>>> Alitalia may have Lufthansa return as bidder - report (translated)

Alitalia may have Lufthansa return as bidder

Lufthansa [ETR: LHA], the German airline, could re-enter the race to acquire a stake in Alitalia, the troubled Italian airline, Italian-language daily Il Sole 24 Ore reported. The report cited sources at the airline who said that given the right conditions, Lufthansa could acquire a stake in Alitalia.

The report added that Lufthansa management has met with Armando Siri, the Italian under-secretary of Transport to discuss the matter.

The report noted that at the end of October Lufthansa ruled itself out of the bidding, saying that it would not partner with a state-controlled entity in the control of Alitalia. The report said that the latest development suggests a rethink and opens the possibility that Lufthansa is willing to work with Ferrovie dello Stato (FS), the Italian railway network that is set to take over the airline.

The report added that Lufthansa is being advised by Merrill Lynch on the Alitalia dossier.

The article also added that Lufthansa's three commissioners will complete their examination of the offers and manifestations of interest received from bidders and will then make their recommendations to the Ministry of Economic Development.

The item noted that Alitalia received binding offers from FS and Delta Airlines [NYSE: DAL] and a manifestation of interest from easyJet [LON: EZJ]

>>> Telecom Italia may sell off Inwit to reduce debt - report (translated)

Telecom Italia may sell off Inwit to reduce debt

Telecom Italia [BIT:TIT] (TIM) could sell off Inwit [BIT: INW], its transmission tower subsidiary to reduce debt, Italian language daily Il Sole 24 Ore reported. The report cited an internal strategy paper produced by TIM that also put forward the sale of Sparkle, TIM's overseas fibre optic network, to CdP and either the partial or total sale of Tim Brasil, TIM's mobile phone subsidiary in Brazil. The aim of the divestments would also be to reduce debt.
The article added that the paper also suggests spinning off TIM's network into a newco that would also contain Open Fiber's network.
The item said that TIM would then focus on providing content to fixed-line and mobile retail customers, as well as providing ICT services to state bodies and large companies.
Inwit has a market cap of EUR 3.84bn.

>>> 2019 iPhones to use new combination of antenna technology, Kuo says

2019 iPhones to use new combination of antenna technology, Kuo says

Reliable Apple analyst Ming-Chi Kuo is out this morning with an investor note covering antenna technology for the 2019 iPhones. Kuo predicts that Apple will move away from Liquid Crystal Polymer antenna technology, and shift towards a new combination of Modified PI tech.

Kuo says there are several reasons for Apple to make this change. For one, the company is said to have “lower bargaining power” against LCP material suppliers, while it’s also more difficult to introduce additional LCP suppliers due to the “complicated production process.”

Further, Kuo says LCP is more “brittle” than alternatives and thus has issues with yield rate, and improving that yield rate could potentially lower the antenna’s performance. As for the performance of Modified PI antenna, Kuo says that performance “can be as good as LCP thanks to the improved fluoride formula.”

Kuo specifically predicts that the 2019 iPhone models will adopt four MPI antennae and two LCP antennae. Currently, the iPhone XR, iPhone XS, and iPhone XS Max are each quipped with six LCP antenna.

The number of suppliers for MPI antennae for the 2019 iPhones will be five, according to Kuo. This gives Apple improved bargaining power, with the suppliers having to compete on price. The LCP antennae tech used in the 2019 iPhones will be supplied “exclusively by the Japanese supplier thanks to its better vertical integration,” according to Kuo.

For the average consumer, this change doesn’t seem as if it will come with any notable changes. Kuo says that both LCP and MPI will be involved in the push towards 5G technology. While LCP has traditionally offered advantages in areas like consistent performance and low loss, MPI is widely believed to be catching up.

Earlier this month, Kuo predicted that upgraded Face ID is coming to the new iPhones in 2019, while he also noted that new iPads will arrive by early 2020.

>>> Week in Review: Fed Policy Statement Not Enough to Derail U.

Week in Review: Fed Policy Statement Not Enough to Derail U.S. Midterm Gains

The S&P 500 rose 2.1% this week, but had to weather a late week sell-off after the latest policy statement from the Federal Reserve humbled an upbeat reaction to the midterm elections. Neither outcome was a surprise, but they were representative of recent market volatility. The Dow Jones Industrial Average and the Nasdaq Composite also finished the week higher, adding 2.8% and 0.7%, respectively. The Russell 2000 added 0.1%.

The midterm elections produced a split Congress with the Democrats taking control of the House and the Republicans retaining control of the Senate. The prevailing assumption in the market was that a newly divided Congress would preserve market-friendly policies, namely the tax cut and deregulation efforts. In addition, investors took delight in the fact that the stock market has historically done well in years with a Republican president and split Congress.

The Fed released its policy statement on Thursday, in which it decided to leave the fed funds rate unchanged as expected. The central bank noted that it expects further rate hikes that are consistent with sustained economic growth, strong labor market conditions, and inflation near its symmetric 2% target over the medium term, but omitted October's sell-off and U.S.-China trade developments from its policy statement. Those omissions were a clear, between-the-lines message that the FOMC remains poised to raise rates for a fourth time this year in December.

In the stock market, the health care (+4.0%), real estate (+3.6%), and utility (+3.1%) groups led the way. Of note, health care has surpassed the information technology (+1.4%) and consumer discretionary (+2.0%) sectors for the top spot in the yearly sector standings with a 2018 gain of 12.4%. For comparison, tech is up 10.7%, and consumer discretionary is up 10.9%.

Conversely, the communication services sector was the only group to finish in negative territory with a weekly loss of 0.2%.

In earnings, some notable companies that had upbeat reports included Berkshire Hathaway (BRK.B), CVS (CVS), Eli Lilly (LLY), Humana (HUM), and Walt Disney (DIS). On the other hand, Skyworks Solution (SWKS) led chip stocks lower on Friday after it issued below-consensus Q1 earnings and revenue guidance. Skyworks, which is an Apple (AAPL) supplier, warned of slowing chip demand, continuing a disappointing trend out of the semiconductor industry.

On a related note, Japan's Nikkei Asian Review reported that Appledecided to cancel a production increase in its newest low-end iPhone XR. However, the Nikkei also said that demand for the older generation iPhone 8 and iPhone 8 Plus has been higher than expected. Nevertheless, the report corroborated fears over the company reaching peak iPhone sales.

In politics, Attorney General Jeff Sessions resigned his post effective immediately per President Trump's request. Pot stocks initially surged in response to his resignation, as his adamant anti-marijuana stance has been seen as a roadblock to advancing the national discussion for legalization. However, pot stocks pulled back as replacement names currently being floated are against marijuana legalization; acting Attorney General Matthew Whitaker has a mixed record on the issue.

Looking at other markets, U.S. Treasuries had a volatile week, and closed near last week's levels. This week, the 2-yr yield decreased two basis points to 2.91%, and the 10-yr yield added two basis points to 3.21%.

Also of note, WTI crude lost 4.8% this week, entering bear market territory and extending its decline from last month's four-year high. U.S. President Donald Trump granted temporary wavers on Monday to eight countries who import oil from Iran after the U.S.'s energy sanctions on the OPEC member were officially reimposed.

>>> US Close Dow -0.77% S&P -0.92% Nasdaq -1.65% Russell -0.94%

Closing Market Summary: S&P 500 Pulls Back from Midterm Election Spike

The S&P 500 lost 0.9% on Friday, with the pullback suggesting a natural consequence of an overreaction to this week's election spike. The Dow Jones Industrial Average lost 0.8%, the Nasdaq Composite lost 1.7%, and the Russell 2000 lost 1.8%. For the week, the S&P 500 advanced 2.1%.

Outperforming the broader market on Friday were the defensive-oriented consumer staples (+0.5%), real estate (+0.1%), and utilities (+0.1%) sectors. Conversely, FANG stocks within the lagging communication services (-1.5%), consumer discretionary (-1.5%), and information technology (-1.7%) sectors underperformed. Netflix led the FANG group lower with a loss of 4.6%. Apple (AAPL 204.47, -4.02), Amazon (AMZN 1712.43, -42.48), Alphabet (GOOG 1066.15, -16.25), and Facebook (FB 144.96, -2.91) bared losses between 1.5% and 2.4%.

Chip stocks dragged on the lagging tech sector, as key Apple supplier Skyworks Solutions (SWKS 766.66, -6.74) fell 8.1% after it issued below-consensus top and bottom line guidance for its fiscal first quarter. Its guidance has extended a trend within the semiconductor industry that has warned of slowing chip demand. The Philadelphia Semiconductor Index lost 1.9%.

In other corporate news, Walt Disney (DIS 118.00, +2.00, +1.7%) rose after an upbeat earnings report, while General Electric (GE 8.58, -0.52, -5.7%) took a hit after JPMorgan cut its price target on the stock to $6 from $10. In response, the former Dow component responded that it is a "fundamentally strong company with a sound liquidity position," according to a CNBC report.

Demand for Treasuries increased amid the equity setback, pushing yields lower across the curve. The 2-yr yield lost four basis points to 2.93%, and the 10-yr yield lost five basis points to 3.19%. For the week, the 2-yr yield added two basis points, while the 10-yr yield shed two basis points.

Separately, WTI crude, which is the U.S. benchmark for oil, fell 0.9% to settle at $60.16/bbl. Friday's loss has extended its decline to 21.8% from its Oct 3 four-year high. On a related note, the oil-sensitive energy sector lost 0.4% on Friday.

In economic data, the Producer Price Index (Briefing.com consensus +0.2%) for October was released on Friday morning, showing a higher-than-expected increase of 0.6%. The core reading, which excludes the volatile prices of food and energy, also came in above consensus (+0.5% actual vs +0.2% Briefing.com consensus). The headline pressures stoked concerns about pass-through inflation to consumers and, in turn, helped to strengthen the Fed's case for additional rate hikes.

In trade news, White House National Trade Council Director Peter Navarro made some combative comments against CEOs for pushing President Trump to make a trade deal with China and stated a trade deal will be on the president's terms. Separately, President Trump has reportedly been telling associates that he wants to replace Commerce Secretary Wilbur Ross by the end of the year.

Overseas, China reported just a 0.2% rise in its Consumer Price Index on Friday, which was in-line with estimates but significantly below last month's increase of 0.7%. Its softening inflation has continued to fuel concerns over a slowing Chinese economy.

Reviewing Friday's economic data, which included the Producer Price Index for October, the preliminary reading of the University of Michigan Consumer Sentiment Index for November, and the Wholesale Inventories report for September:

  • The Producer Price Index for final demand jumped 0.6% in October (consensus +0.2%) while the index for final demand, less food and energy, rose 0.5% (consensus +0.2%). Those increases left the index for final demand up 2.9% year-over-year, versus 2.6% in September, and the index for final demand, less food and energy, up 2.6% year-over-year, versus 2.5% in September.
    • The key takeaway from the report is that it will stoke concerns about pass-through inflation to the consumer, which have already been stoked by numerous companies during the third quarter earnings-reporting period talking about higher input costs and increasing prices.
  • The preliminary University of Michigan Index of Consumer Sentiment for November held quite steady, edging down to 98.3 (consensus 98.0) from the final reading of 98.6 for October.
    • The key takeaway from the report is that stock market sell-off in October had no real impact on consumer sentiment, which was rooted more in favorable views about income expectations and job growth that are key drivers of consumer spending.
  • Wholesale inventories increased 0.4% in September (consensus 0.3%) on top of a downwardly revised 0.9% increase (from 1.0%) in August.
    • The key takeaway from the report is that sales are increasing year-over-year at a faster rate than inventories, which can be a precursor to improved pricing power for wholesalers.

Looking ahead, investors will not receive any economic data on Monday.

  • Nasdaq Composite +7.3% YTD
  • Dow Jones Industrial Average +5.1% YTD
  • S&P 500 +4.0% YTD
  • Russell 2000 +0.9% YTD


WSJ : FDA to Propose Ban of Menthol Cigarettes

FDA to Propose Ban of Menthol Cigarettes
Move comes amid crackdown on e-cigarettes and would be big blow to makers of brands like Newport

The Food and Drug Administration isn’t just cracking down on e-cigarettes. Commissioner Scott Gottlieb also plans to pursue a ban on menthol cigarettes, according to senior agency officials.

It could take a year or more for a rule banning menthol to be finalized, and then another year for it to be enforceable in the marketplace. But a ban on menthols would be a big blow to British American Tobacco BTI -4.24% PLC, which sells the Newport brand of cigarettes in the U.S.

BAT’s U.S. subsidiary, Reynolds American, in 2015 paid $25 billion to acquire Lorillard Inc. and Newport, the leading menthol brand in the country. Menthols last year represented 55% of BAT’s U.S. cigarette sales by volume and about 20% of rival Altria Group ’s MO -2.95% cigarette sales, according to Cowen analyst Vivien Azer.

The FDA concluded in 2013 that menthols are harder to quit and likely pose a greater health risk than regular cigarettes. The agency said use of the cigarettes, which are flavored with the compound menthol, was likely associated with increased smoking initiation by youth and young adults, possibly because menthol helps reduce the throat irritation caused by cigarette smoke.

But it wasn’t until last year that the agency signaled it was actively considering a ban on menthols and other flavored tobacco products. The tobacco industry has rejected the FDA’s findings. BAT didn’t respond to requests for comment Friday, and an Altria spokesman declined to comment.

Dr. Gottlieb is expected to announce as early as next week sharp restrictions on the sale of most flavored pod-style e-cigarettes, effectively pulling them from most convenience stores and gas stations and requiring strict age-verification controls for online sales, according to senior agency officials. Those actions are aimed at reversing a surge in vaping among children and teens. E-cigarette products in mint, menthol and tobacco flavors will be allowed to remain in all retail outlets for now, but mint and menthol flavors could be restricted later if youth use continues to increase, senior agency officials said.

FDA officials—who want to curb use among youth while still encouraging adult cigarette smokers to switch to less harmful products like e-cigarettes—decided not to restrict sales of mint and menthol e-cigarettes because they didn’t want to create a situation in which cigarettes were more attractive to smokers who prefer menthol, senior agency officials said.