>>> Europe ; Brokers Upgrades & Downgrades - 12th of February 2016

>>> Up
*BERENDSEN RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE
*BUNGE RAISED TO OVERWEIGHT AT JPMORGAN
*FRESENIUS SE RAISED TO BUY VS HOLD AT BERENBERG
*GAZPROM RAISED TO HOLD AT HSBC
*GERRESHEIMER RAISED TO BUY VS HOLD AT BERENBERG
*HELLENIC PETROLEUM RAISED TO BUY AT HSBC
*HISPANIA ACTIVOS RAISED TO BUY VS HOLD AT KEPLER CHEUVREUX
*IAMGOLD RAISED TO NEUTRAL VS SELL AT GOLDMAN
*INVESTEC RAISED TO BUY VS HOLD AT HSBC
*KLOVERN RAISED TO BUY VS HOLD AT PARETO
*NEMETSCHEK RAISED TO HOLD AT BAADER-HELVEA
*PROVIDENT FINANCIAL RAISE TO OVERWEIGHT AT BARCLAYS
*RED ELECTRICA RAISED TO HOLD AT HSBC
*REXEL RAISED TO HOLD AT BERENBERG (YESTERDAY)
*ROSNEFT RAISED TO HOLD AT HSBC
*SAGAX RAISED TO BUY VS HOLD AT PARETO
*UDG HEALTHCARE RAISED TO BUY VS HOLD AT BERENBERG
*VOESTALPINE RAISED TO BUY VS HOLD AT BERENBERG

>>> Down
*BBVA CUT TO ADD VS BUY AT ALPHAVALUE
*CAMBIAN CUT TO HOLD VS BUY AT BERENBERG
*DNO ASA CUT TO HOLD AT NORDEA
*EUROCASH CUT TO REDUCE AT HSBC
*FRESNILLO CUT TO NEUTRAL VS OUTPERFORM AT MACQUARIE
*HENDERSON CUT TO NEUTRAL AT BOFAML
*LEGRAND CUT TO UNDERPERFORM AT RBC CAPITAL
*MEDA AB CUT TO NEUTRAL VS BUY AT CITI
*SOCGEN CUT TO NEUTRAL VS OUTPERFORM AT MEDIOBANCA

>>> PT Change


>>> Initiation
*CAPITA PLC REINSTATED AT SELL AT GOLDMAN; PT 1,028P
*EUTELSAT COMMUNICATIONS RATED NEW OUTPERFORM AT MACQUARIE
*INMARSAT RATED NEW NEUTRAL AT MACQUARIE; PT 1,100P
*SES SA RATED NEW NEUTRAL AT MACQUARIE; PT EU25

>>> Call

>>> Asian Update

Asian Market Update: More Yen intervention chatter driving sentiment; RBA Stevens sees Australia with an easing bias

***Economic Data***
- (AU) AUSTRALIA DEC CREDIT CARD BALANCES: A$52.1B v A$51.3B PRIOR; CREDIT CARD PURCHASES: A$27.6B v A$25.6B PRIOR
- (AU) AUSTRALIA DEC HOME LOANS M/M: 2.6% V 3.0%E; 6-month high
- (NZ) New Zealand Jan Food Prices M/M: +2.0% v -0.8% prior; First rise after 6 declines
- (KR) South Korea Jan prelim department store sale Y/Y: +9.6% v -5.7% prior; Discount store sales Y/Y: +13.4% v -5.1% prior
- (PE) PERU CENTRAL BANK RAISES REFERENCE RATE BY 25BPS TO 4.25%; AS EXPECTED
- (CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED A 3.50%; AS EXPECTED

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -3.0%, S&P/ASX -1.1%, Kospi -1.6%, Shanghai Composite closed, Hang Seng -0.5%, Feb S&P500 +0.5% at 1,833

***Commodities/Fixed Income***
- Apr gold -1.1% at $1,234/oz, Mar crude oil +5.6% at $27.68/brl, Mar copper +0.8% at $2.02/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 14.0 tonnes to 716.0 tonnes; biggest increase since Dec 18th; highest since May 2015
- USD/CNY: Offshore Yuan falls 0.2% through CNH6.54 level; Yuan down for the first time in 4 sessions
- (AU) Australia MoF (AOFM) sells A$600M in 5.25% 2019 Bonds; avg yield: 1.725%; bid-to-cover: 2.97x
- (JP) Japan investors bought net ¥1.45T in foreign bonds v sold net ¥78.8B in prior week; Foreign investors sold net ¥610B in Japan stocks v sold ¥365B in Japan stocks in prior week

***Market Focal Points/FX***
- Asian trading session has been as volatile as late afternoon in the US hours, where another day of extreme selling was thwarted by reports of UAE energy minister expressing the willingness for OPEC to capitulate on production cuts as all producers see prices "not appropriate". The sentiment was timely, with reports of US 2nd biggest refinery at Baytown, TX reportedly operating 75K bpd below nameplate capacity of 560.5K bpd. After a spate of US earnings that included notable beats by GRPN/ROVI and misses by P/NTVI/NUS, the beaten down financial sector also got a vote of confidence from CEO Dimon who plunged some $27M to buy 500K shares of JPM stock. JPM was up over 3% afterhours, oil traded as high as $27.75 in electronic session, while closely watched USD/JPY spiked up to ¥113 handle on speculation of more intervention.

- In the absence of mainland China markets, rhetoric from Japan has taken the driver seat in delivering twists and turns in the overall sentiment, particularly as it pertains to BOJ's latest negative rate decision. Earlier today (early US hours), USD/JPY spiked up from 111 to 113 on unconfirmed dealer rumors that BOJ is checking rates for intervention. Today Fin Min officials refused to comment on those reports but most defended Japan's fundamentals and reiterated the blame for volatility with external factors. Econ Min Ishihara said there was global aversion in FX market driving JPY strength but consumer sentiment is solid. Fin Min Aso said Japan fundamentals are very strong, though policy coordination could be considered at the upcoming G20 meeting. BOJ Gov Kuroda said risk-off flows were excessive as price trends are improving and QQE have had desired effects. PM Abe's economic advisors Hamada and Honda also spoke - Hamada said the markets are "panicky" and worries are overblown since Yen is still much weaker than at the start of Abenomics, and Honda floated the idea of emergency BOJ policy meeting if volatility continues. Session's most active trading moments came on the reports of Japan FX chief Asakawa and BOJ Gov Kuroda meeting with PM Abe, sending USD/JPY up over 50pips back to 113 before a quick reversal below 112.50. Most dovish comments came from LDP party official Yamamoto - one of the Abenomics architects - who said Japan needs to hold emergency economic summit and act in coordination with other central banks.

- Outside Japan, RBA Gov Stevens spoke extensively before the Parliament Standing Committee on Economics, reiterating some more easing could be justified by low inflation, mining investment is still dropping, adjustment in the economy toward non-mining should continue. AUD initially edged up on the comments but moved to the lows below 0.71 after Stevens explicitly stated RBA has a bias toward easing. Central bank's policy stance has generally been perceived as firmly neutral.

- Outside Asia, there may be some progress made on the war in Syria with reports of a Munich draft communique stating major powers agree to push for end to hostilities through truce in the coming days. Report added the relaunch of a peace process in Geneva could take place when conditions on the ground have improved.

***Equities***
US equities / ADRs:
- GRPN: Reports Q4 $0.04 v $0.00e, R$917.2M v $841Me; +18.3% afterhours
- ROVI: Reports Q4 $0.65 v $0.40e, R$149.5M v $138Me; +9.6% afterhours
- COLM: Reports Q4 $0.90 v $0.77e, R$699.4M v $679Me; +7.9% afterhours
- ELLI: Reports Q4 $0.44 v $0.21e, R$64.9M v $61.4Me; +7.1% afterhours
- NBIX: Reports Q4 -$0.34 v -$0.35e, Rev is nil; +5.3% afterhours
- JPM: CEO Dimon reportedly buys 500K shares of stock, worth about $26.5M - financial press; +3.4% afterhours
- AIG: Reports Q4 -$1.10 v -$0.93e; Board authorizes share repurchase of up to $5B (8% of market cap); +1.9% afterhours
- FEYE: Reports Q4 -$0.36 v -$0.37e, R$184.8M v $186Me; +0.2% afterhours
- CBS: Reports Q4 $0.92 adj v $0.91e, R$3.91B v $3.78Be; -1.3% afterhours
- P: Reports Q4 $0.04 adj v $0.07e, R$336M v $333Me; -5.7% afterhours
- ATVI: Reports Q4 $0.83 v $0.87e, R$2.12B v $2.20Be; Raises dividend 13% to $0.26 from $0.23; Authorizes repayment of $1.5B in debt; -14.0% afterhours
- SCSS: Reports Q4 -$0.42 (incl items) v -$0.05e, R$214.7M v $289Me (2 est); -17.4% afterhours
- NUS: Reports Q4 $0.62 v $0.72e, R$572M v $587Me; -20.6% afterhours

Notable movers by sector:
- Consumer discretionary: Sands China 1128.HK +3.1% (Q4 result); Unicharm 8113.JP +1.0% (FY15 result)
- Consumer staples: Orion Corp/Republic of South Korea 001800.KR -6.0% (FY15 result)
- Industrials: Worley Parsons WOR.AU -3.7% (no plan to hold equity raise); Alliance Aviation Services AQZ.AU +2.0% (contract)
- Technology: Sharp Corp 6753.JP -5.8% (jointly bid for Apple OLED orders)
- Materials: Elemental Minerals ELM.AU +2.7% (receives expression of interest); Newcrest Mining NCM.AU +0.9% (In contract with trapper worker)
- Energy: Origin Energy ORG.AU -1.4% (asset sales)

>>> US After Hours Summary: GRPN +18.3%, VCRA +13.6%, COLM +8.4%



After Hours Summary: GRPN +18.3%, VCRA +13.6%, COLM +8.4%, NUS -20%, SCSS -15.9%, ATVI -13.8%, ZG -10.8%, P -3.7%, FEYE -2.3% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance:  GRPN +18.3%, VCRA +13.6%, COLM +8.4%, BSQR +8.1%, ELLI +7.1%, ROVI +6.3%, NBIX +5.3%, INFN +3.7%, DVA -1.7% (also Co's services provider and subsidiary DaVita Rx received Civil Investigative Demand from the U.S. Attorney's Office), AIG +1.5%, WYNN +1.5%

Companies trading higher in after hours in reaction to news: IMMR +12.9% (filed a complaint with the U.S. International Trade Commission against Apple (AAPL), AT&T (T), and AT&T Mobility), JPM +2.7% (WSJ reported that CEO Jamie Dimon purchased 500K shares), 

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: NUS -20%, SCSS -15.9%, ATVI -13.8%, ZG -10.8%, CYBR -9.8%, LOGM -7.9%, AMKR -7.5%, QLIK -7.3%, P -3.7%, FEYE -2.3%, CBS -1.7%

Companies trading lower in after hours in reaction to news:  TRXC -5.7% (filed ~15.543 mln share common stock offering by selling shareholder SOFAR & filed ~42.759 mln share common stock shelf offering by selling investors).

(CS) Volkswagen : Worrying revelations -CO2 irregularities could be much more ex

(CS) Volkswagen : Worrying revelations -CO2 irregularities could be much more expensive than NOx

* Investigations expanded into CO2: VW released a statement that internal
investigations found unexplained inconsistencies when determining Type
Approval CO2 levels. Company indicated that around 800,000 cars are
being affected with economic risk estimated at €2bn, implies €2,500 per car
vs. c.€609 per car provisioned for Diesel so far; thus the ratio is 4.1x. At this
point the legality of the "inconsistencies" is unclear since no further details
are known, but VW indicates that a reliable assessment of the scale of the
irregularities is not yet possible.

* What's next?: This statement comes one day after the EPA made
allegations against 3.0 liter Diesel engines (also Porsche Cayenne) of also
using defeat devices, which VW subsequently denied. With investigations
still ongoing, the key question remains if there are any further disclosures to
be made. Furthermore after the EPA announcement yesterday and today's
release we see Volkswagen's credibility further deteriorating.

* Maintain UP – uncertainty not priced in: At this point the financial impact
from today's release is unclear, as only limited details have been provided.
However, given that that provisions per vehicle are 4.1x higher versus the
NOx issue, the magnitude could be much bigger in scale. In our view,
today's announcement could concern those who believe that the economic
impact is manageable and more than priced in post the drop in share price.

>>> US Close Dow-1.60% S&P-1.23% Nasdaq-0.39% Russell-1.1%

Closing Market Summary: A Down, and Volatile, Day

The capital markets have been a hot mess in 2016 and things heated up again on Thursday on a series of headlines that led mostly to a risk-averse disposition.

The concise overview is that stock prices declined, oil prices fell, gold prices surged, the yen continued to strengthen, and the 10-year Treasury yield slipped to its lowest level (1.54%) since August 2012.

To say the least, there were a lot of factors at play on Thursday, including a second day of monetary policy testimony from Fed Chair Yellen in front of the Senate Banking Committee. The key headline items contributing to the broader market's weakness included the following:

  • A 3.9% decline in Hong Kong's Hang Seng Index in its first day of trading after the Lunar New Year celebration
  • A decision by Sweden's Riksbank to take its key borrowing rate further into negative territory with a 15 basis point cut to -0.50%
  • Renewed concerns about the financial position of European banks, which took a heavy toll on European bourses and the S&P 500 financial sector (-3.0%)
  • Reports that Boeing (BA 108.44, -7.92, -6.8%) is the subject of an SEC investigation into its accounting for costs and sales of its 747 and 787 planes; and
  • Underlying angst about the state of the global economy and earnings prospects in general

The confluence of these factors, and others, led to a decidedly negative start to the day for the equity market.

Fed Chair Yellen didn't provide any reprieve from the selling pressure during her testimony either. She did acknowledge that negative interest rates are still on the table as a potential tool for further policy accommodation, yet she also asserted that economic evidence to date is not enough to suggest a rate cut is the Fed's next move.

Strikingly, the Dow Jones Industrial Average and S&P 500 fell to new lows for the day after the conclusion of her testimony while the Nasdaq Composite came back to test its morning low.  In the case of the S&P 500, it cut a path through its January 20 intraday low (1812.29) to 1810.10.  Just as it did, however, a headline from Dow Jones crossed the wires suggesting OPEC members are ready to cooperate on a possible production cut.

That headline led to a dramatic change in the trading tone, as the major indices rallied late in the day on the back of a resurgent energy sector (-0.4%), which had been down as much as 3.1% in response to a 5.1% drop in oil prices during pit trading to $26.14 per barrel.

At the same time, there was a large wave of buying interest in large-cap technology stocks that bolstered the S&P 500 technology sector (-0.2%) and helped drive the Nasdaq Composite back into positive territory after being down as many as 74 points earlier in the session.  A closing volley of selling interest left the Nasdaq down 0.4% for the day.

By the time the closing bell rang, all S&P 500 sectors had worked their way back from larger losses but none ended with a gain.  The financial sector (-3.0%) was the most conspicuous underperformer.  

The technology sector (-0.2%), which got a nice boost from Cisco (CSCO 24.68, +2.17, +9.6%) after its pleasing earnings report, exhibited relative strength along with the consumer staples (-0.8%), telecom services (-0.5%), energy sector (-0.4%) and consumer discretionary (-0.1%) sectors.

The US Treasury market was a picture of strength throughout Thursday's trading.  Granted the benchmark 10-yr note finished off its best levels of the session, yet it drew some notable buying interest that dropped its yield to 1.64% from 1.70 % on Wednesday. 

That move was precipitated by a flight-to-safety amid the volatility elsewhere.  Similarly, gold prices also benefited from the safety trade, rising 4.4% to $1247.30/troy ounce.

The only economic release today was the weekly initial claims report.  It was better than expected with claims decreasing by 16,000 to 269,000 (consensus 280,000) for the week ending February 6.  Friday will feature the influential Retail Sales report for January at 8:30 a.m. ET.

Volume on Thursday was heavier than average with 1.32 billion shares trading at the NYSE.  The advance-decline line favored decliners at the NYSE by a 4-to-1 margin, which was better than earlier in the day but still indicative of a market lacking conviction from buyers.

NY Post : Dell hits snag in bid to raise $45B to finance EMC deal

Dell hits snag in bid to raise $45B to finance EMC deal

Dell is off to a rocky start in its bid to raise $45 billion for the biggest tech deal in history.

The Round Rock, Texas-based computer giant was expected Wednesday to price the first $10 billion chunk of debt it needs to finance the $67 billion buyout of data storage company EMC.

But the JPMorgan-led group of banks working on the debt deal will need another 10 days to get it done because tighter credit markets are making the loans harder to sell, said a source.

Meanwhile, the steep downturn in technology stocks is also taking its toll. Dell is trying to sell its Perot Systems business for up to $5 billion to lighten its EMC debtload.

French tech company Atos — which was seen as the front-runner to acquire Perot — dropped out of the auction in the last week, following a sharp drop in its stock price, a source said.

With the loss of Atos, there are two suitors for Perot. India’s Tata and Japan’s NTT Data are reportedly in the auction. Dell is still hoping to announce the Perot sale in a few weeks, the source said.

Investors are increasingly jittery about the EMC deal. Dell execs keep insisting the purchase will close by October — despite concerns about the sheer debt, the complexity of the transaction and getting regulatory approval.

If Dell can’t complete the deal, the closely held company is on the hook for a $4 billion breakup fee. Founder and CEO Michael Dell, along with a group of private equity investors, took the company private in 2013 after battling shareholders.

Dell didn’t respond to a request for comment.

The deal calls for EMC shareholders to get $24.05 per share in cash, plus a VMware tracking stock that will fluctuate with that company’s share price.

When they announced the deal, the total value per EMC share was $33.15, but with the sharp drop in tech stocks, that’s no longer the case.

EMC shares were down 1.3 percent, at $24.22, in Thursday afternoon trading.

NY Post : Pandora shares jump amid report that it’s exploring a sale

Pandora shares jump amid report that it’s exploring a sale

Shares of online radio giant Pandora surged more than 9 percent Thursday on a report that it is exploring a sale.

Pandora is working with investment bank Morgan Stanley to field potential buyers, Bloomberg News reported, adding that the sale talks were early stage and may not lead to a deal.

The sale chatter hit just a few hours before the company is slated to report fourth-quarter results. Shares were up around 7 percent to $8.99 at 2:50 p.m. in New York trading.

Pandora did not respond to requests for comment. The sale talks were reported earlier by the New York Times.

>>> Pernod Ricard could consider US acquisitions of up to EUR 1bn

Pernod Ricard could consider US acquisitions of up to EUR 1bn - exec
French beverages group Pernod Ricard [EPA:RI] could consider new targeted acquisitions in the US as part of its growth strategy, CEO Alexandre Ricard said during the H1 FY15-16 financial results presentation today, 11 February, in Paris.

Pernod Ricard could consider deals from EUR 50m to up to EUR 1bn for targets that can strengthen its market share and complement its brand portfolio, CFO Gilles Bogaert said on the sidelines of the presentation.

The US is a growing market and a key priority for the group in terms of sales and innovation, he added. He declined to give further details on how much Pernod Ricard could spend on acquisitions this year. Ricard and Bogaert also declined to comment on the share of cash on hand they could use to finance potential acquisitions.

According to a French press report published last June, the group’s debt would prevent it from launching a major acquisition.

The group’s net debt increased by EUR 237m in H1 FY15/16 and stands as of today at EUR 9.25bn, according to a company press release. This is partly explained by an unfavorable foreign currency impact linked to the fact that 60% of the group debt is in USD, Bogaert said, adding the average cost of the debt decreased to 4.2% vs. 4.6% in H114/15.

The group’s H1 FY15/16 recurring free cash flow increased by 10% compared to H1 FY14/15 and stands at EUR 544m.

Sales for H1 FY15/16 increased by 3% compared to H114/15 and reached EUR 4.95bn. The group generated EUR 8.55bn in net sales for FY14/15.

The Americas region represented 28% of the group's total sales in H1 FY15/16 and registered a 4% growth compared to last year. This improvement was driven by the US where in H1 FY15/16 sales increase by 3% versus H1 FY14/15, according the company press release.

Pernod Ricard’s latest transactions in the US include the acquisition of a majority stake in Avión Spirits, owner of the ultra-premium tequila brand Avión, from its joint-venture partner Tequila Avión, in July 2014 and its June 2014 acquisition of the assets related to US Kenwood Vineyards.

The company’s most recent acquisition was announced last month.The group acquired a majority stake in dry-gin brand Monkey 47 from German Black Forest Distillers, for an undisclosed amount .