>>> US Gapping Up

Gapping up
In reaction to strong earnings/guidance: RHT +5.9%, RAD +0.9%

M&A news: WCIC +36.7% (to be acquired by Lennar (LEN) in a cash and common stock transaction valued at $23.50/share), LEN +2.4%

Select financial related names showing strength: CS +3.3%, DB +3.2%, BCS +2.2%, SAN +2%, PUK +1.7%

Select metals/mining stocks trading higher: MT +4%, BBL +3.8%, FCX +3.6%, BHP +3.2%, RIO +3.2%, X +3%,AG +2.6%, GOLD +2.1%

Select oil/gas related names showing strength: STO +3%, BP +2.9%, WLL +2.8%, SDRL +2.4%, RDS.A +2.3%,CHK +2.2%, MRO +1.7%, TOT +0.9%

Other news: OCRX +18.8% (completes enrollment in STOP-ALF, a Phase 2a clinical trial to evaluate the Safety and Tolerability of Ornithine Phenylacetate in patients with Acute Liver Failure), AVXL +14.9% (presents preclinical data demonstrating that ANAVEX 2-73), URRE +9.6% (to acquire certain placer mining claims comprising the Sal Rica lithium brine project from Mesa Exploration), GALT +9.6% (following 35% move higher), NVAX +9.3% (Director disclosed purchase of 100K shares, worth total of $144.9K), NVAX +9.3% (following 30%+ move higher), TTOO +5.7% (presents data on the T2MR technology for the detection of Borrelia directly from whole blood samples at the Diagnostic Tests for Lyme Disease Conference), BSPM +4.5% (signs LOI to acquire 100% of equity interest in Xianyang Yongsheng in exchange for cash and issuance of shares of its restricted common stock), AQXP +3.2% (Baker Bros increases active stake to 45.1% ), IONS +3.1% (publication of key clinical results of two randomized controlled studies), HH +2.8% (announces a $1.8 mln private placement equity offering to certain accredited investors; co sold approx. 1.3 mln shares at $1.35/share), IRBT +2.8% (light volume - awarded $23 mln US Navy contract modification), FLEX +2.3% (favorable commentary on Wednesday's Mad Money), BUD +2.2% (still checking), KDMN +2.1% ( doses first patient in a Phase 2 clinical trial of KD025 for the treatment of chronic graft-versus-host disease; also initiates placebo-controlled Phase 2 clinical trial evaluating KD025 in Psoriasis), SRPT +1.8% ( announces a $225 mln underwritten public offering of common stock), CRM +1.8% (Salesforce.com and Cisco (CSCO) announce global strategic allianceg), ADMP +1.2% (Adamis Pharma higher on light volume as Mylan (MYL) CEO appears before Congress)

Analyst comments: FATE +6.6% (initiated with a Buy at ROTH Capital), PBYI +4.9% (target raised to $111 from $54 at Credit Suisse), TI +2.2% (upgraded to Outperform from Neutral at Macquarie), BABA +1.9% (target raised to $125 at Stifel), BLUE +1.7% (resumed with a Buy at ROTH Capital), AAPL +0.5% (target raised to $125 at RBC Capital Mkts; raised to $135 from $120 at Nomura)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • MLHR -9.8%, ALOG -5%, JBL -3.9%, (also details restructuring plan, sees approximately $195 mln in pre-tax restructuring and other related costs)
Other news:
  • CPK -3.1% (prices 835,207 share underwritten public offering of common stock at $62.26/share)
  • SFLY -1.5% (modestly higher in after hours - attributed to Robert W. Baird suggesting today's move is overreaction to the new competing Amazon product)
  • TBIO -0.8% (signs a data sharing agreement with Roche (RHHBY) subsidiary Ventana Medical Systems)
Analyst comments:
  • PSO -0.9% (downgraded to Neutral from Outperform at Exane BNP Paribas)

>>> US Early premarket gappers

Early premarket gappers

Gapping up: WCIC +36.9%, OCRX +18.8%, URRE +9.6%, NVAX +7.7%, RHT +7.7%, AQXP +7.1%, GALT +5.8%,BBL +3.3%, DB +3.2%, CS +2.9%, HH +2.8%, IRBT +2.8%, MT +2.8%, BHP +2.6%, DRD +2.5%, RIO +2.5%, BP+2.4%, CHK +2.2%, SAN +2.2%, KDMN +2.1%, FCX +2%, SDRL +1.9%, BUD +1.8%, WLL +1.6%, AG +1.6%, MRO+1.6%, RDS.A +1.5%, GOLD +1.5%, NOK +1.4%, BCS +1.3%, ALV +1.3%, X +1.3%, ADMP +1.2%, PUK +1.2%, STO+1.2%, VRX +0.9%, BABA +0.9%, AZO +0.5%

Gapping down: MLHR -9.8%, ANDE -5.4%, ALOG -5%, JBL -4.8%, HMY -2.9%, CPK -2.1%, CPK -2.1%, LYG -2%,SFLY -1.5%, SBGL -1.4%, HSBC -1.4%, PSO -1.3%

Handelsblatt : Deutsche Bank Under Attack, Again

Deutsche Bank Under Attack, Again

As if last week’s $14-billion claim from U.S. authorities wasn’t enough, confidence in Deutsche Bank has been hit this week by a warning from a U.S. watchdog that it’s far more fragile than its competitors.


Germany’s largest and most troubled bank received more bad news this week when U.S. Federal Deposit Insurance Corp. Vice Chairman Thomas Hoenig released figures on the leverage of the world’s biggest banks, reflecting the stability of the financial system.
The data showed that Deutsche Bank has a far thinner cushion than other banks if a crisis arises — only half as thick, in fact, as the average of its competitors in the United States and the rest of the world.
According to Mr. Hoenig’s calculations, the bank has a leverage ratio — capital against assets — of just 2.68 percent. The ratio is seen as a key benchmark for gauging a bank’s resilience to shocks. Deutsche Bank itself says it has a leverage ratio of 3.4 percent.

>>> Airbus Helicopter business should be impacted -velt by Drone business

>>> Airbus Helicopter business should be impacted -velt by Drone business...have a look to this Article on consolidation int he Drone business as news solutions to replace costly helicopters are growing



Airware buys Redbird to build a full-stack commercial drone services empire
“I want to be the global leader. I don’t want to build the non-relevant European or French player.” That’s why Emmanuel de Maistre just sold Redbird, his drone-powered analytics provider for construction and mining companies, to US drone services giantAirware.
Together they can sell package of aerial vehicle hardware, flight software, data collection, cloud management, and actionable insights to Fortune 500 companies who don’t know how to drone by themselves.
Redbird was actually the first investment from Airware’s own Commercial Drone Fund back 2015, which contributed to its $3.19 million in venture capital. Airware CEO Jonathan Downey tells me he’s vetted 115 drone investment pitches, and Redbird remained so impressive that he decided to buy it when the French startup began looking to raise more money.
Airware wouldn’t reveal the price it paid, but CEO Jonathan Downey told me “It’s a lot more than an acquihire.” Airware is buying Redbird’s 38 team members as well as their technology and business, which will continue to run under its own brand in Europe. Redbird’s Paris office will also become Airware’s European headquarters, powering the American startup’s expansion there.
Airware has raised $70 million for itself since 2011, originally building a drone operating system for controlling aerial vehicles, carrying out data collection flights, and providing cloud management and analytics for the data to industrial clients.

Early this year, Airware began building hardware itself when necessary to offer complete end-to-end drone services. Yet now, it’s finding that high-end consumer drones equipped with its software can get the job done. That means it’s cooperating more than competing with Chinese manufacturer DJI, one of the few other drone giants.
Downey tells me “DJI started as consumers vehicles. Over time they’ve been able to address more and more of these commercial applications if you marry them with the right enterprise software.”
The acquisition allows Airware to concentrate on the insurance vertical where it helps State Farm and other customers with inspecting roofs, residential claims management, and commercial underwriting. Redbird will try to expand its lead as a provider for providing mines, quarries, and construction sites with drone-captured aerial data an analytics about their production quantities and pace, their efficiency, and their safety compliance.
Without drones, big businesses are forced to rely on expensive helicopters, limited satellite photography, or fragile human beings climbing ladders and dangling from harnesses. It’s rare that technology makes something instantly better, cheaper, and safer. Airware is betting that buying a foothold in the construction and mining drone business could turn into massive footprint as the market grows.

(DBK) Luxury Goods Quaterly

the valuation disconnect
The sector has bounced back and re-rated from 17.5x to 20.4x on 12-month forward PER. It is not unusual to see pricey valuation on the market these days, and relative valuation is indeed in line with history. However, the disconnect exposes the risk of sharp share price moves in the case of disappointment and already anticipates a recovery that is not yet visible. Our selective approach continues to privilege LVMH, Moncler and Yoox-Net-a-Porter. We recently upgraded Luxottica to Buy in a secular positive call on the eyewear sector.

(ZH) $195 Billion Asset Manager: "The Time Has Come To Leave The Dance Floor"

$195 Billion Asset Manager: "The Time Has Come To Leave The Dance Floor"


We find it surprising how, having covered the unprecedented growth in US corporate debt over the past few years, which has more than doubled from $2 trillion at around the time of the financial crisis to approximately $6 trillion currently...

... resulting in a debt/ETBIDA ratio that has never been higher...

... some are still amazed by what is taking place on corporate America's balance sheets.
Overnight, one person warning how all this will end is TCW Group's Tad Rivelle, who is the latest to observe that "corporate leverage, which has exceeded levels reached before the 2008 financial crisis, is a sign that investors should start preparing for the end of the credit cycle."
Rivelle says that “the credit-fuelled expansion inevitably comes to a bad end,” Rivelle, chief investment officer for fixed income at TCW, said in a note sent to investors Tuesday. “We’ve lived this story before.”
He is, of course, right: corporate leverage in America continues to soar to new highs every month, and just in September sales of company bonds passed $1 trillion for the fifth consecutive year according to Bloomberg. Total company debt is at a record 2.4 times collective earnings as of June, according to a Sept. 9 estimate from Morgan Stanley. The ratio fell to 1.7 in 2010 when the U.S. economy started recovering from the Great Recession.
Rivelle, whose firm oversees $195 billion, blames central bankers for fueling asset bubbles, which are bound to collapse as leverage goes up faster than income available to service debt. “Our counsel remains as it has been: avoid those assets that will be broken in the coming de-leveraging while keeping a ‘steady as she goes’ attitude towards the future purchase of those assets that will merely bend when the flood come,” Rivelle wrote.
His other observations are just as dire in their stark admission of just how scary reality has become:


over the course of the past 25 years, the traditional business cycle has been replaced with an asset price cycle. Rather than let recessions run their painful but necessary course, central bankers move forthwith to dispense the monetary morphine. The Fed’s playbook on this is well worn: first, policy rates are lowered. This triggers a daisy-chain of events: low or zero rates promote a reach for yield; the reach for yield lowers capitalization rates across a variety of asset classes which, in turn, spurs a rise in asset prices. Rising asset prices – the so-called wealth effect – “rescues” the economy by rebuilding balance sheets and restoring the animal spirits. And voila! Aggregate demand rises, businesses invest, and a virtuous growth process is launched.

Well, maybe not so much. If it were all so simple, then why is it that after ninety something months of zero or near zero rates, growth is sputtering, the corporate sector is in an earnings recession, and productivity growth is negative?

The explanation is simple: growth is not a simple function of higher asset prices.
Which, incidentally means, that central bankers are now powerless.
Rivelle concludes with an even more dire warning:"Face it: the central banking Emperors have no clothes... when the supposed solutions to the Fed’s dilemma are merely new “problems,” you know you are approaching the cycle’s end... successful, long-term investing is predicated on not just knowing where the happening parties are during the reflationary parts of the cycle but, even more importantly, knowing when the time has come to leave the dance floor. In our view, that time has already come."
* * *
Here is his full note:
Trading Secrets: Twilight of the Central Bankers
While every asset price cycle is different, they all end the same way: in tears. As obvious as this truth is to investors, when the sad end to the credit cycle comes, it always comes as a big surprise to many, including the central bankers who, reliant on their models, confidently tell you that no recession is (ever) in the forecast. But, successful, long-term investing is predicated on not just knowing where the happening parties are during the reflationary parts of the cycle but, even more importantly, knowing when the time has come to leave the dance floor. In our view, that time has already come.
Allow us to properly explain ourselves. Consider the chart below which plots the trajectory of cumulative asset prices (stocks, bonds, real-estate) against that of aggregate income (GDP):
The chart reveals something rather extraordinary: over the course of the past 25 years, the traditional business cycle has been replaced with an asset price cycle. Rather than let recessions run their painful but necessary course, central bankers move forthwith to dispense the monetary morphine. The Fed’s playbook on this is well worn: first, policy rates are lowered. This triggers a daisy-chain of events: low or zero rates promote a reach for yield; the reach for yield lowers capitalization rates across a variety of asset classes which, in turn, spurs a rise in asset prices. Rising asset prices – the so-called wealth effect – “rescues” the economy by rebuilding balance sheets and restoring the animal spirits. And voila! Aggregate demand rises, businesses invest, and a virtuous growth process is launched.
Well, maybe not so much. If it were all so simple, then why is it that after ninety something months of zero or near zero rates, growth is sputtering, the corporate sector is in an earnings recession, and productivity growth is negative?
The explanation is simple: growth is not a simple function of higher asset prices. Growth results when the productive sectors of the economy make themselves more productive by delivering goods more efficiently or by innovating products valued by the marketplace. In short, the vast partnership of labor and capital that is our economy must constantly up its game so as to expand output and, along with it, incomes. The process by which this happens is essentially Schumpeterian: profitable activities expand and bid resources away from the decaying and inefficient. Say what one wants, this has been the wealth engine for centuries.
The central banker’s model of growth not only ignores these creative/destructive forces – it is antithetical to them. Consider: what does a boom in asset prices actually foster? Higher asset prices literally means that your economy has “more” assets. If you double the value of all homes in the nation, then you have “twice” as much real-estate. But twice the real-estate means there is twice the real-estate to lend against. Effectively, higher asset prices is the Fed’s mechanism for expanding the system-wide pool of loanable collateral. More collateral means that more credit can be created. Of course, in the short-run, more credit creation feels like an economic recovery, which is why monetary expediency has so many cheerleaders.
But buying growth today with credit that needs to be repaid tomorrow is not a free lunch! Artificially “stimulated” credit creation means marginal or even unprofitable enterprises are being fed when they should actually be starved. Further, the low rate induced asset price inflation preferentially directs credit to those who are already asset rich. Those whose assets have inflated now possess more collateral, making them more credit-worthy in the eyes of the lender. This results in all sorts of distortions that serve to further impair efficiency. Fortune 500 companies get to borrow cheap so as to repurchase shares even as small businesses are starved for capital; affluent homeowners get favorable access to loans to build swimming pools while renters suffer impoverishment by the resulting housing price inflation.
Indeed, the longer term consequences of policies that fixate on credit growth lead to a general, system-wide expansion of leverage ratios. Meanwhile, this credit inflation disempowers the market based mechanisms that would otherwise allocate resources to their highest, best uses. The result? Leverage goes up faster than the income available to service it. As such, the credit-fuelled expansion inevitably comes to a bad end. We’ve lived this story before: indeed, while every cycle is distinctly different, they all end up suffering from the same central banker induced maladies. Consider the similarities in terms of where we are today versus where we were in 2007:
It’s back to the future – again. Leverage has returned, most notably in the corporate sector where debt metrics have not just roundtripped but indeed are now in excess of the levels experienced before the Great Recession.
And while the Fed clings to the fiction that it is “data dependent,” its response function – cowering in the face of every market “tantrum” – reveals monetary policy to be what it really is: a put on financial prices. But can the Fed, Canute-like, hold back the future tides of de-leveraging? No, though we expect that they, like their comrades in arms at the ECB and BOJ, will keep trying. Indeed, negative rates can be best understood as merely the latest attempt to forestall the failures of policies past. But, is anyone helped by establishing negative “hurdle” rates to incentivize “investment?” If a commitment of capital requires a negative opportunity cost, then whatever activity that might be launched will assuredly be productivity destroying. Negative rates have all the economic “logic” of destroying the village so as to rebuild it. It is monetary madness and while it might hold back the flood for a time, it fairly well guarantees that when the flood comes, it will be worse than it would otherwise.
Face it: the central banking Emperors have no clothes. But, might the Fed come up with new artifices to prop up the towers of leverage they have built? They might, though it would be folly. Yet, underestimating folly is, I suppose, a folly of its own. The Fed could continue to use its printing press to falsify capital market signals, but to what end? When a central bank buys an asset with an electronically printed dollar, a “something for nothing” trade has taken place. Unless everything we understand about economics is plain wrong, the Fed cannot go on blithely adding printing press dollars to the system and expect no ill effects. Essentially, inflationist monetary policies cannot be the answer to the problems caused by inflationist monetary policy.
And this is precisely our point: when the supposed “solutions” to the Fed’s dilemma are merely new “problems,” you know you are approaching the cycle’s end. Our counsel remains as it has been: avoid those assets that will be broken in the coming de-leveraging while keeping a “steady as she goes” attitude towards the future purchase of those assets that will merely bend when the flood comes.