>>> Europe : Brokers Upgrades & DOwngrrades - 21st of October 20

>>> Up
*AB Foods Raised to Hold at Jefferies, PT 2450p
*CRH RAISED TO BUY AT SOCIETE GENERALE
*HEINEKEN RAISED TO OUTPERFORM BERNSTEIN, PT €95
*Informa Raised to Buy at Berenberg, PT 800p
*Premier Oil Raised to Buy at Citi, PT 103p
*Tele2 Raised to Add at AlphaValue, PT SK86.20
*Technip Raised to Buy at UBS, PT EU69
*Valeo Raised to Neutral at Exane BNP Paribas, PT EU54

>>> Down
*BOIRON CUT TO SELL AT SOCGEN
*PUBLICIS CUT TO ADD AT ALPHAVALUE

>>> PT Change
*RANDSTAD PRICE EST. CUT TO EU57 VS EU61 AT ING; MAINTAINS BUY

>>> Initiation
*A3M SM Rated New Outperform at Credit Suisse
*Aker Solutions Rated New Sell at UBS, PT NK33
*Amec Foster Wheeler Rated New Neutral at UBS, PT 640p
*Hunting Rated New Neutral at UBS, PT 535p
*Petrofac Rated New Buy at UBS, PT 1100p
*RTL Rated New Underperform at Credit Suisse, PT EU68
*Tenaris Rated New Sell at UBS, PT $23
*TFI RATED NEW UNDERPERFORM AT CREDIT SUISSE
*Vallourec Rated New Neutral at UBS, PT EU5
*Wood Group Rated New Neutral at UBS, PT 800p

>>> Call

>>> Asian Update

Asia Mid-Session Market Update: China property price growth stays hot; BOJ's Kuroda reiterates flexible stance on yield curve;

***US Session Highlights***
- (US) INITIAL JOBLESS CLAIMS: 260K V 250KE; CONTINUING CLAIMS: 2.06M V 2.05ME (4-week average of continuing claims lowest since July 8, 2000)
- (US) OCT PHILADELPHIA FED BUSINESS OUTLOOK: 9.7 V 5.0E; new orders reach 23-month high
- (US) SEPT EXISTING HOME SALES: 5.47M V 5.35ME
- US Dollar Index hits fresh multi-month high post data
- Tesla shares trade off-course following self-driving technology announcement
- WFM: Detroit Health Dept investigating case of hepatitis A found in a food handler at a Whole Foods market; urges customers that ate at the prepared foods bar at that local store to contact their doctor - press

***US markets on close: Dow -0.2%, S&P500 -0.1%, Nasdaq -0.1%***
- Best Sector in S&P500: Healthcare
- Worst Sector in S&P500: Technology
- Biggest gainers: AXP +9.1%, SNA +6.6%, MAT +6.0%, WBA +5.0%, TWX +4.8%
- Biggest losers: EBAY -10.8%, UNP -6.7%, TRV -5.7%, ADS -4.9%, AN -4.1%
- At the close: VIX 13.75 (-0.4pts); Treasuries: 2-yr 0.82% (+2bp), 10-yr 1.75% (+1bp), 30-yr 2.50% (-1bp)

***US movers afterhours***
- ALKS: Announces positive topline results from FORWARD-5 pivotal Phase 3 study of ALKS 5461 for Major Depressive Disorder; +44.8% afterhours
- WLH: Meritage Homes said to target acquistion of William Lyon - Betaville; +12.2% afterhours
- PFPT: Reports Q3 $0.19 v $0.05e, R$99.8M v $94.4Me; +11.2% afterhours
- VRSN: Discloses amendment Dept of Commerce agreement; Verisign to remain sole registry for .com domains through Nov 30, 2024 - filing; +7.1% afterhours
- MSFT: Reports Q1 $0.76 adj v $0.68e, R$22.3B v $21.5Be; +5.9% afterhours
- PTCT: Spinal Muscular Atrophy Program Advances into Phase 2 Clinical Studies in SMA Patients with RG7916; trial triggers $20M milestone payment to PTCT; +5.3% afterhours
- PYPL: Reports Q3 $0.35 v $0.35e, R$2.67B v $2.65Be; Will allow Xoom accounts to link to PYPL; +4.5% afterhours
- SAM: Reports Q3 $2.48 v $2.54e, R$253.4M v $291Me; -1.9% afterhours
- AMD: Reports Q3 $0.03 v $0.00e, R$1.31B v $1.20Be; -5.8% afterhours
- RRGB: Reports prelim Q3 $0.38 v $0.46e, R$297M v $300Me; -6.9% afterhours
- SKX: Reports Q3 $0.42 v $0.46e, R$942.2M v $953Me; -15.4% afterhours

***Asia Session Notable Observations, Speakers and Press***
- China property prices in September continue to rise particularly in the top-tier cities; Annualized growth in Shanghai And Beijing was up 32.7% and 27.8% - up from 31.2% and 23.5% respectively in the prior month and also the biggest increase of the year. All-70 cities calculation saw y/y rise 11.2% v 9.2% prior and m/m at 2.1% v 1.5% prior - also 2016 highs. Also of note, State Administration of Foreign Exchange (SAFE) was not concerned about the impact of Fed tightening on emerging markets while also cheering the easing in capital outflow pressure.
- Ahead of Nov 1st BOJ meeting, Gov Kuroda reiterated he would consider what is appropriate for the yield curve target at every decision, but also added he sees no immediate need for change of view consider there have not been any big changes seen in the economy, price and financial developments; Kuroda further noted one option could be to reduce long-term bond buying to steepen the curve and that monetary base would still grow even if annual JGB pace slowed to ¥70T or ¥60T. Separately, BOJ's Masai also hinted the timing for achieving inflation target could be delayed, with the size of the anticipated BOJ GDP/CPI forecast revisions on Nov 1st driving that decision. Also in Japan, Fin Min Aso acknowledged Japan top union association (Rengo) demands of 2% wage inflation as reasonable, and that he was surprised they did not ask for more.
- Goldman Sachs forecast for RBA to transition to policy tightening mode in early 2018, even with the latest set of employment data overnight showing some turbulence; Focus turns on quarterly CPI next Wednesday that could potentially boost the case for further easing.
- US dollar extended its ascent across a number of major currencies as short-end US rates rise on improving US housing and Philly Fed data; EUR falls below 1.09 to a 7-month low, USD/CNY offshore hits multi-month highs above 6.775, USD/JPY returned above 100-day EMA above ¥104, and USD/CHF is at its near 5-month highs approaching parity.

***Asia Key economic data:***
- (CN) CHINA SEPT PROPERTY PRICES M/M: RISE IN 63 OUT OF 70 CITIES VS 64 PRIOR; Y/Y: RISE IN 64 OUT OF 70 CITIES V 62 PRIOR; China all-70 new home prices m/m: 1.4% v 1.5% prior; y/y: 11.2% v 9.2% prior
- (NZ) New Zealand Sept Net Migration: 6.3K v 5.6K prior
- (KR) South Korea Oct 1-20th exports +1.2% y/y; imports -4.6% y/y
- (US) NORTH AMERICA Sept SEMI BOOK/BILL RATIO: 1.05 V 1.03 prior (above parity for 10th straight month)
- (US) NPD: Sept Video Games Sales -23% y/y at $838M

***Asian Equity Markets (23:30ET)***
- Nikkei +0.3%, Hang Seng closed, Shanghai Composite -0.4%, ASX200 -0.2%, Kospi -0.4%

***FX ranges/Commodities/Futures/Fixed Income (23:30ET):***
- EUR 1.0895-1.0930; JPY 103.90-104.20; AUD 0.7615-0.7635; NZD 0.7160-0.7195
- Dec Gold -0.4% at 1,263/oz; Dec Crude Oil -0.5% at $50.36/brl; Copper +0.1% at $2.10/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 3.0 tonnes to 970.2 tonnes; highest since Aug 11th
- Equity Futures: S&P e-mini -0.2%, Dax -0.2%, FTSE100 -0.2%
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.7558 V 6.7311 PRIOR; lowest CNY setting since 2010
- (CN) PBOC to inject CNY70B in 7-day reverse repos, CNY40B in 14-day reverse repos and CNY50B in 28-day reverse repos; Injects net CNY95.5B for the week v drains CNY415B w/w
- (AU) Australia MoF (AOFM) sells A$900M in 5.75% 2021 Bonds; avg yield: 1.808%; bid-to-cover: 3.58x
- (US) Weekly Fed Balance Sheet Total Assets for week ending Oct 19th: $4.47T v $4.46T prior; Reserve Bank Credit: $4.43T v $4.42T prior; M1: -$4.7B v +$69.1B prior; M2: +$43.4B (11-week high) v -$8.0B prior

***Asia movers***
- BCI.AU BC Iron: Reports Q1 Iron Valley production 2.1M wmt; EBITDA A$4.7M; +6.3%
- JHC.AU Japara: Affirms FY17 EBITDA similar y/y (implies +11%); YTD performance has been in line with expectations - AGM; +1.5%
- 7201.JP Nissan: Co-CEO Ghosn: Mitsubishi and Nissan do not have capacity redundancies; +0.9%
- STO.AU Santos: Reports Q3 production 15.5 MMBOE v 14.5 MMBOE y/y; Sales 21.3 MMBOE v 16.2 MMBOE y/y; Rev A$650M v A$585M y/y; +0.3%
- OZL.AU Oz Minerals: Reports Q3 gold production 28.5K oz v 23.8K y/y; copper 28.8Kt v 33.5Kt y/y; Cuts FY16 gold production 115-120K (prior 125-135K oz); Affirms copper production 115-125Kt; -0.3%
- HSO.AU Healthscope: Warns Q1 saw slower than expected Rev growth in hospitals; -18.4%
- 3861.JP Oji Holdings: May report H1 op profit ¥33B, +16% y/y (v prior forecast ¥31B) - Nikkei; +1.7%
- 4185.JP JSR Corp: May report H1 op profit ¥13B, -32% y/y (v prior forecast ¥17B) - Nikkei; -2.8%

>>> US After Hours Summary: PFPT +9.5%, MSFT +6%, PYPL +4.5%, KLAC +3


After Hours Summary: PFPT +9.5%, MSFT +6%, PYPL +4.5%, KLAC +3% following earnings/guidance, ALKS +41% on positive trial results... SKX -14.6%, RRGB -7.2%, AMD -5.6% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: PFPT +9.5% (also entered into a definitive agreement to acquire FireLayers for ~$55 million), MSFT +5.8%, PYPL +4.5%, APOL +3.2%, KLAC +2.8%, ETFC +2%, SEIC +1.9% (light volume), PBCT +0.5% (light volume)

Companies trading higher in after hours in reaction to news: CERC +52.2% (strength being attributed to Alkermes sympathy; CERC focuses on developing neurological and psychiatric disorders' treatments), ALKS +41.0% (announces positive topline results from FORWARD-5 for major depressive disorder; meets primary endpoint), VRSN +7.1% (discloses amendment to Cooperative Agreement with the U.S. Department of Commerce; amendment to the Registry Agreement with ICANN), PTCT +6.8% (announces that its joint development program in Spinal Muscular Atrophy with Roche and the SMA Foundation initiated a Phase 2 study in pediatric and adult Type 2/3 SMA patients), ALIM +6.6% (ticking higher, amended its $35 mln term loan agreement to provide Limited up to $10 mln in additional financing upon the achievement of certain revenue milestones), RDS.A +1.7% (light volume; Royal Dutch Shell divests non-core shale acreage in Western Canada for total consideration of $1 bln to Tourmaline Oil), SONC +1.4% (increases quarterly dividend to $0.14/share from $0.11/share and also increases its share repurchase program by $40 mln, now up to $195 mln), RCKY +0.9% (continued strength; confirms receipt of an order to produce 'Hot Weather' combat boots for the U.S. Military), GI +0.6% (very thinly traded - GAMCO Investors discloses 5.08% active stake)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: SKX -14.6%, RRGB -7.2% (offers light prelim Q3 results, lowers FY16 Adj-EBITDA guidance), AMD -5.6%, ATHN -2.9%, SAM -1.8%, SLB -0.3%

Companies trading lower in after hours in reaction to news: SHLD -7.4% (light volume; WSJ recaps comments from JAKK conference call highlighting concerns over Kmart's finances and has stopped shipments), DXPE -4.2% (commences 2.7 mln common stock offering), MMLP -3.8% (ticking lower; enters into a definitive agreement with NuStar Logistics to sell certain assets located in Corpus Christi, Texas for gross consideration of $107 mln; reduces quarterly dividend), ENDP -2.1% (announces that Suketu Upadhyay, Executive Vice President and CFO, is leaving the co effective November 22), WFM -0.4% (continued weakness despite issuing statement about situation in Detroit store)

>>> US Close Dow -0.22% S&P -0.14% Nasdaq -0.09% Russell -0.23%

Closing Market Summary: Indices End Little Changed as Earnings Pour In

The stock market ended the Thursday affair on a flat note as the latest round of quarterly reports prompted mixed reactions from investors. Global monetary policy was also in focus as participants digested the October policy decision from the European Central Bank and some somewhat hawkish commentary from a Federal Reserve official. The Dow Jones Industrial Average (-0.2%) settled slightly behind the S&P 500 (-0.1%) and the Nasdaq Composite (-0.1%).

It was a busy day on the earning front as the third-quarter earnings reporting season continued hitting its stride. Influential names such as Verizon (VZ 49.14, -1.24), American Express (AXP 66.78, +5.53), Travelers (TRV 109.52, -6.71), Walgreens Boot Alliance (WBA 81.02, +3.84) and Union Pacific (UNP 90.64, -6.48) each reported their quarterly results, resulting in some varied assessments.

Equity indices struggled for direction at the start of the session as choppy trade in Europe increased volatility during the early portion of the U.S. session. The European Central Bank released its latest policy statement this morning, opting to maintain its key interest rates and its asset purchase levels. ECB President Mario Draghi followed up the policy inaction with noncommittal remarks. Mr. Draghi indicated that neither extending nor tapering the central bank's asset purchase program were discussed at this month's meeting, but that the board would conduct further policy review in December.

The decision took some steam out of the euro, which in turn, provided another tailwind to the greenback. The U.S. Dollar Index (98.30, +0.38, +0.39%) extended its recent winning streak as policy inaction from the ECB, an improving US rate hike picture, and largely positive economic data boosted the currency. Strengthening in the dollar weighed on the broader market as participants eyed headwinds for dollar-denominated commodities and earnings prospects of multinational companies.

The broader market overcame selling interest near midday, but the major averages were unable to make a meaningful move above their flat lines.

The S&P 500 finished off its best level of the day as ten sectors settled in the red. The lightly-weighted telecom services (-2.0%) sector finished at the bottom of the leaderboard with industrials (-0.5%) and consumer discretionary (-0.2%) also underperforming notably. On the flipside, heavily-weighted health care (+0.5%) finished in positive territory.

The PHLX Semiconductor Index finished higher by 0.8% after takeover rumors signaled that Qualcomm (QCOM 67.34, +1.55) is close to acquiring NXP Semi (NXPI 104.49, +3.46).

The health care sector (+0.5%) demonstrated relative strength as biotechnology and generic drug names outperformed. The iShares Nasdaq Biotechnology ETF (IBB 270.04, +2.56) finished higher by 1.0%, narrowing its month-to-date loss to 6.7%. In the ETF, Gilead Sciences (GILD 74.31, +0.97) jumped 1.3% after announcing top-line results from several drug studies.

In the financial sector (UNCH), Dow component American Express (AXP 66.78, +5.53) outperformed after beating bottom-line estimates for the quarter and issuing upbeat full-year earnings guidance. The name finished at the top of the price-weighted average. On the flip side, Travelers (TRV 109.52, -6.71) rounded out the index despite beating estimates. The stock fell 5.8%. 

The industrial sector (-0.5%) underperformed after Union Pacific (UNP 90.64, -6.48) missed bottom-line estimates for the quarter. The stock was also downgraded to "Market Perform" from "Outperform" at Cowen.

Specialty retail names underperformed in the consumer discretionary sector (-0.1%) as eBay (EBAY 29.02, -3.50) plunged 10.8%. The company issued some disappointing guidance, which overshadowed a quarterly beat.

Treasuries finished on a mixed note as the short end of the curve underperformed. The yield on the 2-yr note settled higher by two basis points (0.82%) while the yield on the benchmark 10-yr note finished higher by one basis point at 1.75%.

Today's trading volume fell below the average of 853 million as 773 million shares changed hands at the NYSE floor.

Today's economic data included weekly initial claims, the Philadelphia Fed Survey, Existing Home Sales, and September Leading Indicators: 

  • Initial jobless claims jumped 13,000 to 260,000 (consensus 249,000) for the week ending October 15.
    • Continuing claims for the week ending October 8 rose by 7,000 to 2.057 million.
  • The Philadelphia Fed Index dipped from 12.8 in September to 9.7 in October (consensus 5.5).
    • That reflects a slowing of activity, yet any number above 0.0 still points to an expansion in regional manufacturing activity.
  • Existing home sales increased 3.2% to a seasonally adjusted annual rate of 5.47 million in September from a downwardly revised 5.30 million (from 5.33 million) in August.
    • The uptick in September broke a string of monthly sales declines registered in July and August.
  • The Conference Board's Leading Economic Index (LEI) increased 0.2% in September, as expected, rebounding from an unrevised 0.2% decline in August.

FT : Philip Green faces loss of knighthood after MPs vote

Philip Green faces loss of knighthood after MPs vote
Politicians denounce tycoon as ‘billionaire spiv’ over collpase of UK retailer

The House of Commons has demanded that Sir Philip Green be stripped of his knighthood, after MPs lined up to denounce the Topshop tycoon as a “billionaire spiv” who was “not particularly good at retail”.

The vote is the latest blow in the fierce fight for Sir Philip’s reputation triggered by the collapse of BHS, the high street chain that made him a billionaire.

The affair has cost 11,000 jobs, put the pensions of 20,000 people at risk and made Sir Philip an unwilling emblem of Theresa May’s campaign to “reform capitalism” so it works for everyone as opposed to the privileged.

Thursday’s vote followed a two-hour “debate” on the report of a parliamentary inquiry into the collapse of BHS, little more than a year after Sir Philip sold the high street chain for £1.

At times the parliamentary session seemed more like a contest to concoct the most acidic formulation of a single claim: that Sir Philip made his fortune not by reviving BHS, but by draining the retailer of cash and then selling a fatally weakened business to the former bankrupt who presided over its demise.

“He took the rings from BHS’s fingers,” said Iain Wright, in an apparent reference to the £400m in dividends BHS paid during the early years of Sir Philip’s ownership, mostly to his wife Tina.

“He beat it black and blue,” the Labour MP continued. “He starved it of food and water, he put it on life support, and then he wanted credit for keeping it alive.”

Despite the parliamentary vote, Sir Philip will keep his knighthood unless a committee of civil servants and luminaries decides to remove it.

The honours forfeiture committee is unlikely to consider the case until it becomes clear whether Sir Philip has honoured his pledge to “sort” the pension deficit left behind by the demise of BHS through handing over a sizeable chunk of his personal fortune.

Earlier this week Sir Philip published a legal opinion he commissioned from two leading lawyers, which dismissed the MPs’ accusations as “bizarre”, “unsupportable”, and tainted by “bias”.

The lawyers were especially critical of Frank Field, the inquiry’s pugnacious co-chair, who declared in May, even before the inquiry had heard from its first witness, that Sir Philip should hand over more than £500m if he wanted to keep his knighthood.

Mr Field, who has criticised Sir Philip of running the company his family owns as a personal fiefdom, described the retail mogul as “a character most like the Napoleon I read in the history books when I was at school”.

It was the opening bid in a crescendo of insults directed at a man once called the King of the High Street.

“I’ve always thought that Sir Philip Green was more of a Maxwell,” Labour veteran Dennis Skinner said. “He had the money, he had the yacht, and he robbed them of the pensions.”

For Labour MP David Winnick there was no need for parallels.

“He is a billionaire spiv who should never have received a knighthood,” he said. “A billionaire spiv who has shamed British capitalism.”