>>> Europe : Brokers Upgrades & Downgrades - 4th of August 2016

>>> Up
*APERAM RAISED TO OUTPERFORM AT RBC CAPITAL
*BANK PEKAO RAISED TO HOLD VS SELL AT SOCGEN
*BAYTEX ENERGY RAISED TO OUTPERFORM AT FIRSTENERGY CAPITAL
*EDF RAISED TO HOLD VS UNDERPERFORM AT JEFFERIES
*ENDESA RAISED TO SECTOR PERFORM AT RBC CAPITAL
*ETTEPLAN RAISED TO BUY AT NORDEA
*FERREXPO RAISED TO NEUTRAL VS UNDERPERFORM AT CREDIT SUISSE
*HSBC RAISED TO BUY VS UNDERPERFORM AT BOFAML, PT 570 PENCE
*SAFILO RAISED TO HOLD AT KEPLER CHEUVREUX
*TOTAL RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS

>>> Down
*ACRON CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*CHATHAM LODGING TRUST CUT TO EQUALWEIGHT AT BARCLAYS
*CVR REFINING CUT TO UNDERWEIGHT AT BARCLAYS
*DEUTSCHE POST CUT TO ACCUMULATE VS BUY AT EQUINET
*DIRECT LINE GROUP CUT TO HOLD VS BUY AT BERENBERG
*HIKMA CUT TO NEUTRAL VS BUY AT CITI
*KOMERCNI BANKA CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
*URALKALI CUT TO UNDERPERFORM AT CREDIT SUISSE

>>> PT Change


>>> Initiation


>>> Call

>>> Asian Update

Asian Mid-session Market Update: BOJ's Iwata still sees inflation trends on track to reach objective; Aussie retail sales miss estimates; BOE decision on tap

***Economic Data***
- (AU) AUSTRALIA JUNE RETAIL SALES M/M: 0.1% V 0.3%E; Q2 CORE Q/Q: 0.4% V 0.5%E

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.3%, S&P/ASX +0.4%, Kospi +0.2%, Shanghai Composite -0.2%, Hang Seng +0.6%, Sep S&P500 flat at 2,158

***Commodities/Fixed Income***
- Dec gold -0.4% at $1,358/oz, Sep crude oil +0.8% at $41.16/brl, Sep copper -0.3% at $2.19/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 0.3 tonnes to 969.7 tonnes
- (CN) NDRC to cut fuel prices in current cycle; to cut both gasoline and diesel
- JGB: Japan Ministry of Finance (MOF) sells ¥400B in 0.1% CPI-linked 10-yr JGB auction, bid-to-cover ratio 2.85x
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6444 V 6.6195 PRIOR
- (CN) PBOC to inject CNY50B in 7-day reverse repos
- (CN) China NDRC: China to further increase income to boost consumption - Chinese press
- (JP) Japan investors bought net ¥312B in foreign bonds v bought ¥679B in prior week; Foreign investors sold net ¥95.5B in Japan stocks v sold ¥272B in Japan stocks in prior week

***Market Focal Points/FX***
- Asian equity markets are mostly positive with the exception of mainland China where prescient concerns over extreme financial system leverage are keeping investors at bay. With economic data limited to some soft Aussie retail numbers, macro sentiment is in a holding pattern as traders await the high-profile post-Brexit BOE decision in today's European session and post June-gloom NFP report out of the US on Friday. Findings from today's ADP report as well as Conference Board online ads would imply a more healthy US jobs outlook, and the greenback slide has indeed been halted. Among key FX majors, USD/JPY traded in a 40pip range around 101.10, EUR/USD in a 20pip range around 1.1150, AUD/USD in a 30pip range around 0.76 despite a brief downtick on Retail Sales, and NZD/USD in a 40pip range above 0.7150.

- Among notable Chinese press reports, banking regulator CBRC was said to request that banks work with high-debt companies by rolling over their loans or offering new credit after payment of principal. CBRC officials were reportedly looking to more actively help companies solve their debt issues, maintaining that top banks should not stop credit flow. Likewise in the overheating China property market, CASS researcher called for more proactive tax and credit policy to manage the expanding property bubble rather than relying on administrative measures such as home purchasing restrictions.

- USD/JPY hit its lowest levels of the session below ¥101 after comments from Dep Gov Iwata echoed the BOJ's latest "glass-half-full" outlook. Specifically, Iwata forecast fiscal stimulus to play a big role in reviving economic growth. On the monetary front, Iwata remained confident that QQE is contributing to progress on inflation which has been stalled by Yen gains and lacking improvement in expectations. He added that CPI will start to rise because of the strong labor market and low unemployment, reaching the 2% BOJ target within the FY17 timeframe, but also noted there is still significant uncertainty related to that forecast.

***Equities***
US equities / ADRs:
- SQ: Reports Q2 -$0.08 v -$0.11e, R$439M v $407Me; +15.3% afterhours
- JACK: Reports Q3 $1.07 v $0.87e, R$368.9M v $367Me; +7.7% afterhours
- HLF: Reports Q2 $1.29 v $1.17e, R$1.20B v $1.19Be (1 est); +1.7% afterhours
- ALL: Reports Q2 $0.62 v $0.53e, R$9.16B v $8.10Be; -0.3% afterhours
- MRO: Reports Q2 -$0.23 v -$0.24e, R$1.3B v $1.19Be; -0.4% afterhours
- TSLA: Reports Q2 -$1.06 v -$0.56e, Rev Non-GAAP $1.56B v $1.52Be; -0.8% afterhours
- CP: Announces Pershing Square to sell its remaining 9.8M shares (6.4% stake); Pershing to use proceeds for one or more new investments; -2.2% afterhours
- PRU Reports Q2 $1.84 adj v $2.49e, R$11.2B v $11.5Be; authorizes $500M increase to share repurchases (1.5% of market cap); -2.3% afterhours
- CTL: Reports Q2 $0.63 v $0.59e, R$4.40B v $4.40Be; -2.7% afterhours
- MET: Reports Q2 $0.83 v $1.36e, R$17.0B v $17.1Be; -4.3% afterhours
- FOXA: Reports Q4 $0.45 v $0.37e, R$6.65B v $6.66Be; Raises semiannual dividend by 20% to $0.18 from $0.15 (indicated yield 1.33%); -4.3% afterhours
- CF: Reports Q2 $0.33 v $0.68e, R$1.13B v $1.09Be; -4.6% afterhours

Notable movers by sector:
- Consumer discretionary: Kangwon Land Inc 035250.KR +2.1% (new casino law unlikely to pass, suspends issuance); Olympus Corp 7733.JP -5.6% (Q1 result)
- Financials: China Vanke Co 2202.HK -1.1% (July result); Evergrande Real Estate Group 3333.HK +5.1% (July result); Mitsui & Co 8031.JP +4.3% (Q1 result)
- Industrials: Geely Automobile Holdings 175.HK +3.5% (July result); Suzuki Motor Corp 7269.JP +5.8% (Q1 result); Downer EDI DOW.AU +8.6% (FY16 result)
- Technology: Car Inc 699.HK -0.7% (momentum for Uber-Didi merge)
- Materials: Xingye Copper International Group 505.HK +7.7% (profit alert); Metals X MLX.AU +7.9% (to demerger unit); Rio Tinto RIO.AU flat (H1 result); St Barbara SBM.AU -1.9%; Saracen Mineral SAR.AU -2.9% (gold falls )
- Energy: Beach Energy BPT.AU +4.8%; Santos STO.AU +5.8% (oil rises)

>>> After Hours Summary: SQ +15%, HLF +1.8%, RIG +1.4%, AGO +1.2% h


After Hours Summary: SQ +15%, HLF +1.8%, RIG +1.4%, AGO +1.2% higher following earnings/guidance... TDOC -25.2%, HOS -7.9%, TRIP -7.3%, CF -4.8% on earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SQ +14.8%, XPO +10.6%, AXGN +10%, PODD +8.6%, NSTG +8.3%, EPE +8%, JACK +7.7%, AVID +7.6%, GDDY +7.4% (also names new CFO), EXEL +7%, ERII +6.1%, SNCR +5.9%, MX +5.9%, ALIM +5%, FIVN +4.5%, CSII +3.9%, NLST +3.3%, SAND +3.1%, HIVE +3%, SXL +2.8%, TROX +2.6%, EVC +2.4%, CNAT +2.1%, LPI +1.9%, HLF +1.8%, RIG +1.4%, AGO +1.2%, OAS +1.2%, ETE +1%

Companies trading higher in after hours in reaction to news: OCUL +23.8% (updates on its NDA for DEXTENZA; FDA issued a letter noting that corrective actions detailed in its responses as a whole appear to address the ten inspectional observations raised), WMB +0.3% (Corvex Management discloses 4.1% active stake (Distributed ~10.8 mln shares to an investor in a co-investment Corvex Fund that holds only Shares of WMB), calls shares undervalued)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: TDOC -25.2%, SGMO -18.6%, TEGP -14.7%, FRSH -14.3%, BBRG -13.9%, INOV -13.9%, BSQR -13.3%, QUIK -11%, NSYS -9.7%, HOS -7.9%, TRIP -7.3%, UHAL -7.1%, FRGI -6.7%, SYNC -5.9%, GI -4.8%, (also files for $100 mln mixed securities shelf offering and 6,060,444 shares common stock offering by selling stockholders; announces recent FDA clearance and US launch of Lumos with Adaptive Matrix Imaging), CF -4.8%, PMT -4.7%, IRG -4.3%, MET -4.1%, LGCY -4%, XOMA -3.9%, GPOR -3.2%, CBPX -3.2%, (also expands share repurchase program to $100 mln from $50 mln), LNC -3%, DYN -3%, ALB -3%, MED -2.9%, ADRO -2.6%, PRU -2.5%, (also authorized a $500 mln increase to the existing share repurchase authorization for calendar year 2016), G -2.1%, EVHC -1.9%, BLUE -1.8%, TS -1.8%, CTL -1.7%, ANDE -1.3%, NLY -1%,

Companies trading lower in after hours in reaction to news: PQ -9.5% (in 10-Q adds a potential bankruptcy filing to list of risk factors - Was not part of 10-Q filed in May), ADAP -4.3% (received notice from the FDA that a partial clinical hold has been placed on its planned pivotal study of NY-ESO SPEAR T-cell therapy in myxoid round cell liposarcoma ), RYAM -4% (announces public offering of 1,250,000 shares of the Company's Series A Mandatory Convertible Preferred Stock ), TOPS -3.1% (enters into a senior secured facility with a major northern European bank for the financing of the M/T Nord Valiant), CP -2.2% (Canadian Pacific confirms the commencement of a public offering of 9,840,890 of common shares by certain funds managed by Pershing Square ), EXPE -0.5% (following TRIP earnings), VIPS -0.4% (Sequoia Capital lowers active stake to 4.6%)

>>> US Close Dow +0.23% S&P +0.31% Nasdaq +0.43% Russell +0.86%


Closing Market Summary: Stocks Tick Higher, Boosted by Oil Rebound

The stock market ended the midweek affair on a flat note as investors looked ahead to tomorrow's policy statement from the Bank of England and significant data due out later in the week. The S&P 500 (+0.3%) snapped a two-day losing streak, benefiting from a rebound in crude oil and key sector leadership from the heavily-weighted technology (+0.4%), industrial (+0.4%), and financial (+1.0%) sectors. The Nasdaq Composite (+0.4%) finished slightly ahead of the benchmark index (+0.3%) and the Dow Jones Industrial Average (+0.2%).

Equity indices gyrated at the start of the session as investors responded to a negative bias in global markets. Japan's Nikkei (-1.9%) underperformed for a second session as investors continued to dissect the country's latest stimulus package. Investor apprehension was related to the lack of labor market reforms and limited productivity improvements contained in the new policy measures. Separately, the U.K.'s July Services PMI (47.4; previous 52.3) sparked further growth concerns ahead of tomorrow morning's policy decision from the Bank of England. The central bank is widely expected to offer further easing after holding in July.

The major averages shook off opening weakness as investors poured over the Energy Information Administration's latest stockpile data. The Department of Energy reported that crude oil inventories rose by 1.41 million barrels (estimated: -1.36 million barrels), but that gasoline inventories fell by 3.26 million barrels (estimated: -0.20 million barrels). In response, WTI crude ticked off the $40.00/bbl price level, finishing its day higher by 3.4% ($40.82/bbl; +$1.33).

The S&P 500 (+0.3%) endured a sleepy session, maintaining a meager 11-point trading range. The index finished at its best level of the day as six sectors ended above their flat lines. In front of the pack, the commodity-sensitive energy (+1.8%) sector led financials (+1.0%), industrials (+0.4%), and technology (+0.4%). Conversely, countercyclical utilities (-0.6%), consumer staples (-0.5%), and health care (-0.2%) rounded out the leaderboard.

The financial sector (+1.0%) finished ahead of the broader market as positive quarterly results from Credit Agricole and ING (ING 11.43, +0.87) helped facilitate a rebound among European banking names. On the home front, American International Group (AIG 58.10, +3.96) boosted insurance names after the company beat top- and bottom-line estimates for the quarter and announced an additional $3 billion in share repurchases. Prudential (PRU 76.15, +2.18) and MetLife (MET 43.70, +1.49) gained a respective 3.0% and 3.5% ahead of this evening's quarterly earnings results.

The Dow Jones Transportation Average (+0.8%) outperformed as Avis Budget (CAR 36.89, +2.13) rebounded. The stock jumped 6.1% after posting better-than-expected guidance and mixed quarterly results. Separately, rail names also displayed relative strength as Union Pacific (UNP 92.87, +1.57) and CSX (CSX 28.20, +0.54) jumped 1.7% and 2.0%, respectively.

The heavily-weighted health care sector (-0.2%) ended beneath its flat line as Biogen (BIIB 321.34, -8.77) underperformed in the biotechnology sub-group. The stock finished lower by 2.7% after the company indicated that despite yesterday's reports, it has not received any acquisition offers. Elsewhere, Dow component Pfizer (PFE 35.29, -0.80) rounded out the price-weighted index as investors continue to weigh yesterday's quarterly results and conference call.

The U.S. Dollar Index (95.55, +0.49) finished off its best level of the day as the yen, pound, and euro each gave up ground to the greenback. The dollar/yen pair finished higher by 0.3% (101.20), rebounding from yesterday's 1.5% decline. The pound lost 0.3% against the dollar (1.3312) ahead of tomorrow's Bank of England policy statement while the euro declined 0.7% against the buck (1.1148).

The Treasury complex ended its day on a higher note as yields declined throughout the curve. The yield on the 10-yr note finished lower by two basis points at 1.54%.

Participation was above the recent average as more than 873 million shares changed hands on the NYSE floor.

Today's economic data included the weekly MBA Mortgage Index, the ADP Employment Change Report, and ISM Services for July: 

  • The weekly MBA Mortgage Index showed a seasonally adjusted decrease of 3.5% in mortgage applications after declining 11.2% in the prior week.
  • The ADP Employment Change report was better than expected, showing an estimated 179,000 jobs (consensus 165,000) were added to private sector payrolls.
    • However, those gains weren't as robust as some might have hoped coming off last month's very large increase in nonfarm payrolls.
    • In addition, all of the growth in the ADP number for July came from the service-providing sector (185,000). The goods-producing sector lost 6,000 jobs, according to ADP.
  • The ISM Non-Manufacturing PMI dipped to 55.5 in July from 56.5 in June (consensus 55.8), declining from 59.6 in the same period a year ago.
    • The dividing line between expansion and contraction for the non-manufacturing sector is 50.0. July marked the 78th straight month of growth.
    • The headline disappointment, though, was offset to a large extent by the increases registered in the indexes for new orders (from 59.9 to 60.3), backlog of orders (from 47.5 to 51.0), and new export orders (from 53.0 to 55.5).
    • The biggest drags on the non-manufacturing index in July were the indexes for prices (from 55.5 to 51.9), supplier deliveries (from 54.0 to 51.0), inventories (from 55.5 to 54.0), employment (from 52.7 to 51.4), and imports (from 54.0 to 53.0).
    • It was noted in the report that the past relationship between the non-manufacturing PMI and the overall economy indicates that the 55.5 level for July corresponds to a 2.6% increase in real GDP on an annualized basis.

Tomorrow's economic data will include Challenger Job Cuts for July and weekly initial claims (consensus 264k), which will be released at 7:30 ET and 8:30 ET, respectively. The day's data will be capped off with Factory Orders for June (consensus -1.9%), which will cross the wires at 10:00 ET. 

  • Russell 2000 +6.6% YTD
  • S&P 500 +5.9% YTD
  • Dow Jones +5.3% YTD
  • Nasdaq Composite +3.0% YTD 

>>> Moon Express is the first private company to get regulatory approval to land

Moon Express is the first private company to get regulatory approval to land on the moon

The company plans to launch its maiden mission to the moon in 2017.

It was a sweltering July morning — 93 degrees, to be exact — and yet Naveen Jain sat in the back of a brightly lit coffee shop in midtown New York in his thick plum purple blazer with a rocket ship pin positioned on the left lapel and greeted me with an ear-to-ear smile. He looked me directly in the eyes, barely blinked and said without a tinge of irony, “I want to inspire people to pursue their moon shot.”

Jain, who was speaking at the United Nations before he headed west to meet me, is the co-founder and chairman of a company called Moon Express and he, along with company CEO Bob Richards and their team of 25 employees, plan to launch their maiden mission to the moon in 2017.

In other words, Jain’s “moon shot” — his ambitious life goal — is to literally go to the moon.

“I want people to say, if a boy who grew up poor in India can go to the moon, what can I do?” Jain, who is also the founder of BlueDot, Infospace and Intellius, told Recode. “What is their moon shot?”

Jain and Richards are not alone in their mission to travel beyond earth’s orbit — Elon Musk plans to launch a rocket to Mars in 2018, Jeff Bezos’s company Blue Origin has started testing its own rockets — but as of today, they are leading the only commercial company to ever receive government approval to land on the surface of the moon.

That’s because, in part, until Moon Express pushed for it there was no set process for a commercial company to attain regulatory approval to travel beyond earth’s orbit, much less land on the moon. In fact, there wasn’t even a regulatory agency with jurisdiction over commercial space activities. But with an ambitious goal of landing on the moon in 2017, Jain and his team couldn’t wait for pending legislation the U.S. government is currently considering to go through.

So they took it in their own hands: On April 8, 2016, after ongoing conversations with several agencies including the Federal Aviation Administration, NASA, the Department of Defense, the National Oceanic and Atmospheric Administration, and the Office of Science and Technology Policy that began in January, Moon Express submitted an application to launch the first-ever commercial space trip outside of earth’s orbit in 2017.

“Moon Express proposed in our Mission Approval architecture that a distributed authority among the agencies, managed by FAA [Office of Commercial Space Transportation], should be sufficient for our singular 2017 commercial lunar mission,” Richards told Recode in a statement. “The agencies reached consensus that this would work for our proposal as presented and the FAA issued the determination with the concurrence of the Department of State and other agencies.”

To date, the company has raised more than $30 million from the likes of the Founders Fund, Innovative Fund, Autodesk and a number of individual investors.

But the company, which is preparing for its mission by simulating moon landings in Cape Canaveral, Fla., already has plans for what comes after 2017. Though Richards said it’s a decade away, Moon Express hopes to bring back materials from the moon to be commercialized on earth. The company does, however, expect to begin sample missions where they bring back a few pounds of materials in 2020. And under the Space Exploration Act of 2015, private individuals and companies are allowed to claim ownership of anything they bring back from the moon.

“Space travel is our only path forward to ensure our survival and create a limitless future for our children,” Jain said in a statement. “In the immediate future, we envision bringing precious resources, metals and Moon rocks back to Earth.”

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: SGY -24.3%, RUBI -23.2%, CRAY -18.5%, KATE -18.1%, MXWL -16%,CROX -15.5%, CYH -12.3%, GLUU -10.5%, OESX -10.3%, ECR -9.7%, FARO -8.1%, HFC -7.9%, CALD -7.4%, QRVO -6.4%,HBI -6%, BECN -5.7%, ELGX -5.5%, TSRA -5.4%, CHUY -5.3%, ESIO -5.3%, PRTA -4.7%, REXX -4.6%, SM -4.6%, VRSK-4.4%, DATA -4.3%, DATA -4.3%, CRTO -4.2%, DXCM -4.1%, ZEN -4.1%, (also confirms that the final day of employment for Alan Black, former CFO, will be August 12 ), NFX -3.1%, NYMT -2.5%, QUMU -2%, SLCA -1.9%, (U.S. Silica to acquire Sandbox Enterprises for a combination of $75 million of cash on hand and ~4.2 million its common shares; expected to be modestly accretive to 2016 EPS and generate EPS accretion of $0.20 to $0.30 in 2017), OKS -1.8%, PBPB -1.7%, KLIC -1.6%, EA -1.5%,SBGI -1.5%, CLDT -1.4%, ENBL -1.3%, DVN -1.2%, RGR -1.1%, (also announces Succession Plan), TNAV -1%

M&A news:
  • BIIB -1.3% (follow up to CNBC report that Allergan (AGN) is unlikely to be interested in a Biogen deal)
Other news:
  • VGZ -11.6% (Vista Gold announces $15 million bought deal offering of units)
  • RGC -4.3% (Regal Entertainment announces secondary offering 13 mln shares of Class A common stock by Anschutz Corporation pursuant to the shelf registration statement )
  • NEE -1.8% (agrees to sell $1.50 bln of equity units to Goldman, Sachs & Co., Credit Suisse and Mizuho Securities)
Analyst comments:
  • WDC -2.3% (downgraded to Sell from Neutral at Goldman)
  • TREX -1.7% (downgraded to Neutral from Buy at CL King)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: SZMK +42.9%, STLY +32.7%, GNW +18.9%, BGFV +14.1%, (also announces new $25 mln share repurchase program), ZAGG +14%, OCLR +11%, BOFI +9.2%, TRUP +8.1%, XCO +7.8%, FIT +7.5%,HDSN +7.1%, XXIA +6.4%, RDCM +5.9%, FUEL +5.8%, (also announces it concurrently entered into a Controlled Equity Offering with Cantor Fitzgerald of up to $30 mln of the $50 mln offering it filed for in May), MEMP +5.8%, ZTS +5.6%, WD+5.5%, XNCR +5%, AVD +4.5%, SHOP +4.4%, WMGI +3.9%, AIG +3.8%, (also adds $3 bln to buyback ), NBR +3.6%,ETSY +3.5%, TWX +3.4%, INSY +3.3%, GORO +3.2%, RIGL +3.2%, FNGN +3.1%, OHI +2.8%, AMSG +2.7%, AR+1.8%, EXK +1.8%, RPXC +1.6%, HLTH +1.5%, CENT +1.4%, CENT +1.4%, BEAT +1.3%, FMI +1.2%, (also announces that the FDA and the Centers for Medicare and Medicaid Services have accepted FoundationOne for Parallel Review), ODP+1.2%, SUPN +1.1%, SE +1.1%, ICE +1.1%, MRCY +1%, ARR +1%, SLRC +1%, FGL +0.9%, OMI +0.8%, NVMI +0.8%

M&A news:
  • STLY +32.7% (Stanley Furniture announces its Board, in its review of strategic alternatives, intends to issue to shareholders two special dividends totaling up to $1.50/share)
  • ENT +8.9% (report from M&A blog Betaville (has mentioned ENT in recent weeks) that China's HNA is mulling a potential takeover bid for the company)
  • CALM +2.5% (Cal-Maine Foods to acquire substantially all of the assets of Foodonics International and its related entities doing business as Dixie Egg Company; terms not disclosed)
Other news:
  • KOOL +39.3% (announces 40-month follow-up results for a number of patients that participated in its earlier feasibility study using its SurgWerks system for the treatment of late stage limb ischemia)
  • SVU +4.2% (Supervalu reaffirmed that it is preparing for a separation of Save-A-Lot business; prepared to consider alternatives and is also evaluating a possible sale of Save-A-Lot)
Analyst comments:
  • ZNGA +6.7% (upgraded to Outperform from Market Perform at Cowen)
  • WMB +1% (upgraded to Outperform from Mkt Perform at Raymond James)