TheChek News Flow

+------------------------------------------------------------------------------+

Italy Govt May Approve Decree to Change Takeover Law, Sole Says 2013-11-02 11:11:09.675 GMT

By Daniele Lepido Nov. 2 (Bloomberg) -- Finance Ministry is already drafting measure, decree may be enacted next week, Senator Massimo Mucchetti says in interview with Il Sole 24 Ore. * Telefonica’s decision on Sept. 24 to increase stake in Telecom Italia may lead Spanish co. to gain “actual control of Telecom Italia": Mucchetti * This reform ‘‘is not against Telefonica as we were inspired by Spanish law itself on takeover": Mucchetti * NOTE: Italian Senate approves motion to change takeover law * NOTE: Italy Parliament to review additions to strategic assets * NOTE: Telefonica agrees to increase stake in Telecom Italia

Link to Company News:TEF SM <Equity> CN <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 editor responsible for this story: Daniele Lepido at +39-02-8064-4266 or dlepido1@bloomberg.net

{http://bit.ly/1h8B30c}

NEW YORK – As below-trend GDP growth and high unemployment continue to afflict most advanced economies, their central banks have resorted to increasingly unconventional monetary policy. An alphabet soup of measures has been served up: ZIRP (zero-interest-rate policy); QE (quantitative easing, or purchases of government bonds to reduce long-term rates when short-term policy rates are zero); CE (credit easing, or purchases of private assets aimed at lowering the private sector’s cost of capital); and FG (forward guidance, or the commitment to maintain QE or ZIRP until, say, the unemployment rate reaches a certain target). Some have gone as far as proposing NIPR (negative-interest-rate policy).

And yet, through it all, growth rates have remained stubbornly low and unemployment rates unacceptably high, partly because the increase in money supply following QE has not led to credit creation to finance private consumption or investment. Instead, banks have hoarded the increase in the monetary base in the form of idle excess reserves. There is a credit crunch, as banks with insufficient capital do not want to lend to risky borrowers, while slow growth and high levels of household debt have also depressed credit demand. CommentsView/Create comment on this paragraphAs a result, all of this excess liquidity is flowing to the financial sector rather than the real economy. Near-zero policy rates encourage “carry trades” – debt-financed investment in higher-yielding risky assets such as longer-term government and private bonds, equities, commodities and currencies of countries with high interest rates. The result has been frothy financial markets that could eventually turn bubbly. CommentsView/Create comment on this paragraphIndeed, the US stock market and many others have rebounded more than 100% since the lows of 2009; issuance of high-yield “junk bonds” is back to its 2007 level; and interest rates on such bonds are falling. Moreover, low interest rates are leading to high and rising home prices – possibly real-estate bubbles – in advanced economies and emerging markets alike, including Switzerland, Sweden, Norway, Germany, France, Hong Kong, Singapore, Brazil, China, Australia, New Zealand, and Canada. CommentsView/Create comment on this paragraphThe collapse from 2007 to 2009 of equity, credit, and housing bubbles in the United States, the United Kingdom, Spain, Ireland, Iceland, and Dubai led to severe financial crises and economic damage. So, are we at risk of another cycle of financial boom and bust? CommentsView/Create comment on this paragraphSome policymakers – like Janet Yellen, who is likely to be confirmed as the next Chair of the US Federal Reserve – argue that we should not worry too much. Central banks, they argue, now have two goals: restoring robust growth and low unemployment with low inflation, and maintaining financial stability without bubbles. Moreover, they have two instruments to achieve these goals: the policy interest rate, which will be kept low for long and raised only gradually to boost growth; and macro-prudential regulation and supervision of the financial system (macro-pru for short), which will be used to control credit and prevent bubbles. CommentsView/Create comment on this paragraphBut some critics, like Fed Governor Jeremy Stein, argue that macro-pru policies to control credit and leverage – such as limits on loan-to-value ratios for mortgages, bigger capital buffers for banks that extend risky loans, and tighter underwriting standards – may not work. Not only are they untested, but restricting leverage in some parts of the banking system would merely cause the liquidity from zero rates to flow to other parts of it, while trying to restrict leverage entirely would simply drive the liquidity into the less-regulated shadow banking system. According to Stein, only monetary policy (higher policy interest rates) “gets in all of the cracks” of the financial system and prevents asset bubbles. CommentsView/Create comment on this paragraphThe trouble is that if macro-pru does not work, the interest rate would have to serve two opposing goals: economic recovery and financial stability. If policymakers go slow on raising rates to encourage faster economic recovery, they risk causing the mother of all asset bubbles, eventually leading to a bust, another massive financial crisis, and a rapid slide into recession. But if they try to prick bubbles early on with higher interest rates, they will crash bond markets and kill the recovery, causing much economic and financial damage. So, unless macro-pru works as planned, policymakers are damned if they do and damned if they don’t. CommentsView/Create comment on this paragraphFor now, policymakers in countries with frothy credit, equity, and housing markets have avoided raising policy rates, given slow economic growth. But it is still too early to tell whether the macro-pru policies on which they are relying will ensure financial stability. If not, policymakers will eventually face an ugly tradeoff: kill the recovery to avoid risky bubbles, or go for growth at the risk of fueling the next financial crisis. For now, with asset prices continuing to rise, many economies may have had as much soup as they can stand.

Repsol rules out selling Gas Natural stake to Sinopec

Repsol has ruled out selling its 30% stake in Gas Natural Fenosa (GNF) to Sinopec of China, reported El Economista, citing Repsol sources.

According to the Spanish-language report, although it still intends to sell its stake, Repsol will only dispose of the stake if it needs to raise money for acquisitions.

Although talks with Sinopec about selling Repsol’s GNF stake did take place last week, GNF itself and its leading shareholder La Caixa made known their opposition to the deal, the report said.

Besides Sinopec, other potential suitors have expressed their interest in GNF, the report continued.

Source El Economista

Telecom Italia: Fossati rumoured to have tried to sell stake to Telefonica

Marco Fossati, head of Findim, is rumoured to have recently contacted Telefonica, the listed Spanish telecommunication company, reported Il Sole 24 Ore. The Italian language report, which quoted sources, said that Fossati has contacted Telefonica to sell his 5% stake in Telecom Italia but he did not reach any agreement.

The report also said that Fossati met with Alberto Nagel, chief executive of Mediobanca, on 23 September. Nagel explained during the meeting the plan about the merger between Telefonica and Telecom Italia. The report also said that on 23 October, Fossati went on a business trip to London and New York. In particular, he met representatives of Blackrock, which owns 5.13% of Telecom Italia, and other hedge funds. Fossati's plan was to group a pool of investors to get to above 20% and therefore influence the shareholders meeting. The board of Telecom Italia will meet on 7 November with a view of calling an EGM for mid-December.

Source Il Sole 24 Ore

BlackBerry’s two founders, Mike Lazaridis and Doug Fregin, were close on Friday night to forming a consortium to bid for the struggling smartphone maker with Cerberus Capital Management and Qualcomm, the California chipmaker. Such a deal could resolve the doubts about the future of a company that once led the smartphone revolution, but which has become a marginal and threatened player in the age of Android and the iPhone. Its market value had fallen from a peak of $78.2bn to just $4bn on Friday.

The Lazaridis-fronted consortium would be bidding against a group led by Prem Watsa’s Fairfax Financial which has a Monday deadline to complete due diligence and formalise a tentative $4.7bn cash offer. However, bankers familiar with the negotiations said on Friday that Fairfax, BlackBerry’s largest shareholder with a stake of about 10 per cent, had struggled to find financing. The Cerberus-backed team could wait until Monday to see whether Mr Watsa bids and on what terms. Both the BlackBerry founders and Cerberus had already signalled that they might make separate bids and had signed non-disclosure agreements to see BlackBerry’s accounts. People close to the discussions noted that by joining forces and adding Qualcomm, which supplies chips for BlackBerry phones, the co-founders would have access to ample funding. A spokesman for Mr Lazaridis and Mr Fregin declined to comment. However, the two men, who together own about 8 per cent of BlackBerry, are said to be concerned that the company could be broken up unless they step in with a rescue bid. Mr Lazaridis, the technical wizard behind the original BlackBerry handsets, was co-chief executive of the company until the end of February last year when he and Jim Balsillie stepped aside to make way for Thorsten Heins, who had been chief operating officer. BlackBerry’s share price has remained below the $9-a-share price tentatively offered by Fairfax, closing on Friday at $7.77. This reflects investors’ doubts about Fairfax’s deal and about whether any other firm bids would emerge. As part of the tentative agreement with BlackBerry, the Fairfax-led consortium was given six weeks to conduct due diligence and agreed to a “go shop” clause under which BlackBerry could “actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals”.

But the break clause was lopsided. Whereas BlackBerry agreed to pay a break-up fee of at least $160m if a better offer materialised, Fairfax could walk away for free. Some analysts including Pierre Ferragu, of Bernstein Research, have expressed doubts about the Fairfax deal, noting that Mr Watsa has yet to provide details of the other members of his consortium, or his funding sources. Mr Ferragu told his clients last month that the proposed Fairfax deal was “unlikely to close” while noting that “of the total $4.7bn required in the transaction, Fairfax is not committing any more than it already had when it increased its equity stake last January to about $480m total”. Some bankers also questioned Fairfax’s ability to fund a bid. “It was always a phantom bid done more in hope than with real money behind it,” said one banker familiar with the process. Mr Watsa says he remains committed to the deal, telling the Associated Press in September that Fairfax was not in the business of making offers and then walking away or changing its terms. “We’ve got a record of 28 years of completing what we’ve done. We’ve never renegotiated,” Mr Watsa said. “We thought long and hard before we offered $9 a share and we’re not in the business of offering a number and at the last minute changing the figure.” Mr Watsa has since declined to comment. Demand high for chat app

A man looks at email on a mobile device When BlackBerry launched versions of its popular, free and secure BBM chat service for Apple and Android 10 days ago, demand was so high that the company had to ration access to the download servers with a ‘virtual queueing system’, writes Paul Taylor in New York. When BlackBerry launched versions of its popular, free and secure BBM chat service for Apple and Android 10 days ago, demand was so high that the company had to ration access to the download servers with a ‘virtual queueing system’. continue reading There has been speculation about other potential bidders, including IBM, Microsoft, Samsung, Lenovo, Google, Cisco, SAP, Amazon and Facebook. Most have declined to comment, although SAP’s finance chief appeared to rule out his company in comments he made 10 days ago. Microsoft, which is acquiring Nokia; Samsung; Lenovo; and Google through its Motorola unit all have smartphone operations and could benefit from BlackBerry’s existing technology. Samsung and Lenovo could use the new BlackBerry 10 operating system to cut their dependence on the Android operating system supplied by their partner and rival, Google. However, a bid by either would have to be approved by Canada’s government and security agencies, which might object in particular to Lenovo, which is headquartered in China. IBM and Cisco could be interested in BlackBerry’s secure services for business customers, including new mobile management software that enables corporate IT chiefs to manage both company BlackBerrys and other manufacturers’ handsets that employees bring to work. Yet most analysts doubt whether any “trade” or purely financial buyer would be interested in acquiring all of BlackBerry, particularly while it is in the midst of such a radical restructuring. They believe, however, that some tech companies could want parts of BlackBerry such as its secure private data network and BBM messenger service, or its extensive patent portfolio, which some analysts value at between $1bn and $3bn. One way or another, it should become clear next week whether BlackBerry has a future as an independent handset maker battling for a slice of the global smartphone market or be broken up and sold. BlackBerry still has about $2.6bn in cash reserves, but with the company burning through an estimated $500m in cash per quarter, the clock is ticking.

Software AG seen as takeover candidate

Software AG, the listed German IT and software group, could be a takeover target, Euro am Sonntag reported, without naming sources. The German magazine said that the group has a strong product portfolio, a stable cash flow, and currently has a moderate market valuation. The article added that Software AG is not regularly mentioned as a potential takeover target because the private foundation of the group's founder Peter M. Schnell, still holds a stake of roughly 30%. While the general opinion is that the private foundation, which uses its profits for charitable purposes, will never sell its stake, the report highlighted that a sale could earn a premium higher than the dividend payments. Euro am Sonntag noted that Software AG saw both its turnover and income drop in fiscal 2012.

Software AG has a market cap of EUR 2.379bn.

Source Euro am Sonntag

Vodafone shares rise on AT&T takeover talk US telecoms giant said to consider bid for Vodafone in effort to chase growth in Europe. An American takeover bid for Vodafone is reportedly in the works just weeks after the British company disposed of its US interests. AT&T, the largest telecoms company in the US, is said to be considering an acquisition as early as next year. Vodafone is seen as an attractive target having recently agreed the $130bn sale of its stake in Verizon Wireless, the US mobile operator that competes with AT&T. Randall Stephenson, AT&T’s chief executive, has recently said there are "huge opportunities" in Europe, and Vodafone is seen as one of the few companies big enough to instantly generate a presence. Bloomberg reported that AT&T will consider a bid for Vodafone once the Verizon deal completes in the first few months of 2014.

EE, the UK’s biggest mobile operator which runs the Orange and T-Mobile brands, is understood to be another target, although buying EE alone would not give AT&T the scale it craves. EE’s owners, France’s Orange and Germany’s Deutsche Telekom, are looking to float part of the business in the new year. Shares in Vodafone rose 2.5pc on Friday morning following the report, which said that AT&T would be likely to sell off Vodafone’s emerging markets assets. Vodafone chief executive Vittorio Colao has appeared open to a merger in the past. During discussions with Verizon over selling Vodafone’s stake in the US mobile business, he repeatedly suggested merging the two companies. Mr Colao is understood to have an open mind on the matter. "He doesn’t have the hubris of some management teams in some situations where there’s an approach," said a source. "What is right for the shareholder he’d support." Berenberg analyst Paul Marsch suggested AT&T would have to pay up to £80bn for Vodafone, whose market value will shrink once the Verizon sale completes. He added that recent allegations of US officials using phone networks to spy on European leaders would mean a deal drawing regulatory scrutiny. Mr Stephenson recently told an investor conference in New York: "If there were opportunities that presented a good value, of course we would do it." No approach has been made by AT&T. Analysts at Credit Suisse recently rated the likelihood of a bid at 50-50, valuing a potential bid for Vodafone at 280p per share, against a Friday morning price of 229.5p. Vodafone and AT&T did not comment.

BlackBerry Bidders Start to Circle

Cerberus, Qualcomm in Talks to Join Founders Lazaridis and Fregin as Monday Deadline Looms

The auction for BlackBerry Ltd. BBRY -1.96% heated up Friday, as three potential suitors discussed joining forces for a bid ahead of a Monday deadline for offers.

After one of BlackBerry's largest shareholders struck a preliminary buyout deal with the beleaguered smartphone maker in September, BlackBerry's advisers set about shopping it to a wider group of possible buyers in an accelerated sales process designed to arrest BlackBerry's downward spiral.

In the latest development, Mike Lazaridis and Doug Fregin, who co-founded the company in 1984 but no longer work there, have been in talks to mount a joint bid with mobile-phone chip maker Qualcomm Inc. QCOM +0.59% and Cerberus Capital Management LP, according to people familiar with the matter.

But in a sign that the sales process is far from a frenzied auction, Fairfax Financial Holdings Ltd. FRFHF -3.67% , which struck the preliminary deal with Waterloo, Ontario-based BlackBerry, still hasn't lined up financing for its bid, another person said.

Fairfax has been seen as the bidder to beat, given its tentative deal and the fact that the firm, led by former BlackBerry director Prem Watsa, already owns 10% of the company. The preliminary Fairfax deal values BlackBerry at $9 a share, or $4.7 billion. Fairfax said then that it was seeking financing for the deal. As of Friday, it had still not secured financing, according to a person familiar with the matter, and it was unclear whether it would by the deadline.

BlackBerry's stock price suggests investors are skeptical that a deal will be reached at $9 a share, either with Fairfax or someone else. The stock has been trading well below that level, and Friday closed at $7.77 on the Nasdaq Stock Market—giving BlackBerry a market value of just $4 billion.

BlackBerry and its advisers put a for-sale sign on the company after years of devastating market-share losses to competitors including Apple Inc. and Samsung Electronics Co. According to market researcher IDC, BlackBerry, which once controlled more than half of the U.S. smartphone market, recently had just over 2%. The company and its advisers had hoped to run a speedy sales process that would be completed around now, people familiar with the matter have said. It is still far from clear, however, whether they will achieve that.

The trio considering a joint bid—which might not materialize—each come to it from very different vantage points.

Qualcomm, with a market capitalization of about $120 billion, is the largest maker of chips that manage cellular communications in smartphones, and supplies processors that run software on mobile devices. The San Diego-based company also licenses communications patents to handset makers, generating a large stream of royalty revenue.

Qualcomm had $11.5 billion in cash, liquid investments and short-term securities as of June 30. One motivation for investing in BlackBerry could be to keep a customer afloat.

Another could be access to patents; besides its own intellectual property, Qualcomm licenses rights to other companies' patents under some circumstances. At the same time, having an equity stake in one handset maker could create tensions with other customers. Users of Qualcomm communications chips include Apple and Samsung.

Cerberus has made its name investing in distressed companies. A BlackBerry bid wouldn't be the first foray into Canada for the New York-based firm. In 2004, the firm invested in troubled airline Air Canada.

At the time, the airline was restructuring under bankruptcy-court protection. Two years later, Air Canada's parent company launched an initial public offering and Cerberus exited its stake by 2009.

Messrs. Lazaridis and Fregin, who publicly declared their exploration of a potential BlackBerry deal last month, together own about 8% of the company. As Cerberus and Qualcomm could lend them financial firepower, their stock could lend a big existing equity stake as a platform for a possible offer.

Other parties that have been considering a bid for BlackBerry include China's Lenovo Ltd., people familiar with the matter have said.

Lenovo was still in the hunt for BlackBerry, a person familiar with the matter said Friday. BlackBerry executives recently met with Facebook Inc. officials to discuss a possible bid by the social-networking company for the smartphone maker, according to people familiar with the matter. It isn't clear what, if anything, came of the meeting.

Weekly Market Update: Undead Taper Stalks Zombie Markets

- More FOMC (mis)communications set the tone for global market sentiment this week. Heading into the Fed's two-day October meeting this week, consensus was for an ultra-dovish statement, however the FOMC offered more hawkishness than expected, leaving many scratching their heads and wondering just how far out the taper actually is. Bond yields and the dollar gained steadily. Earnings season marched on, and approximately 75% of the S&P500 have already disclosed quarterly results. The US Treasury's semiannual currency report again declined to name China as currency manipulator, instead shifting more focus to Germany and its large current account surplus, which the US said was contributing to deflationary pressure in the rest of the euro zone. The October US ADP jobs report missed expectations, preparing investors for what could be a spooky October jobs report next Friday. For the week, the DJIA gained 0.3%, the S&P500 edged up 0.1% and the Nasdaq slipped 0.5%.

In its policy decision this week, the FOMC announced again that it is in a wait and see mode and QE tapering remains on hold. It also acknowledge the slowing housing recovery, dropping language that the "housing sector has been strengthening." Some analysts giving the policy statement a closer read came away with a whiff of hawkishness, noting the removal of reference to "tightening financial conditions," and no additional cautionary statements about the fiscal uncertainty in Washington. This comes after many Fed governors justified holding off on tapering in September on concerns about the anticipated budget battle in Congress.

- After a patch of softness, the dollar strengthened notably this week. In Europe, weak data helped drag down the euro, and then the slightly more hawkish FOMC statement piled on more pressure. EUR/USD was probing above 1.3800 late last week and early on Monday, but it was all down-hill after that, with support at 1.3700 broken rapidly. The November ECB meeting is next week and the soft European data prompted analysts to reassess their expectations for possible action. RBS, UBS and BoA are now forecasting the ECB will cut its main refi rate by 25 basis points next week, while BNP, JPM and Scotia bank moved up rate cut expectations to December. The consensus view is that the deposit rate will be held steady and not dropped into negative territory.

- A broad range of commodities dropped to multi-month lows this week, thanks to higher inventories, a stronger dollar and speculation about the Fed taper schedule. WTI crude was as high as $99 on Monday session, but the contract dropped as low as $94.70 during Friday's session. DoE weekly reports over the month of October showed crude inventories have remained elevated and dollar strength has compounded the downward pressure on crude prices. Spot gold touched four-week highs last week around $1,353, but pulled back on Thursday and Friday to below $1,315.

- A raft of global manufacturing data for the month of October out this week indicated that the industrial segment of the global economy may be healthier than expected. China's manufacturing PMI rose slightly to 51.4, an 18-month high, while the China HSBC/Markit PMI hit a seven-month high. Japan's Market/JMMA manufacturing PMI was 54.2, its highest level since May 2010. The HSBC/Markit PMI for South Korea showed factory activity expanded for the first time in five months. Taiwan's PMI reached its highest level since March 2012. Europe's PMI numbers moved back into expansion over the summer, and the euro zone advanced manufacturing PMI for October sustained modest growth. The UK figure edged a bit lower to 56. In the US, the ISM manufacturing survey rose slightly from September's 56.2 reading, with growth seen in all components except employment. The regional Chicago PMI spiked to 65.9, its highest level since spring 2011, although the Dallas Fed's manufacturing activity index fell to 3.6 from September's 12.8 reading.

- The October US ADP employment report missed expectations and bodes ill for nonfarm payrolls next Friday. The September number was revised down to 145K from 166K. The last three ADP reports have overstated the initial NFP number by an average of 34K per month. ADP warned the government shutdown and debt limit game hurt the already softening job market in October, and any further weakening would trigger rising unemployment.

- US automakers Ford, General Motors and Chrysler all saw double-digit y/y gains in October auto sales, marking a sharp reversal from September's very weak results. Ford's sales were a little shy of consensus expectations. Auto executives said the government shutdown slowed sales in the early part of the month, but they did not expect any lasting impact. Both Toyota and Nissan missed expectations on less impressive growth. GM reported solid earnings for Q3, with good gains in North America helping to offset weakness in the international business.

- The US oil majors disclosed mixed earnings. Earnings out of ConocoPhillips topped expectations while Exxon's crude output rose in Q3 for the first time in more than two years. Chevron whiffed on the top and bottom line in its third quarter, missing expectations on weaker y/y upstream and downstream earnings. All three saw notably weaker refining margins due to increased industry capacity and plenty of supply. Valero widely beat very weak expectations, but it is worth noting that its Q3 profit was down more than 50% on margin compression.

- Apple lost ground on the week despite decent Q4 earnings and long lines for the sales launch of its new iPad Air. In Q4, shipments of iPhones exceeded expectations, and several analysts raised their price targets on the stock after the report. Despite beating top- and bottom-line expectations and offering Q1 guidance that was unusually robust, investors appear to be upset by the firm's margin compression (to 37% from 40% y/y), though Apple explained that this was attributable to increased deferrals related to its decision to give away its productivity software suite with new device purchases as well as FX headwinds.

- Shares of Facebook were volatile this week before and after earnings. The firm's headline numbers and both its monthly and daily user totals looked pretty good, with the latter items still registering double-digit growth. However, investors focused on negative commentary on the conference call, as management finally admitted that it is seeing decline in usage among younger teens and warned that it would not boost the percentage of ads in the newsfeed. Social media names Yelp and LinkedIn both lost ground on mixed quarterly reports.

- On Thursday, the BOJ voted unanimously to maintain the increase in its monetary base at an annual pace of 60-70T yen, its standard policy setting, as widely expected. Using its most optimistic language in more than two years, the BoJ upgraded its assessment of the economy, saying it is starting to "recover moderately" and signaling that no additional easing steps are in the cards in the near term.

- In China, the PBoC resumed open market operations due to rising money market rates, conducting its first liquidity injections in two weeks. Despite the initial rush in risk appetite, the repo rate and Shibor hit multi-week highs after the first operation, only declining after the second attempt, for total injections of CNY29B in the week.

Closing Market Summary: Stocks End Mixed Week on Upbeat Note

The S&P 500 added 0.3% to end the week with a slim advance of 0.1%. Although the broader market ended little changed, small caps were under pressure throughout the session as the Russell 2000 lost 0.4%. Notably, relative weakness among small caps was a recurring theme throughout the week, causing the Russell to lose 2.0% since Monday.

Outside of the continued underperformance of small caps, the session did not generate too much excitement. The S&P climbed at the open, but slid to lows during the first two hours as the broader market caught down to the Russell's weakness. The S&P was able to battle its way back to the opening high, but could not muster additional gains as energy (-0.3%) and materials (-0.2%) weighed. The energy sector trailed the broader market throughout the day as Dow component Chevron (CVX 118.01, -1.95) weighed after missing bottom-line estimates by $0.14. Crude oil also pressured the sector, falling 1.8% to $94.61 per barrel. Elsewhere, materials underperformed as miners displayed broad weakness. The Market Vectors Gold Miners ETF (GDX 24.08, -1.02) tumbled 4.1% while gold futures slid 0.8% to $1313.10 per troy ounce. On the upside, the relative strength of industrials (+0.8%) and health care (+0.7%) helped the S&P post a modest advance. Transports paced the gains among industrials as the Dow Jones Transportation Average rallied 1.0%. Meanwhile, the health care sector outperformed with some help from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 206.06, +0.73) added 0.4%. Treasuries sold off throughout the session, sending the 10-yr yield higher by six basis points to 2.62%. Trading volume was a bit above average as just under 810 million shares changed hands on the floor of the New York Stock Exchange.

Although equities endured a relatively quiet session, the same could not be said for the foreign exchange market. The greenback rallied throughout the day, gaining significant strength against the euro and the pound. The Index ended near its high with an advance of 0.7% at 80.72.

The euro was under pressure since yesterday amid rumblings of an ECB rate cut by year-end and continued chatter of negative interest rates. Heavy selling dropped the pair roughly 300 pips off its October highs to 1.3490 against the dollar. Today's economic data was limited to the October ISM Manufacturing Index, which increased to 56.4 in from 56.2 (Briefing.com consensus 55.0). The common adage throughout the government shutdown was that the manufacturing sector would suffer from lost orders and demand. If the ISM index is an accurate gauge of manufacturing activity in October, then the expected weakness never occurred. New orders actually strengthened in October. The related index increased to 60.6 in October from 60.5. Meanwhile, order backlogs ended a contraction period and increased to 51.5 from 49.5. Monday's economic data will be limited to August and September factory orders, which will be released through a single report at 10:00 ET.

o Nasdaq +29.9% YTD o Russell 2000 +29.0% YTD o S&P 500 +23.5% YTD o DJIA +19.2% YTD