>>> Europe : Brokers Upgrades & Downgrades - 18th of October 201

>>> Up
* ADO Properties Upgraded to Buy at ING; Price Target 60 Euros
* Archer Upgraded to Buy at DNB Markets; PT 9 Kroner
* BAT Upgraded to Buy at DZ Bank; PT 28 Pounds
* Carrefour Upgraded to Buy at HSBC; PT 18.50 Euros
* Moncler Upgraded to Buy at Jefferies; Price Target 40 Euros
* OneSavings Bank Raised to Outperform at Macquarie
* Prosegur Cash Upgraded to Outperform at BBVA; PT 2 Euros
* Swatch Upgraded to Hold at SocGen; PT 356 Francs

>>> Down
* Fresenius SE Cut to Hold at Independent Research; PT 66 Euros
* Fresenius Medical Downgraded to Hold at DZ Bank; PT 72 Euros
* Mediclinic Cut to Equal-weight at Morgan Stanley; PT 4.50 Pounds
* Nordic Semiconductor Cut to Neutral at SpareBank; PT 40 Kroner
* Norwegian Air Downgraded to Reduce at HSBC; PT 125 Kroner
* SKF Downgraded to Sell at Berenberg

>>> Initation
* ASA International Group Rated New Buy at EFG-Hermes
* Banca Sistema Rated New Buy at Kepler Cheuvreux; PT 2.70 Euros
* MailUp Rated New Buy at UBI Banca; PT 3.63 Euros
* Team17 Group Rated New Buy at Peel Hunt; PT 2.95 Pounds
* Wirecard Rated New Buy at Guggenheim; PT 218 Euros
* Weatherford Reinstated at BofAML With Underperform; PT $2

>>> Call

>>> US After Hours Summary: AA +4.4% higher after earnings while KALU


After Hours Summary: AA +4.4% higher after earnings while KALU -8.6%, TCBI -7.7% fall lower

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: AA +4.4% (also announced $200 mln stock repurchase program), STLD +3.6%

Companies trading higher in after hours in reaction to news: EIGR +4.9% (announced 'positive' data from Phase 2 LIMT HDV study), TCP +3.1% (light volume; subsidiary filed settlement agreement with FERC), OMED +2.5% (mixed trading; Celgene notified company of decision not to exercise its option to license rosmantuzumab), NOC +1.1% (awarded $700 mln Navy contract)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: KALU -8.6%, TCBI -7.7%, SEE -6.5% (issued downside guidance for Q3 EPS and lowered FY18 EPS outlook), CCK -3.9% (issued downside guidance for Q4 EPS), URI -3.9%, OIS -3.3% (updated Q3 guidance; sees profit and revenue below consensus), SLG -2.4%

Companies trading lower in after hours in reaction to news: ACRS -8% (proposed public offering of common stock), SELB -7.3% (informed of a Grade 5 Serious Adverse Event in trial of combination product candidate SEL-403), KRYS -5% (commenced offering of $60 mln of common stock), ZG -1.4% (light volume; announced management transitions, including departure of COO), MUR -0.7% (filed mixed securities shelf offering)

>>> US Close Dow -0,36% S&P -0.03% Nadaq -0.04% Russell -0.45%

Closing Market Summary: Stocks Close Flat, Near Session Highs

The S&P 500 finished at its flat line on Wednesday following a volatile day of trading. A late morning surge in the financials sector (+0.9%) lifted the benchmark index from its early depths -- the S&P 500 was down as much as 1.0% -- and the release of the September FOMC minutes prompted another small bout of volatility in the afternoon.

As for the other major averages, the blue-chip Dow Jones Industrial Average lost 0.4%, the tech-heavy Nasdaq Composite remained unchanged, and the small-cap Russell 2000 lagged, losing 0.5%.

Stocks opened slightly lower following some disappointing September housing data. Housing starts rose to a seasonally adjusted annualized rate of 1.201 million units in September, below the Briefing.com consensus estimate of 1.221 million, and building permits declined to a seasonally adjusted 1.241 million, also below the Briefing.com consensus estimate of 1.273 million.

In addition, the weekly MBA Mortgage Applications Index declined 7.1% week-over-week.

The softer-than-expected data hit the consumer discretionary sector (-0.7%) in particular, with home improvement retailers Home Depot (HD 185.17, -8.41) and Lowe's (LOW 102.44, -3.54) dropping 4.3% and 3.3%, respectively. The two companies were also downgraded to 'Neutral' from 'Outperform' at Credit Suisse.

Nonetheless, the S&P 500 rebounded to its flat line largely due to the financial sector's sudden climb. Investors initially had a muted reaction to U.S. Bancorp's (USB 52.90, +1.93) better-than-expected earnings, but shares eventually started taking off, ending the day with a gain of 3.8%. Goldman Sachs (GS 228.28, +6.58, +3.0%) and Morgan Stanley (MS 47.19 , +1.25, +2.7%) also had strong performances, extending yesterday's post-earnings gains.

The minutes from the September FOMC meeting briefly caused the S&P 500 to stumble in late afternoon trading after showing that a number of participants agreed for the need for more gradual rate hikes, and that a number of participants saw a need to hike above the long-run level. Following the minutes, the probability of a December rate hike ticked up to 83.0% from 79.5% on Tuesday, according to the CME FedWatch Tool.

Also, Treasury yields ticked slightly higher following the minutes with the Fed-sensitive 2-yr yield and benchmark 10-yr yield each advancing two basis points to 2.88% and 3.18%, respectively. The U.S Dollar Index increased 0.6% to 95.31, touching a one-week high.

Relative weakness in the information technology sector (-0.5%) kept the bulls in check on Wednesday. IBM (IBM 134.05, -11.07) dragged on the sector, losing 7.6%, after missing revenue expectations. The Dow component remained upbeat, though, upholding its guidance and expecting its cloud technology to lift revenue moving forward.

In other earnings news, Netflix (NFLX 364.70, +18.30) climbed 5.3% after reporting higher-than-expected subscriber growth. The company added nearly seven million new subscribers last quarter, with six of the seven million coming from overseas. In addition, Netflix expects to add nine million more in the fourth quarter. The communication services sector, which houses Netflix, advanced 0.5%.

Separately, WTI crude dropped 3.1% to $69.65/bbl, hitting a one-month low, after EIA petroleum data showed a build of 6.5 million barrels in crude oil inventories for the week ended October 12. The oil-sensitive energy sector lost 0.7%, closing near the bottom of the sector standings.

Across the border, Canada became the second country in the world to legalize marijuana on Wednesday, causing a sell-the-news reaction in weed stocks. Widely-followed Tilray (TLRY 148.25, -10.13) lost 6.4%.

Reviewing Wednesday's economic data, which included the weekly MBA Mortgage Applications Index and the Housing Starts and Building Permits for September:

  • Mortgage applications declined 7.1% week-over-week and housing starts declined 5.3% in September, paced in part by a 0.9% decline in starts for single-family units.
  • Housing starts declined 5.3% in September to a seasonally adjusted annual rate of 1.201 million units (consensus 1221K), with single-family starts down 0.9% to 871,000. Building permits were down 0.6% to a seasonally adjusted annual rate of 1.241 million (consensus 1273K), although that was owed to a 9.3% decline in permits for buildings with five units or more. Single-family permits were up 2.9% to 851,000, which tied with March for the third-lowest annual rate this year.
    • The key takeaway from the September Housing Starts and Building Permits report is that the supply of new homes isn't picking up fast enough to meet the demand for new homes at more affordable price points. Accordingly, overall home sales activity will continue to be curtailed by affordability constraints.

On Thursday, investors will receive the weekly Initial Claims report, the October Philadelphia Fed Index, and the Conference Board's Leading Economic Index for September.

  • Nasdaq Composite +10.7% YTD
  • S&P 500 +5.1% YTD
  • Dow Jones Industrial Average +4.0% YTD
  • Russell 2000 +3.5% YTD

FT : G4S branches out into cryptocurrency storage

G4S branches out into cryptocurrency storage
UK security group says it is already providing the service to a Europe-based exchange


G4S, the UK security company, has launched its first foray into the nascent crypto sector with a new digital currency storage service.

The FTSE 250 company, which runs prisons and detention centres and also stores cash for large companies, said on Wednesday that it had developed a custody service for cryptocurrencies that would protect the assets from criminals.

A lack of secure storage options is considered one of the main barriers to the institutional adoption of cryptocurrencies, which have long been the target of hackers. 

G4S said it had already started providing the service to an unnamed cryptocurrency exchange based in Europe. 

“The [crypto] sector has attracted the same old threats for financial systems including robbers, scammers, market manipulators and many others,” Dominic MacIver, senior risk analyst at G4S’s risk consulting division, said in a statement. 

“Our innovative security solution helps protect against some of those threats by taking the assets offline and storing them in high-security vaults.”

Carbon Black, the US cyber security company, estimated that about $1.1bn worth of cryptocurrency was stolen in the first half of this year. That includes the $500m hack of Japanese exchange Coincheck in January. Tracing stolen coins is difficult because most cryptocurrencies are held anonymously. 

Criminals have also kidnapped individuals in order to extort their crypto wealth from them. 

The crypto custody sector has begun to flourish recently, with traditional players entering the space alongside specialised outfits. 

US investment giant Fidelity this week announced plans to offer “enterprise-quality custody” of cryptos to institutional investors, as well crypto trading services. In May, Nomura said it was developing custody services, while Goldman Sachs, Northern Trust and JPMorgan Chase have said they are exploring similar services. 

Cryptocurrency holders access their funds using a unique “private key”, a long alphanumeric password that serves a similar purpose to a bank card PIN. It is this key that must be protected from thieves. 

Many of the digital coins stolen to date have been kept in so-called “hot wallets”, online customer accounts that are connected to the web and therefore more vulnerable to hacks. But custodians are increasingly developing so-called “cold storage” services, where private keys are kept on a hard drive, separated from the internet. 

The new G4S “secure vault storage” service, which will be available globally, uses technology to break up the digits of a private key into fragments. They can then be put on storage devices in closely-guarded vaults in undisclosed locations. 

Mr MacIver said this meant they would be “out of reach of cyber criminals and armed robbers alike”.

G4S said it would charge clients based on how many different offline storage devices they wanted to use to store their private keys, and that it would use its own existing vaults for the service, rather than building new facilities.

WSJ : Constellation CEO Rob Sands to Step Down From Corona Brewer

Constellation CEO Rob Sands to Step Down From Corona Brewer
Rob Sands transformed family wine business, first with Corona deal and now with bet on cannabis

Constellation Brands Inc., STZ 0.11% a family-controlled company that transformed itself from a boxed-wine seller to a beverage giant that brews Corona and has bet big on marijuana, is handing the reins to an outsider for the first time.

Rob Sands, the third in his family to lead the Victor, N.Y., company, will step aside as chief executive on March 1, entrusting Constellation’s future—and the success of its beer and cannabis wagers—to one of his lieutenants, Bill Newlands.

During Mr. Sands’s 11-year tenure as CEO, Constellation’s total shareholder return surged 967% compared with a 141% return for the S&P 500 index. The 60-year-old Mr. Sands will succeed his brother Richard as executive chairman. Richard Sands, himself a former Constellation CEO, will become executive vice chairman.

“It’s good to get some fresh thinking,” said Rob Sands, an attorney who started working at the company in 1986 at age 28 and became CEO in 2007. He said he would remain involved as executive chair, particularly in seeing through Constellation’s $4 billion investment in Canadian marijuana grower Canopy Growth Corp.

Mr. Newlands, 59, is an alcohol-industry veteran who previously held executive roles at what is now Beam Suntory Inc., LVMH Moët Hennessy Louis Vuitton and wine.com, where he was CEO. He joined Constellation in 2015 as chief growth officer. He was promoted to president earlier this year.

In an interview, Mr. Sands and Mr. Newlands said the company would continue its tradition of making big bets such as those that have taken it beyond wine and into beer and cannabis. “The biggest challenge we have as a company is fighting complacency,” Mr. Sands said.

Rob Sands’s father Marvin Sands in 1945 purchased Canandaigua Industries, a company with eight employees that sold bulk wine in barrels to East Coast bottlers. Canandaigua Wine Company Inc. went public in 1973 and was renamed Constellation in 2000.

In the 1990s, the family sought to increase scale by picking up the low-margin brands—such as Almaden and Inglenook jug wines—that larger alcohol companies were looking to shed. Then the family set its sights abroad, with deals to acquire low-margin wine and spirits brands in the U.K., Australia and elsewhere.

Rob Sands now believes the international expansion was a mistake. “We thought we were doing well, but it was kind of a raft of crap, to use the vernacular,” he said. “We sold a lot of it, but we were making 25 cents a bottle.”

When he took over as CEO, he set about selling off those brands in a push toward more premium products. Constellation had bought some high-end Napa wines such as Robert Mondavi in 2004.

But it was a $5.3 billion deal in 2013 to acquire from Anheuser-Busch InBev the U.S. rights to distribute Corona and Modelo that changed the company’s trajectory. Constellation expanded from a market value of $6.3 billion in 2012 to $43 billion today.

The Mexican imports have been a bright spot in the U.S. beer market while other big brewers have struggled with sliding volumes as consumers trade American lagers for wine and spirits. Beer accounted for 61% of Constellation’s $7.6 billion in revenue last fiscal year.

Mr. Newlands, who lives in Winnetka, Ill., with his family and travels between the company’s operations in Chicago, New York and California, said he expects that in a decade cannabis will be “a big part of the portfolio” but there is still room for its alcohol business to grow. “It’s almost betting the company on some of these things,” he said. “That is one of the biggest appeals to me.”

>>> Fed Minutes- Key Excerpts:

Fed Minutes- Key Excerpts:

  • Based on their current assessments, all participants expressed the view that it would be appropriate for the Committee to continue its gradual approach to policy firming by raising the target range for the federal funds rate 25 basis points at this meeting. Almost all considered that it was also appropriate to revise the Committee's postmeeting statement in order to remove the language stating that "the stance of monetary policy remains accommodative.
  • 'With regard to the outlook for monetary policy beyond this meeting, participants generally anticipated that further gradual increases in the target range for the federal funds rate would most likely be consistent with a sustained economic expansion, strong labor market conditions, and inflation near 2 percent over the medium term.
  • Many of them noted that future adjustments to the target range for the federal funds rate will depend on the evaluation of incoming information and its implications for the economic outlook. In this context, estimates of the level of the neutral federal funds rate would be only one among many factors that the Committee would consider in making its policy decisions.
  • The manager of the System Open Market Account (SOMA) discussed U.S. and global financial developments. In global markets, strains in emerging market economies (EMEs) contributed to volatility in currency and equity markets over the period. In addition, concerns about trade tensions between the United States and China were the focus of a great deal of attention among market participants.
  • Participants commented on a number of risks and uncertainties associated with their outlook for economic activity, the labor market, and inflation over the medium term. Participants generally agreed that risks to the outlook appeared roughly balanced.
    • Some participants commented that trade policy developments remained a source of uncertainty for the outlook for domestic growth and inflation.
    • The divergence between domestic and foreign economic growth prospects and monetary policies was cited as presenting a downside risk because of the potential for further strengthening of the U.S. dollar; some participants noted that financial stresses in a few EMEs could pose additional risks if they were to spread more broadly through the global economy and financial markets.
  • A few participants offered perspectives on the term structure of interest rates and what a potential inversion of the yield curve might signal about economic prospects in light of the historical regularity that an inverted yield curve has often preceded the onset of recessions in the United States. On the one hand, an inverted yield curve could indicate an increased risk of recession; on the other hand, the low level of term premiums in recent years--reflecting, in part, central bank asset purchases--could temper the reliability of the slope of the yield curve as an indicator of future economic activity. In addition, the recent rise and possible further increases in longer-term interest rates might diminish the likelihood that the yield curve would invert in the near term.
  • The projection for the medium term was not materially changed, in part because the recently enacted tariffs on Chinese goods and the retaliatory actions of China were judged to have only a small net effect on U.S. real GDP growth over the next few years.
  • Participants offered their views about how much additional policy firming would likely be required for the Committee to sustainably achieve its objectives of maximum employment and 2 percent inflation. A few participants expected that policy would need to become modestly restrictive for a time and a number judged that it would be necessary to temporarily raise the federal funds rate above their assessments of its longer-run level in order to reduce the risk of a sustained overshooting of the Committee's 2 percent inflation objective or the risk posed by significant financial imbalances. A couple of participants indicated that they would not favor adopting a restrictive policy stance in the absence of clear signs of an overheating economy and rising inflation.


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