>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: BONT -18.4% (lowers FY13 EPS guidance to a loss of ($0.30) - $0.15 vs $0.60 Capital IQ Consensus Est, down from $0.15-0.75), PGEM -17.6%, SODA -17%, LULU -13.3% (warns for Q4: lowers EPS and revenue guidance below consensus; lowers Q4 comp guidance ), QSII -9.3%, ( announces impairments in its hospital solutions division; 'results wil be below analysts' consensus expectations for revenues and earnings per share), ASNA -8.4% (Ascena Retail Group reports Total comparable sales for Nov-Dec of +1% YoY; lowers FY14 EPS guidance), VOLC -5.3%, EXPR -4% (lowers Q4 EPS below consensus; Q4 comps flat to pos low single digits ), VRTX -1%.

M&A related: SNI -2.5% (WSJ reporting DISCA / SNI merger talks over).

Other news: ICPT -19.9% (reports additional detail about FLINT Trial provided by NIDDIK; Bloomberg discusses that ICPT may seek partners on liver drug, according to reports), CNAT -17.1% (announced plans to initiate a placebo-controlled Phase 2b clinical trial in the second half of 2014 evaluating its lead drug candidate emricasan in Post Orthotopic Liver Transplant recipients), GSE -11.5% (continued weakness; GSE Holdings entered into a waiver and seventh amendment to its first lien senior secured credit facility with General Electric Capital Corporation and the other financial institutions party thereto; will pursue a sale of the co), RNA -9.1% (provides 2014 pipeline and financial outlook ), AMRN -5.4% (still checking), DNKN -1.4% ( updates global growth outlook; added 790 net new Dunkin' Donuts and Baskin-Robbins restaurants globally in 2013), BP -1.4% (plans to appeal some 'fictitious' oil spill claims, according to reports), TOT -0.7% (Reuters discusses that Total (TOT) plans to invest in Britain shale gas).

Analyst comments: PAL -4.5% (downgraded to Underperform from Mkt Perform at Raymond James ), BBRY -2.4% (downgraded to Underperform from Perform at Oppenheimer), CREE -2.3% (downgraded to Hold from Buy at Stifel), SYMC -2% ( downgraded to Underweight from Equal-Weight at Morgan Stanley), SCHW -1% (Charles Schwab downgraded to Underperform from Outperform at Credit Agricole), SFLY -0.9% (downgraded to Equal Weight from Overweight at Barclays; initiated with a Outperform at RBC Capital Mkts), DUK -0.6% (downgraded to Equal-Weight from Overweight at Morgan Stanley), ABX -0.4% (downgraded to Sell from Hold at Canaccord)

(BFW) *CONTINENTAL AG ‘CAN’T RULE OUT’ AN ACQUISITION IN 1H 2014: CFO

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BN 01/13 13:15 *CONTINENTAL CFO SCHAEFER COMMENTS IN INTERVIEW BN 01/13 13:15 *CONTINENTAL FREE CASH FLOW WAS EU1.5 BLN IN 2013 BN 01/13 13:15 *CONTINENTAL FREE CASH FLOW GIVES `EVEN MORE SCOPE' FOR A DEAL BN 01/13 13:15 *CONTINENTAL AG `CAN'T RULE OUT' AN ACQUISITION IN 1H 2014

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*CONTINENTAL AG ‘CAN’T RULE OUT’ AN ACQUISITION IN 1H 2014: CFO 2014-01-13 13:17:34.726 GMT

--NADINE SKOCZYLAS

-0- Jan/13/2014 13:17 GMT

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: WEN +6.6% ( Q4 adj. EPS $0.10-0.11 vs $0.06 Capital IQ Consensus Estimate; North America Company-Operated Same-Restaurant-Sales up 3.1% in 4Q 2013; sees FY14 EPS $0.34-0.36 vs. $0.29 consensus), PLX +5.9%, (Provides FY2014 Strategic Outlook; says 'we expect to see sales of ELELYSO (taliglucerase alfa) increase across all approved and launched territories') CKSW +4.5%, ZLTQ +2.8%, SEM +2%, SEAS +1.9%, ALNY +1.3%.

M&A news: BEAM +26% (Beam acquired by Suntory Holdings for $83.50/share in cash), ALU +1.9% (reports out indicate co is considering sale of enterprise business unit), CHC halted (China Hydroelectric enters into a definitive agreement and Plan of Merger with CPT Wyndham; Parent will acquire the co for $1.17 per ordinary share or $3.51 per ADS).

Select financial related names showing strength: DB +3.2%, BCS +1.8%, UBS +1.8% (upgraded to Buy from Neutral at BofA/Merrill), IBN +1.6%, RBS +0.9%.

Select metals/mining stocks trading higher: MT +1.9%, EGO +1.8%, GOLD +1.2%.

Other news: TKMR +39.7% ( signs development agreement with Monsanto (MON) on delivery technology for agricultural applications), NPO +36% (estimates Garlock Sealing Technologies' mesothelioma liability at $125 mln ), NIHD +21.1% (Telefonica S.A. And NII Holdings sign agreements to provide wholesale voice and data services to nextel in Brazil And Mexico), CTIC +13.5% (reaches agreement to reacquire rights to two anti-cancer compounds from Novartis), CLVS +11.7% (following interview with Citi analyst on CNBC Friday night where he indicated company may be the next ICPT; also announces 2014 Objectives and financial guidance; 'expect to initiate three global registration studies for CO-1686 in first- and second-line mutant EGFR non-small cell lung cancer in the first half of 2014'; ended 2013 with $323 mln in cash), PLUG +9.6% (continued strength, to host conference call and webcast on January 16, 2014 to provide business update), RGLS +8.7% (Expands its Biomarkers Platform and Establishes Regulus microMarkers, a New R&D Division Focused on Identifying microRNAs as Biomarkers of Disease), SMI +8% (still checking), RSOL +7.5% (still checking for anything new; Mercury Solar Systems shareholders voted last week in favor of Real Goods Solar merger), STEM +5.8% (technology was featured January 10 in television segment on CTV News Channel and on the CTV National News), IDIX +5.2% (Reports Sustained Virologic Response Rate for Phase II All-Oral Combination Study of Samatasvir, a Potent, Pan-Genotypic HCV NS5A Inhibitor, and Simeprevir), QIHU +3.7% (still checking), DVAX +3.6% ( discloses it estimates it cash, cash equivalents, and marketable securities were ~$189 mln as of December 31, 2013), GALE +2.4% (Acquires Mills Pharmaceuticals; financial terms not disclosed; Acquisition adds GALE-401 (Anagrelide CR) to expand Galena's product pipeline), TTM +2.2% (still checking), CELG+1.8% (may be attributed to positive MadMoney comments), VTG +1.6% (announces update of Sigma joint venture: 'Sigma has informed STX that it will claim a refund of its payments made to the shipyard' ), MGA +1.6% ( following positive Barron's mention ), ALNY +1.3% (Alnylam Pharma and Sanofi's Genzyme form transformational alliance for RNAi Therapeutics as Genetic Medicines; Genzyme becomes major Alnylam shareholder through purchase of $700 mln of equity at $80/Share ; acquires investigational RNAi Therapeutic assets from Merck), AAL +0.6% ( Bids have been submitted for AAL slots at Reagan Airport; JBLU, DAL, LUV are interested, according to reports), CSCO +0.5% (Cisco Systems ticking higher following positive Barron's mention), CL +0.5% (may be attributed to positive MadMoney comments), CLF +0.4% ( Indonesia has banned iron ore exports, according to reports), SLM +0.3% (announces new $8 bln financing facility), GM +0.3% ( recalling 370k pickup tricks due to fire risk, according to reports; also General Motors plans to reintroduce dividend, according to reports), TGT +0.3% (Reuters discusses comments from Target (TGT) that the retailer is planning significant changes following data breach; Barron's profiles positive view on Target).

Analyst comments: NCR +5% (resumed with a Overweight at JP Morgan; added to Focus list ), QIHU +3.7% (upgraded to Buy at Stifel; tgt $108; year of search monetization), TWTR +3.5% ( positive Goldman comments and tgt price increase to $65 ), RHT +2.4% (upgraded to Overweight from Equal-Weight at Morgan Stanley), FTNT +2.2% (upgraded to Overweight from Equal-Weight at Morgan Stanley), FFIV +1.7% (upgraded to Outperform from Market Perform at William Blair), MGM +1.7% ( upgraded to Buy from Neutral at BofA/Merrill), ADSK +1.6% (upgraded to Overweight from Equal-Weight at Morgan Stanley), LPLA +1.3% (LPL Financial upgraded to Overweight from Neutral at JPMorgan ), DSX +1% (Diana Shipping upgraded to Buy from Hold at Deutsche Bank), V+1% (upgraded to Buy from Neutral at Citigroup), M +0.8% (Macy's upgraded to Outperform from Neutral at Macquarie ), F +0.8% (initiated with a Strong Buy at ISI Group), D +0.5% (upgraded to Overweight from Equal-Weight at Morgan Stanley)

(BFW) *MARCHIONNE REITERATES NO PLAN FOR CAPITAL INCREASE FOR FIAT

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BN 01/13 13:10 *MARCHIONNE: TO DECIDE ON CONV BOND AFTER OUTLINING NEW PLAN BN 01/13 13:10 *MARCHIONNE SAYS CONVERTIBLE BOND OPTION ANALYZED BN 01/13 13:08 *MARCHIONNE REITERATES NO PLAN FOR CAPITAL INCREASE FOR FIAT BN 01/13 13:07 *FIAT CEO MARCHIONNE SPEAKS AT ROUNDTABLE AT DETROIT CAR SHOW BFW 01/13 13:07 *MARCHIONNE EXPECTS TO COMPLETE CHRYSLER PURCHASE THIS WEEK BN 01/13 13:07 *FIAT'S MARCHIONNE SAYS ALFA REVAMP PLAN NEEDS SPENDING BN 01/13 13:06 *MARCHIONNE: LISTING, HEADQUARTERS TO BE DISCUSSED AT FIAT BOARD BN 01/13 13:06 *MARCHIONNE SAYS FIAT BOARD WILL DISCUSS MERGER PROCESS JAN. 29 BN 01/13 13:06 *MARCHIONNE EXPECTS TO COMPLETE CHRYSLER PURCHASE THIS WEEK

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*MARCHIONNE REITERATES NO PLAN FOR CAPITAL INCREASE FOR FIAT 2014-01-13 13:09:39.104 GMT

--BRIAN LYSAGHT

-0- Jan/13/2014 13:09 GMT

(GS) Equities still the best positioned asset class

--> this is the note mentionned in the ZeroHedge Article in my earlier bbg, "US equity market to underweight relative to other equity markets over 3 months following strong performance" (Page 4)

* Macro outlook: Accelerating DM growth
We believe there will be a sustained acceleration in US and European growth in the first half of the year. This and the related upward pressure on real bond yields are likely to shape the strategic landscape. We expect US unemployment to reach the Fed’s 6.5% unemployment threshold by the 3rd quarter. This together with above-trend growth increases the risk that investors will question the prevailing outlook for rates to be unchanged for a long period of time. We therefore see the risk to other assets from higher rates this year as somewhat back-end loaded.

Our views across asset classes
Equities: We remain overweight over 3 and 12 months with higher conviction over 12 months. Returns should be supported by better global growth, healthy earnings growth and still high risk premia, in our view.
Commodities: We are neutral over 3 months as geopolitical uncertainty for oil markets remains high. We stay underweight over 12 months, where we see significant downside potential for gold, copper and soybeans and downside risks from supply to our relatively benign price forecast for oil.
Corporate credit: We expect the search-for-yield environment to remain strong and push spreads a bit tighter from here. Corporate re-leveraging remains the main risk to credit quality, in our view. Within credit, we prefer high yield over investment grade. We stay neutral on the asset class.
Government bonds: The steep yield curve should offer some protection against a significant further rise in 10 year yields in the near term and we stay neutral over 3 months. Longer term, we continue to expect yields torise as growth improves. We remain underweight over 12 months.

(ZH) Goldman Downgrades US Equities To "Underweight", Sees Risk Of 10% Drawdown

Goldman Downgrades US Equities To "Underweight", Sees Risk Of 10% Drawdown

Link to article {http://bit.ly/Kf04aZ}
It was inevitable that virtually at the same time as Goldman said the S&P is overvalued "by almost every metric" that the firm would go ahead and slam US equities in only its first tactically bearish call on US stocks in over a year.
Recall from Friday night:
S&P 500 valuation is lofty by almost any measure, both for the aggregate market (15.9x) as well as the median stock (16.8x). We believe S&P 500 trades close to fair value and the forward path will depend on profit growth rather than P/E expansion. However, many clients argue that the P/E multiple will continue to rise in 2014 with 17x or 18x often cited, with some investors arguing for 20x. We explore valuation using various approaches. We conclude that further P/E expansion will be difficult to achieve. Of course, it is possible. It is just not probable based on history.
The current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock: (1) The P/E ratio; (2) the current P/E expansion cycle; (3) EV/Sales; (4) EV/EBITDA; (5) Free Cash Flow yield; (6) Price/Book as well as the ROE and P/B relationship; and compared with the levels of (6) inflation; (7) nominal 10-year Treasury yields; and (8) real interest rates. Furthermore, the cyclically-adjusted P/E ratio suggests the S&P 500 is currently 30% overvalued in terms of (9) Operating EPS and (10) about 45% overvalued using As Reported earnings.
Sure enough, here comes Goldman's global portfolio strategy research team headed by Nielsen, Oppenheimer, Kostin, Garzarelli, and Himmelberg, and pulls another leg out of the Fed-driven rally.
We downgrade the US equity market to underweight relative to other equity markets over 3 months following strong performance. Our broader asset allocation is unchanged and so are almost all our forecasts. Since our last GOAL report, we have rolled our oil forecast forward in time to lower levels along our longstanding profile of declining prices. We have also lowered the near-term forecast for equities in Asia ex-Japan slightly. Near-term risks have declined as the US fiscal and monetary outlook has become clearer.
Our allocation is still unchanged. We remain overweight equities over both 3 and 12 months and balance this with an underweight in cash over 3 months and an underweight in commodities and government bonds over 12 months. The longer-term outlook for equities remains strong in our view. We expect good performance over the next few years as economic growth improves, driving strong earnings growth and a decline in risk premia. We expect earnings growth to take over from multiple expansion as a driver of returns, and the decline in risk premia to largely be offset by a rise in underlying government bond yields.
Over 3 months our conviction in equities is now much lower as the run-up in prices leaves less room for unexpected events. Still, we remain overweight, as near-term risks have also declined and as we are in the middle of the period in which we expect growth in the US and Europe to shift higher.
Regionally, we downgrade the US to underweight over 3 months bringing it in line with our 12-month underweight. After last year’s strong performance the US market’s high valuations and margins leaves it with less room for performance than other markets, in our view. Our US strategists have also noted the risk of a 10% drawdown in 2014 following a large and low volatility rally in 2013 that may create a more attractive entry point later this year.
Of course, how the above trade fits with Goldman's top trade #1 for 2014 revealed in November, which was to go long the S&P funded by an AUD short, one can only wonder.
And now the muppets start to wonder: should we do what Goldman is telling us to do, and blow up as always, or do what Goldman's trading desk is doing, which probably is buying risk from all those who are selling. Ah, questions.

>>> Lululemon shares plunge 11% following lowered Q4 guidance

Lululemon shares plunge 11% following lowered Q4 guidance
  • lululemon athletica (LULU $52.20 -7.40) issued lowered guidance for the fourth quarter with EPS of $0.71-0.73 from prior guidance of $0.78-0.80 with revenues of $513-518 million from prior guidance of $535-540 which are both below expectations.
  • Co's current guidance is based on comparable-store sales in the negative low-to-mid single digits on a constant-dollar basis. This compares to the Company's previous guidance of net revenue in the range of $535 million to $540 million for the fourth quarter based on flat comparable-store sales on a constant-dollar basis.
  • "We were on track to deliver on our sales and earnings guidance through the month of December; however, since the beginning of January, we have seen traffic and sales trends decelerate meaningfully. Based on this recent performance and assuming these trends continue through the remainder of January, we are reducing our outlook for the fourth quarter...As we end 2013, we are starting to see the results of the significant investments we made throughout this past year to strengthen and enhance our back-of-house product operations structure. While we realize that it will require continued investment and time to get to best-in-class status, with our new leadership in place we are very focused on building on this stronger foundation to execute our long-term growth strategies."

(BFW) Schaeffler CEO Says Too Early to Talk About Possible IPO Plans

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BN 01/13 12:41 *SCHAEFFLER CEO SAYS CO.'S FINANCING IS SOLID BN 01/13 12:41 *SCHAEFFLER CEO SAYS TOO EARLY TO TALK ABOUT POSSIBLE IPO PLANS BN 01/13 12:27 *SCHAEFFLER CEO ROSENFELD SPEAKS AT PRESS CONFERENCE IN DETROIT BN 01/13 12:26 *SCHAEFFLER CEO: NORTH AMERICA SALES GREW BY ABOUT 13% IN 2013 BN 01/13 12:25 *SCHAEFFLER TO OPEN NEW PLANT IN PUEBLA, MEXICO IN 2014: CEO

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Schaeffler CEO Says Too Early to Talk About Possible IPO Plans 2014-01-13 12:44:07.140 GMT

By Brian Lysaght Jan. 13 (Bloomberg) -- Says financing is solid. * See Oct. 4: Schaeffler Replaces CEO Amid Post-Continental Strategy Shift {NSN MU58DV6KLVRS <go>} Link to Company News:{CON GR <Equity> CN <GO>} Link to Company News:{42386Z GR <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