3603 or wkennedy3@bloomberg.net

FT : Chances are high of mass exodus from EM (G.Frieda -Moore Cap.)

No framework for co-ordinating an orderly reversal of flows

The risks posed by emerging markets relate less to their own vulnerabilities than to deficiencies in the global financial architecture. Financial intermediation mismatches, volatility mispricing and co-ordination failure threaten a train wreck in emerging markets and an atypical spillover to the weakest developed economies.

Thus far, the most extreme asset market weakness has been concentrated in a few countries. Public debt levels generally remain low, as does external indebtedness. Flexible exchange rates and large foreign reserve cushions are serving their traditional buffering role, thereby limiting the more egregious effects of capital flow reversals. And gross domestic product growth, while weaker than in the immediate post-crisis years, is hardly disastrous.


Then why are the emerging markets suddenly under pressure, with interest rates rising sharply, and why have developed country asset markets started to express concern?

Driven down to unprecedented levels during the past five years, real interest rates need to rise substantially across the emerging markets.

During the period preceding the 2008 global financial crisis, foreign capital inflows reached 15 per cent of GDP for the median emerging market country, and remained sizeable after the launch of the US Federal Reserve’s quantitative easing programme. Real interest rates in many emerging markets fell sharply, often to negative levels. In response, private credit growth boomed, following the same pattern as the eurozone periphery and central/eastern Europe a few years earlier. Only after real interest rates normalise will it be clear how much boom-time credit turns into bad debt.

On its own, the above story points to an overdue adjustment rather than a crisis. Instead, the global risks relate to two systemic policy challenges posed by the reversal in capital flows to emerging markets.

First, current low levels of volatility mask the degree of potential “risk”. As exchange and interest rate volatility fell during the 2000s, capital flows well exceeded emerging market GDP growth. Financing constraints eased, and whereas previously a 3 per cent of GDP current account deficit was considered the upper limit of “safe”, a number of countries could now run 5-10 per cent of GDP current account deficits with relative ease.

Volatility should rise, and potentially overshoot, as the US exits its unconventional monetary policies. Rising volatility across global markets forces a reduction in emerging market asset holdings for a given value-at-risk constraint, and this is exacerbated as diversification benefits across countries disappear. This toxic cocktail of rising volatility and a reversal of correlations undermined portfolio insurance strategies in 1987 and led to the failure of Long Term Capital Management in 1998.

In current circumstances, such a trigger could reveal a second problem: a systemic liquidity mismatch. Market prices could plummet and interest rates rise as investors flee emerging markets without the traditional buffering role played by bank dealers, whose market-making capacity has been hollowed out.

Relative to past cycles, capital flows over the past decade were larger and concentrated in local currency debt. Non-resident holdings of local currency emerging market debt surpassed $2.5tn in 2013, up from $637bn in 2008. While emerging market governments benefit from borrowing in local currency, foreigners now carry unprecedented risk exposure. In past emerging market crises they bore only the credit risk on foreign currency denominated debt. Now they bear currency and convertibility risk, together with a large degree of interest rate duration risk.

The disparity between the mountain of assets invested in less liquid emerging markets and risk-averse financial intermediaries will lead to periods of illiquidity, where investors encounter difficulties in liquidating positions, and contagion, where they are forced to sell more liquid assets in unrelated markets.

Taken together, one can spot elements of the 1987 Wall Street crash, the 1998 Asian-Russian crisis and the 2008 financial crisis in today’s financial market landscape. Concentrated common lenders, together with mispriced volatility, correlation and liquidity risk create contagion risk within and beyond the emerging markets. They influence the extent to which real interest rates will need to adjust, the potential credit losses associated with the rate adjustment and the distribution of losses.

It is in no one’s interest that creditors beat a hasty retreat or that debtors (or indeed asset managers) impose controls to prevent that retreat. Because the potential fallout is more of a market risk than a fundamental macro risk for developed economies, the odds of pre-emptive co-ordination by major central banks or the IMF are reduced.

Emerging market countries and investors alike face a potential prisoner’s dilemma: co-operation is optimal, but with no framework for co-ordinating an orderly reversal of capital flows, the chances of a mass exodus are high.

Gene Frieda is a global strategist for Moore Europe Capital Management

FT : KPN rebuilds bridges with América Móvil after takeover failure

KPN rebuilds bridges with América Móvil after takeover failure

KPN will re-establish commercial partnership agreements with Carlos Slim’s América Móvil that were torn up during the failed takeover attempt by the Mexican telecoms group last year.

The decision signals a thawing of the relationship between the two groups after América Móvil’s attempted acquisition of the Dutch telecoms incumbent was thwarted.

América Móvil withdrew its offer having failed to agree a price with KPN’s management, while a hostile move was blocked following the intervention of an independent foundation with rights to protect the Dutch group

América Móvil said on Wednesday it had cut its stake in KPN from 29.7 per cent to 27.1 per cent, pushing KPN shares down 4 per cent in morning trading. It is prevented from bidding again until April owing to the “lockout” following the end of the takeover discussions.

Eelco Bloc, chief executive of KPN, said that the two groups were on better terms now, although he admitted that the relationship had become more difficult after his management team rejected the Mexican group’s offer.

“After the withdrawal of América Móvil, the relationship was not really good but today we have again a good relationship. Not as good as it was before the offer, but the América Móvil board representatives are participating in a constructive manner,” he said.

“We were not able to come to an agreement with América Móvil – in the end it was only about price. They were not willing to move on price, not any cent. Looking at where share price is today, shareholders believe that KPN is worth more than €2.40.”

KPN will begin to reform the working groups that dissolved with the end of “relationship agreement” between the two sides. These will bring the business practices of two companies closer together again, starting with work on joint procurement of technology.

Mr Bloc said: “We have agreed to start first with procurement and see how it evolves to see if we should extend the relationship to a level where we were in August last year. It’s an OK relationship and we are starting to work together again.”

América Móvil has not made clear any further intentions, he added, although insisted that there was no regulatory blocking position if it did make a second attempt to acquire the former Dutch incumbent.

The first takeover bid was hindered by the blocking stake held by a foundation that exercised a poison pill to protect the Dutch telecoms on behalf of shareholders and employees.

“Neither the government nor the foundation are against an acquisition of KPN. The government have some clear requirements but if these are fulfilled then they would not do anything about an acquisition.”

He added that while he had been surprised about the timing of the foundation’s decision to call the option, “in hindsight their decision really helped get América Móvil round the table and start seriously discussing important subjects”.

FT : Spain proposes citizenship for Sephardic Jews

Spain proposes citizenship for Sephardic Jews

Jews mourn in front of the house of Rabbi Ovadia Yosef, spiritual leader of Israel's Sephardic Jewish community and the ultra-Orthodox Shas party following his death on October 7, 2013 in Jerusalem. The rabbi's death came just two weeks after he underwent heart surgery at the city's Hadassa hospital in Ein Kerem, where he eventually passed away. AFP PHOTO / JACK GUEZ
©AFP

The Spanish Embassy in Tel Aviv has been inundated with calls from eager Israelis after Madrid proposed a potentially far-reaching change to its laws that would allow citizenship to be offered to all Jews whose ancestors hail from Spain.

Until now the descendants of Jews expelled from Spain during the 15th century – known as Sephardic Jews – could claim Spanish citizenship only after living in the country for two years, and then only if they renounced their previous nationality.

The new bill, which is still to be approved by the Spanish parliament, will allow the estimated 3.5m Sephardic Jews who are alive today to claim Spanish nationality without having to give up their current passport.

All Spanish Jews were either expelled or forced to convert to Christianity in 1492, as part of the Catholic reconquest of Spain that also saw the entire Muslim population either driven from the country or forced to convert. Though estimates vary, historians believe at least 200,000 Jews lived in Spain before the expulsion.

While the biggest community of Sephardic Jews lives in Israel, other communities also exist in Latin America, Turkey, the US and other parts of Europe. The proposed offer of Spanish citizenship would also apply to them.

Alberto Ruiz-Gallardón, the Spanish justice minister, said the move was an attempt to address the 1492 expulsions, which he described as one of Spain’s “most important historical errors”.

“Now they have an open door to become once again what they should have never stopped being – citizens of Spain,” he added.

Abraham Haim, chairman of the Council of the Sephardi Community in Jerusalem, welcomed the move as the latest step in a reconciliation process that began with the establishment of diplomatic ties between Spain and Israel in 1986.

“We do not forget the tragedy or torture of the Inquisition but we have always regarded Spain as the place of our origin,” Mr Haim said, adding he did not see any “material benefit” for the struggling Spanish economy.

However, the attraction of an EU passport with access to residence, education and welfare could be attractive to many Sephardic Jews across the world.

Those wishing to obtain Spanish citizenship would be required to prove their status by way of a certificate issued by the Federation of Jewish Communities in Spain or the rabbinical authority in their home country.

They would also have to do so in the first two years after the change is passed – suggesting the law is a one-off opportunity.

The Spanish embassy in Tel Aviv warned applicants they would have to be patient.

“Those interested in applying for Spanish citizenship through this channel must wait for its entry into force as law to process their application,” the embassy explained.

Spain’s Jewish community welcomed the move, which it described as “a step towards righting a mistake and an injustice”.

However, Chaim Hames, head of the Centre for the Study of Conversion and Inter-Religious Encounters at Ben-Gurion University, questioned how many applicants would be successful.

“Unless they are very, very relaxed about how they are going to check criteria of who actually is a descendant of a Spanish Jew, it is going to be impossible for most people to prove,” said Prof Hames.

“How many people can go back 10 or 15 generations in their family? Even if they do have names which are Spanish in origin, they might have been adopted or changed.”

He added: “However, if they are going to be very loose with their criteria, I might even apply.”

>>> Vallourec at Risk of Being Removed From CAC 40, Exane Sa

Vallourec at Risk of Being Removed From CAC 40, Exane Says

Vallourec is smallest constituent and liquidity is decreasing, Exane’s Christophe Wakim writes. * Says Veolia Environnement, Bouygues, Alstom and Solvay are on watch list * In CAC Next 20, Rexel could now replace Lagardere: Exane * In SBF120, Numericable could replace Faiveley Transport, Tarkett could also be added: Exane * Results of quarterly review due no later than March 7, implementation March 21 close: Exane * Feb. 11: Leoni, Tui may join Stoxx 600, Vedanata, Debenhams leave: Exane