Reuters - Dan Loeb: Trump will make hedge funds great again

U.S. hedge fund manager Dan Loeb is betting President Donald Trump will be good for investments thanks to his planned mix of tax cuts, reduced regulation and infrastructure spending.
"This environment is undoubtedly better for active investing – just as active investing was considered to be on its deathbed," Loeb wrote in a letter to clients of his $15 billion Third Point LLC Wednesday.
A shift from government monetary stimulus to measures that will increase personal and corporate spending will create lower correlations between various types of securities and greater dispersion of results within them, such as stocks, Loeb said.
Higher interest rates will also create investment opportunities, Loeb added.
Third Point's main hedge fund lost 1.1 percent in the fourth quarter, wrapping up a year that Loeb said was "disappointing". The fund gained only 6.1 percent in 2016, below its 15.7 percent average annual return since 1996 and less than an approximately 12 percent gain for the S&P 500 Index, with dividends.
Loeb wrote he had made changes to New York-based Third Point's investment holdings immediately after Trump's election win, shifting to stocks and away from corporate and structured credit. Third Point now has similar-sized holdings in the healthcare, technology, industrial and financial sectors, according to the letter.
One large change was in securities of financial companies. The sector now represents 11.8 percent of the fund, up from 4.4 percent on Nov. 8, according to the letter. Loeb's focus is now on banks and brokers and includes exposure to Japan.
"The pendulum in monetary policy has begun to shift away from the past decade of extraordinary easing just as the pendulum in fiscal policy has begun to shift away from austerity and its limiting factors," Loeb wrote. "The U.S. elections served as a marker for these policy shifts which, in our view, are bullish for rate‐sensitive financials."
Loeb did urge some caution on investment during the Trump presidency, noting hedges on Third Point's portfolio. But he said that even volatility could be a boon.
"While America may or may not be made great again, there is no question that the rules are literally being rewritten," Loeb wrote. "We do not plan to trade the tweets but we expect an increasing number of real and, even better, fake dislocations to create some extremely rewarding investing opportunities."
Third Point's offshore hedge fund rose 2.6 percent in January, according to a person familiar with the situation who requested anonymity because the information is private.

>>> What to look at today - 2nd of February 2017

Dow+0.14% S&P +0.03% Nasdaq +0.50% Russell -0.04%
US MArket closed slightly highe,r, AAPL +7.1% helped sentiment. The FOMC voted unanimously to maintain the current fed funds target range at 0.50%-0.75%, as expected. By and large, there was little change in the wording of the directive from the December meeting. There was some concern ahead of its release that it might have a hawkish-sounding angle to it, but the fact that it was little changed took a little of the rate-hike edge off the market. financial sector (unch) also closed the day higher, along with materials (+0.6%), and health care (+0.7%). The health care space rallied. At the bottom of the leaderboard was utilities (-1.7%), which suffered from the uptick in interest rates, telecom services (-0.7%) and real estate (-1.1%) sectors also finished lower. US After Hours WFT +7% on earnings/Nabors alliance news, ALL +4%, FB +1% higher following earnings/guidance, MJN +20% on potential M&A deal... SFLY -18% on earnings/restructuring plans, MLNX -15%, CRUS -10%, QRVO -7%, MTW -7%, SYMC -3.8% following earnings/guidance. Investors digest FOMC statement as the US yield curve steepens; While the Fed is more convinced about inflation reaching 2% target in the near term, there were no direct signals of March rate hike, prompting some modest USD selling.
Latest PMI data showed over 40% of business owners experienced some weak market demand along with cash and labor shortages - Shanghai Daily.

Nikkei -1.22% Hang Seng -0.61% CSI +0.36% Shanghai +0.31%

Eur$ 1.0781 CNH 6.8204 CNY 6.8840 JPY 112.80 GBP 1.2664 CHF 0.9918 RUB 60.03 WTI$ 53.58 -0.56%

S&P -0.36% EuroStoxx -0.21% FTSE -0.11% DAX -0.29% SMI 0.39%

Macro :
- FOMC Balance Sheet/Reinvestment Outlook Unchanged; Rates on Hold
- Fed Fund Futures Continue Pricing Two Rate Hikes for 2017

Keep an eye on :
- ATL IM : Atlantia Said to Consider Bid for Mexico’s RCO: Reuters
- AZN LN : AstraZeneca 4Q Rev. Beats Est.
- EN FP : Bouygues Gets EU800m Paris Metro Extension Contract: Echos
- BT/A LN : BT’s Andrea Giovanni Bono Takes Over Italian Unit Amid Scandal
- BUCN SW : Bucher Sees 2016 Operating Profit Decline, Recovery in 2017
- CABK SM : CaixaBank 4Q Net EU77M, Compares With EU170M Estimate
- DAI GY : Daimler Sees ‘Slight Growth’ in 2017 Ebit, Revenue, Deliveries --> -1% Pre open
- DASNKE DC : Danske 4Q Net Beats Estimates; Will Buy Back DKK10b Shares, Danske to Buy Back DKK10b of Own Shares, Starts Feb. 3
- DSY FP : Dassault Systemes Targets 1Q Non-IFRS EPS EU0.48-EU0.50
- DSY FP : Dassault Systemes CEO Says He’s Confident in Company’s Forecast
- DENERG DC : Dong FY Ebitda Beats Estimates; Will Phase Out Coal by 2023
- DBK GY : Deutsche Bank Quarterly Loss Narrows; CET1 Ratio at 11.9%
- EDF FP : EDF Said to Plan Extending Jobcuts, Cut Up to 7,000 Jobs: AFP
- FINGB SS : Fingerprint Cards Proposes SEK2 Dividend, Earnings Below Ests.
- G IM : Generali Shareholder CRT: No ‘Prejudice’ on Intesa Bid: Stampa
- HNR1 GY : Hannover Re Raises Guidance for 2017 Net to More Than EU1b
- IFX GY : Infineon 1Q Segment Result Beats Ests.; Sees 2Q Revenue Increase
- IIA AV : Immofinanz Sells About Half of Stake in BUWOG AG
- INGA NA : ING Group 4Q Underlying Pretax Profit Rises 63%; Dividend 42c
- KPN NA : KPN Loses Almost 4% as Confidence in Enterprise Growth Dampens
- NOKIA FH : Nokia 4Q Net Sales Misses Lowest Est.
- NRE1V FH : Nokian Renkaat 4Q Net Sales Beats Highest Est.
- NOVOB DC : Novo Nordisk FY Sales in Line; Cuts Outlook Range in Local FX, Novo Nordisk 2016 EPS rises to 14.96 kroner vs 15.08 kroner est.
- OCDO LN : Ocado “would probably be worth significantly more in the hands of a bigger retailer as it would improve purchasing power and reduce costs”, JPMorgan said.
- UG FP : France Calls on PSA, Renault to Help Keep GM&S in Business
- RB/ LN : Reckitt Benckiser Said to Be in Talks to Buy Mead Johnson: WSJ
- RNO FP : France Calls on PSA, Renault to Help Keep GM&S in Business
- RDSA NA : *SHELL 4Q ADJ. PROFIT $1.8B, EST. $2.8B
- UHR VX : Swatch 2016 Earnings Miss Estimates; Co. Cuts Dividend Payment
- TIE1V FH : Tieto 4Q Net Sales Miss Est.; Sees FY Operating Profit Growing
- TEL NO : Telenor 4Q Net Misses Ests.; Declares NOK7.80/Share Dividend
- UL FP : Unibail-Rodamco FY EPS Meets Estimates; Sees Higher 2017 Profit
- UCG IM : UniCredit Prices Shares With 38% Discount on TERP
- MF FP : Wendel to Hold 21.4% Direct IHS Stake After MTN Transaction
- WPG LN : Largest Worldpay Holders Bain Capital, Advent to Exit Stake --> Worldpay Shares Priced at 282.75p/Shr in Sale: Terms

>>> Europe : Brokers Upgrades & Downgrades - 2nd of February 201

>>> Up
*Aena Raised to Buy at Intermoney Valores, PT EU152
*Anglo American Raised to Buy at Investec, PT ZAr27300
*ArcelorMittal Raised to Buy at Goldman, PT EU9.30
*Electrolux Raised to Buy at DNB Markets
*Grainger Raised to Buy at Peel Hunt
*Pearson Raised to Neutral at Credit Suisse
*Salzgitter Raised to Buy at Goldman, PT EU45
*Volvo Raised to Neutral at JPMorgan, PT SEK110
*Whitbread Raised to Buy at Oddo & Cie, PT 4600p

>>> Down
*Electrolux Cut to Underweight at JPMorgan, PT SEK210
*Julius Baer Cut to Hold at SocGen, PT CHF51
*Logista Cut to Neutral at BPI, PT EU23.80
*Mitchells & Butlers Cut to Underweight at Barclays
*NN Cut to Underperform at KBW, PT EU29
*Novozymes Cut to Sell at Goldman, PT DKK226
*Punch Taverns Cut to Equal-Weight at Barclays
*Shutterfly Cut to Neutral at Baird
*Stabilus Cut to Hold at Commerzbank, PT EU57.50
*ThyssenKrupp Cut to Hold at Baader-Helvea, PT EU25
*Trelleborg Cut to Hold at ABG Sundal, PT SEK195

>>> PT Change

>>> Initiation
*Ashmore Rated New Hold at HSBC, PT 285p
*Ashmore Rated New Hold at HSBC, PT 285p
*Hargreaves Lansdown Rated New Hold at HSBC, PT 1320p
*Jupiter Rated New Buy at HSBC, PT 485p
*St James's Place Rated New Buy at HSBC, PT GBP12.80
*Schroders Rated New Hold at HSBC, PT 3180p
*SFR Group Rated New Equal-Weight at Morgan Stanley, PT EU29.60

>>> WFT; Weatherford beats by $0.01, misses on revs


Weatherford beats by $0.01, misses on revs (5.18   -0.03)

  • Reports Q4 (Dec) loss of $0.32 per share, excluding items, $0.01 better than the Capital IQ Consensus of ($0.33); revenues fell 30.1% year/year to $1.41 bln vs the $1.43 bln Capital IQ Consensus.
  • Free cash flow generated from operations (non-GAAP) was $171 mln and op margins improved by 273 basis points sequentially, with 68% incrementals.
  • The North Sea and Russia experienced a seasonal slowdown. Sub-Sahara Africa activity declined in Angola and Nigeria while Asia-Pacific benefited from product sales in Australia and Malaysia. The Middle East/North Africa region was positively impacted by higher product sales as well as the start-up of activities on several of the service contracts won over the last six months. "We expect to start-up on the remaining service contracts in early 2017."

>>> After Hours Summary: WFT +7% on earnings/Nabors alliance news,


After Hours Summary: WFT +7% on earnings/Nabors alliance news, ALL +4%, FB +1% higher following earnings/guidance, MJN +20% on potential M&A deal... SFLY -18% on earnings/restructuring plans, MLNX -15%, CRUS -10%, QRVO -7%, MTW -7%, SYMC -3.8% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ESIO +11.7%, WFT +6.6% (also Weatherford and Nabors form alliance for integrated drilling solutions to oil and gas land market in the lower 48 states of the United States), CACI +5.5%, BRKS +4.3%, LCI +4.3%, ACLS +4.2%, ALL +3.7%, TSCO +3.6%, CAVM +3.1%, CDNS +3% (ticking higher), ZUMZ +2% (reports January comps of +9.4% vs -4.6% year ago and -3.4% last month; sees Q4 EPS at or slightly above high end of $0.60-0.66 prior guidance vs $0.64 consensus), EXTR +1.3%, FB +1%

Companies trading higher in after hours in reaction to news: MJN +19.5% (WSJ reporting that Reckitt Benckiser may acquire the company), ETRM +4.4% (after closing at highs - up more than 30% on the day), PULM +4% (after surging 80% higher on Wed), X +1.5% (modestly rebounding from earnings related weakness; upgraded to Buy at Bofa/Merrill following pullback)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: SFLY -18.1% (also updates strategic plan / restructuring in 2017; expects to incur 2017 restructuring charges of $15-20 million), EGOV -16.7%, MLNX -15.4%, CRUS -10.3%, QRVO -7.2%, MTW -6.7%, LM -4.7% (light volume), SYMC -3.8% (also announces its intention to offer $1.0 billion aggregate principal amount of senior unsecured notes due 2025), MET -1.7%, HOLX -1.4%, EW -1%, AGNC -0.8% (also announces a $750 mln at-the-market offering of common stock)

Companies trading lower in after hours in reaction to news: AVIR -22% (announces top-line data from its double-blind, placebo-controlled Phase 2a study of BTA585 in adults challenged intranasally with respiratory syncytial virus; data indicate there was not a significant reduction in the primary endpoint), MNKD -16.2% (lower in extend trading after filing a proxy statement for an upcoming special meeting of stockholders under which it will seek approval to effect a reverse stock split), CBAY -13.5% (to offer and sell shares of its common stock; size not disclosed), CVEO -11.4% (Civeo commences an underwritten public offering of 20,000,000 common shares), FBP -4.5% (commences 20 mln common stock offering -- 10 mln shares by funds affiliated with Thomas H. Lee Partners and 10 mln by Oaktree Capital), CORI -3.8% (to offer shares of its common stock in an underwritten public offering)

>>> Asian Update

Asia Mid-Session Market Update: Australia Trade Surplus hits record high; Korea inflation finally within BOK target range

***US Session Highlights***
- (US) JAN ADP EMPLOYMENT CHANGE: +246K V +168KE; goods producing +46K v -16K m/m
- (US) JAN FINAL MARKIT MANUFACTURING PMI: 55.0 V 55.1E
- (US) JAN ISM MANUFACTURING: 56.0 V 55.0E; PRICES PAID: 69.0 V 65.5E (Manufacturing Index highest since Nov 2014, Prices Paid highest since May 2011)
- (US) DOE CRUDE: +6.5M V +3ME; GASOLINE: +3.9M V +1.5ME; DISTILLATE: +1.6M V -0.5ME
- (US) Atlanta Fed raises Q1 GDP forecast to 3.4% from 2.3% on 1/30
- (US) Senate Finance Committee votes to approve Mnuchin for Treasury Secretary and Price for HHS Secretary; Democrats boycotted the vote and were not present; GOP members suspended committee rules to force a vote; full Senate to take up vote

***US markets on close: Dow +0.1%, S&P500 flat, Nasdaq +0.5%***
- Best Sector in S&P500: Healthcare
- Worst Sector in S&P500: Utilities
- Biggest gainers: ARNC +11.2%, AVY +9.1%, AAPL +6.1%, AGN +4.8%, NVDA +4.4%
- Biggest losers: PBI -17.5%, D -5.8%, ADP -5.7%, PVH -4.2%, AFL -4.1%
- At the close: VIX 11.8 (-0.2pts); Treasuries: 2-yr 1.21% (-1bps), 10-yr 2.47% (+2bps), 30-yr 3.08% (+3bps)

***US movers afterhours***
- MJN Reckitt Benckiser confirms its in talks to acquire Mead Johnson at $90.00/shr cash (implied deal ~$16.6B), in period of due diligence; +23.7% afterhours
- LCI: Reports Q2 $0.92 v $0.83e, R$170.9M v $169Me- Affirms FY17 Net sales in the range of $675-685M v $672Me (prior $675-685M); +4.3% afterhours
- ALL: Reports Q4 $2.17 v $1.61e, R$9.3B v $8.45Be; +3.7% afterhours
- TSCO: Reports Q4 $0.94 v $0.92e, R$1.92 v $1.87Be; +3.6% afterhours
- FB: Reports Q4 $1.41 (adj) v $1.34e, R$8.81B v $8.47Be; Monthly active users (MAUs) 1.86B, +17% y/y; +0.1% afterhours
- EW: Reports Q4 $0.73 v $0.71e, R$768Mv $756Me; -1.0% afterhours
- MET: Reports Q4 $1.28 v $1.34e, R$17.2B v $17.3Be; -1.1% afterhours
- HOLX: Reports Q1 $0.52 v $0.51e, R$734.4 v $724Me; -2.0% afterhours
- CRUS: Reports Q3 $1.87 v $1.63e, R$523M v $495Me; -10.1% afterhours
- SFLY: Reports Q4 $2.63 v $2.73e, R$561.2M v $586Me; To restructure in 2017; Guides Q1 GAAP -$1.00 to -$0.95 to $ v -$0.87e, R$185-190M v $199Me, gross margin 37-37.5%; -18.0% afterhours

- M Said to be open to a sale to prevent shakeup of the Board - NY Post

***Asia Key economic data:***
- (AU) AUSTRALIA DEC TRADE BALANCE (A$): 3.5B (record surplus) V +2.0BE
- (AU) AUSTRALIA DEC BUILDING APPROVALS M/M: -1.2% V -1.5%E; Y/Y: -11.4% (4th stragith decline) V -10.8%E
- (KR) SOUTH KOREA JAN CPI M/M: 0.9% V 0.3%E; Y/Y: 2.0% V 1.5%E (highest annual pace since Oct 2012)
- (NZ) NEW ZEALAND JAN ANZ JOB ADVERTISEMENTS M/M: -0.2% V +1.4% PRIOR

***Asia Session Notable Observations, Speakers and Press***
- Investors digest FOMC statement as the US yield curve steepens; While the Fed is more convinced about inflation reaching 2% target in the near term, there were no direct signals of March rate hike, prompting some modest USD selling.
- Fears of a Trump-led trade and FX war continue to reverberate across the globe after reports of a tense call between Trump and Australia's Turnbull regarding refugee agreement made between the countries' leaders under Obama.
- AUD rises to 2 1/2-month high as Australia terms of trade hits a record high amid recent rise in prices of iron ore and coal; Components showing value of shipments to China at record high, Iron ore at highest since Apr 2014, and Coal at highest since Nov 2008. Exports remained robust with 5% increase, though down from 8% prior. Conversely, Aussie building approvals contracted y/y for the 4th straight month, as analysts declare the peak in the housing market coming in 2016.
- Korea CPI y/y rises to its best levels since late 2012 and finally within BOK's target range for the first time in 39 months; Stats Bureau attributes rise in prices to food and gasoline inflation.

China:
- (CN) China Stats Bureau economist: Latest PMI data showed over 40% of business owners experienced some weak market demand along with cash and labor shortages - Shanghai Daily
- (CN) According to Economic Policy Institute (EPI) report trade with China has cost 3.4M US jobs from 2001-2015 - SCMP

Japan:
- (JP) Japan PM Abe: Generally not desirable for US and Japan leaders to talk forex at summits
- (JP) Japan Center for Econ Research (JCER): Japan Dec GDP estimated at -0.5% m/m (first drop in four months) - Nikkei

Australia/New Zealand:
- (AU) RBC economist: Last 4 months' of building approvals affirms the view that Australia housing market peaked in 2016 - AFR
- (NZ) New Zealand PM English: Will continue to advocate for free trade - State of the Nation

***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.9%, Hang Seng -0.7%, Shanghai Composite closed, ASX200 -0.1%, Kospi flat
- Equity Futures: S&P500 -0.3%; Nasdaq -0.4%; Dax -0.3%; FTSE100 -0.3%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0760-1.0795; JPY 112.50-113.40; AUD 0.7580-0.7650; NZD 0.7240-0.7310
- Apr Gold +0.7% at $1,218/oz; Mar Crude Oil -0.6% at $53.58/brl; Mar Copper +0.3% at $2.72/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 10.6 tonnes to 809.7 tonnes; first rise since Jan 21st
- SLV: iShares Silver Trust ETF daily holdings fall to 10,414 tonnes from 10,444 tonnes prior
- JGB: (JP) Japan MoF sells ¥2.17T in 10-yr 0.1% JGBs; Avg yield: 0.087% v 0.056% prior; bid to cover: 3.62x v 3.59x prior

***Asia equities / Notables / movers by sector***
- Consumer discretionary: TAH.AU Tabcorp -5.5% (H1 result); 6952.JP Casio Computer Co -5.1% (9-month result); 9697.JP Capcom Co -9.1% (9-month result)
- Consumer staples: 4967.JP Kobayashi Pharmaceutical Co +2.0% (FY16 result)
- Financials: VCX.AU Vicinity Centres -1.2% (Jefferies cuts rating)
- Industrials: DOW.AU Downer EDI +13.0% (H1 result); CSR.AU CSR -2.0% (JPMorgan cuts rating); GUD.AU GUD Holdings -0.9% (JPMorgan cuts rating); 7013.JP IHI Corp +2.3% (9-month result); 6501.JP Hitachi Ltd +2.0% (9-month result); 5202.JP Nippon Sheet Glass -8.8% (private placement)
- Materials: 4186.JP Tokyo Ohka Kogyo -6.9% (9-month result); 3861.JP OJI Holdings Corp -1.2% (9-month result speculation)
- Energy: 010950.KR S-Oil Corp +1.4% (Q4 result)
- Healthcare: VRT.AU Virtus Health -2.2%; 4519.JP Chugai Pharmaceutical +10.4% (guidance); 6849.JP Nihon Kohden Corp -8.5% (9-month result)
- Telecom: VOC.AU Vocus +4.5% (Macquarie initiates Outperform); 032640.KR LG Uplus Corp +3.6% (Q4 result)

WSJ : Reckitt Benckiser Is in Talks to Buy Mead Johnson

Reckitt Benckiser Is in Talks to Buy Mead Johnson
Deal for baby-food maker could be worth more than $15 billion

Reckitt Benckiser Group PLC is in talks to buy baby-food maker Mead Johnson Nutrition Co., according to people familiar with the matter, a move that would further a push by the U.K. consumer giant into the healthy-products arena.

Terms of the potential deal are unclear, but with a market value of $12.9 billion Wednesday and a stock that is down more than 30% from its 2015 high, Mead Johnson could fetch more than $15 billion with a takeover premium. Reckitt has a market value of £48 billion ($60 billion). As with all such negotiations, the talks could fall apart before a deal is reached.

Mead Johnson, based in Glenview, Ill., makes a range of nutritional products including Enfamil infant formula and the Sustagen milk supplement for children. It had net sales of $3.7 billion in 2016, down 8%. Half the company’s sales came from Asia, with 17% coming from Latin America and the rest from North America and Europe.


Reckitt Benckiser, based in Slough, England, comprises consumer brands such as Lysol cleaning spray, Durex condoms, Strepsils lozenges and Scholl footcare products. The company, which hasn't yet reported 2016 results, had sales of £8.9 billion in 2015.

If the two companies were to combine, it could breathe new life into a push by Reckitt into higher-margin consumer-health products. Under Chief Executive Rakesh Kapoor, who took the helm in 2011, the company has made a string of acquisitions aimed at expanding the business. The consumer-health unit’s growth has slowed however.

In October, when it reported the results, Reckitt lowered its outlook for the year—the second time it had guided estimates slightly lower in three months—and reported overall third-quarter sales that missed estimates. Reckitt said then that like-for-like sales for the three months ended Sept. 30 rose by 2% compared with the same period last year, missing the 2.8% expected by analysts and marking the lowest growth during Mr. Kapoor’s tenure.

Reckitt’s performance signals how European consumer-goods companies have struggled to notch robust sales growth in tough macroeconomic conditions marked by currency swings and the rise of local competitors. Mead Johnson’s results have also been hampered by currency swings.

Mead Johnson was once part of pharmaceutical giant Bristol-Myers Squibb Co. In 2009, Bristol split off the nutrition company to focus on its core medical business. Mead Johnson has been the subject of takeover speculation ever since, given its exposure to fast-growing emerging markets and its manageable size for an acquirer.

The company was founded more than 100 years ago in Jersey City, N.J., by Edward Mead Johnson Sr., who started it after leaving Johnson & Johnson, which he co-founded with his brother.

A deal would come on the heels of a $10.4 billion tie-up between France’s Danone SA and U.S. organic-foods producer WhiteWave Foods Co., struck in July. Danone had been considered by analysts to be a logical buyer for Mead Johnson.

A number of other substantial mergers in the consumer industry have been announced since then, including British American Tobacco PLC’s agreement last month to take full control of Reynolds American Inc. in a $49 billion deal. Also last month, Luxottica Group SpA, maker of Ray-Ban sunglasses, agreed to a merger with French optical-lens maker Essilor International SA, a tie-up that would create a company with a combined market value of nearly $50 billion, and confectionery company Mars Inc. said it would buy veterinary and dog-daycare company VCA Inc. in a $7.7 billion deal.