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Macro :

- Longest S&P 500 Rally Ever? It’s Wall Street’s Official Forecast

Keep an eye on :

- ADS GY : Adidas CEO Rorsted Says He Won’t Join Bayern Munich Board: BamS

- AKZA NA : Buy Axalta as Nippon Paint Antitrust Risk Manageable, UFP Says

- ATC NA : Altice should avoid fire sales, no urgent balance sheet requirement – bankers (MergerMarket.com)

- ALV GY : Allianz GI Plans More Acquisitions, CEO Tells Welt Am Sonntag

- BAB LN : potential exlusion of FTSE 100

- BMPS IM : Alken Seeks EU434m Damages From MPS on Derivatives: Repubblica

- CBK GY : UBS Team Examining Commerzbank Options: NZZ am Sonntag

- ECP FP : Europacorp to Refocus on Core Business; Could Sell Assets

- ENI IM : Eni Says Preventive Seizure Order of Measurement Devices Lifted

- FCA IM : Magneti Marelli May Be Valued at EU4b-EU6b in IPO: Sole

- FCA IM : Magneti Marelli to have 50% stake floated - La Republicca

- GATE SW : HNA Gave False Detail on Gategroup Bid, Says Swiss Regulator

- JNJ US : J&J Is Said to Pull Plan for 1st U.K. Research Centre: Telegraph

- JE/ LN : potential inclusion in FTSE 100

- LHA GY : Lufthansa Says It’s Ready for German Cartel Office Probe: WamS

- MERL LN : potential exlusion of FTSE 100

- ROG VX : Roche Diagnostics CEO Sees Investments in New Technologies: SamW

- RYA LN : Ryanair to Review Pilot Leave Policy After Flight Cancellations

- SNG GY : Intends capital increase of up to 10% to strengthen its equity and the financing of order intake 

- SNAP US : Director Mitch Lasky (Benchmark) sold 25K shares at $12.38 on 11/21 - Lasky, who's Benchmark was an early investor in Snap, still holds 270K shares

- STAN LN : StanChart May List Chinese JV It Launched Earlier This Year: FT

- UBSN SW : UBS Team Examining Commerzbank Options: NZZ am Sonntag

You know everybody loves Tesla-the-company. But did you know that a whole lot of smart people hate Tesla-the-business? “From a return-on-investment-capital standpoint, Tesla is a catastrophe.” “The electric-car maker has been burning money at a clip of about $8,000 a minute (or $480,000 an hour.)” “Tesla is losing a massive amount of money with no competition, and yet massive competition is coming.”

Security breach involving 57 million Uber accounts could change investor’s evaluation of shares

As soon as this week, SoftBank Group Corp. is expected to proceed with an offer to buy billions of dollars worth of shares from Uber Technologies Inc.’s stakeholders.

First it must settle on an offer price, only days after Uber disclosed a security breach involving 57 million accounts that took place a year ago and prompted regulatory scrutiny from government agencies around the world.

Uber’s decision to keep quiet about last year’s data breach until earlier this week raises the prospect that the incident could affect SoftBank’s offer price. SoftBank learned of the hack about a month ago, which may have changed its evaluation of Uber’s shares, according to people familiar with the matter.

Some investors and observers say corporate breaches are becoming so routine that they shouldn’t weigh on a company’s valuation, though Uber’s string of controversies this year has given shareholders reason to question what’s next.

A group of investors led by SoftBank plans to launch an effort in the coming days to buy at least 14% of the ride-hailing firm from existing shareholders through the tender offer at a steep discount, as well as through a direct investment of at least $1 billion at Uber’s prior $68 billion valuation. The investor group includes Dragoneer Investment Group and General Atlantic.

SoftBank has negotiated for weeks with Uber’s board to move forward with a deal, while some big investors have privately said they would balk if the valuation is too low. Former CEO Travis Kalanick, who holds about 10% of Uber shares, has indicated he won’t sell in the tender offer, while Benchmark Capital has wavered on whether it would sell some of its 13% stake.

A spokesman for Mr. Kalanick declined to comment. Benchmark Capital had no immediate comment.

The Japanese firm hasn’t yet set a price, said a person familiar with the matter, though talks between the SoftBank consortium and Uber investors in recent weeks centered on a valuation around $50 billion. While a discount is customary in so-called secondary sales, some investors have also marked down their valuations of the company amid its executive suite turmoil in the past year.

SoftBank wants to name the lowest number possible, while investors and board members are pushing for a higher valuation. Too steep of a discount risks repelling would-be sellers and imperiling the tender offer, which lasts 20 business days. SoftBank can try again at a higher price if its initial attempt fails.

It is in Uber’s interest to get the deal done. In October, the board passed a series of corporate-structure reforms that only kick in if the SoftBank consortium reaches its 14% stake threshold. The reforms include revoking the supervoting rights of early investors, which granted them multiple votes per share, as well as expanding the size of the board by six to 17 directors. SoftBank would get two of the new seats. As part of those measures, Uber also set a deadline of 2019 for an initial public offering.

Uber was obligated to disclose the hack before the tender offer was announced because a breach of its size could be material to investors, people familiar with the matter have said. The disclosure means all Uber investors and employees are now aware, which could strengthen SoftBank’s hand, observers said.

“This is just going to be more leverage for SoftBank,” said Anand Sanwal, chief executive of tech-focused research firm CB Insights. If investors believe there is new potential for litigation and regulatory measures, he said, “that is going to have an impact on the valuation.”

Mitchell Green, founding partner at Lead Edge Capital, an Uber investor, said breaches have become so commonplace that consumers are going to keep using the service and the core business won’t be affected.

The breach should have been disclosed, Mr. Green said, but the executives that oversaw that decision are now gone, and he said there is wide support for the new chief executive. “That was Uber 1.0,” Mr. Green said. Now, “this company is being run by seasoned management,” he said.

Uber said no financial information was obtained in the breach and it has found no evidence of fraudulent use of personal information. It said it was assured the stolen data was destroyed.

While numerous hacks in the early 2000s frequently hurt corporate stock prices after they were disclosed, data breaches in recent years have generally had little impact on the market values of large corporations, such as Home Depot Inc. and Sears Holdings Corp. That is because investors now assume such hacks will continue for a wide range of companies, said Karthik Kannan, a management professor at Purdue University who researches the subject.

There are recent exceptions. Equifax Inc. has lost more than $3 billion of its market value since it disclosed a breach that potentially exposed more than 145 million Americans’ personal information, while Verizon Communications Inc. lowered the price it paid to buyYahoo Inc. by about $350 million after Yahoo disclosed widespread data breaches from 2013 and 2014.

For Uber, the concerns extend beyond cybersecurity. The decision under Mr. Kalanick not to disclose the breach raises more questions about Uber’s past management after a year of scandals and legal issues. While Mr. Kalanick learned of the breach about a month after it happened, Uber decided not to tell riders, drivers and the government, paying $100,000 to two hackers to destroy the data.

Srikanth Paruchuri, a professor at Penn State University who has studied the effects of corporate malfeasance on firms and industries, said valuations fall not only because of the additional costs of litigation or regulation, but because of rising fears about the unknown. With Uber, “it increases the uncertainty about what is hidden,” Mr. Paruchuri said.

Singulus - Intends capital increase of up to 10% to strengthen its equity and the financing of order intake 

Plans to increase the share capital of the company of EUR 8,087,752.00 by up to 10 % by issuing additional common bearer shares from the existing authorized capital 2017/I. The new shares are to be placed by an investment bank under exclusion of subscription rights in the fourth quarter.

At the extraordinary general meeting on November 29, 2017, the Executive Board of SINGULUS TECHNOLOGIES will provide the shareholders with details about the planned strengthening of the equity base and the company's future prospects. SINGULUS TECHNOLOGIES intends to use the funds from the capital increase to strengthen its equity and the financing of current and anticipated incoming orders. Furthermore, it should support the entry into new market areas financially.

Magneti Marelli to have 50% stake floated - report (translated)

Magneti Marelli, the car components subsidiary of Italian-US car manufacturer FCA [BIT:FCA], is to have a 50% stake floated on the Italian Stock Exchange, Italian-language daily Il Sole 24 Ore reported. The report cited financial sources who said that the remaining 50% of the company is to be spun off from the main group and its shares assigned to FCA shareholders.

FCA is looking to complete the spin-off and listing in 1H18.

The report noted that FCA is still considering whether to spin off its robotics and automation division Comau. The spin-off of the Maserati and Alfa Romeo luxury car brands would not take place before 2019, the report added.

As previously reported, Magneti Marelli could be worth around EUR 4bn- EUR 5bn

Canali Denies Sale Rumors

According to Italy's daily paper La Repubblica, the company appointed Goldman Sachs to test the interest of potential investors, including Andrea C. Bonomi's Investindustrial.

MILAN — Italian men’s wear company Canali SpA denied on Saturday it was negotiating to sell shares in the company.

The fashion house responded to a rumor reported on Saturday by Italy’s daily paper La Repubblica. According to the article, the third generation of the family-run business has charged Goldman Sachs with the task of testing the interest of potential investors.

In its report, La Repubblica also stated the French private equity firm Chequers Capital and Andrea C. Bonomi‘s Investindustrial investment house were eyeing the Italian company.

Recently, Bonomi has said he is targeting fashion brands and design companies to add to his firm’s portfolio, which includes the full control of the Sergio Rossi firm — acquired from Kering in 2015 — in addition to stakes in Aston Martin, Perfume Holding, B&B Italia and luxury lighting firm Flos, among others.

In October, Canali began the dismissal procedure of 134 of its employees, all working in the brand’s factory in Carate Brianza, a one-hour drive from Milan. Dedicated to the manufacturing of jackets, the plant is one of the company’s seven production centers.

At the time Canali confirmed the staff reduction was due to the market’s contraction, while trade unions and employees reacted to the decision by protesting with a strike outside the plant.

New research shows a behavioral quirk may be leading investors to take excessive risk

Why are stocks so expensive? In part it may come down to a behavioral quirk that could be putting the market at risk.

The stock market is rich by just about any valuation measure, and by some excessively so. Given how low interest rates are, there is some sense to that: When the average on the 10-year Treasury is just 2.35%, paying a higher price than usual for a stock seems to make sense.

But how much more? A series of experiments conducted by economics graduate students Chen Lian, Yueran Ma and Carmen Wang show that when rates are low, investors’ appetite for risk increases beyond what seems logical.

The researchers created two investing scenarios. In one, the risk-free rate of return from investing for one year is 5%, and the expected rate of return from a risky asset (such as stocks) is 10%. In the other, the risk-free rate is 1% and the expected return on the risky asset is 6%. In both scenarios, $100 invested in the risky asset has an expected return of $5 over the risk-free rate. An investor should be agnostic about how much money gets allocated to risky assets in either case.

But when the economists asked workers on Amazon.com’s online labor service Mechanical Turk how they would invest in these scenarios, the answer they got was different. People invested far more in the risky asset when rates were low. In another experiment, they found the results intensified the lower rates went.

They ran the first experiment again and told people they would get a payment based on the success of their hypothetical investment (with a computer program determining how the risky asset performed). The results were identical, as was a similar experiment with Harvard Business School students.

Why do people behave this way? One reason is that people who had long earned 6% returns, were willing to take more risk to reach that number. The more investing experience the people had, the more likely they were to take on more risk in the low-rate environment. The researchers avoid such real life dilemmas as the need to hit a target level of return from a portfolio.

Over the past several years, during which central bankers have driven down rates, investors steadily took on more risk—just as the bankers wanted. This research suggests it may have been excessive.

If rates go up and investors go back to less risky portfolios, assets such as stocks could be in for a big drop.

Barrons weekend summary: Positive features on VZ, MDLZ 

* Cover story: Four emerging market stock fund managers discuss the best sectors for investors, identify risks that could be of concern, and offer stock picks: Taizo Ishida of MPACX and MEASX (BZUN, Indus Motor, Shenzhou Intl Group Holdings, China Lodging Group, PC Jeweller), Rejiv Jain of GOGPX (Sberbank of Russia, Bank Central Asia, Qualicorp, Interglobe Aviation), Howard Schwab of DREGX (Titan, Samsung Electronics, China Shenhua Energy), and Leon Eidelman of JFAMX (BABA, Kroton Educacional, Hangzhou Robam Appliances, JD). 

* Feature: 1) Positive on VZ: Price wars with rivals have sent down shares, but company is on track to bring in about as much revenue this year as 2016, and could return to modest growth, making the shares a bargain; 2) Positive on VMC, FLR, MLM, ACM, JEC, GVA, EXP, USCR, CAT: Among companies that would benefit if the Trump administration manages to get a $1T infrastructure building program under way, or even a compromise measure on a smaller scale; 3) Positive on MDLZ: Investors think the packaged-food company could return to growth under new chief executive Dirk Van de Put, especially if it leverages its strength in Europe and developing economies. 

* Tech Trader: AMZN, MSFT, and GOOGL dominate cloud computing, but a rapidly evolving new “serverless” technology pioneered by AMZN called Lambda requires far less work from programmers, gets dramatically better results--and could either solidify their position, or undermine it. 

* Trader: Nomura Instinet analyst Joseph Mezrich says the market is expecting earnings growth of 11.7%, well above the long-term average of 7%, a sign the market is overvalued and may undergo a correction; With quantitative easing ending, borrowing costs should rise, and high stock valuations mean companies will get less bang for their buck with buybacks; A market “melt up” would cause concern because it could entail a sharp climb followed by a painful drop. 

* Profile: Daniel Chace, manager of the Wasatch Micro Cap fund, picks through the less-trafficked corners of the market and focuses on about 80 potential growth companies (top 10 holdings: SGC, LGIH, HQY, IBP, V-Mart Retail, FRPT, ENSG, ENV, TREX, EXAS). 

* Follow-Up: Cautious on HPE: Chief Meg Whitman has made improvements at the company, but many of the challenges it faced after she took over remain, despite her efforts to reshape the business. 

* European Trader: Positive on Hapag-Lloyd: With the global container shipping industry seeing an uptick, the German company appears to be a good way for investors to play the revival. 

* Asian Trader: Positive on Tencent Holdings: Chinese giant is the world’s best-performing large-cap stock this year, bypassing the FANGS, and the shares still look good as the company continues to grow. 

* Commodities: “A brutal cold snap in December is likely, according to some forecasters, and it could lift winter wheat prices higher than $5 a bushel, up more than a dollar from recent prices.” 

* Streetwise: Uber’s decision to delay releasing news of a data breach last years is the latest example of its history of playing by its rules—and that isn’t likely to change as long as it remains a private company.

Babcock and Merlin Entertainments face prospect of downgrade in quarterly reshuffle

Food-ordering app Just Eat is set to be promoted to the FTSE 100 three years after its stock market debut, while defence contractor Babcock and Merlin Entertainments, which owns UK theme parks including Alton Towers and Legoland, are among the companies facing relegation.

Just Eat’s market value has more than tripled since it floated in April 2014 as online food ordering has surged across the UK.

Its shares were priced at 260p at the time of issuance but this month hit an all-time high when the company received approval from the UK’s competition watchdog for its £240m takeover of smaller competitor Hungryhouse.

It is now trading around 819p, up about 40 per cent in the year to date, to give a market capitalisation of £5.6bn.

The company has “benefited from a change in consumer habits,” said Ben Thomas, analyst at Investec Wealth & Investment. He also noted the impact of the group’s “long history of small, bolt-on acquisitions since its IPO”.

Investors believe the Hungryhouse deal, which is expected to complete in January, will help Just Eat to compete with newer rivals such UberEats and Deliveroo.

If promoted, Just Eat would be the “first consumer facing tech business to reach the FTSE 100,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

By contrast, Babcock International and Merlin Entertainment could both be demoted to the FTSE 250 based on their recent market capitalisations.

The quarterly reshuffle will be assessed this Tuesday, with any changes coming into force from mid-December.

Babcock, one of Britain’s oldest engineering groups, has struggled to shake off concern that Brexit will reduce defence spending. It has also been damaged by troubles elsewhere in the outsourcing industry, including operational problems and the historic mispricing of contracts.

Babcock have been found “guilty by association,” said Mr Thomas.

Its shares are down 19 per cent compared with a month ago to give a market capitalisation of £3.4bn.

Merlin’s shares dropped sharply in October after the group downgraded its full-year profit expectations, citing “difficult” summer trading due to bad weather and a spate of UK terror attacks.

Hospital group Mediclinic International, which recently ended takeover talks with Spire Healthcare after the two failed to agree on a price, is also likely to be evicted from the FTSE 100.

Both paper packaging business DS Smith and Halma, the health and safety sensor maker, are set to move up into the FTSE 100, boosted by acquisitions and organic growth.