>>> Goldman Sachs beats by $0.86, beats on revs --> +1.18% pre-market 21k sha\re

Goldman Sachs beats by $0.86, beats on revs (242.41)
  • Reports Q3 (Sep) earnings of $5.02 per share, $0.86 better than the Capital IQ Consensus of $4.16; revenues rose 2.0% year/year to $8.33 bln vs the $7.59 bln Capital IQ Consensus.
    • Annualized return on average common shareholders' equity (ROE) was 10.9% for the third quarter of 2017;
  • Investment Banking
    • Net revenues in Investment Banking were $1.80 billion for the third quarter of 2017, 17% higher than the third quarter of 2016 and 4% higher than the second quarter of 2017.
    • Net revenues in Financial Advisory were $911 million, 38% higher than the third quarter of 2016, reflecting an increase in completed mergers and acquisitions.
    • Net revenues in Underwriting were $886 million, essentially unchanged compared with the third quarter of 2016, as slightly higher net revenues in debt underwriting, reflecting higher net revenues from investment-grade activity, were largely offset by lower net revenues in equity underwriting, reflecting a decrease in industry-wide offerings.
  • Institutional Client Services
    • Net revenues in Institutional Client Services were $3.12 billion for the third quarter of 2017, 17% lower than the third quarter of 2016 and 2% higher than the second quarter of 2017.
    • Net revenues in Fixed Income, Currency and Commodities Client Execution were $1.45 billion for the third quarter of 2017, 26% lower than the third quarter of 2016, due to significantly lower net revenues in commodities, interest rate products and credit products and lower net revenues in currencies, partially offset by higher net revenues in mortgages.
    • Net revenues in Equities were $1.67 billion for the third quarter of 2017, 7% lower than the third quarter of 2016, primarily due to lower net revenues in equities client execution, reflecting significantly lower results in derivatives, partially offset by higher results in cash products.
  • Investing & Lending
    • Net revenues in Investing & Lending were $1.88 billion for the third quarter of 2017, 35% higher than the third quarter of 2016 and 19% higher than the second quarter of 2017.
  • Expenses
    • Operating expenses were $5.35 billion for the third quarter of 2017, essentially unchanged compared with both the third quarter of 2016 and the second quarter of 2017.
  • Book value per common share was $190.73 and tangible book value per common share was $180.42, both based on basic shares of 393.7 million as of September 30, 2017.

>>> Netflix Color on Quarter : NFLX --> +1.3% pre market 150k shares traded

Netflix Color on Quarter

Shares of Netflix are trading up 1.30% at $205.30/share in pre-market trading

  • Stifel raises their tgt to $235 from $230. Firm notes that Netflix topped consensus expectations with 5.3mm global subscriber additions in 3Q, driven by continued strength in both domestic and international markets. Guidance for 4Q came in slightly above expectations despite some perceived conservatism from management regarding potential churn from Netflix's recently announced price increase, particularly in the more mature U.S. market. They anticipate Netflix to deliver ~400bps of operating leverage next year as we expect subscriber growth/pricing increases to more than offset growth in content and marketing expenses.
  • FBR raises their tgt to $207 from $172, reiterates Neutral. Firm notes that NFLX's 3Q17 earnings were mixed but, on balance, constructive (despite high expectations) as international upside ultimately, they believe, outweighs a domestic miss and FCF burn.
  • RBC raises their tgt to $250 from $210, reiterates Outperform. Firm notes that Netflix posted very strong Q3 results, with Q3 Sub Adds/Q4 Sub guidance handily beating the Street, except for the U.S. Q4 outlook. They believe secular demand for Internet TV is ramping rapidly, and Netflix has positioned itself extremely well to benefit from this, with a compelling value proposition to consumers, based on price, selection, and functionality.
  • Needham reiterates Hold. Firm notes that at current valuations, their worries about NFLX include: a) competition is driving higher cash losses in 2018, driven by $8B of content spending plus $4.5B of working capital (and $17B of content obligations), which works against valuation multiple compression; b) price increases may negatively impact sub growth/churn levels in 4Q17 & '18; c) EU quotas (supported by Spain, France, Germany & Italy) that SVOD & OTT platforms must have 30% of their catalog be European content (up from 20%) plus talk of adding marketing spending quotas in 2018; e) NFLX will make 80 feature films in 2018 (up from 8 in '17), suggesting falling ROIC's; f) higher marketing spending guidance for 2018 signals a shift from balance sheet growth to EBITDA and EPS compression; and g) original productions growing from 25% to 50% in 2020 adds risk.
  • Pivotal raises their tgt to $270 from $200, reiterates Buy. Firm notes that overall, NFLX 3Q and 4Q guidance (which includes temp adverse effects from price increases) continues the strong subscriber trends from the last 4 quarters, as management has taken advantage of the drawing power of originals to generate strong subscriber growth (driven by higher gross and lower churn), while demonstrating pricing power, a very powerful combination. Post these results and the recently announced sooner/higher than anticipated price increase, we raised our ARPU growth expectations materially (including '22 U.S. streaming ARPU from $11.77 to $12.93 and international ARPU from $9.85 to $10.92) which helped drive our steady state EBITDA margin from 25->30%.
  • Oppenheimer raises their tgt to $245 from $215, reiterates Hold. Firm notes that 4Q sub guide suggests future pricing cycles will be less painful than 2016. Strong International contribution margin guide was driven by broader than anticipated ASP increases. As a result, they're raising ‘18E International contribution profit by $391M, partially offset by 5% lower US profit on marketing/ content costs. Stepping back torrid top-line/sub growth only outpaced by profits (3Q Global Streaming Subs/Revenue +26%/+33% y/y vs. Contribution Profit +52% y/y). Everything moving in right direction now, but investor anxiety over 2018 cash burn and content competition looms if sub growth slows.

>>> US Early premarket gappers

Early premarket gappers
Gapping up:
  • DEST +21.3%, PSO +6.3%, SAVE +4.9%, IMDZ +4.5%, KMG +3%, CENX+2.6%, HOG +2.4%, BIIB +2.2%, JNJ +1.7%, NFLX +1.6%, KALV +1.5%,BCLI +1.5%, NAVI +1.4%, SFM +1.3%, MS +1.1%, LRCX +1%, ULTA +0.7%,UNH +0.5%, UNH +0.5%
Gapping down:
  • BMI -12.2%, VICL -3.8%, ABEO -2.1%, FCX -1.8%, FCAU -1.6%, KALU-1.4%, BRO -1.3%, RIO -0.9%, SONC -0.7%, GOGL -0.5%

ABLYNX ANNOUNCES LAUNCH OF PROPOSED GLOBAL OFFERING

ABLYNX ANNOUNCES LAUNCH OF PROPOSED GLOBAL OFFERING
REGULATED INFORMATION - INSIDE INFORMATION

GHENT, Belgium, 17 October 2017 - Ablynx NV [Euronext Brussels: ABLX; OTC: ABYLY], a late-stage clinical biopharmaceutical company utilising its proprietary Nanobody(R) platform to develop treatments for a broad range of therapeutic indications with an unmet medical need, announced today that it intends to offer and sell, subject to market and other conditions, approximately $175 million of its ordinary shares in a global offering, which is comprised of a public offering in the United States and Canada of ordinary shares in the form of American Depositary Shares ("ADS"), and an offer of ordinary shares in Europe and countries outside of the United States and Canada in a concurrent private placement. Investors other than qualified investors under applicable law will not be eligible to participate in this private placement.

(LE Monde) Pourquoi Amazon lorgne nos distributeurs

Pourquoi Amazon lorgne nos distributeurs
Le cybercommerçant américain cherche à mettre la main sur un réseau de magasins physiques et à
bénéficier d’un meilleur accès aux fournisseurs.

Amazon déroule son plan de conquête du secteur des produits alimentaires et de grande
consommation en France. Après avoir ouvert, en septembre 2015, des espaces « Epicerie » et
« Bières, vins et spiritueux » sur son site Internet, commercialisé, en novembre 2016, le Dash
Button, une offre de réapprovisionnement automatique de certains produits, puis lancé, le 7 mars,
un service où la livraison est facturée au carton rempli, le groupe américain cherche à passer à la
vitesse supérieure.
« Intervenant du mieux-vivre »
Ces derniers mois, le cybercommerçant a approché un à un les distributeurs français en vue de
nouer des partenariats, voire de racheter des enseignes. Amazon a ainsi pris contact avec Casino,
pour mettre la main sur Monoprix, dont la clientèle à fort pouvoir d’achat est proche de la sienne.
« Ce qui les intéresse, c’est le client CSP +, qui fréquente les magasins physiques pour faire ses
courses, explique un fin connaisseur du dossier. L’idée, c’est de capter cette clientèle qui, après
avoir effectué ses achats alimentaires dans un magasin Amazon, achèterait naturellement tout le
reste sur le site Internet de l’américain. »
Avec Système U, Intermarché ou Leclerc, l’idée est plutôt de mettre en place des partenariats.
Impossible, en effet, de racheter ces groupes indépendants qui sont détenus par leurs adhérents.

Amazon pourrait devenir notre logisticien », a expliqué le 4 octobre Michel-Edouard Leclerc, le
président du groupe homonyme, en marge d’une conférence sur le lancement de l’Observatoire E.
Leclerc des nouvelles consommations. Leclerc propose déjà, dans « quelques dizaines de
magasins », des casiers de livraison réservés à Amazon, un système qui, selon lui, « devrait se
généraliser dans l’ensemble de la distribution ».
Mais le groupe américain ne souhaite pas seulement installer de simples
casiers pour ses colis. « Il cherche un distributeur en France qui pourrait lui servir de back-office [réalisation des tâches administratives], si possible une
marque », soulignait Serge Papin, PDG de Système U, dans une interview
à Ouest-France, le 3 octobre.
Selon Michel-Edouard Leclerc, cette tentative d’approche du géant
américain montrerait que ce dernier est arrivé au bout de son modèle.
« Pour moi, Amazon a un problème, expliquait-il mercredi 4 octobre. Il
remplit le contrat de l’accessibilité au produit, mais comme cela se
généralise à l’ensemble des distributeurs, Amazon ne peut pas se contenter
d’être une simple offre logistique. En rachetant Whole Foods Market, il se
positionne comme un intervenant du mieux-vivre, des produits
organiques… »

Un entrepôt alimentaire en construction
En cherchant à s’allier à un distributeur national, Amazon vise aussi l’accès aux fournisseurs. Le
cybercommerçant a certes commencé à tisser des liens avec de grands industriels, mais « il doit se
rapprocher d’un distributeur pour profiter de sa capacité d’achat, qu’il n’a pas pour le moment, et
pour la connaissance du client, que nous possédons avec nos magasins », raconte un acteur du
secteur. « Ils vont aller chercher le maillon faible. De toute façon, ils vont faire bouger les lignes »,
souligne un autre.

Car, en parallèle, Amazon avance ses pions dans la mise en place de son offre de livraison de
produits alimentaires. Au parc d’activités des Portes de Senlis, dans le sud de l’Oise, Amazon
envisage, dans le plus grand secret, la construction d’un entrepôt où il pourrait stocker des denrées
alimentaires.

TechCrunch : Netflix’s original content costs are ballooning

Netflix today once again showed that its subscriber growth is on a tear — especially its growth internationally — but a note in the report may indicate one of the biggest challenges the company faces going forward.
Netflix took home 20 Emmy awards this year, and that’s thanks to its enormous investments in original content. Shows like “Stranger Things,” “The Crown,” and “Master of None” are critical to getting new users to sign up to the service. But in today’s earnings report, the company said it’ll spend between $7 billion and $8 billion on original content next year. In short, making those shows and snapping up those awards is expensive — and vital to Netflix’s growth.
In August, Netflix’s Ted Sarandos said in an interview with Variety that he anticipates the company spending $7 billion on content in 2018. This spend is an escalating arms race, and while so far it’s turned out well for Netflix, it has to keep churning out those Emmy awards and keep users happy with its original shows. Netflix’s costs, in sum, have continued to rise over several quarters.
In the first quarter this year, Netflix said it would spend more than $1 billion on marketing in 2017. And in the fourth quarter last year, the company said it would spend $6 billion on original content in 2016, up from $5 billion in 2015. As the war for eyeballs continues to heat up and more and more companies start spending on original content, like Apple reportedly looking to spend $1 billion on original content in 2018, these costs are likely only going to escalate.
Here’s the chart for the company’s costs of revenue — which probably includes more than just the original content costs, but it’s a good example of what’s going on:
“Investors often ask us about continued access to content from diversified media companies,” the company said in its earnings report. “While we have multi-year deals in place preventing any sudden reduction in content licensing, the long-term trends are clear. Our future largely lies in exclusive original content that drives both excitement around Netflix and enormous viewing satisfaction for our global membership and its wide variety of tastes. Our investment in Netflix originals is over a quarter of our total P&L content budget in 2017 and will continue to grow. With $17 billion in content commitments over the next several years and a growing library of owned content ($2.5 billion net book value at the end of the quarter), we remain quite comfortable with our ability to please our members around the world. We’ll spend $7-8 billion on content (on a P&L basis) in 2018.”
So, it’s not super surprising to see some of those numbers go up over time. Great original content is expensive, and as the company continues to expand internationally, it’s going to have to consider what kind of original content will do well internationally. There are some examples like Netflix’s “3%,” and it looks like the content it’s already produced is helping buoy its growth abroad.
All this being said, those green bars for the company’s revenue keep getting bigger and bigger. So, too, have the company’s subscribers in both the U.S. and abroad. If those subscribers keep outpacing those costs, Netflix will probably be fine.

FT : The danger of Black Monday becoming a mere data point

The danger of Black Monday becoming a mere data point

Failure to fully explain stock market crash of 1987 should be warning for investors

I don’t remember leaving our Cannon Street office on the evening of Black Monday, October 19, 1987. But I remember vividly where I was two hours later at 8.30pm. I was standing at the bar in Kettners, a fashionable Soho restaurant, drinking champagne at least partly to celebrate the profits made by Adam, Harding & Lueck, the company I had started that year with two partners.

We had been betting on stock markets around the world declining. The FTSE 100 had obligingly done exactly that the previous Friday, when City offices were half empty following the UK’s worst storm in living memory. That Monday, there had been further heavy falls in American stocks and we were again making money for our clients. The Dow Jones Industrial Index had just closed down 508 points that day — the biggest one-day fall in American stocks of all time.

I also remember vividly what happened 12 hours later. While I was in a meeting at our offices with a prospective client, bond and interest rate markets began rallying strongly. Over the course of the morning, all our glorious profits of the night before were wiped out. And then some. And then some more. By the end of the meeting we had lost 25 per cent of our funds. A 10 per cent gain on the month had been transformed into a 15 per cent loss.

Of course, we know now that the 1987 stock market crash elicited an immediate, “equal and opposite” reaction from Federal Reserve authorities. There is no clearer example of the reflexive dialectic between financial markets — though the rescue of LTCM 11 years later, and the global financial crisis a decade after that, provided partial reprises.

Price changes on those days in stocks and bonds were tens of standard deviations from the norm — or would be if return distributions were normal and standard deviation thereby a meaningful statistic.

Prices moved a lot and, as in the 2008 financial crisis, assumed relationships between markets collapsed, forcing the Fed into drastic intervention. Ultimately, the sharp decline in interest rates prevented further stock market falls and led, gradually, to an accelerating decline in the US dollar.

People generally seek fundamental explanations for dramatic events in financial markets. Bad US trade figures a few days before, comments from the Bundesbank: these were explanations offered. But the smoking gun lay with the “portfolio insurers”: algorithm-toting professors running trading strategies that overloaded the young S&P 500 futures market with selling.

In my 30-year career in the markets since, a move of this magnitude and duration in stocks has never been repeated. Since 2000 there have been two massive declines, but each has occurred over months or years and have been profitable for Winton and similar firms. The flash crash was dramatic, but over before we had a chance to react.

With the great growth of momentum trading in recent decades, I have sometimes worried about a repeat of the portfolio insurance phenomenon. Market liquidity has grown, but whether that would help in the event of short-term instability is uncertain. My fear of another 1987-type event is what has limited Winton’s willingness to use leverage.

Belief in the general framework of market efficiency was surprisingly unaffected by the events of October 1987. Were the efficient markets hypothesis really a hypothesis, that day’s events would have disproved it. Academic economists and practitioners somehow managed to pull the frayed threads together. To this day, many continue to believe that markets follow a random walk, with all the mathematical consequences that entails.

Today, more than $600bn is invested in so-called “smart beta” exchange traded funds — most in strategies that assume profitable returns will result, almost automatically, from exposing a portfolio to anything that can be defined as a “risk”.

Yet financial market history is characterised by discontinuities. With the passage of time, Black Monday and other major events fade from the collective memory of investors and become abstract data points — what academics somewhat benignly term “fat tails”. Real markets do not dance to a tidy mathematical tune. They change and evolve through time, and portfolio managers need skill and creativity to keep up.

David Harding is founder and chief executive of Winton Group

Reuters - Unhedged debt stock could supercharge euro rise

Unhedged debt stock could supercharge euro rise - Reuters News
16-Oct-2017 12:49:51 PM
  • EZ investors hold over 1 trln euros in foreign bonds under QE
  • Sizeable chunk of these positions unhedged - analysts
  • Hedging activity on foreign bond holdings bolster currency
  • Create additional headwind as ECB prepares to taper
By Saikat Chatterjee and Dhara Ranasinghe
LONDON, Oct 16 (Reuters) - Euro zone investors who have snapped up over a trillion euros worth of foreign debt without protecting the foreign exchange risk are rethinking that vulnerability because of the currency's hefty rally this year.
The move entails buying euros to hedge, which turbo charges the rally even further - creating a headwind for the European Central Bank.
The ECB is widely expected to start laying out its plans for scaling back monetary stimulus at next week's policy meeting, but a strong euro complicates this since it puts downward pressure on inflation which is already running below target.
One reason for the euro's resilience is some 1.16 trillion euros ($1.37 trillion) of foreign bonds that have been purchased by European investors since the ECB launched its quantitative easing programme in March 2015, according to estimates from investors based on official data.
They have been forced to buy non-euro debt because the ECB has been taking up much of the domestic pool of bonds.
The bulk of the non-euro purchases were bought on a currency-unhedged basis because euro weakness during the bulk of ECB asset purchases meant that returns from overseas investments would be higher when accounting for exchange rates.
While those investments flattered returns in the three consecutive years until last year when the euro posted annual losses against its major rivals, 2017 has prompted a sharp reversal in those bets.
The currency has risen more than 13 percent against the dollar so far this year EUR=.
So investors have rushed to cover their currency exposure as the euro has gained, notably after the French elections in April and again in July.
Even with this, though, investors say a large chunk of foreign debt investments remain unhedged, indicating hedging-related purchases are likely to resurface if the euro renews its climb.
"If the euro starts to rise again, these investors are going to have to come back and start buying euros again and you could see euro/dollar topside continue," said Michael Sneyd, global head of currency strategy at BNP Paribas in London.
The euro traded at $1.1786 on Monday, not far off a 2-1/2 year high of $1.21 tested in early September.
BlackRock strategists recommend hedging currency risk fully for an international bond portfolio but market watchers estimate that only about 60-70 percent of these international debt investments by European investors are currently hedged.
Sneyd estimates that every 1 percent rise in overall hedge ratios translates into roughly $10 billion buying of euros, a sizeable chunk for even the euro/dollar exchange rate which is the most liquid in the world and has an average daily trading volume of nearly $700 billion.

STABLE EURO
Opportunistic demand for euros from bond holders when there is any sign of currency weakness, explains the euro's recent resilience during the conflict between the Spanish region of Catalonia and the central government, as well as unexpected German election results.
The euro has remained stable against the dollar and has gained against some other rivals such as the British pound EURGBP= and the Australian dollar EURAUD= since the start of the month.
That stability has puzzled some investors given that the euro was hurt early this year when the popularity of the anti-euro far-right in France ahead of elections sparked fears about the future of the currency bloc.
"We have seen a raft of dollar positive news and euro negative news but the currency has remained in a tight range, indicating some purchasing activity by either bond holders, reserve managers or some large institutional players," said Borut Miklavcic, managing partner at Lindengrove Capital.
Analysts polled by Reuters expect the euro EUR=EBS to trade around current levels in three months, indicating that markets still underprice the extent of which this unhedged stock of bonds could boost the currency. (Full Story)
The euro is being watched closely by the ECB as it debates the future of its 2.3 trillion euro stimulus scheme. (Full Story)
A solid recovery provides a favourable backdrop for the ECB to roll back the scheme and which faces a scarcity of eligible bonds for the scheme. But a further rapid rise in the euro could delay that process.
"A high currency should lead to lower inflation pressures and in an area where inflation has been stable but relatively benign it has led some to believe that the ECB may potentially delay removing its stimulus," said Shaughn Wilkie, bond portfolio manager at Macquarie Investment Management.
But it's not only the ECB that are likely to be concerned about a stronger euro give the vulnerability of unhedged positions.
"We still think this is a Damocles sword dangling over euro investors," said BNP Paribas' Sneyd.

(BofA-ML) October Fund Manager Survey

October Fund Manager Survey

BofA Merrill Lynch October Fund Manager Survey finds cash balance falling, investor expectations of Goldilocks rising
Highlights include:
  • Average cash balance falls to 4.7%, the lowest level in two and a half years, well down from last October’s high of 5.8%
  • For the first time in six years, Goldilocks trumps secular stagnation, with a record high 48% of investors surveyed expecting above-trend growth and below-trend inflation; the number of fund managers expecting below-trend growth and below-trend inflation fell 11ppt from last month to 34% in October
  • Investors are bullish on bond yields, with 82% of those surveyed indicating they expect bond yields to rise in the next 12 months and a record net 85% saying bonds are overvalued
  • Fund managers are positioning for higher yields, rotating over the past month into banks and Japan (assets benefitting from rising rates and inflation) and out of utilities, EM, healthcare and bonds
  • Over two-thirds of investors surveyed (68%) think the U.S. will see tax cuts in 2018 but tax reform will not have a big impact on risk assets
  • Long Nasdaq is considered the most crowded trade for the fifth time this year (29%), followed by Long US/EU corporate bonds (18%) and Long Eurozone equities (16%)
· A policy mistake from the Fed/ECB is considered as the biggest tail risk to markets by investors (24%); this is followed by North Korea (23%) and a crash in global bond markets (22%)
  • Overall growth expectations ticked higher this month, with a net 41% of investors expecting a stronger global economy in the coming year, up from net 25% last month but still well below the high of net 62% in January of 2017

“Cash balances dipped this month but remain somewhat elevated,” saidMichael Hartnett, chief investment strategist. “A faster drop in cash leading into 2018 would indicate a sell signal from investors. Icarus remains intact.”
Ronan Carr, European equity strategist, added that, “Europe is in vogue according to global investors, with the overweight in Eurozone equities back near record highs and EPS expectations accelerating. European investors remain positive on the macro outlook and are looking for a global reacceleration.”

“More investors are saying they want to overweight Japan over the next 12 months but that still lags behind Europe and EM,” said Shusuke Yamada, chief Japan FX/Equity strategist. “More ‘Japan catalysts’ may be needed to attract long-term investor interests.”