>>> US Early premarket gappers

Early premarket gappers

Gapping up: ARIA +5.7%, ZHNE +3.4%, ALU +3.4%, ERIC +2.9%, NOK +2.8%, YRCW +2.2%, RIO +2.2%, BBL +2.2%, SIRO +2%, BHP +1.6%, BUD +1.6%, CCL +1.5%, SIG +0.6%, DB +0.5%

Gapping down: CTIC -8.8%, TSL -6%, JKS -5.7%, VOD -4.8%, TKC -4.5%, CSIQ -4.4%, TTM -3.3%, EDMC -3.3%, SCLN -2.7%, SNE -2.5%, SCTY -2.2%, TSLA -2.1%, DDD -2.1%, AA -1.7%, FSLR -1.4%, YGE -1%, YHOO -0.8%, EBAY -0.7%

(Citi) European Media : Forget 2014; Focus on 2015

Key Calls for 2014 and 2015 — We are positive on Prof Pubs and Internet, selectively positive on Pay TV, Outdoor and Agencies. We are negative on broadcasters and consumer publishers. Our top picks for 2014 are TF1, DMGT, ELSN, PSON, BSY, all rated Buy.

>>> 5 Most Preferred Stocks
Our top picks come from across the strategies we highlight above. Going through them in brief:
* TF1 (TFFP.PA, Buy, PT €19) — Our view is that the TV ecosystem in France is
stabilising and TF1 audience share has not only leveled out but started to grow.
In the ST there should also be support from one-off events and easy comps.
More importantly, we see scope for significant medium-term margin rebuild driven
by better top line and focus on cost savings. The scale of margin disconnect vs.
peers is underlined by a massive EV/Sales discount.
* DMGT (DMGOa.L, Buy, PT 1180p) — In the past 12 months we believe the
market has better recognised the c.75% of EBIT coming from B2B. What is still
under-recognised in our view is the strength of B2B organic growth. At 8.6%
FY14E on our forecasts, well ahead of peers, it is becoming harder to ignore. In
addition, we think DMGT enjoys a strong position within consumer media and
see upside from 3 areas: (1) UK recovery — 1% on advertising adds c.1% to
EPS; 2) cover price levers - 5p on the Mon-Fri Mail adds c.3% to EPS; 3)
valuation and earnings upside for online assets, both Zoopla and MailOnline.
* Reed Elsevier PLC/NV (REL.L/ELSN.AS; Buy, PT 1100p/€20.8) — Reed is
already delivering organic growth across each of its operating units with scope
for a further acceleration in trends in 2014 as developed market macro recovery
takes hold. We also see scope for meaningful upside to margins driven by (1)
Legal where current margins of 15% could expand to over 20% in time; (2) BI,
where we see scope for margins to move to 20% or more as the division
migrates toward Data Services. Finally we see scope for earnings enhancement
from (1) active portfolio management; (2) proactive cash usage.
* Pearson (PSON.L, Buy, PT 1350p) — Medium-term we see strong growth
trends driven by continued worldwide demand for educational services — both
instructional materials and, increasingly, learning platforms. We also see scope
for better margins over time as the business migrates away from print and
becomes more of a professional information company. Pearson was the best
‘through the cycle’ earnings grower over the last cycle (with compound growth of
around 15% p.a.); we think it can deliver across the next cycle as well.
* BSkyB (BSY.L, Buy, PT 1000p) — Although uncertainty from the launch of BT
Sport is clearly unwelcome, we don’t think the investment case is broken. We
think valuation is underpinned at the current level and see scope for upside from
three areas: (1) greater product penetration; (2) better yield/pricing; (3) optionality
on management being able to extend the life of Sky Sports beyond 2017.

>>> 5 Least Preferred Stocks
Our least preferred names are largely focused on the more cyclical end of the
sector, but the common thread is a sense that valuation is potentially running ahead
of events (recovery or M&A). In each case, we have to acknowledge that the
absolute downside is not massive; we also note that to a varying degree, near-term
newsflow for each name is likely to continue to be positive. In this context our Sell
recommendations largely represent a call to take profits or use the companies as
potential source of funds, rather than signaling significant absolute downside.
* ITV (ITV.L, Sell, PT 191p) — Over the past 3 years every metric we monitor or
care about at ITV has improved, and in some cases substantially. Looking into
2014E we remain enthused about economic recovery and think ITV should fully
participate in this but worry about three issues. (1) we worry that the market is
overly sanguine about the sustainability of growth and the impact of sports rights
losses on 2015E/2016E growth. (2) With BBC Charter renewal and the potential
sale of Channel 5, we think the UK TV landscape could become more
competitive rather than less, at least in the near-term (3) Looking at valuation, we
believe much is already discounted: ITV’s long term average EV/Sales is 2.0x-
2.5x — this compares with the group at nearly 3.5x 2014E EV/Sales today.
* ProSiebenSat.1 Media (PSMGn.DE, Sell, PT €32) — P7S1 is much like ITV. It
is hard to pick a hole in short-term performance, but again three factors weigh on
our view: (1) while sports rights are not an issue in Germany, we do worry about
the effect of increased competition from new entrants, both linear (cf. Disney) and
non-linear (cf. the proliferation of OTT launches, from Watchever to Netflix). (2)
Second, and linked, we note that margins at P7S1 are at all time highs (recurring
EBITDA margins of nearly 35% for the core broadcast business). The point here
is that we fear the market potentially underestimates the amount of investment
risk, especially as P7S1 is proportionately more reliant on acquired (as opposed
to commissioned) content than its major competitor RTL. (3) Given the stage in
the cycle, valuation looks rich at 3.2x 2014E EV/Sales and 10.3x EV/EBITDA.
* Vivendi (VIV.PA, Neutral, PT 19.8) — Of our least preferred names, this is
perhaps the most risky because there are so many permutations over the scope
and mode of value crystallisation at Vivendi. We highlight two risks: (1) many
investors assume that GVT will be disposed of but there is uncertainty on this
point and running GVT is much less preferable to a clean sale, in our view. (2)
Virtually all analysis assumes no further deterioration in u/l EPS momentum,
which we think may be optimistic (our ests. stand almost 20% below consensus).
* Mediaset (MS.MI, Sell, PT €2.70) — Stock performance and fundamentals have
rarely diverged as much as in 2013. Despite a short summer truce, advertising
remained heavily negative throughout the year: whereas consensus was initially
pointing at -4/5% for ad-collection for 2013E, we estimate advertising should
have ended the year down 11-12%. Pay TV (PPV) has also remained poor, even
if Mediaset has done well on costs. Our concerns focus on two areas (1) we
continue to worry about the structural outlook for TV. The advertising industry
may well recover part of the c. €3.0bn of revenue lost since 2010, but we worry
that both FTA and Mediaset will struggle to maintain market share, at least
without costs coming back in. (2) We are less convinced of the value creation
from divesting the group’s PPV businesses.
* Mediaset Espana (TL5.MC, Sell, PT 5.0) — Our view here is directly that the
market is too optimistic on recovery potential, at least ST. The issue with
Mediaset Espana (in contrast to Neutral-rated Atresmedia) is that the group
trades at a continued valuation premium. This doesn’t necessarily make A3M
cheap, but we think the gap will close in time driving a more benign view.

(BN) *LIBERTY GLOBAL AGREES TO BUY ZIGGO FOR EU34.53 PER SHR

 BN 01/27 07:55 *LIBERTY TO BUY ZIGGO FOR ABOUT EU10B IN STOCK AND CASH
 BN 01/27 07:55 *LIBERTY GLOBAL AGREES TO BUY ZIGGO FOR EU34.53 PER SHR
 BN 01/27 07:54 *ZIGGO, LIBERTY GLOBAL FOOTPRINT WILL REACH 90% OF DUTCH HOMES
BFW 01/27 07:54 *LIBERTY GLOBAL OFFER PRICE OF €34.53 PER ORDINARY ZIGGO SHR
BFW 01/27 07:53 *LIBERTY GLOBAL TO BUY ZIGGO
 BN 01/27 07:53 *LIBERTY GLOBAL OFFER PRICE OF €34.53 PER ORDINARY ZIGGO SHR
 BN 01/27 07:53 *LIBERTY GLOBAL: COMBINED FOOTPRINT WILL REACH 7M
 BN 01/27 07:53 *LIBERTY GLOBAL TO BUY ZIGGO
 BN 01/27 07:53 *ZIGGO: LIBERTY GLOBAL, ZIGGO JOINED ANNOUNCEMENT
Ziggo: Liberty Global and Ziggo joined announcement
2014-01-27 07:53:17.572 GMT

             Ziggo: Liberty Global and Ziggo joined announcement

 

Liberty Global to Acquire Ziggo

Strategic combination creates national Dutch cable operator

· Combined footprint will reach 7 million or over 90% of Dutch homes

· Creates leading challenger in the mobile & enterprise businesses

· Continued investment & innovation to benefit Dutch consumers

· Planning to leverage Ziggo's strong brand nationwide

· Centralizing Dutch operations at Ziggo's Utrecht headquarters

· Significant synergy opportunities

· Unanimously recommended by Ziggo's Supervisory & Management Boards

· Intended stock and cash offer implies a price of €34.53 per ordinary Ziggo
share based on January 24, 2014 close (and a price of €35.74 per ordinary
Ziggo share based on 10-day VWAP

1)

Denver, Colorado and Utrecht, the Netherlands

- January 27, 2014
Liberty Global and Ziggo joined announcement

(KEP-CHEU) Chemical Reaction Q4

* Less destocking in Q4 – good start to 2014
Based on information from non-listed and listed companies, we have
formed the impression that seasonal destocking in Q4 2013 was
significantly less pronounced than in past years and that orders for Q1
2014 continued the sequential positive momentum. Several private
companies say that order amounts have increased (but not yet the number
of orders), possibly signalling the start of a restocking trend, in our view.

* After several profit warnings, Q4 should be okay
In our view, Akzo’s, Arkema’s and Kemira’s profit warnings had mainly
company-specific causes. Only DSM’s warning represents a negative
read-across for the global nutrition market. More important than Q4 will
be the outlook, where we expect companies to become more positive.

* Top picks Clariant and Solvay; top avoids Akzo and Syngenta
Despite Clariant’s fantastic performance, we still see 25% upside. Solvay
is among the least loved EU chemicals and therefore expectations are low;
in contrast, we expect positive news flow on the EU PVC JV approval soon
and recovery signs at its troubled units (Polyamides, Rare Earth, Guar,
Electrochemistry). We would still avoid Akzo and Syngenta as we think
consensus is still far too optimistic.

(BFW) BG Expects 4Q Cash Impairments of $2.4b in Egypt, U.S.

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

BFW 01/27 07:12 *BG TOTAL 2013 EARNINGS TO FALL TO $2.2 BLN ON U.S., EGYPT BN 01/27 07:12 *BG TOTAL 2013 EARNINGS TO FALL TO $2.2 BLN ON U.S., EGYPT BN 01/27 07:08 *BG EXPECTS PRODUCTION VOLUMES IN RANGE OF 710-750KBPD IN 2015 BN 01/27 07:06 *BG SAYS 2013 OUPUTVOLUMES EXPECTED IN RANGE OF 590-630KBPD BN 01/27 07:05 *BG EXPECTS 2013 PRODUCTION VOLUMES OF AROUND 633,000 B/D BN 01/27 07:04 *BG EXPECTS TOTAL RESULTS EARNINGS OF $2.2 BLN AFTER IMPAIRMENTS BFW 01/27 07:03 *BG GROUP DECLARES FORCE MAJEURE IN EGYPT BN 01/27 07:03 *BG EXPECTS 4Q CASH IMPAIRMENTS OF $2.4 BLN IN EGYPT, U.S. BN 01/27 07:02 *BG DECLARES FORCE MAJEURE IN EGYPT ON DOMESTIC GAS DIVERSIONS BN 01/27 07:01 *BG GROUP DECLARES FORCE MAJEURE IN EGYPT

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

BG Expects 4Q Cash Impairments of $2.4b in Egypt, U.S. 2014-01-27 07:14:01.86 GMT

By Brian Lysaght Jan. 27 (Bloomberg) -- Co issues Force Majeure notices under its LNG agreements in Egypt reflecting the ongoing diversions of gas volumes to the domestic market in excess of pooling arrangements. * Non-cash, post-tax impairments of approximately $2.4 billion associated with Egypt (around $1.3b) and the US (around $1.1b) * 2013 production volumes of around 633 thousand barrels of oil equivalent per day (kboed), in line with guidance * Total results earnings (post impairments) of approximately $2.2 billion (around 65 cents per share) * 2014 production volumes expected in the range of 590 - 630 kboed * 2014 E&P unit operating costs expected to be $15.50 - 16.25 per boe * 2015, BG Group expects production volumes to be in the range of 710-750 kboed excluding portfolio changes, and continues to expect to be free cash flow positiv

Link to Statement:{NSN N01ST13HBS3T <GO>} Link to Company News:{BG/ LN <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: Brian Lysaght at +44-20-7330-7908 or blysaght@bloomberg.net

WSJ : Global Woes Fail to Send Cash Into U.S. Stocks

Global Woes Fail to Send Cash Into U.S. Stocks

Further Selloff Could Put Stocks on Track for Correction

The emerging-world tumult that rattled global markets last week is prompting investors to take a fresh look at their portfolios. But so far few are responding to the shakeout by seeking shelter in U.S. stocks, a sign that markets around the globe likely face further turmoil.

A further selloff could put the U.S. stock market on track for its first so-called correction—typically defined as a pullback of at least 10%—since the euro crisis of 2011. The emerging-market unrest makes such a decline likelier, some say, given headwinds such as uneven economic growth and receding central-bank support.

"We came into the year thinking 2014 would be a much more challenging year for investors," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co., with $105 billion under management.

He said he has been expecting a "stiff correction of 10% to 20%" sometime in 2014, reasoning that stocks have risen too far given the likely path of earnings and economic growth. He is waiting for stocks to extend their decline before adding to his holdings.

The stocks, bonds and currencies of developing countries including Turkey, South Africa and Brazil have been hammered in recent days. The problem is that a wide range of emerging-market countries are having trouble adapting to a softer world economy. Until they make some deep economic adjustments, investors and analysts say, their markets could face continued selling.

Many investors say U.S. stocks eventually will benefit as retreating money managers look for a safer place to invest. Few expect a slowdown in China or market turmoil in places like India and Argentina to hit the U.S. economy or corporate profits. U.S. consumers could benefit as commodity prices fall as a result of lower Chinese demand, Fidelity Investments said last week in a note to clients.

Even so, many investors are saying they would prefer to wait for lower prices before buying again. The uproar in developing-country markets hit U.S. stocks hard last week, with the Dow Jones Industrial Average tumbling 3% over two days to its worst weekly loss in more than a year.

Joseph Quinlan, chief market strategist at U.S. Trust, Bank of America Private Wealth Management, with $333 billion in assets under management, expects the upheaval in emerging markets to benefit U.S. markets—though he also isn't buying yet.

"All these problems in the emerging markets make the U.S. more attractive," Mr. Quinlan said. "If we got a 5% to 8% pullback, we'll be putting more money to work in equities."

In 2013, of course, investors looking for a correction were proven wrong time and time again as the Dow powered to a 26.5% rise. With the declines last week, the Dow is 4% below its recent high.

Now a number of factors are seen as laying the groundwork for a pullback. With the Federal Reserve taking its first step toward scaling back its unprecedented efforts to support the economy, some investors see the easy-money tailwind diminishing.

Valuations, meanwhile, look stretched, many say.

Wayne Kaufman, chief market analyst at New York-based brokerage Rockwell Securities, points to the price of the S&P Composite 1500 index, which covers approximately 90% of U.S. market capitalization. At the end of 2013, it was 18 times the earnings of its components, up 20% from a year earlier.

"We can't expect that to continue," he said.

To be sure, while earnings haven't been strong enough to push stocks higher, they haven't been disastrous. With a quarter of S&P 500 companies having reported results through Thursday, earnings are on track for a 6.4% rise from last year, compared with forecasts for a 6.2% increase just before the start of earnings season.

And the scale and timing of any investor shift out of emerging markets is uncertain. A large-enough selloff overseas may push money around the globe out of stocks and into lower-risk bonds, hurting share prices everywhere. Even if investors do put funds to work in the U.S., other factors could offset those gains and leave stocks treading water.


That said, the picture for U.S. markets appears much more upbeat than for many developing countries.

Richard Bernstein, chief executive of Richard Bernstein Advisors, which oversees $2.1 billion in New York, says he has worried for some time that expectations for developing-country securities were too high. He thinks the trouble in emerging markets is symptomatic of deeper economic problems and that emerging-market stocks and bonds will fall further.

"People thought that emerging-market growth was something special," said Mr. Bernstein. "They are learning it was fueled by the credit bubble, which is now deflating."

Manoj Pradhan, global emerging-market economist at Morgan Stanley in London, has been warning clients for months not to jump back into the stocks and bonds of most developing countries. It is still too soon, he says.

"The weakness that we have seen in asset prices and continue to see in asset prices is inevitable," he says.

Some see declines as likely in the U.S. as well, at least in the near term. John Kosar, director of research at Asbury Research, points to the S&P 500's drop below 1814 on Friday—a level it broke through last year only on Dec. 20. Many investors who bought since then are now likely losing money, Mr. Kosar said.

"That's the pressure point for the market," Mr. Kosar said. "If you push on it, people feel pain. And when people feel pain, they sell."