>>> What to look at today - 13th of September 2016

Dow+1.32% S&P+1.47% Nasdaq+1.68% Russell+1.37%
US MArket closed sharply higher after Friday correction. Interest rates remained in focus at the start of the session as participants mulled over a continued downturn in global bond markets. Recall that last week the European Central Bank disappointed investors by voting to leave its monetary policy stance unchanged. Furthermore, ECB President Mario Draghi indicated that the Governing Council did not discuss expanding the asset purchase program at the central bank's latest meeting. Equity indices shook weakness in the opening hour of trade as Atlanta Fed President (non-FOMC voter) Dennis Lockhart and Minneapolis Fed President (non-FOMC voter) Neel Kashkari struck divergent tones on the future path of interest rate normalization. Mr. Lockhart signaled that recent data seriously warrants the discussion of raising rates. However, Mr. Kashkari stated that there's no urgency in raising rates at this time. implied probability of a rate hike at the September meeting fell to 15.0% from 24.0% in the prior session. All ten sectors ended in the green with technology (+1.7%), utilities (+1.7%), consumer staples (+1.9%), and telecom services (+2.0%) leading the pack. On the flipside, the commodity-sensitive energy (+0.9%) and materials (+1.0%) sectors finished at the bottom of the leaderboard. Volume were above average at 992mil shares. US After Hours UNFI +1% following earnings, KTOS +6% on contract news... WTW -4% on CEO news and despite confidence in growth, APC -3% following Gulf of Mexico asset acquisition news. Asian equity markets are marginally higher, tracking a bounce-back rally on Wall St after a fairly cautious set of comments from Fed's Brainard balanced some of the more hawkish remarks from Rosengren and Kaplan last week. Key August economic data in China were fairly constructive. Industrial output growth of 6.3% stood out the most as it accelerated to a 5-month high. After a record magnitude 5.8 earthquake in South Korea earlier today, Samsung, LG Electronics, and Hyundai Motor temporarily halted some production facilities. South Korea Finance Ministry has also announced it is closed monitoring the impact of the quake, while adding the nuclear test by the North has not played a big part in financial markets. President Park has called for more measures to effectively deal with threats from Pyongyang.

Nikkei +0.41% Hang Seng +0.92% CSI -0.26% Shanghai -0.19%

Eur$ 1.1230 CNH 6.6906 CNY 6.6797 JPY 101.87 GBP 1.3323 CHF 0.9721 RUB 64.6346 WTI$45.92 (-0.80%)

S&P -0.38% EuroStoxx +0.86% Dax +0.83% SMI +0.68%

Macro :
-Germany Considers Venture Capital Tax Law Change: Handelsblatt
- Fed’s Brainard Urges ‘Prudence’ in Removal of Accommodation
- EU May Allow Regional Telecom Cartels: Handelsblatt

Keep an eye on :
- ABBN VX : Cevian’s Gardell Wants to Spin Off ABB’s Power Grids Unit: SVD
- ABN NA : ABN Amro CEO Zalm to Step Down in 2017
- AIR FP : Boeing Predicts China Demand for 6,810 New Planes in Next 20 Yrs
- AI FP : Air Liquide Seeks EU3.3b in Rights Offer for Airgas Purchase
- AZ IM : Alitalia Seeking 30% Cut in Labor Costs: Repubblica
- APD US : Air Products Block Trade: 3.5m Shrs at $149.25
- ATO FP : Atos to Buy Anthelio Healthcare Solutions From Actis
- BARC LN : Diamond Said to Still Be Interested in Barclays Africa Bid: FT
- BMPS IM : New Paschi CEO To Be Appointed on Wednesday, Padoan Says
- FCX US : Anadarko Buys $2b in Freeport-McMoRan Gulf Assets
- GAS SM : Repsol, Caixa Each Sell 10% Stake in Gas Natural to Gip
- ITP FP : Interparfums Names Ferrant Artistic Director of Rochas Homme
- ISIL US : Renesas to Buy Intersil for $22.5/Share
- RAND NA : Monster Worldwide Board Recommends Accepting Randstad Offer
- RBS LN : RBS Facing Cyclical Headwinds in Core Business, Barclays Says
- SAB LN : ISS Recommends SABMiller Holders Vote for AB InBev Deal
- SAN SM : Santander Said to Buy Citi’s Argentina Retail Business: Nacion
- VOW3 GY : VW’s HR Head Wants to Avoid Layoffs in Restructure: Handelsblatt

>>> Europe : Brokers Upgrades & Downgrades - 13th of September 2016

>>> Up
*CAIRN ENERGY RAISED TO OUTPERFORM VS NEUTRAL AT MACQUARIE
*LUXOTTICA RAISED TO BUY VS HOLD AT DEUTSCHE BANK
*PERNOD RAISED TO BUY VS HOLD AT JEFFERIES
*USG CORP. RAISED TO OUTPERFORM AT RBC CAPITAL

>>> Down
*AB FOODS CUT TO UNDERPERFORM AT JEFFERIES
*BUZZI UNICEM CUT TO NEUTRAL VS OUTPERFORM AT MEDIOBANCA
*HSBC CUT TO NEUTRAL VS BUY AT CITI, PT HK$62
*KONE OYJ CUT TO UNDERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*KRONES CUT TO NEUTRAL VS BUY AT UBS
*LINDE CUT TO SELL VS NEUTRAL AT CITI
*SECHE ENVIRONNEMENT CUT TO HOLD VS BUY AT KEPLER CHEUVREUX
*SYMRISE CUT TO REDUCE VS HOLD AT KEPLER CHEUVREUX


>>> Initiation
*AB INBEV RATED NEW BUY AT JEFFERIES; PT EU130
*BERRY PLASTICS GROUP INC RATED NEW OVERWEIGHT AT JPMORGAN
*BRITVIC RATED NEW HOLD AT JEFFERIES; PT 650P
*CAMPARI RATED NEW HOLD AT JEFFERIES; PT EU10
*CARLSBERG RATED NEW HOLD AT JEFFERIES; PT DKK600
*COCA-COLA HELLENIC RATED NEW BUY AT JEFFERIES; PT 2,000P
*GB GROUP RATED NEW BUY AT CITI; PT 400P
*GRANDVISION RATED NEW BUY AT DEUTSCHE BANK; PT EU30.5
*HEINEKEN RATED NEW HOLD AT JEFFERIES; PT EU80
*NCC GROUP RATED NEW NEUTRAL AT CITI; PT 335P
*PURPLEBRICKS GROUP RATED NEW BUY AT CITI; PT 200P
*REMY COINTREAU RATED NEW HOLD AT JEFFERIES; PT EU80
*UNIPER RATED NEW HOLD AT HSBC, PT EU11
*UNIPER SE RATED NEW OVERWEIGHT AT JPMORGAN

>>> Call
>> Index
*EURO STOXX 50 END-2016 TARGET RAISED TO 3,200 AT BARCLAYS
*STOXX 600 END-2016 TARGET RAISED TO 360 VS 340 AT BARCLAYS

>>> Asian Update

Asia Mid-Session Market Update: Improving economic data and upbeat remarks suggest neutral central bank stance in China and Australia


***Economic Data***
- (CN) CHINA AUG FIXED URBAN ASSETS YTD Y/Y: 8.1% V 7.9%E
- (CN) CHINA AUG INDUSTRIAL PRODUCTION Y/Y: 6.3% (5-month high) V 6.2%E; YTD Y/Y: 6.0% V 6.0%E
- (CN) CHINA AUG RETAIL SALES Y/Y: 10.6% V 10.2%E; YTD Y/Y: 10.3% V 10.3%E
- (CN) China Aug Fiscal Balance (CNY) -429.3B v +200.2B prior
- (JP) BSI LARGE ALL INDUSTRY Q/Q: +1.9 V -7.9 PRIOR; LARGE MANUFACTURING Q/Q: +2.9 V -11.1 PRIOR
- (AU) AUSTRALIA AUG NAB BUSINESS CONFIDENCE: 6 V 4 PRIOR; CONDITIONS: 7 V 9 PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 118.1 v 114.3 prior
- (KR) SOUTH KOREA AUG UNEMPLOYMENT RATE: 3.8% V 3.6%E; 387K jobs created v 298K m/m
- (NZ) New Zealand AUG Food Prices M/M: 1.3% v -0.2% prior
- (KR) SOUTH KOREA AUG IMPORT PRICE INDEX M/M: -1.9% V -2.8% PRIOR; Y/Y: -8.5% V -7.1% PRIOR; Export Price Index M/M: -1.9% v -2.1% prior; Y/Y: -9.7% v -7.4% prior

***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +0.1%, S&P/ASX +0.1%, Kospi +0.6%, Shanghai Composite -0.2%, Hang Seng +0.8%, Dec S&P500 -0.3% at 2,146

***Commodities/Fixed Income***
- Dec gold +0.6% at $1,334/oz, Oct crude oil -0.9% at $45.88/brl, Dec copper -0.4% at $2.10/lb
- SLV: iShares Silver Trust ETF daily holdings fall to 11,231 tonnes from 11,281 tonnes prior
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.6726 V 6.6908 PRIOR
- (CN) PBOC to inject CNY70B in 7-day reverse repos, CNY30B in 14-day reverse repos and CNY60B in 28-day reverse repos (1st time to conduct 28-day reverse repos since Feb)
- JGB: (JP) Japan's MoF sells ¥1.0T in 0.5% (0.2% prior) 20-year JGBs; Avg yield: 0.437% v 0.286% prior; bid-to-cover: 3.33x (lowest since March) v 3.87x prior
- (AU) Australia MoF (AOFM) sells A$150M in 3.0% 2025 indexed bonds; avg yield 0.4106%; bid-to-cover 2.33x

***Market Focal Points/FX***
- Asian equity markets are marginally higher, tracking a bounce-back rally on Wall St after a fairly cautious set of comments from Fed's Brainard balanced some of the more hawkish remarks from Rosengren and Kaplan last week. As the "bookend" Fed speaker entering the quiet period before next week's FOMC decision, Brainard seemingly achieved a halt of momentum for building expectations of an impending rate hike, and fixed income probability of a 25bps move now stands at just 15% vs 24% prior. USD has been under some pressure as a result as well, particularly against the Yen, with USD/JPY falling as much as 50pips below 101.50. AUD/USD and NZD/USD traded in about a 25pip range in Asia below 0.7570 and 0.7370 respectively.

- Key August economic data in China were fairly constructive. Industrial output growth of 6.3% stood out the most as it accelerated to a 5-month high. Power generation component also preserved its momentum, rising 7.8% v 7.2% prior. Retail Sales also topped consensus at 10.6% V 10.2%E, while fixed asset investment showed healthy growth in property investment (+5.4% y/y), construction (+12.2% y/y), and sales value (+38.7% y/y). China Stats Bureau spokesperson did note that while August saw some positive changes in the economy, downward pressure remains large. NBS official added that jobless rate stabilized, housing inventory reduction is running its course, and there is reason for optimism on both external and internal demand. China state researcher Zhu was less optimistic ahead of the data, warning that GDP could slow below 6% in 2018, while recommending that Beijing sets a GDP target 5.5-7.5%.

- In Australia, RBA Assistant Gov Kent said there's a good chance that growth in wages and the rate of inflation will gradually rise in coming months, and that AUD has fallen as much as expected in recent years. Kent added the post-mining boom transition has taken place faster and healthier than expected, and that the worst of a slump in mining investment was over given recent improvement in materials prices. Goldman Sachs' take on the speech was that it signals a neutral RBA policy stance, with no hint of further easing in the pipeline. Australia's upcoming employment and quarterly CPI data will help determine whether expectations of a hold can be sustained.

- After a record magnitude 5.8 earthquake in South Korea earlier today, Samsung, LG Electronics, and Hyundai Motor temporarily halted some production facilities. South Korea Finance Ministry has also announced it is closed monitoring the impact of the quake, while adding the nuclear test by the North has not played a big part in financial markets. President Park has called for more measures to effectively deal with threats from Pyongyang.

***Equities***
US equities / ADRs:
- ISIL: Renesas to acquire Intersil for $22.50/shr or $3.22B cash; +7.3% afterhours
- KTOS: Awarded $54M contract to provide Marine Common Aircrew Trainers (MCAT); +5.9% afterhours
- SANM: Announces $150M stock buyback program (8% of market cap); +3.5% afterhours
- FCX: Anadarko announces $2B acquisition of Freeport McMoRan assets; raises FY16 capex $2.8-3B (prior $2.6-2.8B); FCX -0.4%, APC -2.9% afterhours
- WTW: CEO resigns, effective Sept 30th; -2.6% afterhours

Notable movers by sector:
- Consumer discretionary: Le Saunda Holdings 738.HK +1.9% (Q2 result); FAW Car Co 000800.CN +2.1% (restructuring)
- Financials: China Resources Land 1109.HK -0.5%, China Overseas Land 688.HK -0.2% (Aug result); Woori Bank 000030.KR -2.2% (POSCO not to bid for stake)
- Technology: Mabuchi Motors 6592.JP +2.6% (SMBC raised to outperform); Samsung Electronics 005930.KR +5.4% (HP printer business deal)
- Materials: Evolution Mining EVN.AU +2.9% (affirms guidance); Fortescue Metals Group FMG.AU +2.8% (repayment of loans)
- Energy: China Shenhua Energy Co 1088.HK +1.1% (Aug result); Origin Energy ORG.AU -2.0% (bidders for windfarm development); Santos STO.AU -1.5% (job cut)
- Healthcare: Santen Pharmaceutical Co 4536.JP +4.5% (to buy back shares)

>>> US After Hours Summary: UNFI +1% following earnings, KTOS +6% on c


After Hours Summary: UNFI +1% following earnings, KTOS +6% on contract news... WTW -4% on CEO news and despite confidence in growth, APC -3% following Gulf of Mexico asset acquisition news

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: UNFI +1%

Companies trading higher in after hours in reaction to news: ACTS +7.5% (thinly traded; Action Semi enters into definitive merger agreement for going private transaction at $2.20/share in cash), KTOS +5.9% (awarded $54 mln contract to provide five Marine Common Aircrew Trainers to the United States Marine Corps), SANM +1.4% (announces $150 million stock repurchase program)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: AGTC -5.2% (initially traded higher but has since relinquished gains and is lower in after hours trade), FARM -1.8% (light volume - also to acquire substantially all the assets of China Mist Brands for an upfront payment of $10.8 mln)

Companies trading lower in after hours in reaction to news: FATE -7.8% (files for 5,250,000 share common stock offering by the selling stockholders), MCFT -4.9% (commences a 4 mln share follow-on offering of common stock held by an affiliate of Wayzata Investment Partners, WTW -4% (Weight Watchers CEO James Chambers resigns; commences search for a new CEO; CFO and two Directors to comprise interim Office; sees membership growth in Q3, confident in top and bottom line growth for the year), BUFF -3.2% (files for 14.3 mln share common stock offering by selling shareholders), APC -2.7% (to acquire the deepwater Gulf of Mexico assets of Freeport McMoRan Oil & Gas for $2.0 billion; expected to increase its 2016 FY capital guidance to a range of $2.8-3.0 bln; announces public offering of 35,250,000 shares of common stock), FCX -0.5% (confirms that its oil and gas subsidiary will sell its Deepwater Gulf of Mexico properties for $2 bln and up to $150 mln in contingent payments to Anadarko Petroleum),

>>> US Close Dow+1.32% S&P+1.47% Nasdaq+1.68% Russell+1.37%

Closing Market Summary: Stocks Rebound Following Dovish Fed Remarks

The stock market began the week on a sharply higher note as market participants dialed back rate hike expectations for the coming months. The major averages finished broadly higher, retracing the lion's share of Friday's losses. The Nasdaq Composite (+1.7%) settled slightly ahead of the S&P 500 (+1.5%) and the Dow Jones Industrial Average (+1.3%).

Interest rates remained in focus at the start of the session as participants mulled over a continued downturn in global bond markets. Early weakness was attributed to persistent uncertainty regarding the future path of global monetary policy. Recall that last week the European Central Bank disappointed investors by voting to leave its monetary policy stance unchanged. Furthermore, ECB President Mario Draghi indicated that the Governing Council did not discuss expanding the asset purchase program at the central bank's latest meeting.

Equity indices shook weakness in the opening hour of trade as Atlanta Fed President (non-FOMC voter) Dennis Lockhart and Minneapolis Fed President (non-FOMC voter) Neel Kashkari struck divergent tones on the future path of interest rate normalization. Mr. Lockhart signaled that recent data seriously warrants the discussion of raising rates. However, Mr. Kashkari stated that there's no urgency in raising rates at this time.

The major averages notched fresh session highs shortly after Fed Governor Lael Brainard reaffirmed her dovish stance. Governor Brainard stated that the case for preemptive tightening is less compelling given persistently low inflation and continued slack in the labor market. Ms. Brainard continues to advocate a cautious approach given the limited nature of the Fed's policy toolkit. In response, the implied probability of a rate hike at the September meeting fell to 15.0% from 24.0% in the prior session.

The benchmark index settled near its best level of the day, testing resistance near the 2160 price level. All ten sectors ended in the green with technology (+1.7%), utilities (+1.7%), consumer staples (+1.9%), and telecom services (+2.0%) leading the pack. On the flipside, the commodity-sensitive energy (+0.9%) and materials (+1.0%) sectors finished at the bottom of the leaderboard. 

The defensively-oriented consumer staples sector (+1.9%) outperformed as the group recovered from last Friday's 2.1% decline. In the group, Dow component Wal-Mart (WMT 71.94, +1.64) demonstrated relative strength after being upgraded to "Outperform" from "Market Perform" at Cowen. Meanwhile, Philip Morris International (PM 100.64, +3.10) ended higher by 3.2% after Goldman added the stock to its conviction buy list. The broader sector trimmed its month-to-date loss to 1.4%.

In the technology sector (+1.7%), HP (HPQ 14.49, +0.54) gained 3.9% after announcing that it will acquire Samsung's (SSNLF 1250.00, 0.00) printer business for approximately $1.05 billion. Meanwhile, Apple (AAPL 105.44, +2.31) gained 2.2%, recovering from last week's 4.3% decline. The stock was under pressure after unveiling its iPhone 7 device last Thursday. The PHLX Semiconductor Index finished higher by 2.0%, narrowing its month-to-date loss to 2.2%.

Biotechnology outperformed in the health care space (+1.6%), evidenced by the 3.0% gain in the iShares Nasdaq Biotechnology ETF (IBB 287.11, +8.48). In the ETF, Mylan Labs (MYL 41.33, +1.44) rebounded 3.6%. The sub-group also benefited from reports that activist investor Starboard has taken a 4.6% stake in Perrigo (PRGO 95.23, +6.52).

The financial sector (+1.2%) ended behind the broader market as investors trimmed rate hike expectations and as Treasury yields pulled back. In the group, Wells Fargo (WFC 48.54, -0.18) underperformed as the stock continues to see weakness from last Thursday's settlement with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the Office of the LA City Attorney.

Treasuries ended modestly higher, recovering from relative weakness at the start of the session. The yield on the 2-yr note fell two basis points to 0.77% while the yield on the 10-yr note ticked down to 1.67% (-1 bps).

Today's participation was above the recent average as more than 992 million shares changed hands on the NYSE floor.

There was no economic data of note released today.

Tomorrow's economic data will be limited to the Treasury Budget for August, which will be released at 14:00 ET. 

  • Russell 2000: +8.6% YTD
  • S&P 500: +5.6% YTD
  • Dow Jones: +5.2% YTD
  • Nasdaq: +4.1 % YTD