>>> Rio Tinto could partner with private equity to pursue large copper producers

Rio Tinto could partner with private equity to pursue large copper producers

Rio Tinto [ASX, LON:RIO] could partner with a private equity player to pursue large copper producers, The Australian’s Dataroom reported. The paper noted that Deutsche Bank said in a report that Rio could pursue an overseas copper producing business to build up its exposure to the commodity.
Deutsche names Anglo American [LON:AAL], First Quantum [TSE:FM], and Freeport [NYSE:FCX] as potential targets, the paper said.
The item noted that Anglo American has a market capitalisation of USD 23bn, while Freeport is valued at USD 15.32bn and Frist Quantum is valued at USD 8bn. Deutsche noted that the size of the targets would likely require Rio to partner with private equity for financial assistance.
Rio Tinto has a market cap of AUD 113.8bn (USD 81.7bn), the item noted.
Deutsche Bank also speculated that Rio could list the Iron Ore Company of Canada, which would raise USD 3bn, the item noted.

>>> US Close Dow -2.11% S&P -2.08% Nasdaq -2.27% Russell -2.32% VIX +13,4%

Closing Market Summary: Stocks Tumble amid Broad De-Risking

The S&P 500 lost 2.1% on Monday, as uncertainty surrounding a host of issues continued to drive an inclination to sell into strength and to reduce risk exposure to stocks. The benchmark index (2545.99) ran into resistance at the 2600 level amid a morning rebound effort before steadily backpedaling throughout the afternoon and re-testing its February low (2532.69).  That re-test invited some late buying interest that enabled the indices to close off their worst levels of the day.

The Dow Jones Industrial Average (-2.1%), the Nasdaq Composite (-2.3%), and the Russell 2000 (-2.4%) also squandered intraday rebound efforts to finish near session lows. The tech-sensitive Nasdaq is now negative for the year, and the small-cap Russell 2000 has fallen more than 20.0% from its yearly high.

The degree of pessimism is picking up noticeably, evidenced by the widespread de-risking activity.  No sector was safe today.  All 11 sectors ended in negative territory, with losses ranging from 1.0% (financials) to 3.7% (real estate).

Influential fund manager, Jeffrey Gundlach, contributed to the bearish price action.  in a CNBC interview, he expressed ample concern about the rising U.S. budget deficit, while adding that he thinks passive investing has reached "mania" status and that investors should avoid index funds. Mr. Gundlach also said his best idea for 2019 is "capital preservation."

Softening economic data also fueled concerns about the growth outlook and compounded the market's negative bias.  The NAHB Housing Market Index for December fell from 60 to 56 (Briefing.com consensus 61), which is its lowest level in nearly four years.  The Empire Manufacturing Index for December, meanwhile, dropped to 10.9 (Briefing.com consensus 20.0) from 23.3.

The silver lining, if one could call it that, is that the weaker-than-expected data will help validate the market's belief that the Federal Reserve is apt to turn more conservative with its 2019 rate-hike projections.

Mounting losses in the stock market have raised the stakes in front of Wednesday's FOMC announcement, which many participants still think is going to produce another rate hike and at the same time see the Fed temper its rate-hike projections for 2019.  President Trump today questioned again why the Fed would be raising rates at this time.

The real estate (-3.7%), utilities (-3.3%), and consumer discretionary (-2.8%) sectors led the broad-based retreat. The financials sector (-1.0%) was the best-performing group, although it still finished notably lower and well off the 0.9% gain it registered earlier in the day.

The pullback in the financial sector was emblematic of a market that continues to see any sign of strength as a selling opportunity.  On a related note, Goldman Sachs (GS 168.05, -4.72, -2.7%) underperformed after Malaysian authorities reportedly filed criminal charges against Goldman Sachs related to the 1MDB scandal.

The health care sector (-2.1%) for its part fell amid the uncertainty attached to a ruling by a federal judge in Texas that the Affordable Care Act is unconstitutional. That decision will head to an Appeals Court and most experts believe it is ultimately headed to the Supreme Court.

Separately, Xerox (XRX 21.29, -3.16) was the biggest laggard in the S&P 500 with a loss of 12.9% after Moody's cut Xerox's senior unsecured debt ratings to Ba1 from Baa3. The cut from investment grade to junk status was due to an uncertain revenue base amid a decline in demand for copy and printing services as well as intense global competition, according to Bloomberg.

Reviewing Monday's economic data, which included the Empire State Manufacturing Survey for December and the NAHB Housing Market Index for December:

  • The Empire Manufacturing Survey for December checked in at 10.9 for December (consensus 20.0), down from 23.3 in November, with a deceleration seen across almost every category.
    • A number above 0.0 still connotes expansion, yet it is clear to see that activity decelerated in December; moreover, the report indicates that optimism about the six-month outlook was slightly more tempered than in November.
  • The NAHB Housing Market Index for December came in at 56 (consensus 61), down from 60 in November.
    • The drop reflects deteriorating confidence in housing market conditions, although it needs to be noted that the dividing line between optimism and pessimism is 50.0.

Looking ahead, investors will receive Housing Starts and Building Permits for November on Tuesday.

  • Nasdaq Composite -2.2% YTD
  • Dow Jones Industrial Average -4.6% YTD
  • S&P 500 -4.8% YTD
  • Russell 2000 -10.5% YTD

>>> Oracle beats by $0.02, reports revs in-line; guides Q3 on the call (45.73 -

Oracle beats by $0.02, reports revs in-line; guides Q3 on the call (45.73 -0.87)
  • Reports Q2 (Nov) earnings of $0.80 per share, excluding non-recurring items, $0.02 better than the S&P Capital IQ Consensus of $0.78; revenues fell 0.3% year/year to $9.57 bln vs the $9.52 bln S&P Capital IQ Consensus.
  • Total Cloud Services and License Support plus Cloud License and On-Premise License revenues were up 1% to $7.9 billion.
  • "In addition to our strong EPS growth, free cash flow grew 10% to $13.8 billion over the previous twelve months. I am confident that we will continue to record strong EPS and free cash flow growth during the second half of this fiscal year." "Oracle's two cloud ERP businesses, Fusion ERP and NetSuite ERP, delivered a combined revenue growth rate of 32% in Q2," said Oracle CEO, Mark Hurd. "With nearly 6,000 Fusion ERP customers and over 16,000 NetSuite ERP customers, Oracle is the clear leader in cloud ERP. ERP has always been the largest segment of the enterprise applications business, so we have lots of room to grow as customers migrate from their traditional on-premise ERP to the Oracle Fusion ERP Cloud."

>>> ACHN - Reports Positive Interim Data for ACH-4471 Phase 2 Trials and Provide

Reports Positive Interim Data for ACH-4471 Phase 2 Trials and Provides Clinical Development Strategy Update; Projects 2019 cash burn $80-85M
ACH-4471, First Generation Oral factor D Inhibitor
- Proof of Concept Validated in both PNH as Monotherapy and in Combination w/C5 Inhibitor
- Proof of Mechanism Validated in C3G, End of Phase 2 Meeting Targeted for 4Q 2019ACH-5228, Next Generation Oral factor D Inhibitor
- Data Demonstrate 3x to 4x Greater Potency and Extended Half-life- Phase 1Multiple Ascending Dose Trial targeted to begin January 2019
- USPTO has Issued Achillion a Patent Covering ACH-5528 Composition of Matter

Reported interim results for the Company’s Phase2 trials of its first-generation oral factor D inhibitor, ACH-4471, as well as Phase 1 pharmacokinetics and potency data for its next-generation factor D inhibitors, ACH-5228 and ACH-5548.The Company also confirmed today an expected YE 2018 cash and marketable securities balance of approximately $270 million and a projected 2019 cash burn of $80-85 million.
Comments: “These compelling findings underscore the momentum for Achillion and our factor D portfolio as we advance three oral small molecule compounds through clinical development. Our oral factor D inhibitors have the potential to treat patients suffering from alternative pathway mediated diseases,” said Joe Truitt, President and Chief Executive Officer at Achillion. “In C3G, we have completed patient dosing in our 14-day biomarker/dose ranging study and we are currently enrolling patients in our 6 and 12-month PoC trials. We now have 18 clinical sites open globally and plan to open additional sites in 2019. We are also delighted that the FDA has recently agreed to allow adolescents in our trials as C3G is a disease with unmet medical needs that often begins in childhood. Our C3G plan is to enroll up to 20 patients in our 6 and 12-month trials and to present our data to the FDA at an End of Phase 2 meeting in Q4 2019.”Truitt continued, “The PNH trial data show that factor D inhibition may play an important role in the future treatment paradigm for PNH patients. Our trials have demonstrated a positive impact on patient’s hemoglobin, reticulocyte counts, LDH, FACIT-fatigue scores and reduced blood transfusions both as a monotherapy and in combination with a C5 inhibitor. Our hypothesis has been reinforced that if the alternative pathway is adequately inhibited then patient benefit can be achieved in fundamentally different ways than has been seen with C5 inhibitors. We believe this is an unmet medical need and a market segment we will continue to evaluate. Additionally, based on the Phase 1 pharmacokinetic and potency data, our next generation compounds, ACH-5228 and ACH-5548, allow for higher alternative pathway inhibition along with a reduced dosing frequency. These compounds have the potential to be transformative both for patients and Achillion and to deliver on the promise of alternative pathway inhibition across a wide spectrum of diseases.”