TheChek News Flow

Is Infinera Set for Verizon 100G Deal? Link : {http://ubm.io/1di5Djb}

It's been talked about for some time, but current chatter amongst the optical networking community suggests that Infinera is set to become the second 100G transport supplier at Verizon Communications, joining incumbent supplier Ciena. (See How Infinera Could Get a Shot at Verizon.)

Word has been circulating for a few weeks now that Infinera Corp. (Nasdaq: INFN) is "the chosen one" ahead of Alcatel-Lucent and the speculation has been stoked even further by Infinera management's reference during the company's third-quarter earnings conference call to anticipated "strategic" customer deals in North America.

MKM Partners analyst Mike Genovese noted in his report on Infinera's third-quarter results that there appears to have been "recent positive competitive changes at one or more major US strategic accounts where management seems to have increased confidence in their likelihood of winning significant deals," though George Notter at Jefferies & Company Inc. noted that industry sources say Verizon Communications Inc. (NYSE: VZ) has not yet made a decision but that the carrier will likely choose before the end of this year.

The US carrier reiterated that position. "A final decision has not been made," said Verizon spokeswoman Lynn Staggs in an email to Light Reading in response to questions about a second 100G equipment supplier.

Infinera says it doesn't comment on rumor or speculation. But for some in the industry, the vendor's name is all but on that deal.

If confirmed, that news would undoubtedly give the transport equipment specialist's stock price a boost. Unfortunately for Infinera, which has been touting its software-defined networking proposition to carriers in recent weeks, its share price was heading south following the publication of its third-quarter financials, dipping 9 percent Thursday to end the day at $10.40. (See Infinera Reports Q3 Profit and Infinera: SDN Can Master Optical Layer.)

The vendor's numbers looked strong: revenues up 27 percent compared with a year ago at $142 million and its earnings after one-time costs stood at 10 cents, much higher than expected. But its fourth-quarter guidance of revenues between $130 million and $140 million left investors dissatisfied, while the vendor's expectation for 2014 gross margins in the low 40 percent range failed to excite.

Even at $10.40, Infinera's stock is still at the high end of its 52-week range. And any confirmation of a deal with Verizon would certainly help the vendor's stock head north instead of south.

Stock has been weak since Ericsson comments and miss...Nokia is reporting tomorrow...we see some profit taking ahead of that but move like overdone...there is also some fast money playing th potential interest of Nokia for AlcatelLucent that could be down play tomorrow...

Stock is testing important support level today, volume are important today but in line with average, the all move last week was a low volume compared to the last few weeks except Thu. On Ericsson announcement....

I will have a look to ALU here as it's still a good story and even if Nokia is not talking about a potential deal tomorrow, there is still some upside from here

Teva Pharma follow-up on potential CEO resignation

Teva Pharma early weakness was being attributed to speculation related to CEO departure. Globes later reported that the CEO denied it.

{TEVA US Equity GIP <GO>}

PIMCO's Gross: Expecting language changes from the Fed but not tapering this week - Tweet - Positive on maturities inside 10 years, expecting dovish stance to remain

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Criteo Now Sees IPO Price $27-$29, Had Seen $23-$26 2013-10-28 14:49:32.905 GMT

By Felice Maranz Oct. 28 (Bloomberg) -- Criteo offer via JPMorgan, Deutsche, Jefferies. * NOTE: Sept. 18, Criteo, Internet/mobile ads co. headquartered in France, to list ADSs on Nasdaq under symbol CRTO: Filing: NSN MVDVDG0J1HJC <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: Felice Maranz in New York at +1-212-617-8118 or fmaranz@bloomberg.net

To contact the editor responsible for this story: Joanna Ossinger at +1-212-617-7789 or jossinger@bloomberg.net

Dubai Holding arm aims to sell stake in Swatch-backed retailer Rivoli -sources

Oct 28 (Reuters) - The private equity arm of Dubai Holding, which is owned by the emirate's ruler, is planning to sell its minority stake in a luxury retailer backed by Swatch, four banking and industry sources aware of the matter said.

The unit, Dubai International Capital (DIC), is in exclusive negotiations to sell its 18 percent stake in Rivoli Group to Saudi-based Al Rajhi Capital, the investment banking and private equity arm of the kingdom's top listed lender, Al Rajhi Bank , the sources said.

The sources, who spoke on condition of anonymity, did not provide a potential value for the deal.

Swatch, the world's biggest watchmaker, owns a 40 percent stake in Rivoli, which has more than 300 outlets across the Gulf Arab region and also operates boutiques on behalf of Mont Blanc, Dunhill and Vertu, among others.

The discussions are at an advanced stage and the two parties expect to complete a deal before the year end, two of the sources said. The talks could still falter and no agreement has been reached, they added.

A spokesman for DIC in Dubai declined to comment. Al Rajhi Capital was not immediately available for comment. (Reporting by Dinesh Nair and Mirna Sleiman; Additional reporting by Marwa Rashad in Riyadh; Editing by Anthony Barker)

FUND FLOWS - October 2013

Persistence vs. Speculation Fund flows provide two very different types of insights. Traditional mutual fund flows provide us with a window into more persistent trends coming from longer-term investors. In contrast, ETFs—often used as trading vehicles—give us an indication of sentiment shifts among professional traders. This is especially helpful in identifying changes in investor attitudes at the sector level.

Re-Risking Portfolios There has been an enormous shift in the allocation of funds since the market’s 2009 trough. Interestingly, both stocks and bonds have experienced inflows. The greatest loser over this time has been low-yielding money funds. The largest relative growth rates have occurred in international stocks and balanced funds. Market Neutral funds have experienced tremendous investor interest over the past several years.

Move into Stocks, Not Simply Out of Bonds Since early 2013, fund investors have flocked to equities. Many attribute this move to rising rates. A look at relative flows shows that the move into stocks occurred roughly four months earlier than the move out of bonds. This is positive for stocks for two reasons: (1) it signals greater conviction in stocks by the investing public; and (2) it would indicate that flows into stocks should hold up despite the recent decline in Treasury yields.

ETF and Mutual Fund Investors Differ on Sector Outlook Over the past month and quarter, traditional mutual fund and ETF investors have differed significantly in their sector views. More specifically, ETF investors have increased their exposure to Tech and Health Care at the expense of Energy. In contrast, mutual fund investors have rotated toward Energy and Financials. Both groups have shunned more interest rate sensitive groups such as Utilities and REITs.

US Market continue to trade on the highs...VIX @ 13.09 - 0,83%...Asia trading higher with Nikkei +1,8%...Hitachi strong before reporting numbersa after close...China flat as investors are waiting to see what PBoC will do in term of injexction...Shibor not really moving

Many trains and flights delay in northern europe / uk because of heavy rain and wind...

Eur$ 1,3810 ....

Keep an eye on : - ALRS RM : Alrosa IPO Raises $1.3b, Shares Sold at RU35/Share - AREVA FP : signs an agreement to develop uranium mines in Mongolia - ASSAB SS : Assa Abloy 8am, 3Q, see ests. - BKIA SM : Bankia is scheduled to report 3Q earnings - BMPS I'm : U.S. Hedge Funds Weigh Monte Paschi Cap. Increase Stakes Sole - FSA I'm : Fondiaria-SAI controlled by Unipol won’t take part in Alitalia rights issue: Ansa - GAS SM : Gas Natural wins EU2.2b LNG contract in Argentina, El Economista report - IBE SM : Iberdrola wins EU240m contract to build biomass plants in Canada - DSY FP : Dassault Systemes CEO tells Investir that 3Q operating margin isn’t a "ceiling" - ORA FP : Orange CEO tells Journal du Dimanche that co. must be ready to take part in European telecom consolidation - UG FP : Moscovici Says Peugeot Must Remain French, Les Echos Says - PHIA NA : Funai denies breach of contract in transaction with Philips - STL NO : Statoil says Tanzania find not yet big enough to develop: Dagens Naeringsliv - TIT I'm : Telecom Italia (TIT IM) -6.4%, co. is said to consider up to $2.8b capital increase; press reports on dividend, capital hike are "speculation," co. says - TLW LN : Tullow Oil Suspends Drilling in Kenya Over Job Protests - UL NA : Unibail-Rodamco says nine-month revenue rose on malls - UNA NA : Hindustan Unilever beats estimates as cosmetics sales rise - VIE FP : Veolia to Pay EDF EU550M as Part of Dalkia Accord, Echos Says

Asian Market Update: Growth in China industrial profits slows as investors anticipate renewed PBoC injections

***Observations/Insights*** - China industrial profits growth slowed on an annual basis from Aug levels but picked up slightly on YTD terms. NBS attributing diverging prints to the slowdown in manufacturing prices as well as slowing growth of investment returns. - China Construction Bank - the first among the Big 4 to report Q3 results - is up modestly following earnings that were somewhat in line with expectations even as the ROE and net profit margins fell modestly from corresponding period last year. - Japan defense forces said to have scrambled its jets on 3 separate occasions over the weekend after fly-by conducted by China aircraft around the Senkaku islands over the weekend; Earlier today, local press reported 4 China ships have appeared around the disputed Senkaku islands. - China's 7-day repo rate was down about 20bps in early session, but Shibor rates are set a touch firmer; Markets await whether the central bank breaks several consecutive sessions of absence from liquidity injections into the money markets at its regularly scheduled operation tomorrow.

***Economic Data*** - (CN) CHINA SEPT INDUSTRIAL PROFITS Y/Y: 18.4% V 24.2% PRIOR; YTD: 13.5% V 12.8% PRIOR - (KR) SOUTH KOREA SEPT DISCOUNT STORE SALES Y/Y: -5.3% V -2.6% PRIOR; DEPARTMENT STORE SALES Y/Y: 2.8% V 6.6% PRIOR - (KR) SOUTH KOREA OCT CONSUMER CONFIDENCE: 106 V 102 PRIOR (17-month high) - (TH) Thailand Sept Manufacturing Production Index: -2.9% v 1.7%e; Capacity Utilization: % v 63.4% prior - (UK) UK OCT HOMETRACK HOUSING SURVEY M/M: 0.5% V 0.5% PRIOR; Y/Y: 3.1% V 2.4% PRIOR

***Fixed Income/Commodities/Currencies*** - (JP) BOJ to buy ¥400B in CP outright on Oct 31st; To buy ¥110B in JGBs maturing within 1 year - (KR) South Korea sells 20-yr govt bond at avg yield of 3.620% - GLD: SPDR Gold Trust ETF daily holdings fall 4.5 tonnes to 872.0 tonnes - update as of Oct 25th

- Risk-on majors remaining bid in early Asian trade, with AUD/USD and NZD/USD up about 0.3% above $0.96 and $0.83 handles respectively. Yen-selling also reflects some of the recent risk appetite in the global markets, as USD/JPY saw a 30pip gap higher at the open above ¥97.70. Yen selling is particularly favored on the crosses, where AUD/JPY rose 50pips above ¥93.80 and NZD/JPY hit a high above the ¥81 level. CNY is also bid higher in OTC markets, as USD/CNY is testing CNY6.08 level.

***Speakers/Political/In the Papers*** - (CN) China Iron and Steel Association (CISA): China avg daily crude steel production 2.107M tonnes in mid Oct, -1% from last ten days - (CN) Former PBoC adviser/director of National Economic Research Institute Fan Gang: Chinese economy has already "soft-landed"; Will continue on rapid growth for 20-30 years; GDP will stabilize at 7.5-8.0% level in the following years - Chinese press - (CN) China Stats official: sees China 2013 GDP 7.5% v 7.5% official target - People's Daily - (CN) China local govt debt over CNY14T - Caijing - (CN) China Housing Department: real estate industry has entered into direct financing era - financial press

- (JP) Japan air forces respond to China aircraft flying over Okinawa island chain for 3rd straight day; According to Japan Defence Ministry the Japan Air Self-Defense Force (SDF) fighter aircraft were scrambled on Sunday responding to four China military aircraft flying over international waters (near Okinawa) - (JP) Japan Chief Cabinet Sec Suga: would respond to any airspace or vessel incursion - (JP) Japan govt plans to raise contribution ceiling for pension plans by 20-30% - Japanese press

- (AU) GE Exec: Australia still needs a a carbon price; May miss out on green investments until there is clarity on climate measures - SMH - (AU) S&P/ASX extending gains above 5,400; fresh 5 1/2 -year high

- (KR) Samsung Economic Research Institute (SERI): Sees South Korea 2014 GDP forecast at 3.1% vs 3.9% govt target - Korean press - (KR) South Korea may strengthen measures against rising KRW - Yonhap - (KR) South Korea chief economic advisor to Pres Park: To wait in entering talks regarding TPP - FT

- (IR) Iran foreign policy committee official: Denies press speculation Iran has halted enrichment of uranium to 20% purity

- (EU) US Pres Obama said to have been informed of NSA spying on German Chancellor Merkel as early as 2010 - German press - (DE) German Fin Min Schaeuble: Affirms his CDU party is unlikely to meet SPD's demands for higher taxes on the wealthy - German press - (FR) France said to have backtracked on recent bill to increase tax on savings - French press - (ES) Spain Treasury Min Montoro: To completely overhaul the income tax model in 2015; To lower tax contributions - financial press - (IT) Italy Fin Min Saccomanni: To unveil the details of a debt-cutting privatisation plan that is likely to include stakes in state-owned companies - Italian media

***Equities*** Market Snapshot (as of 03:30 GMT): - Nikkei225 +1.1%, S&P/ASX +1.1%, Kospi +0.3%, Shanghai Composite -0.3%, Hang Seng +0.4%, Dec S&P500 +0.3% at 1,760, Dec gold -0.2% at $1,350, Nov crude oil -0.2% at $97.70/brl

Notable movers by sector: - Consumer discretionary: Wuliangye Yibin Co 000858.CN -7.2% (Q3 results); Navitas Ltd NVT.AU -9.4% (provides FY14 guidance); KT Skylife Co Ltd 053210.KR +4.3% (Q3 results) - Industrials: Zoomlion Heavy Industry Science and Technology Co Ltd 000157.CN +7.2% (Chinese journalist apologizes over previous false speculation); Hyundai Merchant 011200.KR -4.0% (seeks to sell assets); James Hardie Industries JHX.AU +1.3% (provides operating update); Suzuki Motor 7269.JP +1.1% (Sept results); Mazda Motor 7261.JP +0.2% (Sept output results); Mitsubishi Motors 7211.JP +3.3% (share raising plans); ANA Holdings 9202.JP +1.4% (speculation regarding H1 results) - Materials: Kingsgate KCN.AU -4.4% (provides quarterly production results); Tokuyama 4043.JP flat (raises H1 guidance) - Financials: Chong Hing Bank Ltd 1111.HK -6.8% (Yuexiu acquires 75% stake); Ping An Insurance 601318.CN +0.7% 2318.HK +2.2% (Q3 results); China Construction Bank 601939.CN +0.2% 939.HK +0.7% (Q3 results); Mizuho Financial Group 8411.JP +1.5% (panel finds no wrongdoing) - Technology: Sharp 6753.JP +1.4% (sale of logistic centers) - Energy: Xinjiang Goldwind Science & Technology Co Ltd 002202.CN +3.9% 2208.HK +7.2% (Q3 results); China Oilfield Services Ltd 601808.CN +4.9% 2883.HK +7.7% (Q3 results) - Telecom: NTT DoCoMo Inc 9437.JP +1.1% (news of acquisition) - Utilities: TEPCO 9501.JP -1.4% (smart meter installation plans)

Forget China, switch to Mexico or Egypt

Where does growth come from? Why do some countries "emerge" and take on "developed" status, while others flounder before reaching that stage? Some once highly unlikely candidates have emerged as powerful economies. South Korea, for example, grew in two generations from a peasant economy devastated by war, to a fully paid-up member of the developed world. Others once far better placed have stumbled. This is not simply a question of natural resources, or of educational systems. Instead, ambitious research led by Ricardo Hausmann at Harvard University suggests that growth is "driven by knowledge – at the level of society, not the individual". The first question asks what a society knows how to do. The follow-up is whether this knowhow can be applied in new areas. If people are already skilled in one area, are there other industries in which their skills could easily be applied? The Harvard research involved producing a multi-modal "map" known as the Atlas of Economic Complexity (a simplified version can be viewed at www.ft.com/authersnote), examining how knowhow forms clusters among industries. Big groups form around garments – where many successful emerging markets started their ascent – construction, machinery, chemicals and electronics. All need skills readily transferable to other sectors. Outlying clusters involve natural resources. Countries blessed with oil or mineral wealth can do well for a while. But extractive industries do not involve expertise that can easily be transferred to other things. Unless countries deliberately build new areas of expertise with the cash they generate from their minerals, they will regress when the money runs out. So Mr Hausmann endorses the notion of an "oil curse" – politicians in countries that can get all the wealth they need from the ground under their feet tend to grow complacent, and avoid necessary reforms. This might explain why South Korea, with little mineral wealth, grew so fast, while Mexico, endowed with what in the 1970s appeared to be among the world’s biggest oil supplies, lapsed into stagnation. The next stage is to spot the nations best positioned to improve. The winners run counter to market wisdom. For example Mexico, an underperformer of the last generation, shows up as the Latin American economy best positioned for growth. Brazil, recently an investor darling, shows up very poorly. Why? Mexico is better positioned, according to Mr Hausmann, because it has diversified enormously, into aircraft, information technology and so on. After the financial crises of the 1980s and 1990s showed that it could not live on oil alone, Mexico invested in manufacturing and assembly companies on its border with the US. This was a crude play on cheap labour, piecing together imported parts and then sending them back across the border. But these industries are well connected. With these skills, it becomes easier for Mexico to diversify into other industries, from car manufacturing to electronics, and to take on more stages of the production process. Brazil has concentrated on its resources sector, led by soybeans and mining. "Brazil has grown remarkably little in the context of very high commodity prices," warns Mr Hausmann. "If they stay where they are or decline, their ability to grow will depend on their ability to diversify into more complex products. Brazil isn’t well positioned to do that." Predictions around the rest of the world are also counterintuitive. In sub-Saharan Africa, the country best positioned for growth is Zimbabwe. "If you assume that biology is going to take care of their main obstacle, which is Mr Mugabe, the country has knowhow in its society that could be expressed into higher levels of income." Tunisia and Egypt, despite the turmoil after the Arab Spring, show up as promising growth spots. Qatar, potentially a classic victim of the "oil curse", does not. "Oil is unlikely to be an additional source of growth, so the rest of the economy doesn’t have much to help it." Most importantly, there is China. The good news is that Mr Hausmann’s group think it is well-positioned to grow. The bad news is that their prediction, of 4.5 to 5 per cent growth per year for the rest of this decade, is in line with a recession at some stage. As conventional wisdom has pencilled in China for growth of at least 7.5 per cent, bailing out the rest of the world in the process, this is not good news. For many, Chinese growth below 5 per cent would be a "hard landing". But Mr Hausmann’s target sounds fair. "They have to go from a 46 per cent investment rate to something more reasonable. It’s hard to do that without a period of very slow or negative growth." You have been warned. To mitigate the effects of a slowing China, perhaps it is best to look on Mr Hausmann’s map for the countries that are counter-intuitively best placed to grow regardless.