>>> Niel says has ideas on how to improve Telecom Italia - La Stampa - RTRS

Niel says has ideas on how to improve Telecom Italia - La Stampa - RTRS


MILAN, Dec 18 (Reuters) - French businessman Xavier Niel has some ideas on how to improve Telecom Italia TLIT.MI but will not comment on whether he plans to convert options he bought in the Italian phone group into shares, according to an interview with daily La Stampa.

In the first detailed comments since he invested in options that could hand him a stake in the company of just over 15 percent, Niel said he was an industrial investor in Telecom Italia and not a financial "raider".

He said Telecom Italia was a "fantastic operator with not too bad management", but also had some weaknesses.

"And I have some ideas," he told the paper in an interview published on Friday. "You need to give (Telecom Italia) the capacity to invest to grow both in fibre optic and 4G mobile networks so that it can generate higher revenues but still keep tariffs low."

>>> Veneto Banca has banking consortium in place to back EUR 1bn capital increas

Veneto Banca has banking consortium in place to back EUR 1bn capital increase 

Veneto Banca, the Italian bank, has put in place a banking consortium to back its EUR 1bn capital increase, Italian language daily Il Sole 24 Ore reported.

The unsourced article said the principal international investment banks had signalled their willingness to take part in the consortium.

The report added that an official announcement will be made if shareholders approve Veneto Banca's transformation from a cooperative society into a joint stock company when they meet tomorrow, 19 December.

The item noted a positive vote is necessary for the capital increase and a subsequent listing to go ahead.

The report also cited Veneto Banca CEO Cristiano Carrus who said that talks had been taking place with various parties including banks interested in a potential merger. Carrus said these banks could take a significant stake in Veneto Banca via the capital increase as the first step to toward such a merger.

The item noted that Carrus refused to be drawn on the identity of the merger candidates, but the report, without citing sources, said that listed Italian banks Banco Popolare and BPER were the prime candidates.

Il Sole 24 Ore

>>> Banca Carige CEO says group open to mergers but does not rule out standalone

Banca Carige CEO says group open to mergers but does not rule out standalone strategy 

Piero Luigi Montani, the CEO of listed Italian bank Banca Carige, says that the lender would consider interesting merger offers. In an interview with Italian language daily Il Sole 24 Ore, Montani said that there were concrete negotiations at present despite rumours that talks had taken place with listed Italian bank BPM.

Montani also told Il Sole that a merger would only be considered if it gave value to shareholders and that Banca Carige was willing to pursue a standalone strategy.

Banca Carige has a market cap of EUR 1.038bn.

Il Sole 24 Ore

>>> Wartsila could acquire Rolls-Royce’s marine business or MAN power engine bus

Wartsila could acquire Rolls-Royce’s marine business or MAN power engine business

Wartsila, the Finnish power engine company, could acquire the British engine maker Rolls-Royce’s marine business or the German MAN power engine business, according to Arvopaperi.

The Finnish-language magazine cited Jaakko Eskola, the chief executive who said that the company wants to be an active M&A player and boost its business with acquisitions.

He said that Rolls-Royce has certain problems right now and Wartsila is waiting to see if its marine operations will come up for sale.

It would make a suitable target for Wartsila, he said. He also said that it is possible MAN will come up for sale, due to difficulties experienced by Volkswagen.

It was reported last year that Rolls-Royce was interested in buying Wartsila but now Wartsila wants to be the acquirer, he said.

Arvopaperi

>>> BOJ Gov Kuroda: Today's decison was NOT additional easing but to make it eas

BOJ Gov Kuroda: Today's decison was NOT additional easing but to make it easier to continue QQE; reiterates that virtuous cycle is working as economy is recovering gradually - post rate decision press conference 
- Exports are recovering with some weakness
- Inflation trend is improving and expects to meet 2% inflation target around 2nd half of FY16; timing of reaching target could change depending on oil prices 
- Some gap in ending the deflationary mindset
- China economic slowdown is not threatening the 2% target; lower commodity will not make achieving the inflation target impossible
- Reiterates view that could adjust policy as necessary
- Notes that the Fed rate hike reflects a strong US economy; will watch effects

>>> Asian Update

Asian Mid-session Update: BOJ expands ETF buying, raises assessment of exports; China property prices continue recovery

***Economic Data***
- (JP) BANK OF JAPAN (BOJ) POLICY STATEMENT: ANNOUNCES NEW ¥300B ETF PURCHASE PROGRAM (NOT EXPECTED); MAINTAINS ITS MONETARY BASE EXPANSION AT ANNUAL PACE OF ¥80T (AS EXPECTED); Maintains overall assessment
- (NZ) NEW ZEALAND DEC ANZ ACTIVITY OUTLOOK: 34.4 V 32.0 PRIOR; BUSINESS CONFIDENCE: 23.0 V 14.6 PRIOR (8-month high)
- (NZ) NEW ZEALAND NOV ANZ JOB ADVERTISEMENTS M/M: 2.0% V 1.3% PRIOR; 3rd straight increase
- (US) NORTH AMERICA NOV SEMI BOOK/BILL RATIO: 0.96 V 0.98 PRIOR; 2nd straight month below parity
- (KR) South Korea Nov PPI Y/Y: -4.6% v -4.6% prior
- (CL) CHILE CENTRAL BANK (BCCH) RAISES OVERNIGHT RATE TARGET BY 25BPS TO 3.50%, NOT EXPECTED

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.7%, S&P/ASX -0.2%, Kospi +0.1%, Shanghai Composite flat, Hang Seng +0.1%, Mar S&P500 -0.2% at 2,019

***Commodities/Fixed Income***
- Feb gold +0.3% at $1,052/oz, Feb crude oil -0.4% at $36.11/brl, Mar copper +0.6% at $2.05/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 4.4 tonnes to 630.2 tonnes; Lowest since Sept 2008
- (CN) China considering merger of aluminum producers in order to cut capacity - Chinese press
- USD/CNY: (CN) PBoC sets yuan mid point at 6.4814 v 6.4757 prior; weakest Yuan setting since June 2011; 10th straight session of weaker setting
- (US) Weekly Fed Balance Sheet Total Assets for week ending Dec 16th: $4.49T v $4.48T prior; Reserve Bank Credit: $4.45T v $4.44T prior; M1 y/y change: 6.4% v 6.6% prior; M2 y/y change: 6.0% v 6.1% prior

***Market Focal Points/FX***
- Post-FOMC volatility in Asian indices is more subdued than in the US markets, where the initial post-liftoff gains have been completely erased in Thursday's rout. China markets are little changed heading toward the close, with positive property sales data offsetting the troubling Beige Book report. Gyrations are still pronounced in Tokyo in the wake of the BOJ policy statement containing some surprises to both its QE program and its statements. Likewise, USD/JPY is is most volatile among the USD majors, initially spiking nearly 100pips above ¥123.50 on the BOJ announcement before selling off to ¥122. AUD/USD is up about 30pip in a steady day of gains, approaching $0.7150. NZD/USD was mired in a 25pip range, capped by $0.67, while EUR/USD was up about 30pips toward $1.0850 as it reversed most of the early US session drop.

- Bank of Japan maintained its overall QQE program of expanding monetary base by an annual ¥80T, but also unveiled a new ¥300B ETF purchase program that will commence at the start of next FY in Apr of 2016. The decision for these new purchases that will track JPX-Nikkei Index 400 was approved by a 6-3 margin, with BOJ's resident hawk Kiuchi supported by 2 other members. USD/JPY initially spiked on the release but then sold off sharply, as the statement also maintained its overall assessment of economy as continuing to recover moderately and also revealed an upgrade on the Exports component. Traders suggest the more bullish view on this key sector of economy, along with the start date of incremental ETF buying, will keep a lid on more aggressive QE expansion. As Tokyo headed toward the close, USD/JPY was en route to new session lows around 121.80.

- China property names got a lift from continued recovery in prices during November. Across the top 70 cities, prices were up 0.3% m/m (7th straight month of gains) v +0.2% prior. Y/Y gains were particularly impressive, accelerating to +0.9% v +0.1% prior and marking the 2nd straight increase. Y/Y prices were also down in 49 cities out of 70, less than 54 reported in October, while m/m declines were registered in 27 cities vs 33 prior. The bounce in China housing helped erase the initial pessimistic tone of the latest Beige Book report that observed some deterioration in Q4 economic growth with data worse than in Q3. This would run counter to the already announced monthly metrics for industrial output and retail sales in Oct and Nov as they generally showed signs of recovery. On FX front, PBoC has once again weakened the midpoint to over 4-year lows - the 10th straight session of lower Yuan settings.

***Equities***
US equities / ADRs:
- RHT: Reports Q3 $0.48 v $0.46e, R$524M v $521Me; +6.4% afterhours
- RMBS: Will collaborate with Microsoft researchers in the exploration of future memory requirements for quantum computing; +2.7% afterhours
- AKS: Guides Q4 -$0.38 to -$0.33 v -$0.16e; cites idling of Ashland facility and impairment charge; -0.5% afterhours
- VTAE: Top-line results from remaining Monotherapy Arm of BI187004 Phase 2 Clinical Trial in overweight Type 2 Diabetes patients did not meet the predefined primary efficacy endpoint criteria; -2.6% afterhours
- KNX: Cuts Q4 $0.31-0.33 v $0.37e (prior $0.36-0.38); -7.0% afterhours
- ICPT: FDA extends PDUFA date by three months for obeticholic acid for the treatment of PBC; -7.2% afterhours

Notable movers by sector:
- Consumer discretionary: Sydney Airport SYD.AU +1.3% (Nov result); China Southern Airlines Co 1055.HK +4.6%, China Eastern Airlines 600115.CN +4.3% (oil trends lower); Corporate Travel Management CTD.AU +7.8% (raises guidance)
- Financials: China Vanke 000002.CN +10.0% (unhappy with its largest shareholder, China Nov property data)
- Industrials: Samsung Engineering Co 028050.KR +5.9% (awarded contracts); GrainCorp GNC.AU -2.0% (guidance); Mitsubishi Heavy Industries 7011.JP -1.1% (plans to cut cruises ship business)
- Technology: Toshiba Corporation 6502.JP -1.9% (plan to spinoff flash memory)
- Materials: Yunnan Aluminum Co 000807.CN -5.1%, Aluminum Corporation of China 2600.HK -4.1 % (China to merge aluminum producers); Kumiai Chemical Industry Co 4996.JP +15.9% (FY14/15 result)
- Energy: China Shenhua Energy Co 1088.HK -0.7% (Nov result); Oil Search OSH.AU -1.6% (lower oil price)

>>> US After Hours


After Hours Summary:

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings:  RHT +6.5%, DLTH +3.5%, AIR +1.2%

Companies trading higher in after hours in reaction to news:  PHH +3.3% (and Bank of America (BAC) to continue mortgage relationship; terms of the new agreement will commence on January 1, 2016), CC +1.6% (reported it will increase prices on all Ti-Pure titanium dioxide grades; a net price increase of $150 per ton will apply on January 1, 2016), 

After Hours Losers:

Companies trading lower in after hours in reaction to earnings:  DYSL -27%, KNX -10.2%

Companies trading lower in after hours in reaction to news:  ICPT -6.5% (FDA extended PDUFA date for Obeticholic acid for the treatment of PBC to May 29, 2016), ALIM -2.7% ( disclosed it promoted Richard Eiswirth to the position of President and Chief Financial Officer), VTAE -2.6% (announced top-line clinical efficacy results from the remaining monotherapy arm of Boehringer Ingelheim's Phase 2 trial of BI187004 in type 2 diabetes), RIG -1.8% (confirmed Statoil (STO) contract termination, will receive an early termination payment fully compensating the company as provided for in the contract).

>>> US Close Dow-1.43% S&P-1.33% Nasdaq-1.35% Russell-1.04%

Closing Market Summary: Stocks Surrender Post-FOMC Gains

The stock market stumbled on Thursday, erasing its entire post-Fed advance. The S&P 500 lost 1.5%, falling below its 50- and 200-day moving averages (2,062), while the Nasdaq Composite (-1.4%) settled just a step ahead.

Equity indices held slim gains at the open after the overnight session saw a broad rally in Japan (+1.6%), France (+1.1%), and Germany (+2.6%); however, that bullish sentiment faded in a flash, pulling stocks lower through the first two hours of the session. The key indices ranged near their morning lows into the late afternoon, hitting new lows into the close.

The Thursday retreat was not a huge surprise considering a higher fed funds rate will translate into increased borrowing costs. Furthermore, the resulting dollar strength is expected to be a negative for U.S.-based companies that conduct a large portion of their activities overseas.

Fittingly, the greenback was on the rise today, climbing 0.7% against the euro (1.0808) while the yen (122.50) resisted some of the pressure, but still slid 0.4% against the dollar. As a result, the Dollar Index (99.23, +0.65) gained 0.7%, returning into the neighborhood of this year's high (100.51).

Today's dollar strength did no favors to crude oil as the energy component fell 1.7% to $34.95/bbl. The settlement price masked the fact that oil was down more than 2.8%, marking a session low ($34.64/bbl) just above its worst level from Monday ($34.53/bbl). Accordingly, the energy sector (-2.5%) paced today's retreat.

However, energy was not the only weak spot as every other cyclical sector settled behind the broader market. The top-weighted technology space (-1.6%) had to contend with relative weakness in Apple (AAPL 108.98, -2.36) as the largest stock by market cap fell 2.1% and returned into the neighborhood of yesterday's session low. Meanwhile, another large tech component—Oracle (ORCL 36.93, -1.98)—surrendered 5.1% after the company's sluggish revenue growth overshadowed a bottom-line beat.

Staying on the earnings front, FedEx (FDX 151.84, +3.01) spiked 2.0% after reporting better than expected earnings and reaffirming its guidance. It is worth noting that the company voiced some concern about the domestic economy, lowering its 2015 GDP growth forecast to 2.4% from 2.5%. FedEx represented a bright spot in the Dow Jones Transportation Average (-2.0%), but heavy losses in other index components caused the bellwether complex to widen its December loss to 7.0%.

Things looked a bit better on the countercyclical side where consumer staples (-1.3%), telecom services (-1.0%), and health care (-1.1%) registered slimmer losses than the broader market while the utilities sector (+0.1%) outperformed thanks to lower yields.

Interestingly, Treasuries spent the day in the green, hitting their highs just ahead of the close. The 10-yr note ended near its best level of the session, sending the benchmark yield lower by six basis points to 2.24%. Investors will keep a close watch on the bond market going forward, considering prolonged strength in Treasuries would be indicative of bond traders doubting the Fed's ability to continue raising rates.

Today's participation was above average as more than 920 million shares changed hands at the NYSE floor.

Economic data included Initial Claims, Philadelphia Fed Survey, Current Account balance, and Leading Indicators:

  • Weekly Initial claims declined by 11,000 to 271,000 (consensus 276,000), remaining bounded in the 250,000 to 300,000 range where they have been since July 2014
    • Continuing claims for the week ending December 5 decreased by 7,000 to 2.238 million (consensus 2.211 million)
  • The Philadelphia Fed's Manufacturing Index slipped back into negative territory in December with a reading of -5.9 (consensus 2.0) versus 1.9 in November. A number below zero denotes contraction
    • This was the third negative reading in the diffusion index for current activity in the last four months, reflecting weaker manufacturing conditions in the region
    • The diffusion index for future general activity is still positive, yet it showed a huge drop from 43.4 in November to 23.0 in December, representing the lowest reading since November 2012
  • The current account deficit for the third quarter totaled $124.10 billion while the Briefing.com consensus expected the deficit to hit $114.20 billion
    • The second quarter deficit was revised to $111.10 billion from $109.70 billion
  • The Conference Board's Leading Economic Index (LEI) increased 0.4% in November on top of an unrevised 0.6% increase in October (consensus +0.1%)
    • The difference between the expected number and the actual number can be traced back directly to the contribution from building permits, considering they were much stronger than expected in November, running at a seasonally adjusted annual rate of 1.289 million versus the consensus estimate of 1.150 million

Investors will not receive any economic data tomorrow.

  • Nasdaq Composite +5.6% YTD
  • S&P 500 -0.8% YTD
  • Dow Jones Industrial Average -1.8% YTD
  • Russell 2000 -5.4% YTD