>>> More takeovers expected in the shipping industry, says Hapag-Lloyd CEO - rep

More takeovers expected in the shipping industry, says Hapag-Lloyd CEO 

More takeovers are expected in the shipping industry, said CEO of German Hapag-Lloyd, Rolf Habben Jansen in an interview in Hamburg, Het Financieele Dagblad reported.

Suspension of payments by South Korean company Hanjin will consolidate the sector, said Habben Jansen. He expects many companies to consider collaboration.

Structural overcapacity and decreasing exports from China have led to several mergers and acquisitions in the world wide sea transportation sector, the report added.

According to the report, Hapag-Lloyd, like its competitors, is considering taking over some of Hanjin's ships. Habben Jansen said Hapag-Lloyd does not want its capacity to grow faster than the market, which it expects will grow 2%-3% this year.

>>> Asian Update

asia Mid-Session Market Update: Australia employment data mixed as AUD/USD tests 6-week lows; New Zealand GDP undershoots consensus

***Economic Data***
- (AU) AUSTRALIA AUG EMPLOYMENT CHANGE: -3.9K (first decline in 6 months) V +15.0KE; UNEMPLOYMENT RATE: 5.6% (3-year low) V 5.7%E
- (AU) AUSTRALIA SEPT CONSUMER INFLATION EXPECTATION: 3.3% V 3.5% PRIOR; 4-month low
- (AU) AUSTRALIA AUG NEW MOTOR VEHICLE SALES M/M: +0.1% v -1.4% PRIOR; Y/Y: 2.9% v 1.3% PRIOR
- (NZ) NEW ZEALAND Q2 GDP Q/Q: 0.9% V 1.1%E; Y/Y: 3.6% V 3.6%E; YTD: 2.8%
- (NZ) NEW ZEALAND AUG BUSINESS MANUFACTURING PMI: 55.1 V 55.5 PRIOR; 5-month low

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -1.2%, S&P/ASX -0.2%, Kospi closed, Shanghai Composite closed, Hang Seng +0.5%, Dec S&P500 -0.1% at 2,111

***Commodities/Fixed Income***
- Dec gold +0.1% at $1,328/oz, Oct crude oil +0.2% at $43.65/brl, Dec copper -0.1% at $2.15/lb
- (JP) Japan investors sold net ¥607B in foreign bonds v sold ¥1.3T in prior week; Foreign investors sold net ¥479B in Japan stocks v bought ¥1.9B in Japan stocks in prior week

***Market Focal Points/FX***
- Asian equity markets are mixed with volatility remaining compressed as China, Taiwan, and Korea indices remained untraded in observance of Mid-Autumn Festival. Rate decisions from SNB and BOE loom large in the upcoming European session, while stateside the focus falls on the upcoming retail sales data on Thursday morning. Outlook for the BOJ next week is also playing into the overall uncertainty, with two separate press reports tipping in favor of more easing - Kyoto forecast another 10bps drop in negative interest rates to -0.2%, while Abe's advisor Hamada suggested there is more room for easing whether through negative rates or expanded asset purchases. US equity futures were down as much as 0.3% but recovered to trade just slightly lower. In FX, USD/JPY tested below ¥102 in spite of building BOJ move expectations, AUD/USD traded down some 40pips from the highs below $0.7550 on mixed employment data in Australia, and NZD/USD fell about 40pips below 0.7260 in the wake of a slight miss in NZ Q2 GDP.

- Australia August employment change was in the red for the first time in 6 months at -3.9K. Although unemployment rate fell further to a 3-year low of 5.6%, participation rate played into that decline with a 15-month low of 64.7% v 64.9%e. Aggregate hours worked were similarly unimpressive at -3.9M v +3.6M prior. AUD/USD fell 30pips to session lows on the release and S&P/ASX200 erased its declines, as the data could give the RBA a bit more leeway to consider another rate cut. In New Zealand, Q2 GDP was a slight miss q/q at 0.9% V 1.1%E, though components were less worrisome - Private consumption rose to 1.9% v 0.4% prior, capital formation rose to 6.0% v 4.2% prior, and exports grew 4% after a 1% drop last quarter. In the corporate space down under, Myer beat on top and bottom line in FY16, even though stock traded lower on plans for store closures.

***Equities***
US equities / ADRs:
- AERI: Reports positive Roclatan (netarsudil/latanoprost ophthalmic solution) 0.02%/0.005% Phase 3 topline efficacy results; +61.0% afterhours
- APOG: Reports Q2 $0.77 v $0.67e, R$278.5M v $271Me (1 est); +8.0% afterhours
- CLC: Reports Q3 $0.73 v $0.70e, R$331M v $340Me; -4.7% afterhours

Notable movers by sector:
- Consumer discretionary: China Southern Airlines Co 1055.HK -0.9% (Aug result); Lawson 2651.JP +5.8% (Mitsubishi confirms talks with Lawson about investment); Myer Holdings MYR.AU -2.7% (FY16 result); Reject Shop TRS.AU +7.5% (Morgan Stanley raised to Overweight)
- Financials: Commonwealth Bank of Australia CBA.AU +1.4% (Macquarie raised to Neutral); Mitsubishi Estate Co 8802.JP -3.4% (Jefferies cuts to Hold)
- Industrials: Nippon Electric Glass 5214.JP +3.3% (forms venture with Dongxu Optoelectronic); Komatsu 6301.JP +0.3% (Citi raised to Buy); BAIC Motor Corp 1958.HK +6.1% (may form China venture with Fiat)
- Technology: Screen Holdings Co 7735.JP -2.6% (UBS cuts to Sell)
- Utilities: Hokkaido Electric Power Co. 9509.JP -6.5% (Goldman cuts to Neutral)

>>> US After Hours Summary: APOG +6.5% following earnings/guidance, AE


After Hours Summary: APOG +6.5% following earnings/guidance, AERI +64% on clinical trial update... SBLK -4.1% following earnings/offering

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: LAKE +9.5% (thinly traded), APOG +6.5%, STB +5.5% (light volume)

Companies trading higher in after hours in reaction to news: AERI +64.1% (reports its 12-month Phase 3 'Mercury 1' clinical trial for Roclatan achieved its primary efficacy endpoint), ACTG +16.1% (favorable judgement against Apple in patent case), ACRX +14.1% (will announce the results of its Phase 3 study of ARX-04 at 9am ET on September 15 during a conference call), DRYS +4.3% (light volume - DryShips agrees w/ Sifnos Shareholders to convert $8.75 mln of its revolver to 3.5 mln preferred shares), PYPL +0.6% (modestly higher on light volume -- initiated with Buy rating at Craig Hallum; tgt $52)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: SBLK -4.1% (also announces a $51.5 mln underwritten public offering of common stock)

Companies trading lower in after hours in reaction to news: UUUU -22.5% (Energy Fuels announces US$10.0 mln bought deal offering of units; unit price of US$1.80 per unit, consists of one common share and one half of one common share purchase warrant), SQNS -10.5% (to offer newly issued American Depositary Shares in an underwritten public offering), MSON -4.6% (ticking lower - files for extension of time for annual report on form 10-K, appoints Joseph Dwyer as interim CFO, reports prelim results for the year ended June 30, 2016), SBLK -4.1% (announces a $51.5 mln underwritten public offering of common stock), LXRX -2.9% (FDA extended PDUFA date 3 months for Telotristat Etiprate for the treatment of carcinoid syndrome to February 28, 2017 from November 30, 2016), SRPT -0.9% (after hours pullback being attributed to Jefferies comments - reiterated Underperform rating and $7 tgt), ELY -0.5% (ticking lower - issues statement following Golfsmith bankruptcy, says expects to be able to collect substantially all of the outstanding accounts receivable balances owed by Golfsmith and Golf Town either through the bankruptcy process or through its trade credit insurance)

>>> US Close Dow-0.18% S&P-0.06% Nasdaq+0.36% Russell-0.06%

Closing Market Summary: Indices End Mixed with Bank of England on Tap

The stock market ended the midweek affair on a mixed note as investors favored a cautious approach ahead of a plethora of economic data and the latest policy statement from the Bank of England. The Nasdaq Composite (+0.4%) ended ahead of both the S&P 500 (-0.1%) and the Dow Jones Industrial Average (-0.2%).

Equity indices gyrated at the start of the session as investors continued to mull a recent resurgence of volatility and a downturn in crude oil futures. The energy component was under pressure as participants responded to a mixed reading of the American Petroleum Institute's weekly inventory report. The API reported that crude oil stockpiles rose by 1.4 million barrels (last: -12.0 million barrels) while gasoline inventories fell by 2.4 million barrels (last: -2.40 million barrels).

The broader market shook early weakness in the opening hour as investors looked to confirm the inventory reading with the Department of Energy's more influential stockpile data. The EIA reported that crude oil inventories declined by 0.55 million barrels (consensus: +3.80 million) after falling 14.51 million barrels in the prior week. Meanwhile, gasoline inventories increased by 0.56 million barrels (consensus: +0.34 million). WTI crude initially spiked on the news, but was unable to maintain position above the $45.00/bbl price level. Crude oil ended its day near its low, sliding 3.0% ($43.58/bbl; -$1.34).

The S&P 500 (-0.1%) moved lower with crude oil, but managed to stay in positive territory amid strength in the top-weighted technology sector (+0.4%). The benchmark index carved out a session low in the final hour of trade as seven sectors finished in the red. The consumer staples (-0.3%), financial (-0.3%), and energy (-1.2%) sectors ended at the bottom of the leaderboard while consumer discretionary (UNCH), utilities (+0.5%) and technology (+0.6%) led.

The influential technology sector (+0.6%) outperformed as Dow component Apple (AAPL 111.83, +3.88) rallied 3.6%. The name displayed relative strength as bullish pre-order data for the iPhone 7 elicited a bid for the second session in a row. The PHLX Semiconductor Index (+0.9%) also outperformed as iPhone suppliers led. Broadcom (AVGO 169.61, +4.37) and Skyworks (SWKS 72.40, +3.04) finished at the top of the index, gaining 2.6% and 4.4%, respectively.

In the health care space (-0.1%), biotechnology outperformed amid recent M&A news. Allergan (AGN 244.81, +4.71) rallied 2.0% after announcing that it would acquire Vitae Pharmaceuticals (VTAE 20.85, +12.75) for $21 per share in cash. Allergan also benefited from a bullish note from Mizuho. Conversely, McKesson (MCK 167.70, -8.14) fell 4.6% after the Department of Justice requested more information regarding the company's contribution and sale agreement with Change Healthcare.

In the financial sector (-0.3%), Wells Fargo (WFC 46.52, -0.44) erased a modest gain after reports indicated that California and New York may investigate the bank for its sales tactics. Separately, Dow component American Express (AXP 63.48, -0.88) finished at the bottom of the price-weighted index. The financial sector has declined 1.0% this week, leading only materials (-0.2%; week-to-date: -1.2%) and energy (-1.2%; week-to-date: -3.1%).

Treasuries ended higher with the short end of the curve demonstrating relative strength. The yield on the 2-yr note fell four basis points to 0.76% while the yield on the 10-yr note declined three basis points to 1.70%.

Today's participation was above the recent average as more than 878 million shares changed hands on the NYSE floor.

Today's economic data was limited to the weekly MBA Mortgage Index and Import/Export Prices for August:

  • The MBA Mortgage Index showed that mortgage applications increased 4.2% in the week ending September 10. This followed a 0.9% gain in the prior week.
  • Lower prices for agricultural and nonagricultural exports led a 0.8% decline in export prices in August while lower fuel prices paced a 0.2% decline in import prices.
    • Excluding agriculture, export prices declined 0.4% after increasing a revised 0.2% (from +0.3%) in July.
    • Excluding fuel, import prices were unchanged after increasing an unrevised 0.3% in July.

Tomorrow's economic data will include weekly initial claims (consensus 263k), Retail Sales for August (consensus -0.1%), PPI for August (consensus +0.1%), the Philadelphia Fed Survey for September (consensus 0.0), the second quarter Current Account Balance (consensus -$122.8 billion), and Empire Manufacturing for September (consensus 0.0) each crossing the wires at 8:30 ET. Separately, Industrial Production consensus -0.3%) and Capacity Utilization (consensus 75.7%) for August will be released at 9:15 ET while Business Inventories for July (consensus +0.1%) will cross the wires at 10:00 ET. 

  • Russell 2000: +6.7% YTD
  • S&P 500: +4.0% YTD
  • Dow Jones: +3.5% YTD
  • Nasdaq: +3.3% YTD

18:03:58 RTRS - BASF SE BASFn.DE SAYS : BASF INTENDS TO ACQUIRE HENKEL'S PROFESSIONAL WESTERN EUROPEAN BUILDING MATERIAL BUSINESS BASFn.DE

>>> MON/BAYN GR Quick First Thoughts

MON/BAYN GR - SYT/ChemChina has 6.6% gross spread but that deal risk was primarily CFIUS which has been received. DD/DOW is more of a merger of equals (followed by three spins) and has been trading as such - no real spread throughout the deal, though DD had pre-deal premium in it due to activists pushing to break up the company. Initial SYT deal spread was low-teens but moved to high-teens in a very short time.

 

MON deal looks like it is already going to be priced in high-teens, partly due to long closing time frame (end of 2017) combined with higher antitrust uncertainty due industry consolidation (and AGU/POT deal, while an ancillary industry, makes the reviews even more complicated). Downside at 16x P/E of 2017E $5.40 EPS is $86.40/share; a 1x multiple increase is $91.80/share.

 

DISCLAIMER This information represents neither an offer to buy or sell any security nor, because it does not take into account the differing needs of individual clients, investment advice. Those seeking investment advice specific to their financial profiles and goals should contact their Oscar Gruss & Son Incorporated sales representative. Oscar Gruss & Son Incorporated believes this information to be reliable, but no representation is made as to accuracy or completeness. This information does not analyze every material fact concerning a company, industry, or security. Oscar Gruss & Son Incorporated assumes that this information will be read in conjunction with other publicly available data. Matters discussed here are subject to change without notice. There can be no assurance that reliance on the information contained here will produce profitable results. A security denominated in a foreign currency is subject to fluctuations in currency exchange rates, which may have an adverse effect on the value of the security upon the conversion into local currency of dividends, interest, or sales proceeds. The value of securities and depositary receipts of foreign issuers that are denominated in United States dollars are also influenced by fluctuations in currency exchange rates. © 2016 Oscar Gruss & Son Incorporated. All rights reserved.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • RLGT -4%, CBRL -1.7%
Other news:
  • LFVN -23.9% (to delay the release of its Q4 and FY16 financial results following an internal review by Company personnel of its policies and procedures)
  • AGIO -5.2% (is offering to sell up to $150 mln of its common stock in an underwritten public offering )
  • OAS -4.1% ( announces offering of $250 mln of senior convertible notes due 2023; commenced tender offers to purchase 7.250% senior notes due 2019, 6.500% senior notes due 2021, 6.875% senior notes due 2022, & 6.875% senior notes due 2023 for aggregate cash consideration of up to $275.0 mln)
  • CALD -2.9% (announces an underwritten public offering of 4 mln shares of common stock)
  • F -1.9% (hosting Investor Day)
  • MTU -1.0% (Financials weak in Japan overnight)
Analyst comments:
  • COH -2.3% (downgraded to Underweight from Equal-Weight at Morgan Stanley)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: HOME +8%

M&A news:
  • VTAE +157.8% (to be acquired by Allergan (AGN) for $21.00/share in cash, or approximately $639 mln)
  • COMM +3.7% (sells fiber access products, technologies, and service relationships to Adtran (ADTN))
  • GLUU +3.5% (acquires Poke Radar for $500k in cash)
Select metals/mining stocks trading higher:
  • GFI +2.9%, HMY +2.8%, BBL +2.4%, GOLD +2.1%, BHP +2%, VALE +2%, AU +1.9%, MT +1.4%, AUY +1.4%, X+1.3%, GDX +1.1%, ABX +0.9%
Other news:
  • SRPT +13.3% (higher in extended trade on chatter that Dr. Ronald Farkas is no longer with the FDA)
  • AST +10.3% (presents positive interim efficacy data from the 10 mln cell cohort in the Company's ongoing AST-OPC1 SCiSTAR Phase 1/2a multicenter clinical study)
  • PTX +6.7% (announces the USPTO has issued patents related to dosing patients with Zohydro ER with BeadTek)
  • PLUG +6.6% (announces that Mitsubishi Nichiyu Forklift is displaying one of the company's GenDrive fuel cell systems in its industrial trucks at Logis Tech Tokyo)
  • HTBX +6.4% (resumes enrollment in its Phase 1b trial evaluating HS-110 in combination with nivolumab)
  • ARRY +5.7% (announces Phase 3 Beacon CRC SPA agreement with FDA)
  • EXEL +4.4% (receives EU approval for CABOMETYX tablets; triggers $60 million milestone payment)
  • AVGR +4.2% (light volume - receives FSS Contract Award from the U.S. Department of Veterans Affairs)
  • HLF +3.3% (following Icahn comments at CNBC Delivering Alpha)
  • BLDP +2.6% (in sympathy with PLUG)
  • EQR +2.2% (declares a special cash dividend of $3/share)
  • SGMS +1.9% (ticking higher, wins lottery technology contract in Germany)
Analyst comments:
  • SSL +5.2% (upgraded to Buy from Neutral at Citigroup)
  • CYH +4.5% (upgraded to Positive from Neutral at Susquehanna)
  • EGO +4.4% (upgraded to Buy from Underperform at BofA/Merrill)
  • M +2.1% (upgraded to Buy from Neutral at Citigroup)
  • FFIV +1.6% (upgraded to Outperform from Perform at Oppenheimer)
  • LVS +1.3% (upgraded to Buy from Hold at Argus)