>>> What to look at today - 16th of October 2017

Asian equity markets opened generally higher. After hitting multi-year highs on Friday’s session, the Nikkei 225 has continued to gain on today’s session. Japanese technology names, including Toshiba, Hitachi and Softbank have all traded higher following today’s weakness in the yen, Friday’s gain seen on the Nasdaq and the recent earnings guidance out of HP Inc. The Hang Seng has hit highs not seen since Dec 2007 amid over 4% gains in shares of Hong Kong Exchange (0388 HK). China’s Sept banking data released over the weekend (M2, M1, New Yuan Loans and Aggregate Financing) all beat market expectations. The inflation data released earlier today was mixed, as CPI was inline while PPI rose more than expected. Zhou said total debt leverage in China is too high. The latter comments by the Chinese central banker were made at the Group of 30 seminar in Washington D.C. Other central bankers that made comments at this event over the weekend included, Fed Chair Yellen. ECB’s Draghi also made comments on Saturday on the sidelines of the IMF and World Bank meetings, which also occurred in the US capital. Brent Crude futures are higher by over 1%, amid reports that Iraqi forces have advanced towards Kurdish-held Kirkuk. Recall in late Sept, the Kurdish region held a referendum and there was said to be 90% support for independence. Meanwhile in Catalonia, today is the deadline imposed by Spain’s central government for the leaders of the region to clarify their independence stance. According to a prior press report, if Catalan President Puigdemont confirmed by today that he has declared independence, he will be given a further 3 days to withdraw the declaration.

Nikkei +0.54% Hang Seng +0.88% CSI -0.04% Shanghai -0.31% Shenzen -1.23%

Eur$ 1.1798 CNH 6.5728 CNY 6.5795 JPY 111.89 GBP 1.3287 CHF 0.9761 RUB 57.2935 WTI$ 51.88 +0.84%

S&P +0.05% EuroStoxx +0.11% FTSE +0.07% Dax +0.12% SMI +0.13%

Macro :
- Draghi Sees No Evidence That Stock, Bond Valuations Stretched
- Some ECB Members Are Said to Identify 2.5 Trillion-Euro QE Limit
- Constancio Says ECB Will Decide Policy Recalibrations in Autumn
- Macron Says He Speaks to Iran in the Interest of Security
- Cohn: U.S. Wants to Get Financial Regulation to Right Level
- Yellen: Ongoing Strength of Economy to Warrant Gradual Hikes
- Italy Widens Golden Power Rules for Non-EU Bids in Some Sectors

Keep an eye on :
- ABE SM : Atlantia Is Said Ready to Raise Offer for Abertis: Reuters
- ABE SM : Abertis Wants Control Premium for Hispasat, Expansion Says
- ACS SM : ACS Courts Criteria’s Support For Abertis Bid: El Confidencial
- AIR FP : French Govt Remains "Vigilant" on Airbus Ethics: Le Maire
- AF FP : Air France-KLM to Redeem Early OCEANE Bonds Maturing 2023
- AKZA NA : Akzo CEO Doesn’t Expect New PPG Bid Immediately: FD
- ATC NA : Altice Intends to Repurchase Shares Worth up to EU1B
- AZN LN : AstraZeneca Says Faslodex Gets Positive CHMP Opinion
- BK US : Blackstone May Offer Direct Access to Retail Investors: WSJ
- BOSS GY : Bafin Files Suspected Insider Complaint on Boss Shares: Spiegel
- EN FP : Bouygues Unit Colas Files Complaint After Suspicious Payments
- DTE GY : T-Mobile, Sprint Deal Said to Be W/Out Divestitures: Reuters
- EZJ LN : EasyJet Confirms Talks Are Continuing W/ Air Berlin Overseers
- ERICB SS : Investor AB Raised Ericsson Stake to 6.61% of Capital: DI
- FUR NA : Fugro Will Nominate Oystein Loseth as CEO to Succeed Van Riel
- GALP PL : Galp 3Q Average Net Entitlement Production 92.4 Kboepd
- GLEN LN : Glencore Is Said to Have Standstill Agreement With Bunge: WSJ
- KINI VX : Kuehne + Nagel 9M Ebit, Net Turnover Rise
- LIN GY : Linde CEO Optimistic Share Swap Target Met by Deadline: Euro
- MHG NO : Marine Harvest Says 3Q Operational EBIT Around EUR 191m
- BMPS IM : Monte Paschi Advised By Six Banks for NPLs Securitization: Sole
- NESN VX : Hershey Is Said to Prepare Nestle Confectionery Unit Bid: CNBC
- NESN VX : Brazil Antitrust Is Said to Extend Nestle’s Deadline: O Globo
- NoKIA FH : German Industry Wants to Build Own 5G Mobile Network: WiWo
- PRS SM : Prisa Publishes Agenda for EGM Meeting to Raise Capital: Filing, Prisa Plans EU550m in Capital Increases, Eyes Cebrian Succession
- RB/ LN : Reckitt Said to Mull Financing Options for Pfizer Ops Bid: Times
- ROG VX : Roche to Pay $387 Million to Warp Drive Bio in Antibiotics Pact
- RYA LN : Ryanair Wants Malaysia Airlines’s Bellew as COO: Sunday Times
- SHP LN : Sachem Head Is Said to Ask Shire to Explore Sale of Assets: Sky
- SGRE SM : Siemens Gamesa Revises Fiscal Year Year Forecasts Downwards
- RCF FP : Teleperformance 3Q Rev. EU1.01b; Acquired Start-Up Wibilong
- TIT IM : Tel Italia CEO May Meet Calenda Over Grid Split-Off: Repubblica
- TOP DC : Topdanmark Raises FY Outlook After 3Q Profits of DKK464 Million
- UBSN VX : UBS to Show Setback in Third-Quarter FX Trading: Platow
- VOW3 GY : VW Is Said to Face Challenges in Securing L-T Cobalt Supply: FT
- VOW3 GY : VW Targets Tesla as Rival in E-Car Volume Sales: Automobilwoche
- MF FP : Wendel May Pick Francois-Poncet as New Executive Chairman: JDD
- ZURN VX : Zurich May Make More Travel-Insurance Purchases: Les Echos

>>> Europe : Brokers Upgrades & Downgrades - 16th of October 2017

>>> Up
* Apple Raised to Overweight at Keybanc, PT $187
* AstraZeneca Raised to Outperform at Credit Suisse
* Eurotunnel Raised to Buy at Goldman
* Hochtief Raised to Buy at Bankhaus Lampe
* ITV Raised to Buy at HSBC, PT GBP2.10
* M6 Raised to Buy at HSBC, PT EU23.50
* Sky Raised to Add at AlphaValue

>>> Down
* Adler Real Estate Cut to Hold at HSBC, PT EU15.50
* ADO Properties Cut to Hold at HSBC, PT EU46
* Bristol-Myers Cut to Hold at Jefferies
* Flow Traders Cut to Neutral at Credit Suisse
* GKN Cut to Hold at SocGen, PT 350p
* Lundbeck Cut to Underperform at Credit Suisse
* Roche Cut to Neutral at Credit Suisse
* Unieuro Cut to Neutral at MedioBanca
* Virbac Cut to Hold at Jefferies
* Worldline Cut to Hold at HSBC, PT EU40

>>> Initiation
* Digital360 New Neutral at Corporate Family Office, PT EU1.35

>>> Asian Update

Asia Mid-Session Update: China PPI comes in hotter, food inflation falls; Fed's Yellen and Rosengren comment on rates and policy

***Asia Summary***
-Asian equity markets opened generally higher. After hitting multi-year highs on Friday’s session, the Nikkei 225 has continued to gain on today’s session. Japanese technology names, including Toshiba, Hitachi and Softbank have all traded higher following today’s weakness in the yen, Friday’s gain seen on the Nasdaq and the recent earnings guidance out of HP Inc.
-Australia’s ASX 200 has gained over 0.5%. Various names including, OZ Minerals, have started to release their Q3 production updates. On tomorrow’s session, iron-ore giant Rio Tinto is expected to release its production report and its shares have gained over 3% on today’s session. On the macro front, the Reserve Bank of Australia (RBA) Oct meeting minutes are due to be released on Oct 17th, while the September employment change figures are due on Oct 19th.
-The South Korean Won has gained for the 6th straight day, even as its navy confirmed the start of joint military drills with the US. In Taiwan, solar names have traded broadly higher following a report that the government is planning to fund a new solar company.
-In New Zealand, the government formation talks continue to drag on. Earlier today, the head of the ruling National Party English said the government formation process could take until the end of the week, as the First Party continues to decide on a coalition partner. Later this week, New Zealand’s Q3 CPI data is due to be released on Oct 17th.
-The Hang Seng has hit highs not seen since Dec 2007 amid over 4% gains in shares of Hong Kong Exchange [0388.HK]. Cheung Kong Property Holdings [1113.HK] has gained over 2%, as there has been press speculation that the company will sell most of its stake in The Center office tower in Hong Kong for a record HK$40.2B. Great Wall Motor [2333.HK] had earlier traded higher by over 9%, but shares have since pared gains. Last week, the company’s shares rose over 12% amid speculation related to a partnership with BMW.
-In China, the ChiNext small-cap index has declined and underperformed the broader market. At the same time, the country’s 10-year sovereign bond yield has traded at over 2 year highs.
-China’s Sept banking data released over the weekend (M2, M1, New Yuan Loans and Aggregate Financing) all beat market expectations. The inflation data released earlier today was mixed, as CPI was inline while PPI rose more than expected. Looking ahead, China’s twice per decade Communist Party Congress is due to begin on Oct 18th, while Q3 GDP is expected to be released on Thursday, Oct 19th. Ahead of the data, PBoC Gov Zhou was quoted as saying that H2 GDP growth was seen at 7%, which would be ahead of the 6.9% readings seen in each Q1 and Q2.
-Separately, Zhou said total debt leverage in China is too high. The latter comments by the Chinese central banker were made at the Group of 30 seminar in Washington D.C. Other central bankers that made comments at this event over the weekend included, Fed Chair Yellen. ECB’s Draghi also made comments on Saturday on the sidelines of the IMF and World Bank meetings, which also occurred in the US capital.
-Brent Crude futures are higher by over 1%, amid reports that Iraqi forces have advanced towards Kurdish-held Kirkuk. Recall in late Sept, the Kurdish region held a referendum and there was said to be 90% support for independence.
-Meanwhile in Catalonia, today is the deadline imposed by Spain’s central government for the leaders of the region to clarify their independence stance. According to a prior press report, if Catalan President Puigdemont confirmed by today that he has declared independence, he will be given a further 3 days to withdraw the declaration.

***Key economic data***
- (CN) CHINA SEPT NEW YUAN LOANS (CNY): 1.27T V 1.23TE
- (CN) CHINA SEPT AGGREGATE FINANCING (CNY): 1.82T V 1.57TE
- (CN) CHINA SEPT M2 MONEY SUPPLY Y/Y: 9.2% V 8.9%E; M1 MONEY SUPPLY Y/Y: 14.0% V 13.5%E
- (UK) Oct Rightmove House Prices m/m: 1.1% v -1.2% prior; y/y: 1.4% v 1.1% prior
- (CN) CHINA SEPT CPI M/M: 0.5% V 0.3%E; Y/Y: 1.6% V 1.6%E; PPI Y/Y: 6.9% V 6.4%E

***Speakers and Press***
Japan
- (JP) BoJ Gov Kuroda: Real interest rates expected to fall further as inflation expectations rise, further enhancing effects of BoJ’s monetary easing
Korea
- (KR) South Korea Fin Min Kim: the worst would be soon over with China after the Communist Party Congress in Beijing - financial press

China
- (CN) PBOC Gov Zhou: Total debt leverage in China is too high, there is no clear fiscal discipline to constrain local govts
- (CN) China Q3 GDP may have grown ~6.8% y/y; Q4 GDP may grow 6.7% and 6.8% in 2017 - Chinese Press
- (CN) PBOC Gov Zhou: Sees H2 GDP to reach 7%

Australia/New Zealand
- (NZ) New Zealand National Party (ruling) leader English said outstanding issues remain and further talks are needed before government can be formed; government formation could take until end of week – NZ Press

Europe
- (UK) UK PM May’s Office confirms she will meet with EU officials Barnier and Juncker
- (EU) ECB Constancio says reinvestment policy will continue until further notice
- (EU) Some ECB members said to identify €2.5T limit for QE - US financial press
- (EU) On Saturday, ECB President Draghi reiterated have to be persistent with our monetary policy

US
- (US) Fed Chair Yellen: New normal will be lower interest rates than we've seen historically; biggest surprise in the US economy this year has been inflation
- (US) Fed's Rosengren (moderate, non-voter): 3-4 rate hikes next year will probably be appropriate; may need to overshoot on rates if unemployment is below 4% while inflation reaches target

***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.7%, Hang Seng +0.9%; Shanghai Composite -0.1%; ASX200 +0.7%, Kospi +0.1%
- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 +0.1%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1823-1.1798; JPY 112.08-111.74; AUD 0.7889-0.7868;NZD 0.7183-0.7166
- Dec Gold +0.0% at $1,304/oz; Nov Crude Oil +0.9% at $51.89/brl; Dec Copper +0.6% at $3.15/lb
- (CN) China PBOC injects CNY20B in 7-day reverse repos v skipped prior; injection matches maturities
- USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.5839 V 6.5866 PRIOR
- (CN) PBOC has completed trial runs on the algorithms needed for digital currency supply, taking it a step closer to addressing the technological challenges associated with digital currencies - Chinese press
- (KR) Bank of Korea (BOK) sells KRW950B in 1-yr bonds at 1.61%

***Equities notable movers***
Australia/New Zealand
- NEU.AU Confirms Phase 3 plan for Rett syndrome at FDA Meeting; +17.5%
- TGA.AU Cuts FY17 Net A$17-20M (prior A$24-26M); Guides H1 Net A$11M; -22%

Korea
- 000080.KR Operations at four of the six factories halted on Friday, as union decided to stage a strike after failure of negotiations on wage increases – filing; -8%, 6-yr low
- 006400.KR Said to be selling retirement pension to Samsung Fire & Marine Insurance without going through without competitive bidding – press; -5%

- China/Hong Kong
- 2333.HK Unusual share price movement and trading volume movement: cooperation for vehicles of MINI brand is still at preliminary stage (Friday headline), +10% daily limit for premarket

US
- TSLA Said to have fired ~400 employees in the past week as part of its company wide annual review - financial press

>>> Abertis suitor Atlantia ready to raise bid to beat ACS - report

Abertis suitor Atlantia ready to raise bid to beat ACS - report
15 OCT 2017
Italian toll-road operator Atlantia (BIT:ATL) is prepared to raise its takeover bid for Spanish rival Abertis(BME:ABE) to up to about EUR 17.8bn if construction company ACS (BME:ACS) materialises a counter offer next week, a newswire report said, citing sources close to the matter. Different sources said last Friday that Atlantia was prepared to offer up to EUR 18 per share, if necessary, without hurting its credit rating and significantly increasing its cost of funding, Reuters said.
As has been widely reported, Atlantia formally launched this week a cash and share offer that values Abertis at around EUR 17bn — or about 17 euros per share — in a deal that would create the world’s biggest toll-road operator.
The deal is conditional on Abertis shareholders — who own between 10% and 23% of the Spanish company’s capital — accepting the share offer, the item noted. Top shareholder La Caixa would be willing to sell, but it wants a compelling case with a better price, Reuters added citing Mediobanca, in a note to clients.
ACS needs to disclose a counter-bid by October 19, which would put Atlantia’s bid on hold for weeks or months as Spanish market regulator CNMV would have to examine ACS’s offer and decide whether it can go ahead.
As reported, ACS’s offer is expected to be roughly half in cash and the rest in newly issued shares in German construction group Hochtief (HOTG:DE), which is controlled by ACS. The value of ACS’s potential offer is not known and the company declined to comment.
According to stock sales company Banca IMI, an offer with no premium versus Atlantia’s offer would be unattractive, as investors were unlikely to prefer receiving Hochtief shares. Hochtief board will discuss the matter on 18 October.

>>> Toshiba Memory could receive additional investments of more than JPY 1tn by

Toshiba Memory could receive additional investments of more than JPY 1tn by Bain Capital-led consortium until listing - translated
15 OCT 2017
The Bain Capital-led consortium that is acquiring Toshiba Memory from Toshiba [TYO:6502] will likely provide additional investments of more than JPY 1tn (USD 8.9bn) until the flash memory unit is listed, the Nihon Keizai Shimbun reported.
The Japanese-language report cited Yugi Sugimoto, managing director at Bain Capital’s Japanese unit, who said during an interview with the paper that the private equity fund is not planning to restructure Toshiba Memory, but provide support for its growth, noting that the additional investments would be above the roughly JPY 2tn acquisition fee for the flash memory unit. The current team of executives will be maintained, he said, although Bain will take an active approach to appointing outside directors, who will take a supervisory role. He added that he himself will become a director.
Sugimoto noted that the consortium will spare no expense in providing the support required for R&D and equipment, adding that it will make use of a variety of methods to raise funds.
Regarding Western Digital’s litigation against the deal for Toshiba Memory, Sugimoto said that even if the court rules wholly in favor of Western Digital, which is unlikely, the US-based memory company will only gain manufacturing equipment that is owned by a joint venture company that is a paper company. He went on to say that obtaining a manufacturing operation that has no employees will not likely be considered a victory for Western Digital, adding that he believes the two sides will be able to reach a settlement.

>>> Barrons weekend summary: Positive features on GOOGL, BAC, C, JPM

Barrons weekend summary: Positive features on GOOGL, BAC, C, JPM, MS, WFC ; Cautious on Softbank (9984.JP) 
* Cover story: In the years following Black Monday on October 19, 1987, the use of algorithms to pick stocks, mitigate risk, and place trades using computer systems has grown, creating the illusion that risk can be measured and managed—but the system may be more fragile than investors expect. 

* Tech Trader: Positive on GOOGL: Company is seeking to catch up to rivals AMZN and MSFT in cloud computing, and could make a large acquisition—such as WDAY or CRM—to increase its footprint in the sector. 

* Trader: “Even though the large-stock indexes ended the week in positive territory, they didn’t make the big moves they have in recent weeks, as evidenced by gains of half a percentage point or less”; Many traditional dividend-paying stocks are pricey on a relative basis, says Jim Tierney of AB, who cites KO as an example; Canadian Tire chief financial officer disputes PAA Research’s view that AMZN will soon disrupt Canada’s bricks-and-mortar merchants. 

* Interview: Nobel laureate Robert Shiller talks about how narratives help shape investor sentiment, and discusses the importance of the 1890s depression. 

* Profile: Mark Durbiano, manager of the Federated High Yield Trust portfolio, allows up to 20% of its assets to be allotted to equities (top five equity holdings: OI, GT, BERY, NCR, GPK). 

* Features: 1) In Barron’s annual Big Money Poll, top money managers remain optimistic, with 61% describing their outlook as bullish; 2) Positive on JD: Investors shopping for growth stocks in China might look beyond BABA to JD.com, the country’s No. 2 online retailer, whose shares could gain 30% or more in the next year; 3) Positive on D: With a strong power portfolio, the company hopes to increase earnings by 6-8% annually during the next few years, and raise its dividend by 10% each year. 

* Echoes of ‘87: Wall Street investors Art Cashin, Abby Joseph Cohen, Marc Faber, and Peter Tuchman look back on Black Monday and the lessons they learned from the crash; Eight funds (OAKIX, BEXFX, VGTSX, JENRX, PRDGX, VIG, VBMFX, MWTRX) can help investors dial down risk; A look at market selloffs that transformed Wall Street, starting with the crash of 1929; Former Barron’s writer Alan Abelson’s column on Black Friday, first published on October 26, 1987. 

* Follow-Up: Positive on BAC, C, GS, JPM, MS, WFC: Major banks, which are benefiting from higher short-term rates, modest loan-demand growth, restrained expenses, and generous capital returns look attractive for investors. 

* European Trader: The British market “has too many stocks vulnerable to central bank tightening,” creating a weak spot in the market in addition to problems the Brexit process is causing. 

* Asian Trader: Cautious on Softbank: While some investors think the company’s strong track record and stake in BABA make it a good opportunity, others argue its huge debt load and the capital gains taxes it would face were it to sell assets pose problems. 

* Emerging Markets: International Monetary Fund data indicate that global growth is on track and many developing countries are fueling the economic expansion. 

* Commodities: Prices for gold have outpaced those for silver this year, but the latter metal should emerge as the winner amid growing demand from the solar and smartphone sectors. 

* Streetwise: This year has seen only eight daily moves of one percent either way in the S&P 500, so that if the market hits a bump, lower correlations should absorb some of the damage.