>>> What to look at today - 28th of Sept. 2017

Dow +0.25% S&P +0.41% Nasdaq +1.15% Russell +1.92%
US Market Closed higher, settling new records. Tax reformed news helped the sentiment, Some of the most notable highlights of the plan include cutting the corporate tax rate to 20% from 35%, doubling the standard deduction, and reducing the number of tax brackets to three (or possibly four) from seven. The individual tax rates would be set at 12%, 25%, and 35%, with a fourth option for the highest earners, financing details of this measure were limited. Three of the eleven sectors finished with notable losses on Wednesday--utilities (-1.4%), real estate (-0.8%), and consumer staples (-0.7%)--while only one, in addition to technology and financials, settled with a notable gain--consumer discretionary (+0.5%). MU +8,5% on numbers pushed PHLX up +2.4%, NKE -1.9% on numbers. US After Hours, THO / SINO +4%, PIR -7%, JBL -1% following earnings/guidance, AAAP +11% on potential NVS deal. Asian equity markets opened mixed, generally following the lead of US markets. Hong Kong property names were weaker on another Chinese city adding property curves. Financial names gained on US yields rose overnight. Analysts note that Q4 volatility in China is likely to be subdued with efforts to keep markets stable ahead of Communist Party gathering on Oct 8th. USD strength in the session attributed to Trump’s confirmation of proposed tax plan. USD/JPY rose giving some support to the Nikkei.

Nikkei +0.47% HAng Seng -0.34% CSI +0.03% Shanghai -0.15% Shenzen +0.15%

Eur$ 1.1730 CNH 6.6618 CNY 6.6590 JPY 113.02 GBP 1.3368 CHF 0.9744 RUB 58.2177 WTI$ 52.05 -0.17%

S&P +0.02% EuroStoxx +0.17% Dax +0.23% FTSE +0.14% SMI +0.05%

Macro :
- Fed’s Bullard Says Equity Valuations ‘May Be Stretched’
- EU is Said to Consider Brexit Concession on Transition Talks

Keep an eye on :
- AF FP : AF-KLM Says Regulators Approve Shr Sales to China Eastern, Delta
- AMAT US : Applied Materials Target FY20 Adj.EPS $5.08;Buy Back $3B in Shrs
- AAPL US : Apple Interested in JDI’s LCDs for Some iPhones Next Year: WSJ
- AAPL US : Apple Is Said to Reach Final Terms for Bain’s Toshiba Chip Bid
- ARYN VX : Aryzta lining up KPMG to advise on sale of Irish fine foods business La Rousse
- BNP FP : BNP L-T Deposit, Sr Unsecured Rtg Raised to Aa3 vs A1 by Moody’s
- BWO AV : Buwog First Quarter Recurring FFO EU44.2 Mln
- CRG IM : Banca Carige Gets ECB Approval for Capital Strengthening Plan
- COFA FP : Coface Lifts 2017 Guidance, Now Sees Net Loss Ratio Below 54%
- COLR BB : Colruyt Aims for FY2017-18 Net to Match Last Year’s Results, Colruyt Approves Buyback Program of Up to EU350m, Starts Oct. 2
- DSY FP : Dassault Systemes to Buy Exa for $24.25/Shr in Cash --> 44.45% Premium (yest Close 16.96)
- DEZ GY : Deutz Buys Torqeedo in Push to Ramp Up Electric Division
- DIREN FP : Direct Energie Sees Full Year Revenue EU2 Bln
- EI FP : Essilor/Luxottica Unlikely to Close Deal at Year-End: UFP
- FIA1S FH : Finnair Rises to Highest Level in 10 Years on Heavy Volume
- GAS SM : Gas Natural Has 3 Binding Offers for Italian Assets: Europa
- G IM : Generali to Simplify Products, Focus on One Brand in Germany
- HSBA LN : HSBC Holdings Sr Debt Cut to A2 From A1 by Moody’s
- DEC FP : JCDecaux Wins 10-Year Ad Contract for Bahrain Intl. Airport
- JMT PL : J. Martins Sees 2017 Double-Digit Revenue Growth in Poland: CEO
- NETS DC : Nets’ Ratings Placed Under Review for Downgrade by Moody’s
- NOVN VX : Novartis Is Said to Consider Deal for Advanced Accelerator --> traded up to $70
- ROG VX : Roche Ocrevus Approved in Switzerland for Multiple Sclerosis
- RKET GY : Rocket Internet Sells 13% Delivery Hero Stake for EU660m
- SAN FP : Sanofi, Regeneron Announce Marketing Approval of Dupixent in EU
- SAN SM : Santander Resumes Talks on TotalBank Sale to BCI: Confidencial
- SGL GY : SGL Wins U.S. Antitrust Nod for Sale of Unit to Showa Denko
- VIV FP : Macron Says Telecom Italia, Vivendi Are Private Actors


>>> Europe : Brokers Upgardes & Downgrades - 28th of Sept. 2017

>>> Up
* Balfour Beatty Raised to Buy at Peel Hunt, PT 340p
* Cineworld Raised to Buy at Panmure Gordon & Co, PT 750p
* SGS Raised to Overweight at Morgan Stanley, PT CHF2,740
* UBM Raised to Overweight at Barclays, PT GBP7.55
* Zurich Airport Raised to Outperform at MainFirst, PT CHF240

>>> Down
* Aegon Cut to Neutral at Goldman, PT EU5.20
* Ageas Cut to Sell at Goldman, PT EU36
* Man Group Cut to Sector Perform at RBC, PT 175p
* Mapfre Cut to Underweight at JPMorgan, PT EU2.80
* Meritor Cut to Sector Weight at Keybanc
* Orpea Cut to Hold at SocGen, PT EU113
* SGL Cut to Hold at Baader-Helvea
* TalkTalk Cut to Underperform at Credit Suisse
* Trivago Cut to Equal-weight at Morgan Stanley

>>> Initiation
* ASR Nederland New Sell at Goldman, PT EU30
* Diageo New Outperform at Evercore ISI, PT $152
* NN New Buy at Goldman, PT EU40.50
* Titan Cement New Buy at HSBC, PT EU27
* Vicat New Hold at HSBC, PT EU64

>>> Call


FT : China’s SASAC won’t backstop Syngenta against legal claims

Beijing will not directly intervene to shore up seeds company Syngenta against claims from American farmers and grains traders, nor chip in money for its takeover by Chinese buyer ChemChina, the regulator in charge of China’s state-owned companies said on Thursday.

The comments from Xiao Yaqing, head of the State Assets Supervision and Administration Commission, come as Syngenta hurries to settle a dispute that has already scuppered a $7bn bond issue this week. The bond was designed to help pay for the company’s $43bn takeover by ChemChina, China’s largest outbound acquisition to date.

Standard & Poor’s said in a report published last month that Sasac might have to step in to backstop Syngenta against liabilities stemming from a dispute over seeds marketed in the U.S. in 2013, since both the Swiss firm and ChemChina are already heavily leveraged.

Mr Xiao said he was not aware of S&P’s specific comments, but he was confident ChemChina could handle the matter on its own. “Companies have to resolve these cases on their own,” he told the Financial Times after a press conference on state-owned enterprise reform.

“The government won’t give them money. They have the ability to borrow money, they can use their own methods of financing,” he said, adding: “ChemChina is pretty good. Their results last year were not bad.”

S&P currently rates Syngenta at BBB-, the lowest rung of investment grade, while Moody’s rating is even lower, in junk territory.

TheVerge.com : Michelin wants to reinvent the wheel for the driverless age

Michelin wants to reinvent the wheel for the driverless age

Airless, indestructible, and 3D-printed from orange zest (among other biomaterials)

They’re completely airless, last virtually forever, and could be the perfect tire for our autonomous future. Michelin, the 128-year-old tire manufacturer based in Clermont-Ferrand, France, recently unveiled a 3D-printed tire concept that it says could be the ideal ride for self-driving cars. It just needs to figure out how to actually manufacture them first.

Dubbed “Vision,” these spidery, psychedelic-looking sponges are printed from bio-sourced and biodegradable materials, including natural rubber, bamboo, paper, tin cans, wood, electronic and plastic waste, hay, tire chips, used metals, cloth, cardboard, molasses, and orange zest.

While it may sound like Michelin is rooting through your compost pile to come up with its futuristic concept, there’s more to it than that. These tires would be embedded with RFID sensors to collect data and predict performance and function of the vehicle. And they will be adaptive to different conditions. Heading to the mountains for some skiing? Drive through a Michelin printing station and get your tires retrofitted for snowy terrain.

This concept vision is a dream for an ideal solution for the long-term,” said Terry Gettys, Michelin’s executive VP for research and development. “We’re confident you can replace a tire-and-wheel-combination with a unique structure, carry the load, provide good comfort and noise, and we’re very encouraged that can be the solution of the future.”

If cars become fully autonomous, then the traditional design language that has held up for decades goes out the window. Engineers and automakers are already beginning to rethink the vehicle’s interior, removing steering wheels, adding bookshelves, and positioning car seats to face one another. Rather than be left behind, Michelin is contributing to this effort through its reinvention of its tires, both in form and function.

“As vehicles become more automated, the requirements for handling and driving pleasure are greatly diminished,” Gettys said. “In fact the passengers when they turn over the driving to the car, they don’t even care about the handling feel. And as such, there’s going to be a huge shift in customer expectations toward comfort and noise.”

He continued, “They’ll want to enter the vehicle like a cocoon and have a very pleasurable experience getting to their destination, but that pleasure coming from using their telephone, their PC, discussing, and being totally oblivious to the distractions outside.”

The concept of “air-free” tires isn’t new. Bridgestone has been playing around with the idea since 2013, when it unveiled its first air-free concept for tiny, smart-car sized vehicles. It was a bid to reduce the need for drivers to pull to the side of the road to fix flat tires, as well as reduce CO2 emissions and create a more sustainable drive. Recently, it began testing airless bicycle tires.

The Vision tire first debuted at the company’s Movin’ On conference in Montreal earlier this year. Michelin then brought samples of the 3D-printed tire to New York City in early August for more exposure. But a brief trip through the 128-year-old company’s history reveals that this isn’t Michelin’s first rimless, airless tire to be released. The Tweel, an airless tire concept that emerged over a decade ago, is currently in use in small-frame, low-speed vehicles and appliances like golf carts and lawn mowers.

The limited application of the Tweel hints at the challenges Michelin will face in mass producing its 3D-printed concept. “It’s really not an existing product,” Gettys said. “We don’t have all the materials to make this work.”

So what’s missing? Michelin already manufactures tires with embedded RFID sensors for groups like the Porsche Club and truckers, allowing for the monitoring of things like temperature and pressure. So connected tires won’t be too difficult, Gettys said. The long-term challenges relates to printing the entire material structure from biodegradable materials like sugar stalks and orange zest. That will require much further research, he admits. But Michelin is working with a number of external partners and predicts being able to entire into production by 2023.

It’s admirable pursuit, and a sustainable one too. Currently, over 70 percent of tires produced globally are made from non-biodegradable materials. (Just think of the eternal burning tire pile in The Simpsons.) Natural rubber is replenishable, but most of the materials are petroleum-based. Its taken researchers 10 years to produce biosourced synthetic elastomers. “It may take the same amount of time” to make all of the other materials that comprise automobile tires, Gettys said.

But even when it finally gets to productions, further hurdles remain for Michelin’s vision of airless tires printed from biodegradable materials. For example, what’s to prevent the tires from biodegrading while in use? “That’s a good question,” Gettys said, “and that’s the real challenge.”

>>> Asian Update

Asia Mid-Session Market Update: Equities follow US lead, USD strengthens

***Asia Summary***
- Asian equity markets opened mixed, generally following the lead of US markets. Hong Kong property names were weaker on another Chinese city adding property curves. Financial names gained on US yields rose overnight. Analysts note that Q4 volatility in China is likely to be subdued with efforts to keep markets stable ahead of Communist Party gathering on Oct 8th. RBNZ left rates unchanged as expected, noting that weaker currency is best for dealing with tradables inflation. Japan PM Abe dissolved lower house to make way for snap elections.

- USD strength in the session attributed to Trump’s confirmation of proposed tax plan. USD/JPY rose giving some support to the Nikkei which opened +0.7%. The USD/KRW fell for a 3rd consecutive day, with North Korea continuing to weigh. In Japan weekly portfolio data, foreign investors sold a record amount of Japan assets, ¥3.41T, the most since mid-June. In Hong Kong, the 1-week HK$ HIBOR rose 15bps to 0.57786%, a fresh 2017 high.

***Key economic data***
- (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED
- (CN) CHINA AUG SWIFT GLOBAL PAYMENTS (CNY): 1.94% V 2.00% PRIOR
- (KR) South Korea Sept CPI m/m: 0.1% v 0.2%e; y/y: 2.1% v 2.2%e; Core y/y: 1.6% v 1.7%e
- (AU) Australia Jun- Aug Job Vacancies: 6.0% v 3.3% prior (highest on record for quarter)

***Speakers and Press***
China/Hong Kong
- (CN) China State Council chaired by Premier Li: Will further bolster its small and micro businesses with more financial measures to increase vitality of the economy – Xinhua
- (CN) China State-owned Assets Supervision and Administration Commission (SASAC) Planning 3rd phase of SOE mixed-ownership pilot

Korea
- (KR) North Korea (DPRK): joint declaration issued a decade ago with South Korea on realizing peaceful national reunification "clarified the practical ways for building trust between the north and the south
- (KR) South Korea to allow tax deferment to companies impacted by Thaad; to offer cheap loans to car component markers impacted by China measures
- (KR) South Korea Fin Min Kim: Growth is firm despite North Korea risk

Japan
- (JP) Japan considering lowering leverage limit for FX trades on grounds that both retail and institutional investors are facing greater risks should the market face sudden fluctuations – Nikkei
- (JP) S&P Analyst: Japan PM Abe's announcement to defer the FY20 primary budget balance goal will not affect S&P's credit rating for Japan
- (JP) Japan PM Abe: Election will be a fight over developing Japan's future

US/Europe
- (US) Fed's Rosengren (moderate, non-voter): Does not offer clue on rate hike timing
- (UK) BOE's Haldane (chief economist): Was part of MPC majority that felt a reduction in monetary stimulus may be warranted in the coming months - UK press

***Asian Equity Indices/Futures (00:00ET)***
- Nikkei +0.5%, Hang Seng -0.4%; Shanghai Composite -0.1%, ASX200 +0.1%, Kospi -0.1%
- Equity Futures: S&P500 -0.0%; Nasdaq100 +0.0%, Dax +0.0%, FTSE100 -0.1%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1756-1.1727; JPY 113.09-112.71; AUD 0.7856-0.7816;NZD 0.7233-0.7187
- Dec Gold -0.3% at $1,284/oz; Nov Crude Oil -0.3% at $51.97/brl; Dec Copper -0.3% at $2.92/lb
- GLD SPDR Gold Trust ETF daily holdings +0.3% to 864.7 metric tonnes
- (CN) PBOC OMO: injects CNY70B in 14 and 28-day reverse repos v skips prior; drains net CNY0B v CNY40B prior
- USD/CNY (CN) China PBOC sets yuan reference rate at 6.6825 v 6.6192 prior
- (JP) Bank of Japan (BOJ) to accommodate T+2 JGB settlement for foreign central banks
- (JP) Japan MoF sells ¥816.9B in 3-month bills; avg yield -0.1652%; bid-to-cover 4.46x
- (JP) Japan MoF sells ¥1.80T v ¥2.2T indicated in 0.1% 2-yr JGBs; avg yield -0.1190%; bid-to-cover 4.11x v 4.97x prior (lowest bid-to-cover since March)

***Equities notable movers***
Australia/New Zealand
- OEL.AU Gives independent reserves report for the SM 71 project; +17.5%
- SHJ.AU Receives statement of claim for class action; -13.5%

Japan
- 9064.JP Amazon has agreed to pay Yamato at least 40% more for shipping services in Japan – Nikkei; +4%
- 8028.JP Raises H1 guidance Net ¥23B from ¥14B; Op ¥33.5B from ¥24.6B; Rev ¥633B from ¥628.1B, +8.8%

Hong Kong/China
- Hong Kong property sector weaker on additional city adding cooling measures: 884.HK -3.8%, 1030.HK -3.3%

>>> US After Hours Summary: THO / SINO +4%, PIR -7%, JBL -1% following


After Hours Summary: THO / SINO +4%, PIR -7%, JBL -1% following earnings/guidance, AAAP +11% on potential NVS deal

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: THO +4.1%, SINO +3.6%

Companies trading higher in after hours in reaction to news: AAAP +11.3% (potential NVS M&A deal), ADVM +10.1% (presents updated preclinical data on ADVM-022 in Wet AMD at conference; data continue to demonstrate the durability and safety of a novel gene therapy approach ), CHMA +4.1% (announced the randomization of first patient in its new Phase 3 trial referred to as 'CHIASMA OPTIMAL', 'meeting its previous guidance'; also surpassed 50% patients randomized in its international Phase 3 clinical trial), ABT +2.1% (confirms the FDA approved the FreeStyle Libre Flash Glucose Monitoring System as a replacement for blood glucose monitoring for adults with diabetes)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: PIR -6.7%, JBL -1.1%

Companies trading lower in after hours in reaction to news: DXCM -14.5% (Glucose monitoring systems focused company Dexcom is 15% lower on Abbott FDA news)

>>> US Close Dow +0.25% S&P +0.41% Nasdaq +1.15% Russell +1.92%

Closing Market Summary: Investors Cheer Tax Reform Plan

The U.S. equity market moved into positive territory for the week on Wednesday as investors cheered the GOP's latest tax reform outline. Small caps led the rally, sending the Russell 2000 (+1.9%) to a new record high for the fourth session in a row. The Nasdaq (+1.2%) easily outperformed the S&P 500 (+0.4%) while the Dow (+0.3%) finished a tick behind.

Market participants received the tax reform framework on Wednesday morning, but it contained few surprises as many of the details were leaked to the media beforehand. President Trump gave a speech on the plan in the late afternoon, but provided little to no new information.

Some of the most notable highlights of the plan include cutting the corporate tax rate to 20% from 35%, doubling the standard deduction, and reducing the number of tax brackets to three (or possibly four) from seven. The individual tax rates would be set at 12%, 25%, and 35%, with a fourth option for the highest earners.

Details on how the government will make up for the immediate loss in tax revenue were limited. This topic will likely be an area of contention for the GOP going forward as many conservatives are opposed to the idea of driving up the federal deficit, which would probably be necessary to fund the tax overhaul--at least in the short term.

U.S. Treasuries finished broadly lower in a curve-steepening trade that left the 2-yr yield three basis points higher at 1.47% and the 10-yr yield eight basis points higher at 2.31%. The S&P 500's financial sector (+1.3%) outperformed as lenders cheered the steepening of the yield curve, which bodes well for their earnings prospects.

The information technology sector, the only sector more influential than financials, also soundly outpaced the broader market, moving higher by 1.1%. These two sectors exhibited relative strength throughout the session, keeping the broader market afloat during a long stretch of morning weakness. 

Equity indices opened Wednesday's session with modest gains, but quickly retreated toward their flat lines. Sentiment picked back up in the early afternoon, sending the major averages to new session highs. At its worst mark of the day, the S&P 500 held a loss of 0.03% and, at its best, held a gain of 0.6%--marking an all-time high (2,511.75).

Three of the eleven sectors finished with notable losses on Wednesday--utilities (-1.4%), real estate (-0.8%), and consumer staples (-0.7%)--while only one, in addition to technology and financials, settled with a notable gain--consumer discretionary (+0.5%). 

In earnings news, Micron Technology (MU 37.09, +2.91) jumped 8.5%, hitting its best level since the dot-com bubble, after beating both top and bottom line estimates and issuing upbeat guidance. The bullish sentiment radiated throughout the semiconductor space, sending the PHLX Semiconductor Index higher by 2.4%.

Conversely, Dow component Nike (NKE 52.67, -1.03) dropped 1.9% after the athletic footwear and apparel company topped earnings expectations for its fiscal first quarter on scant revenue growth and issued a disappointing gross margin outlook for the fiscal second quarter.

Reviewing Wednesday's economic data, which included August Durable Goods Orders, August Pending Home Sales, and the weekly MBA Mortgage Applications Index:

  • August durable goods orders rose 1.7%, which is more than the 0.7% increase expected by the consensus. The prior month's reading was left unrevised at -6.8%. Excluding transportation, durable orders increased 0.2% (consensus +0.2%) to follow the prior month's revised uptick of 0.8% (from 0.5%).
    • The key takeaway from the report is that it showed a continued pickup in business spending and a favorable translation of that increased activity for Q3 GDP forecasts.
  • Pending Home Sales for August declined 2.6% (consensus -0.4%). Today's reading follows an unrevised 0.8% decrease in July.
  • The weekly MBA Mortgage Applications Index decreased 0.5% to follow last week's 9.7% decline.

On Thursday, market participants will receive several pieces of economic data, including the third estimate of second quarter GDP (consensus +3.0%), weekly Initial Claims (consensus 275K), and Advance International Trade in Goods for August (consensus -$65.1 billion). All three reports will be released at 8:30 ET.

The Nasdaq and the S&P 500 will enter Thursday's session with week-to-date gains of 0.4% and 0.2%, respectively, while the Dow will enter flat. 

  • Nasdaq Composite +19.9% YTD
  • Dow Jones Industrial Average +13.1% YTD
  • S&P 500 +12.0% YTD
  • Russell 2000 +9.4% YTD