>>> Europe : Brokers Upgrades & Downgrades - 12th of October 2017

>>> Up
* comdirect Raised to Buy at Bankhaus Lampe
* Danske Bank Raised to Buy at UBS
* Elis Raised to Buy at HSBC, PT EU25
* Fortum Raised to Buy at SocGen
* JCDecaux Raised to Buy at Citi
* Lufthansa Raised to Outperform at Bernstein, PT EU30
* Maersk Raised to Outperform at MainFirst, PT DKK13,800
* VW Raised to Outperform at Bernstein, PT EU180

>>> Down
* AA Cut to Hold at Berenberg
* Allison Transmission Cut to Neutral at Longbow
* Cummins Cut to Neutral at Longbow
* DNB Cut to Neutral at UBS
* Ferrexpo Cut to Sell at Investec
* Firestone Diamonds Cut to Sector Perform at RBC, PT 19p
* JCDecaux Cut to Reduce at HSBC, PT EU27
* Meritor Cut to Neutral at Longbow
* Nordea Cut to Neutral at UBS
* Randgold Cut to Hold at Investec
* Stolt-Nielsen Cut to Reduce at Fearnley, PT NOK115
* Stroeer Cut to Hold at HSBC, PT EU59

>>> Initiation
* Countrywide New Sell at Berenberg, PT 95p
* EasyJet New Buy at First Shanghai, PT GBP14
* Foxtons New Sell at Berenberg, PT 50p
* Italgas New Buy at Berenberg, PT EU5.30
* LSL Property Services New Hold at Berenberg, PT 220p
* Purplebricks Group New Buy at Berenberg, PT 470p

>>> Call

>>> Asian Update

Asia Mid-Session Update: Dollar weakness resumes after Fed minutes; China tech names to come under govt influence?

***Asia Summary***
- Asian equity markets opened mostly higher. China markets remains muted ahead of next week’s Communist Party congress, while as expected Nikkei closed at a 20-yr high yesterday. While currencies were muted early in the session, dollar weakness resumed heading into afternoon trade, with US Fed minutes showed there is still uncertainty on timing of rate increases. South Korea’s Q3 FDI fell 9.7%, notably YTD China investment into South Korea fell 63% y/y to $608M amid rising tension between the two countries.
- China Govt said to be pushing some of the large tech firms to give the Govt a stake in the company and a direct role in corporate decisions. Internet regulators have discussed taking 1% stakes in Tencent, Weibo, Youku Tudou and Alibaba.
- Looking ahead to tomorrow we will see Singapore Central Bank (MAS) announces any changes to policy. MAS is widely seen sticking to a neutral stance tomorrow, but it may be moving closer to tightening policy as the economy continues to strengthen. China will also report Sept trade data.

***Key economic data***
- (AU) AUSTRALIA AUG HOME LOANS M/M: 1.0% V 0.5%E; INVESTMENT LENDING: +4.3% V -3.9% PRIOR
- (JP) JAPAN SEPT PPI (CGPI) M/M: 0.2% V 0.2%E; Y/Y: 3.0% V 3.0%E
- (AU) Australia Oct Consumer Inflation Expectation: 4.3% v 3.8% prior
- (NZ) New Zealand Oct ANZ Consumer Confidence Index: 126.3 v 129.9 prior; m/m: -2.8% v 2.9% prior
- (KR) South Korea Q3 Foreign Direct Investment (FDI) y/y: -9.7% v -9.0% prior
- (JP) Japan Sept Tokyo Avg Office Vacancies m/m: 3.2% v 3.4% prior (lowest level since Apr 2008)
***Speakers and Press***
Japan
- (JP) Nikkei poll shows Japan's ruling coalition winning close to 300 of the 465 seats in the Diet's lower house ahead of Oct 22nd election

US
- (US) Fed’s Bostic (non-voter, dove): Balance sheet size once normalized is an open question; balance sheet rolloff start not seen significant timing - speaking in Hong Kong
- (US) US President Trump: Looking at ~10% repatriation tax rate (from current 35%)
Australia/New Zealand
- (NZ) New Zealand First Party Leader Peters: NZ First board not likely to meet Friday
- (AU) IMF lowers Australia 2017 GDP outlook to 2.2% from 3.1% in Apr
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.5%, Hang Seng +0.3%; Shanghai Composite -0.2%; ASX200 +0.2%, Kospi +0.3%
- Equity Futures: S&P500 -0.1%; Nasdaq100 +0.0%, Dax +0.0%; FTSE100 +0.0%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1878-1.1858; JPY 112.52-112.32; AUD 0.7824-0.7788;NZD 0.7110-0.7087
- Dec Gold +0.7% at $1,297/oz; Nov Crude Oil -0.5% at $51.03/brl; Dec Copper -0.1% at $3.09/lb
- (CN) China PBOC injects CNY20B v CNY20B in 7-day reverse repos prior; drains net CNY40B v none prior
- USD/CNY (CN) China PBOC sets yuan reference rate at 6.5808 v 6.5841 prior
- (TH) Thailand Central Bank sells THB20B in 14-day bonds; avg yield 1.12188%; bid-to-cover 2.38x

***Equities notable movers***
Australia/New Zealand
- BAL.AU Raises FY18 Rev target 15-20% y/y (prior 5-10%); EBITDA margin 17-20% (prior 15-20%); +6%
- LOV.AU To open pilot store in US – press; +8%

Japan
- 8028.JP Reports H1 Net ¥22.4B v ¥11.9B y/y; Op ¥33.5B v ¥20.1B y/y; Rev ¥633.6B v ¥211.5B y/y; -4%
- 5406.JP CEO apologizes for false data, have finished probes for ~100 of 200 companies; more 'irregularities' may come to light; Thus far no customers have cancelled orders; +1.1%

Korea
- 047810.KR Former and current executives were indicted by South Korean prosecutors over charges of inflating KRW535.8B in sales and KRW46.5B in net profit from 2013 to Q1 2017; halted

China/Hong Kong
- 2382.HK Reports Sept shipments of handset lens: +0.9% m/m; production -9.1% m/m; -4%

>>> US After Hours Summary: JILL -37%, NSTG -10%, HAWK -7% following e

After Hours Summary: JILL -37%, NSTG -10%, HAWK -7% following earnings/guidance, ACLS +5% and NMIH +4% to join S&P SmallCap 600, several biotechs on the move

After Hours Gainers:

Companies trading higher in after hours in reaction to news: ARDX +32.4% (Pivotal Phase 3 study of Tenapanor for IBS-C hits primary and all secondary endpoints to support NDA submission in 2H18), ONCS +19.3% (confirms acceptance of late breaking abstract at upcoming Society for Immunotherapy of Cancer Meeting November 8-12), KTOV +16.5% (after 55% move higher today), BW +7.6% (VIEX Capital Advisors disclosed 6.4% active stake; believes the Board must take immediate action to monetize assets and make aggressive cost reductions), SRNE +6.8% (continued strength after 48% move higher today), ACLS +4.8% and NMIH +4% (to join S&P SmallCap 600), VNTR +3.3% (still checking), FPRX +3.7% (announces Cabiralizumab Phase 1a/1b data abstract selected for late breaking oral presentation), XL +3.2% (estimates Q3 preliminary hurricane related net losses of approx $1.33 bln and total catastrophe losses of $1.48 bln -- largely in line with co's expectations), SIGM +3.1% (ticking higher; announces major restructuring actions to accelerate the return to profitability; strategic review ongoing), DXC +2.7% (light volume; DXC Technology to combine its U.S. public sector business with Veritas affiliates to create independent, publicly traded company serving U.S. government clients), HLF +1% (seeing extended hours volatility after Carl Icahn affirmed active stake), RY +0.9% (to repurchase up to 5 mln shares under a specific repurchase program, ZTO +0.7% (is implementing certain increases in the prices of its delivery services), SQ +0.6% (continued strength after initially pulling back on Cramer tweet - 'monster fan of Square--but it has really run'; was initiated after the close with Outperform at Oppenheimer)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: JILL -37.3% (issued downside Q3 guidance citing lower than expected sales trend across both our retail and direct channels), NSTG -9.8%, HAWK -7.2%, FBM -1.5%, T -0.4% (slightly lower after reiterating 2017 guidance)

Companies trading lower in after hours in reaction to news: HMNY -17.9% (pulling back sharply after releasing MoviePass investment details), TRVN -17.3% (to streamline operations to focus on approval and commercial launch of OLINVO; halting its investment in early stage research), PTGX -12.4% (to offer and sell shares of its common stock in an underwritten public offering), KNDI -6.7% (files for $300 mln mixed securities shelf offering), AZRX -4.4% (thinly traded; files for $10 mln mixed securities shelf offering), CHS -0.9% (light volume; following J Jill guidance), CSCO -0.9% and FEYE -0.5% (ticking lower following JNPR guidance)

(Makor Technical) Happy Anniversary to the S&P 500

Happy Anniversary to the S&P 500

 

The S&P 500 topped exactly 10 years ago and then declined 57% in one of the most brutal bear markets in history. The week after the S&P made the 1576 high it fell 4%.

 

Sometimes dreams to come true.

 

 

 >>> The Bullish Case for the USD Index and entering a short EUR/USD trade idea

 

·         As long as we don’t trade at or below 89.62 (top of wave 1) the wave count suggested on the chart argues for 1 more bull leg in the USD towards 110.

·         This view is based on Elliot wave count and offers a very attractive risk/reward.

·         Given the positioning in the market which suggests that investors are short USD versus a bunch of currencies and based on sentiment a low for the USD might already be in place.

·         Technical wise:

 

o   Wave 2 corrected a bit more than 76.4% of wave 1

o   Wave 3 extended 161.8% of wave 1

o   So far wave 4 corrected exactly 38.2% of wave 3 and did not exceed the top of wave 1 which stands at 89.62

o   Assuming all this is valid we should be starting a wave 5 which has a minimum target which is equal to the height of wave 1 and argues for a move towards 110

 

·         Since the USD Index is heavily exposed to Euro (57%) the best thing will be to short EUR/USD to play this view.

 

Strategy: Short 0.50 unit EUR/USD from 1.1815, working a stop above the cycle high and on a close above 1.21

 

Weekly chart

 

EUR/USD weekly chart

 

 

 

From: Barry Lyss
Sent: 11 October 2017 10:35
Subject: Tech View US 30-10 Yield Spread - time for a bounce!!!

 

  • The Yield spread between the US 30 and 10 Year Yield is trading at 0.53
  • This level is very important on the weekly time frame as it marks the trend line connecting the lows since the year 2000.
  • I don’t have a long term view but I think current levels offer a great risk/reward to bet on the spread to widen
  • One way of playing this idea is by buying US 10 year Future and Selling US Ultra US-T-Bond future. Although the duration on these futures are not similar they are the best I could find

 

Feedback welcomed.

 

Weekly chart

 

From: Barry Lyss
Sent: 11 October 2017 10:03
Subject: Morning Call S&P 500, Nasdaq 100, Long Oil and Gas Vs Short Basic Resources in Europe (SXEP/ SXPP), AAPL US & US & German 10 Year Yield 11oCT17

 

Good Morning,

 

Yesterday was another non-event day in equities which once again managed to sustain its gains as NO DOWN DAYS ARE ALLOWED IN THIS MARKET. In the GOVT Bond market we did see some good buying flow but nothing special. In the FX market the USD was weaker all abroad and the Commodity space was on fire with Crude Oil, Natural Gas, Gold and Silver gaining some strength. On my trading ideas I cut my Long Crude Oil and AUD/USD positions late on the day but remain short S&P 500, Apple & USD/JPY and Long Natural gas for now. Today we get the FOMC Minutes and tomorrow we get US PPI ahead of Friday CPI in the US.

 

 

Equities:

 

S&P 500 Index (2550 last)

 

  • The Index continues to trade at the top of the 9 year rising channel. Despite the overbought technical conditions, divergence between price and Momentum, historical low volatility, deteriorating percentage of stocks making new highs while the Index is making new highs and the fact that we have not witnessed nearly any down days this year there is no impact on price.   

 

Strategy: Short 1 unit from 2547, target 2420 with a stop on a close above 2585.

 

Daily chart

 

Weekly chart

 

Nasdaq 100 Index (6063 last)

 

  • Yesterday price action was bearish and a weak bearish reversal candle was posted on the Index
  • The entire move from the 5600 level fits the criteria’s of a bearish wedge pattern. The break down level of this wedge is at 5950 and a sustain move below it would allow for a move lower towards 5600.
  • The divergence between price and RSI with deteriorating momentum is a 1st confirmation for this view.

 

Strategy: Short 0.5 unit from 6070 (future ref 6067), target 5650 with a stop on a close above 6130.

 

Daily chart

 

Spreads and Single Stock Ideas

 

Long SXEP (Stoxx Europe 600 Oil & Gas Index) / Short SXPP (Stoxx Europe 600 Basis Resources Index)

 

  • The ratio has broken out from a 1.5 year declining channel and should move higher over time.
  • The idea entry level for this idea is at a ratio of 0.6915 which is the declining channel support and 55dma.

 

Strategy: work a GTC order to buy 1 unit at 0.6920, target 0.7950 with a 2% stop loss on a close below 0.6780.

 

Daily chart: SXEPEX GY Vs SXPPEX GY

 

AAPL US (155.90 last)

 

  • Price broke down from its rising channel with the break down level and 55dma standing at 156 / 157
  • As long as 156 / 157 caps the upside another leg lower should start with a downside target at 142.20 / 143.65

 

Strategy: Short 0.5 unit from 156.07, target 142.50 with a stop on a close above 160.50

 

Daily chart

 

 

Weekly chart

 

Government Bonds

 

US 10 Year Yield (2.3570% last)

 

  • Huge resistance stands at 2.40 / 2.42 area and while below it a move lower should be on the cards.
  • Two potential downside targets for this move is the 200dma at 2.3180 and then the 55dma which is also the a trend breakout level at 2.23.
  • Whoever is betting on higher yield should probably keep a tight stop and willingness to add at 2.3170 and 2.230 which is the ideal entry level for this trade.

 

Daily chart

 

 

German 10 Year Yield (0.463% last)

 

  • Major resistance zone at 0.50% and need to see if we breakout or move back lower and remain in the 1 year range
  • Given the fact that we already broke out above 0.50% area in July and fell back into it the more likely scenario is for further range trading.
  • A sustain move above 0.50% would be bullish yield but while below it the risk is for another leg lower possibly towards 0.16% worst case scenario.

 

Daily chart

 

 

>>> AMZN - Introduces a new way for Teens to shop on their own while parents s

Introduces a new way for Teens to shop on their own while parents stay in the know 
- Parents can add teens to their Amazon household account for free, with the flexibility to either approve every order or set pre-approved spending limits.
- Amazon introduced a convenient way for teens 13 through 17 years old to shop on Amazon with their own login. For the first time, teens can independently use the Amazon App, allowing them to shop or stream content while still keeping their parents informed. Parents can approve all orders or set pre-approved spending limits per order – offering teens a customized level of autonomy that can change and grow as they do. Teens and parents can learn more and sign-up at amazon.com/forteens
- When a teen finds something they wish to order, they can place the order on the Amazon App, and parents will receive a text or email showing the item, cost, shipping address and payment information. The teen can also include a personalized note like, “this is the book I need for class.” The parent can approve the order by text or they can visit their orders page to review it in more detail. By default, parents approve every order. Parents can choose to skip the approval step and set pre-approved spending limits, offering teens the freedom to place orders up to a certain dollar amount on their own. Parents receive itemized notifications for every order and can cancel and return any item in accordance with Amazon’s policies.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • VOXX -18.6%, HDSN -14.8%, CUDA -9.1%
Other news:
  • ATEC -12% (NuVasive has filed a lawsuit in the Delaware Chancery Court against Patrick S. Miles, former vice chairman of the Company and a member of NuVasive's Board of Directors-lawsuit asserts that before abruptly resigning from the Company to join Alphatec)
  • MNKD -7.2% (prices offering of 10,166,600 shares of common stock at $6.00 per share)
  • IPCI -6.1% (to sell 3,636,364 common shares at a purchase price of $1.10 per share in a registered direct offering)
  • EBMT -5.5% (commenced underwritten public offering of approximately $18 million of common stock)
  • FLXN -3.4% (to offer 4 mln shares of its common stock in public offering)
  • MU -3.1% (launches $1 billion offering of common stock; files mixed securities shelf offering)
  • XPER -2.3% (German Federal Patent Court issued preliminary opinion that all claims of Invensas (an affiliate of Xperi XPER) patent asserted against Broadcom in Germany should be null and void)
  • PHG -2.1% (reaches agreement with the U.S. government on a consent decree focusing on the company's defibrillator manufacturing in the U.S.)
  • MOH -1.8% (named Joseph Zubretsky as new President and Chief Executive Officer, effective November 6)
Analyst comments:
  • TA -6.5% (downgraded to Sell at Citigroup)
  • CHS -4.7% (downgraded to Underperform from Neutral at BofA/Merrill)
  • GRPN -3.4% (resumed with a Sell at Goldman)
  • JNPR -2.1% (downgraded to Neutral from Buy at BofA/Merrill)
  • EXC -1.9% (downgraded to Sell from Neutral at Goldman)
  • BOJA -1.1% (downgraded to Equal-Weight from Overweight at Stephens)
  • SLB -0.5% (downgraded to Market Perform from Outperform at BMO Capital Markets)
  • SNE -0.5% (downgraded to Equal Weight from Overweight at Morgan Stanley)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • DAL +1.9%, FAST +1.3%
Select Airline stocks trading higher in sympathy with DAL:
  • JBLU +1.8%, UAL +1.5%, LUV +1.3%, AAL +1%
Other news:
  • CASI +28.4% (Director discloses the purchase of 200K shares)
  • ATHX +24.7% (Athersys and Nikon CeLL innovation to collaborate on multistem commercial manufacturing in Japan)
  • MBRX +8.5% (enters into an agreement to collaborate with the University of Bergen to expand research on inhibition of brain metastasis by Moleculin's pre-clinical drug WP1066)
  • BTX +8.5% (reports that an investigator-led clinical trial has successfully treated its first patient in a study of Premvia)
  • SLNO +5.5% (issued new U.S. patent related to the use of pharmaceutical formulations of diazoxide)
  • EARS +3.2% (executes two share purchase agreements for up to $15 mln with Lincoln Park Capital)
  • NBEV +2.2% (announced the expansion of Aspen Pure Probiotic throughout the more than 2,000 Ahold Delhaize (ADRNY) banner stores across 23 states)
  • UVE +1.5% (UPCIC anticipates Q3 gross losses relating to Hurricane Irma will be $350-450 million; expects to recognize net pre-tax losses of only $35 million)
  • ANAB +0.9% (files for 3 mln share common stock offering)
Analyst comments:
  • RRC +3.3% (upgraded to Overweight from Underweight at Barclays)
  • ANGI +2.7% (initiated with a Buy at Goldman)
  • PYPL +1.4% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
  • TOUR +1.2% (initiated with a Outperform at Credit Suisse)
  • CL +1% (upgraded to Buy from Hold at SunTrust)
  • ABBV +0.9% (upgraded to Outperform from Market Perform at Cowen)
  • V +0.6% (upgraded to Outperform from Market Perform at Wells Fargo)
  • JNJ +0.5% (upgraded to Buy from Hold at Jefferies)