>>> What to look at today - 18th of January 2017

Dow -0.30% S&P -0.30% Nasdaq -0.63% Russell -1.44%
US Market Closed Lower. Trump comments start to push some investors to lock some profits. Pharma continue to be weak and Retail traded better after border tax comments (XRT +0.8%). Energy was pnly cyclicalsector to finish higher with Crude closing also higher by 0.2% to $52.46. USD was weak vs Euro & GBP after May speech on brexit. MS -2.3% even after better numbers. In addition to energy, only four other sectors finished in positive territory -- utilities (+1.1%), real estate (+0.8%), telecom services (+0.4%), and consumer staples (+1.4%). US After Hours QCOM rebounding on anticipated 'vigorous contest' to FTC... GIMO -22%, CCJ -8%, CSX -4%, IBKR -3%, UAL -1.5% lower following earnings/guidance. Asia indices mixed; Nikkei is up marginally despite the broad reversal in Yen weakness. USD off its lows after extreme selling in US hours; USD/JPY bounces about 80pips toward 113.40, EUR/USD falls about 30pips toward 1.0680. Shares of China property developers rise slightly following more bening property price data; Prices rose in 65 out of 70 cities y/y - unchanged from prior - while price growth across 70 top cities was little changed at 12.4% v 12.6% prior despite the recent govt curbs. Fed's Williams (non-voter) called December hike an appropriate small step, adding that more gradual hikes will be needed given that economy has reached full employment and inflation is approaching 2% target.

Nikkei +0.43% Hang Seng +1.19% CSI +0.46% Shanghai +0.16%

Eur$ 1.0686 CNH 6.8127 CNY 6.8453 JPY 113.34 GBP 1.2348 CHF 1.0040 RUB$ 59.4005 WTI$ 52.64 +0.30%

S&P +0.20% EuroStoxx +0.31% Dax +0.37% FTSE +0.20% SMI +0.46%

Macro :
- Oil Bosses in Davos See Shale Rebound Capping 2017 Price Surge
- Japan to Watch Brexit Movements Following May’s Speech
- HSBC CEO Says Bankers Generating 20% of London Revenue May Move

Keep an eye on :
- AENA SM : Spain Proposes Reducing Aena Fees by 2 Percent, Expansion Says
- AKER NO : Aker Said to Weigh Sale of Norwegian Offshore-Engineering Firm
- ASML NA : ASML Sees 1Q rev. of 1.8B Euros, Six New EUV Orders in 4Q 2016, ASML CEO: EUV ‘Turned a Corner’ in 2016, Orders Show Commitment
- BAYN GY : Monsanto, Bayer Says Trump Meeting Last Week ‘Very Productive’
- BRK/B US : Gates Foundation in Plan to Sell 60m Class B Berkshire Shares
- DBK GY : Deutsche Bank to Pay $7.2b in Settlement With DOJ --> Deutsche Bank Sees DOJ Pact Hurting 4Q Pretax Results by $1.2b
- DBK GY : Deutsche Bank Sees 65% Chance of Russia Sanctions Lift in Spring
- EDF FP : Hollande Pressures EDF’s Levy on Fessenheim, Le Canard Says
- ENEL IM : Enel Should Exit Russia Amid Ruble Recovery, Limited Growth
- FACC AV : FACC 9M Ebit up 14% to EU16m; Sees 20% FY Revenue Growth
- LHA GY : Lufthansa denies possibility of merger with Etihad, Etihad would first take a 30%-40% stake in the German carrier before moving on to a complete merger.
- NDA SS : Nordea Sells Russia Mortgage Portfolio to Sovcombank: Kommersant
- SFQ GY : SAF-Holland to Restructure North American Manufacturing Plants
- SPM IM : Saipem Gets Onshore Drilling Contracts for Total Value of $240m
- SAN FP : Sanofi Gets EU Approval for Suliqua to Treat Type 2 Diabetes
- SAS SS : SAS CEO Gustafson May Be Candidate for SEB CEO Job: DI
- SY1 GY : Symrise to Stick to or Increase Dividend, CEO Tells Boersen Z.
- TEF SM : Telefonica to Produce TV Series, Expansion Reports
- VOW3 GY : VW to Introduce Electric Car in Japan as Early as June: Nikkei

>>> Europe : Brokers Upgrades & Downgrades - 18th January 2017

>>> Up
*ABN Amro Raised to Buy at Santander, PT EU26.40
*EON Raised to Overweight at Barclays, PT EU8.50
*Gerresheimer Raised to Buy at Deutsche Bank, PT EU82
*InterContinental Raised to Hold at HSBC, PT GBP37
*Jungheinrich Raised to Hold at Kepler Cheuvreux, PT EU25
*Lindt Raised to Hold at SocGen, PT CHF62000
*Mail.Ru Group Raised to Outperform at Renaissance Capital
*Mondi Raised to Neutral at Goldman, PT 1700p
*Spectris Raised to Buy at Deutsche Bank, PT 2795p
*Volvo Raised to Buy at Jefferies, PT SEK125

>>> Down
*Aker Solutions Cut to Hold at Nordea Securities, PT NOK45
*Cap Gemini Cut to Hold at HSBC, PT EU90
*Disney Cut to Underperform at BMO, PT $88
*Inmarsat Cut to Neutral at JPMorgan, PT 830p
*Kuehne Rated New Hold at Kepler Cheuvreux, PT CHF145
*LafargeHolcim Cut to Neutral at Exane, PT CHF58
*Luxottica Cut to Neutral at Exane, PT EU59
*LVMH Cut to Outperform at Raymond James
*Maersk Cut to Neutral at UBS
*Mead Johnson Rated New Sell at Berenberg, PT $66
*Nokian Renkaat Cut to Underweight at Morgan Stanley, PT EU30
*Swatch Cut to Hold at National Bank AG, PT CHF360
*Titan Cement Cut to Neutral at Exane, PT EU24.50
*Uniper Cut to Equal-Weight at Barclays, PT EU14.30
*Volvo Cut to Underweight at Morgan Stanley, PT SEK90
*Vossloh Cut to Sell at M.M. Warburg, PT EU45.50

>>> PT Change


>>> Initiation
*Aena Rated New Outperform at Credit Suisse, PT EU158
*Ageas Rated New Buy at UBS, PT EU50
*DSV Rated New Buy at Kepler Cheuvreux, PT DKK360
*Fraport Rated New Neutral at Credit Suisse, PT EU55
*PWTN SW Rated New Buy at Kepler Cheuvreux

>>> Call
>> Sector
*MOROCCAN EQUITIES CUT TO NEUTRAL VS OVERWEIGHT AT RENAISSANCE
>> Stock
*GRENKE ENTERS DEUTSCHE BANK GERMAN STOCK IDEAS PORTFOLIO
*WACKER CHEMIE EXITS DEUTSCHE BANK GERMAN STOCK IDEAS PORTFOLIO

>>> Asian Update

Asia Mid-Session Market Update: China property price growth maintains momentum; PBoC adviser expects Yuan to rebound

***US Session Highlights***
- (UK) PM May: UK is leaving EU; will seek the best deal possible; not seeking partial or associate membership of EU (in-line with speculation); will be compromises in Brexit - Brexit speech
- (UK) PM May: Government will put the final Brexit deal to a vote in both Houses of Parliament (**Note: downplaying potential UK High Court decision)
- GBP/USD jumps nearly 3% for biggest one-day gain in more than a decade
- (US) JAN EMPIRE MANUFACTURING: 6.5 V 8.5E; new orders growth down m/m
- OPEC Sec Gen Barkindo: Seeks stability to secure current and future oil supply - comments from Abu Dhabi
- (US) Fed's Brainard (Dove, Voter): expansive fiscal policies could lead to higher inflation, interest rate increases

***US markets on close: Dow -0.3%, S&P500 -0.3%, Nasdaq -0.6%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Financials
- Biggest gainers: NBL +7.1%, PVH +6.2%, NRG +5.1%, MAT +4.7%, RL +3.8%
- Biggest losers: CMA -6.5%, NAVI -6.4%, RF -6.1%, CFG -6.0%, ZION -4.7%
- At the close: VIX 11.9 (+0.6pts); Treasuries: 2-yr 1.16% (-3bps), 10-yr 2.33% (-3bps), 30-yr 2.93% (-5bps)

***US movers afterhours***
- SHLO: Reports Q3 $0.11 (incl $0.16 impact from lower scrap metal pricing) v $0.49 y/y, R$275.2M v $216.4M y/y; +9.1% afterhours
- JAZZ: FDA approves generic of Jazz's Xyrem (sodium oxybate) with a REMS programThe U.S. Food and Drug Administration (FDA) has approved the first generic version of Xyrem; +1.3% afterhours
- UAL: Reports Q4 $1.78 adj v $1.65e, R$9.05B v $9.06Be; -1.7% afterhours
- IBKR: Reports Q4 $0.07 v $0.25 y/y, R$193M v $271M y/y; -3.1% afterhours
- CSX: Reports Q4 $0.49 v $0.49e, R$3.04B v $2.86Be; -4.0% afterhours
- NBIX: Primary endpoint not met in Phase II clinical study of VMAT2 Inhibitor INGREZZA (valbenazine) in adults with Tourette Syndrome; -5.4% afterhours
- GIMO: Reports prelim Q4 $0.35-0.37 v $0.38e, R$84.5-85.0M v $92.0Me (guided $0.36-0.38; Rev $91.0-93.0M prior); -22.4% afterhours

***Asia Key economic data:***
- (CN) CHINA DEC PROPERTY PRICES M/M: RISE IN 46 OUT OF 70 CITIES VS 55 PRIOR; Y/Y: RISE IN 65 OUT OF 70 CITIES V 65 PRIOR
- (AU) AUSTRALIA JAN WESTPAC CONSUMER CONFIDENCE INDEX: 97.4 V 97.3 PRIOR, M/M: +0.1% V -3.9% PRIOR

***Asia Session Notable Observations, Speakers and Press***
- Asia indices mixed; Nikkei is up marginally despite the broad reversal in Yen weakness, ASX200 sluggish despite the rally in mining names, Hang Seng led higher by energy and financials
- USD off its lows after extreme selling in US hours; USD/JPY bounces about 80pips toward 113.40, EUR/USD falls about 30pips toward 1.0680
- Shares of China property developers rise slightly following more bening property price data; Prices rose in 65 out of 70 cities y/y - unchanged from prior - while price growth across 70 top cities was little changed at 12.4% v 12.6% prior despite the recent govt curbs.
- Yuan fix was set at the strongest level in 2 months, but USD/CNY still jumped from 6.80 to 6.815 as the margin of strength did not sufficiently reflect USD drop in US session; Earlier, PBoC adviser Fan Gang also noted that he expects stronger CNY vs the greenback going forward since the recent depreciation was mainly due to Donald Trump's election and the possibility of more US interest rate rises.
- Australia Westpac Consumer Confidence index was up marginally in January, a slight rebound after falling to lowest level since April in the prior print. Resident economist notes the absence of a rebound however was a disappointment given a 10% rise in Australia stocks over the past month.
- Fed's Williams (non-voter) called December hike an appropriate small step, adding that more gradual hikes will be needed given that economy has reached full employment and inflation is approaching 2% target.

China:
- USD/CNY: (CN) PBoC adviser Fan Gang: Expect stronger yuan against USD - China Daily

Japan:
- (JP) Japan Chief Cabinet Sec Suga: Watching trends related to Brexit carefully; Hoping for minimal impact on economy - press

***Asian Equity Indices/Futures (00:30ET)***
- Nikkei +0.1%, Hang Seng +1.2%, Shanghai Composite +0.3%, ASX200 -0.5%, Kospi flat
- Equity Futures: S&P500 +0.1%; Nasdaq +0.2%, Dax +0.2%, FTSE100 +0.3%

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.0688-1.0715; JPY 112.55-113.15; AUD 0.7540-0.7565; NZD 0.7190-0.7215
- Feb Gold +0.1% at $1,214/oz; Feb Crude Oil +0.3% at $52.65/brl; Mar Copper +0.3% at $2.63/lb
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8525 V 6.8992 PRIOR; Strongest Yuan fix since Nov 15th
- (CN) PBOC to inject combined CNY460B in 7-day and 28-day reverse repos v CNY330B prior (largest net fund add since 2004)
- (CN) China MoF sells 3-yr bonds at 2.77% v 2.77%e, bid-to-cover 2.41x; Sells 7-yr bonds at 3.12% v 3.14%e; bid-to-cover 2.09x
- (JP) BOJ offers to buy ¥410B in 5-10yr JGBs, ¥190B in 10-25yr JGBs, and ¥110B in JGBs with maturity over 25-yr
- (KR) Bank of Korea (BOK) sells KRW2.3T in 2-yr bonds at 1.58%

***Asia equities / Notables / movers by sector***
- Consumer discretionary: China Eastern Airlines 670.HK +1.6% (Dec result); Yamada Denki 9831.JP +1.1% (partnership with U-next); Li Ning Co 2331.HK -1.2% (block share trade); Nippon Suisan Kaisha 1332.JP +3.5%
- Consumer staples: Bellamy's Australia BAL.AU -2.2% (Goldman Sachs cuts rating)
- Industrials: Baoxin Auto 1293.HK +19.4% (profit alert); Weichai Power 2338.HK +1.7% (profit alert); Orient Overseas International 316.HK +9.4% (receives bid); Bridgestone Corp 5108.JP -1.6% (Macquarie downgrades); Aurizon Holdings AZJ.AU -1.4% (Q2 result)
- Technology: Toshiba Corporation 6502.JP +1.7% (spinoff speculation)
- Materials: China Sunshine Paper Holdings Co 2002.HK -3.3% (profit alert); St Barbara SBM.Au +6.3% (Q2 result); Resolute Mining RSG.AU +6.8%, Saracen Mineral SAR.AU +1.0%; Northern Star NST.AU +0.9% (gold rises)
- Energy: China Coal Energy 1898.HK +1.0% (Dec result); Woodside Petroleum WPL.AU +1.2% (JPMorgan raises rating)

>>> US After Hours Summary: QCOM rebounding on anticipated 'vigorous c


After Hours Summary: QCOM rebounding on anticipated 'vigorous contest' to FTC... GIMO -22%, CCJ -8%, CSX -4%, IBKR -3%, UAL -1.5% lower following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: CVRS +18% (very thinly traded), SHLO +11%, OGS +0.2% (offers upside FY17 guidance, updates five-year growth forecast; increases quarterly dividend)

Companies trading higher in after hours in reaction to news: NXST +0.8% (Nexstar announces completion of Media General acquisition and related divestitures; increases its pro-forma average annual free cash flow guidance for the 2016/2017 cycle to approx. $565 mln vs prior guidance of $540 mln), QCOM +0.3% (says will 'vigorously contest' FTC complaint)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: GIMO -21.9%, CCJ -8.1% (expects adjusted net earnings for 2016 will be significantly lower than analysts' earnings estimates; announces workforce reductions), CSX -3.9%, IBKR -2.7%, UAL -1.5%   BGFV -1.2% (light volume)

Companies trading lower in after hours in reaction to news: BCEI -6.7% (modestly pulling back), AFAM -5.8% (proposed offering of 2,500,000 shares of common stock), TDOC -5.2% (proposed offering of common stock - includes 5,400,000 by Teladoc and 1,850,000 by stockholders), NBIX -3.9% (announces top-line results from the Phase II T-Forward study of INGREZZA - pre-specified primary endpoint was notmet), TRCH -3.2% (files for 6.15 mln share common stock offering by selling shareholders), KOPN -2.4% (modestly pulling back from new multi-year high made today; discloses was unable to complete its investigation and has submitted a plan to regain compliance with Nasdaq), TTPH -1.9% (entered into a Controlled Equity Offering sales agreement with Cantor to sell up to $40 mln in common stock), VIAV -1.1% (GIMO sympathy)

Airline names are lower following United Continental (UAL) earnings: LUV -0.5%, AAL -0.3%, HA -0.3%, ALK -0.3%, DAL -0.1%

>>> US Close Dow -0.30% S&P -0.30% Nasdaq -0.63% Russell -1.44%

Closing Market Summary: Stock Market Closes Tuesday Modestly Lower

The major averages opened the shortened week on a losing note, succumbing to profit-taking activity in the face of some political angst. The S&P 500 finished Tuesday's session 0.3% lower, while the Nasdaq (-0.6%) and Russell 2000 (-1.4%) underperformed, weighed down principally by losses in the financial, semiconductor, transportation, and biotech groups.

Over the weekend, President-elect Trump may have instilled a sense of doubt about his administration's ability to smoothly implement the pro-growth policies that the stock market has rallied around. Mr. Trump's comments raised some concerns that he and the GOP could be on different pages regarding tax policy and the repeal and replacement of Obamacare.

The President-elect also restated his claim that drug companies will have to negotiate with the government on prices for drugs in Medicare and Medicaid. That view prompted a pullback in drug stocks, like Merck (MRK 61.48, -0.86, -1.4%) and Pfizer (PFE 32.06, -0.46, -1.4%), as well as many biotech issues, which could be seen in the underperformance of the iShares Nasdaq Biotechnology ETF (IBB 274.52, -5.49). The S&P 500 health care sector closed the day 0.5% lower.

On the other hand, the retail space received a nice bump after Mr. Trump voiced his thoughts on a potential border tax, stating that the current GOP plan is too complicated. Retailers, many of which source their goods overseas, pushed the SPDR 500 Retail ETF (XRT 44.36, +0.35) 0.8% higher on the hope that a punitive border tax on imported goods won't come to fruition as feared. Naturally, the consumer discretionary sector also benefited, posting a 0.2% gain for the day.

Energy was the only other cyclical sector to finish Tuesday's session in the green, adding 0.6% on the back of an uptick in crude oil. The commodity ended its trading day far below its session high at $52.46/bbl, an increase of 0.2%. The gain came amid a weakening U.S. dollar, which fell 1.2%.

In addition to strength in the eruo and the Japanese yen, the British Pound had a hand in pushing the greenback lower, rallying 3.0% after a Brexit speech from UK Prime Minister Theresa May and a Consumer Price Index report showing the highest year-over-year pace for inflation (+1.6%) for the UK since July 2014. Ms. May confirmed that Britain will leave the single market, but that it is aiming for a flexible and phased Brexit transition, which will be put to a parliamentary vote.  For good measure, President-elect Trump also expressed his belief that the dollar is "too strong." 

On the earnings front, Morgan Stanley (MS 42.15, -1.66) reported better-than-expected top and bottom line results today, but traded down with the entire financial sector (-2.3%) as the stock saw some profit-taking activity. The negative response to Morgan Stanley's otherwise good news triggered some broader profit-taking efforts in the space. That selling picked up in the afternoon trade and drove the indices to new session lows before some late buying interest helped pare today's losses.

Financials will also headline tomorrow's earnings reports. Both Goldman Sachs (GS 235.74, -8.56) and Citigroup (C 58.38, -1.25) are scheduled to report before the opening bell. Investors will be looking for numbers that validate the sector's huge post-election run, but certainly after today's action, they will be watching more intently to see if Goldman Sachs and Citigroup report better-than-expected results and still trade lower.

In addition to energy and consumer discretionary, only four other sectors finished in positive territory -- utilities (+1.1%), real estate (+0.8%), telecom services (+0.4%), and consumer staples (+1.4%). Those four sectors combined have a roughly 18% weight in the S&P 500, so their gains were not enough to offset selling elsewhere.

The outperformance of the consumer staples sector was forged on the back of British American Tobacco's (BTI 113.10, -2.11) $49 billion offer to acquire the remaining 57.8% of Reynolds American (RAI 57.68, +1.71) that it does not already own, as well as a solid gain in sector heavyweights Walmart (WMT 68.42, +1.29, +1.9%), Procter & Gamble (PG 85.21, +1.20, +1.4%), and CVS Health (CVS 83.92, +1.94, +2.4%).

Reviewing today's lone economic report, the Empire Manufacturing Survey:

  • The Empire Manufacturing Survey for January fell to 6.5 from the prior month's reading of 9.0. The consensus estimate was pegged at 8.3.

Tomorrow will see a batch of economic data with the most notable reports being December CPI (consensus 0.3%) and December Industrial Production (consensus 0.6%). The two reports will cross the wires at 8:30 am ET and 9:15 am ET, respectively.

Wednesday's remaining economic reports will include the MBA Mortgage Index at 7:00 am ET, the NAHB Housing Market Index at 10:00 am ET, the Fed's Beige Book at 2:00 pm ET, and Net Long-Term TIC Flows at 4:00 pm ET.

  • Russell 2000 -0.3% YTD
  • Dow Jones Industrial Average +0.3% YTD
  • S&P 500 +1.3% YTD
  • Nasdaq Composite +2.9% YTD

>>> Toshiba mulling spin-off of semiconductor business to Western Digital or inv

Toshiba mulling spin-off of semiconductor business to Western Digital or investment funds - report (translated)

Toshiba [TYO:6502] is mulling a spin-off of its semiconductor business, including its flash memory operations, and has entered talks with California-based Western Digital [Nasdaq:WDC] concerning an investment in the new company, the Nihon Keizai Shimbun reported.
The Japanese-language report, which disclosed that Toshiba could set up the new company as soon as the first half of 2017, cited several persons familiar with the situation as saying that Western Digital and investment funds have expressed an interest, with one proposal being the acquisition of about a 20% stake for about JPY 200bn-JPY 300bn (USD 1.8bn-USD 2.7bn). Due to antitrust laws it is not clear which investor will be the final winner, the report said.
Faced with hundreds of billions of JPY in losses at its nuclear generation business in the US, Toshiba is scrambling to secure investment capacity in its semiconductor business to eliminate fears about its financial affairs, the report said.
Toshiba and Western Digital already jointly operate a flash memory plant in Mie Prefecture, the report noted. The new company would remain majority-owned by Toshiba, and the flash memory plant will continue to be jointly operated by the two companies, the report said. A future public listing for the new company is also possible, the report added.
In addition to securing short-term funds through the spin-off and sale of the unit, the deal would allow Toshiba to more easily obtain annual financing of several hundreds of billions of JPY for research and development from financial institutions, the report said.

Link to the article : http://bit.ly/2iEzdXg

>>> Punch Tavens issues scheme document for merger with Heineken partner Patron

Punch Tavens issues scheme document for merger with Heineken partner Patron
17 JAN 2017
On 15 December 2016, the boards of Punch Taverns plc [LON:PUB] and Vine Acquisitions Limited ("Bidco"), a newly incorporated company formed at the direction of Patron Fund V, announced that they had reached agreement on the terms of a recommended cash offer by Bidco for the entire issued and to be issued ordinary share capital of Punch (the "Acquisition") to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006 (the "Scheme").
Publication of the Scheme Document
Punch is pleased to announce that a circular in relation to the Scheme (the "Scheme Document"), setting out, among other things, a letter from the Chairman of Punch, the full terms and conditions of the Scheme, a statutory explanatory statement, an expected timetable of principal events, notices of the Court Meeting and General Meeting and details of the action to be taken by Punch Shareholders, will be published today on the Punch website at www.punchtavernsplc.com.
Action required
As further detailed in the Scheme Document, in order to become effective, the Scheme will require, among other things, that the requisite majority of eligible Punch Shareholders: (i) vote in favour of the Scheme at the Court Meeting; and (ii) pass the Special Resolution at the General Meeting. The Scheme is also subject to the satisfaction or waiver of the Conditions and further terms that are set out in the Scheme Document.
Timetable
The Scheme Document contains an expected timetable of principal events relating to the Scheme, which is also set out in the Appendix to this Announcement. Subject to the approval of Punch Shareholders and the Court, and to the satisfaction of the other Conditions, the Scheme is expected to become effective in the first half of 2017.

>>> Verizon may acquire a big cable company, sources say


Verizon Chief Executive Lowell McAdam may be getting ready to answer rival AT&T’s moves to buy DirecTV and Time Warner.

The New York wireless giant is weighing the acquisition of a cable company to help grow demand for its wireless data products, two well placed sources told The Post.

The CEO told friends at the Consumer Electronics Show in Las Vegas earlier this month that he wants to buy into cable, one source said.

“They need it for 5G,” said a second source, confirming McAdam’s interest.

The most likely targets would be “Charter or Comcast,” the source noted,

“Altice is too small,” the source speculated.

To be sure, Verizon is not in talks with any cable company and may not ever make such a move.

Still, McAdam has been under pressure recently with its deal to acquire Yahoo still a question mark months after two major hacks of the internal portal were revealed.

The wireless giants operate on 4G wireless networks but are preparing to become a real alternative to the cable company with phone, TV and data services.

To do that more effectively, the phone companies are pouring money into 5G connections which can work with cable systems to provide more stable coverage for consumers.

McAdam has already given Wall Street analysts and investors big hints that he’s looking at a combination with, say, a Charter Communications.

In a mid-December meeting with Wall Street analysts, McAdam said a get together between the two “makes industrial sense.”

Three weeks later, at CES, his comments to friends make it clear that cable distribution is a path he is exploring, perhaps more seriously than first thought.

Verizon is still yet to stay whether its is moving ahead with its planned acquisition of Yahoo.

Were Verizon to make a move on Liberty Media-backed Charter it would replicate the kind of deal shareholder John Malone made back in 1998 to sell global cable company TCI Communications to AT&T.

Rival AT&T not only owns DirecTV but also has an agreement to acquire Time Warner for $109 billion in cash and stock.

McAdam is obsessed with distribution, said a person familiar with his thinking.

Verizon in April sold most of its FiOS network to Frontier Communications, clearing the path, some believe, to allow a cable merger.

“For regulatory reasons, Verizon can’t dominate in FiOS and cable, so it appears to have to set its sights on cable,” an industry source said.

Charter could be a seller under the right conditions, the source added, emphasizing that Malone and Charter CEO Tom Rutledge are just getting going on their vision for Charter.

But it does mean Verizon has to promise enough autonomy for the Charter team to advance its own plans — only if “Malone and Rutledge are not ready to cash out,” the source said.