>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: N/A.

M&A news: TSL +9% (receives preliminary non-binding proposal to be acquired by CEO and Shanghai Xingsheng Equity Investment & Management for $11.60 per ADS), ATML +5.2% (receives unsolicited proposal to be acquired $9.00 per share), JAH +4.9% (to be acquired by Newell Rubbermaid (NWL) for $60.00/share), MU +1.5% (acquires remaining interest in Inotera Memories of Taiwan; expected to be immediately accretive to EPS)

Select generic pharma names showing strength: MYL +1.4%, PRGO +0.9%, TEVA +0.3%

Other news: IMNP +53% (reports new data regarding tetravalent IgG1-like bi-specific antibodies), BPMX +10.2% (may be related to upcoming investor presentation), CBLI +6.2% (announces the publication of a study in Oncotarget demonstrating the ability of entolimod to suppress liver metastases in a preclinical model of uveal melanoma), MNGA +4.4% (cont strength), UDF +3.6% (issues supplemental statement responding to apparent 'short and distort' attack), BLRX +3.1% (files a regulatory submission to commence a Phase 2 trial for BL-8040 for mobilization and collection of bone marrow stem cells), CTIC +2.7% (receives $10 mln milestone payment for TRISENOX from Teva (TEVA)), JKS +1.7% (TSL peer)

Analyst comments: PBYI +2.6% (upgraded to Buy from Neutral at Citigroup), MAT +2% (upgraded to Outperform from Market Perform at BMO Capital)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: NX -0.7%, .

M&A news: NWL -5.2% (Jarden to be acquired by Newell Rubbermaid (NWL) for $60.00/share), PBY -0.9% (Pep Boys and Bridgestone (BRDCY) amended terms to merger agreement from $15.00 per share to $15.50 per share in cash)

Select metals/mining stocks trading lower: HMY -9.9%, AU -7.2%, MT -3.3%, BP -2.2%, BBL -2.2%, SLV -2%, ABX -1.5%, SLW -1.4%, FCX -1.4%, GDX -1.1%, GG -0.9%

Select oil/gas related names showing early weakness: SDRL -7.9%, BHI -4.9%, SWN -3.6%, CHK -3.1%, RDS.A -2.2%, RIG -2.1%, PBR -2%

Other news: ATRA -36.7% (announces that its Phase 2 proof-of-concept clinical trial for PINTA 745 did not meet its primary endpoint), BIND -11.3% (reports that the NSCLC Cohort of the Phase 2 INSITE 1 trial will advance to the second stage; the KRAS mutant NSCLC arm will not advance to the second stage), PSTI -9.2% (still checking), ECA -4.8% (decreases annualized 2016 dividend by $0.26/share to $0.06/share), SYT -3.8% (still checking), SYT -3.8% (may be related to no announcement of M&A deal over the weekend)

Analyst comments: GPRO -5.3% (downgraded to Underweight from Equal-Weight at Morgan Stanley), GTE -5% (downgraded to Neutral from Buy at Citigroup), AAPL -1.7% (hearing Morgan Stanley substantially lowering iPhone estimates), HRL -1.6% (downgraded to Hold at Deutsche Bank), DD -1.5% (downgraded to Hold from Buy at Jefferies), SYK -0.8% (downgraded to Underperform from Market Perform at BMO Capital)

>>> Telecom Italia : Sole24Ore Artcile --> Could see some unwinding of TITR/TIT

Sole24Ore reports that given Vivendi’s declaration to abstain at the shareholders meeting concerning the vote on the conversion of savings shares it’s unlikely that the motion will be passed and that arbitrage funds (if motion not approved) will likely close out positions en masse. Reported also that Co. BoD issued a press release noting Vivendi’s position and reiterated that the conversion plans were in the interests of all shareholders.
Il Corriere reports comments from Vivendi CEO Mr. De Puyfontaine who said that:  
1) Vivendi is in favor of the savings shares conversion but not under these conditions
2) Vivendi will not withdraw its request to increase the number of board members (from 13 to 17)
3) Vivendi has met with representatives of the Government and wants to develop a long term strategic investment policy for Co. Complete agreement with Gov on broadband strategy.
4) If the shareholders meeting rejects Vivendi’s requests for increasing board members Vivendi will still ask for board representation.
5) Reiterated no contact with French Telco investor Niel.

WSJ : Fed Officials Worry Interest Rates Will Go Up, Only to Come Back Down

Fed Officials Worry Interest Rates Will Go Up, Only to Come Back Down (JON HILSENRATH)

More than half of economists polled predict federal-funds rate back near zero within next five years

Federal Reserve officials are likely to raise their benchmark short-term interest rate from near zero Wednesday, expecting to slowly ratchet it higher to above 3% in three years.

But that’s if all goes as planned. Their big worry is they’ll end up right back at zero.

Any number of factors could force the Fed to reverse course and cut rates all over again: a shock to the U.S. economy from abroad, persistently low inflation, some new financial bubble bursting and slamming the economy, or lost momentum in a business cycle which, at 78 months, is already longer than 29 of the 33 expansions the U.S. economy has experienced since 1854.

Among 65 economists surveyed by The Wall Street Journal this month, not all of whom responded, more than half said it was somewhat or very likely the Fed’s benchmark federal-funds rate would be back near zero within the next five years. Ten said the Fed might even push rates into negative territory, as the European Central Bank and others in Europe have done—meaning financial institutions have to pay to park their money with the central banks.

Traders in futures markets see lower interest rates in coming years than the Fed projects in part because they attach some probability to a return to zero. In December 2016, for example, the Fed projects a 1.375% fed-funds rate. Futures markets put it at 0.76%.

Among the worries of private economists is that no other central bank in the advanced world that has raised rates since the 2007-09 crisis has been able to sustain them at a higher level. That includes central banks in the eurozone, Sweden, Israel, Canada, South Korea and Australia.

“They effectively have had to undo what they have done,” said Susan Sterne, president of Economic Analysis Associates, an advisory firm specializing in tracking consumer behavior.

The Fed has never started raising rates so late in a business cycle. It has held the fed-funds rate near zero for seven years and hasn’t raised it in nearly a decade. Its decision to keep rates so low for so long was likely a factor that helped the economy grow enough to bring the jobless rate down to 5% last month from a recent peak of 10% in 2009. At the same time, waiting so long might mean the Fed is starting to lift rates at a point when the expansion itself is nearer to an end.

Ms. Sterne said the U.S. expansion is now at an advanced stage and consumers have satisfied pent-up demand for cars and other durable goods. She’s worried it doesn’t have engines for sustained growth. “I call it late-cycle,” she said.

Several factors have conspired to keep rates low. Inflation has run below the Fed’s 2% target for more than three years. In normal times the Fed would push rates up as an expansion strengthens to slow growth and tame upward pressures on consumer prices. With no signs of inflation, officials haven’t felt a need to follow that old game plan.

Moreover, officials believe the economy, in the wake of a debilitating financial crisis and restrained by an aging population and slowing worker-productivity growth, can’t bear rates as high as before. Its equilibrium rate—a hypothetical rate at which unemployment and inflation can be kept low and stable—has sunk below old norms, the thinking goes.

That means rates will remain relatively low even if all goes as planned. If a shock hits the economy and sends it back into recession, the Fed won’t have much room to cut rates to cushion the blow.

Among the risks to the economy are financial booms that could turn to busts. One is in commercial real estate. Another in junk bonds is already fizzling. Each of the past three expansions was accompanied by an asset price bust—residential real estate in 2007, tech stocks in 2001 and commercial real estate in the early 1990s.

Normally in a recession the Fed cuts rates to stimulate spending and investment. Between September 2007 and December 2008 it cut rates 5.25 percentage points. Between January 2001 and June 2003 the cut was 5.5 percentage points, while from July 1990 to September 1992 it was 5 percentage points.

If the Fed wants to reduce rates in response to the next shock, it will be back at zero very quickly and will have to turn to other measures to boost growth.

Fed officials worry a great deal about the risk. The small gap between zero and where officials see rates going “might increase the frequency of episodes in which policy makers would not be able to reduce the federal-funds rate enough to promote a strong economic recovery…in the aftermath of negative shocks,” they concluded at their October policy meeting, according to minutes of the meeting.

In short, the age of unconventional monetary policy begun by the 2007-09 financial crisis might not be ending.

>>> What to look at today - 14th of December 2015

Turbulence in the high-yield debt markets sent US equities sharply lower on Friday, though US futures now point to a higher open. Investors are more enthused over improvement in China economic data out over the weekend, with industrial production coming in particularly impressive while also helping Shanghai Composite. Nikkei225 and ASX200 remain under pressure however - the former weighed upon by firmer JPY and also a somewhat disappointing outlook in the BOJ quarterly Tankan survey. USD/JPY is off Friday's lows but only slightly, rising some 30pips above 121.20. AUD/USD dipped some 30pips in the opening hour to 0.7160 but has since tested $0.72. EUR/USD is off by about 30pips from Friday close below 1.0960. China industrial output came in at a 5-month high of 6.2%, well above 5.7% consensus. Closely monitored power generation component also saw its first y/y rise in 3 months at +0.1%. Ahead of this week's widely anticipated FOMC liftoff, WSJ Fed watcher Hilsenrath released a somewhat dovish assessment for the medium-long term policy expectations. Hilsenrath contends that after taking target rates to 3% in about 3 years, Fed officials are concerned they may have to reverse course back to zero. Latest WSJ survey of economists revealed that more than half said it was somewhat or very likely that fed funds rate will return to zero within next 5 years, pointing to potential risks that include "a shock to the US economy from abroad, persistently low inflation, new financial bubble bursting, or lost momentum in a business cycle" that may have run its course on the upside.

Nikkei -1.80% Hang Seng -0.70% Shanghai +2.27%

Eur$1.0970 JPY121.20 CNY6.4585 GBP1.5194 CHF 0.9849 RUB$ 70.4197 WTI $3546 (-0.45%)

S&P +0.47% EuroStoxx +0.03% Dax+0.04% SMI -0.15%

Macro :
- China Nov. Industrial Output Rises 6.2%; Est. 5.7%
- France’s Ratings Affirmed at AA by Fitch
-German Transport Ministry Plans Tighter Emission Controls: BamS

Keep an eye on :
- ABG SM : Abengoa Banks Put EU5B of Co’s Debt on Sale: El Confidencial
- AC FP : AccorHotels Ready to Keep Making Acquisitions, Les Echos Says
- ADP FP : ADP Says Ryanair Has Possibility of Getting Slots at Paris CDG
- AIR FP : Cinven, OHB Said to Bid Jointly for Airbus Defense Unit: Reuters
- AZN LN : AstraZeneca May Buy Acerta Pharma for More Than $5b: WSJ
- BG/ LN : Shell-BG Merger Deal Gets Chinese Antitrust Clearance
- BMPS IM : BTG Pactual Sold Stake in Banca Monte Paschi, Il Sole Reports
- CCR LN : C&C targeted by activist investors Southeastern and Sawiris
- CU FP : Club Med 2014-15 Loss EU44M, Les Echos Says
- CSGN VX : Credit Suisse Won’t Cut Bonuses by Up to 60%: Sonntagszeitung
- DLG GY : Dialog Acknowledges Atmel’s Receipt of Unsolicited Proposal
- FGR FP : Awarded renovation contract at Versailles Parc des Expositions for €152M
- FNC IM : Finmeccanica CEO Says No Intention to Sell Westland Unit, Finmecannica CEO says group has received no offer for AgustaWestland from Boeing
- GCL LN : Cinven Said to Buy Kurt Geiger for GBP245m: FT
- GXI GY : Gerresheimer Considering More Acquisitions, Debt Reduction: BZ
- GPRO US : Fitbit v GoPro: faster, faster - FT - http://on.ft.com/1QmtuEb
- IHG LN : Accor & Kingdom could soon be back on hunt for big acquisitions, making IHG a prime target http://thetim.es/1Nq3mm8
- KUNN SW : Kuoni Hires Morgan Stanley to Explore Options, SZ Reports
- LHN VX : China cement makers propose measures to cut overcapacity- financial press
- LHA GY : Lufthansa’s Swiss to Post 2nd Best Result in History: SamS
- EMG LN : Man Group Said in Talks to Name Livingston as Chairman: Sky News
- MUV2 GY : Berkshire Cuts Munich Re Stake to 4.6% From 9.71%
- POG LN : Renova builds 20% stake in Petropavlovsk, fuelling takeover speculation - Sunday Times
- RNO FP : Nissan Happy With Outcome From Renault Board Meeting: Saikawa
- RIO LN : Rio Set to Sell Carbone Savoie Subsidiary, Figaro Reports
- RR/ LN : Rolls-Royce shareholders split over giving ValueAct a board seat
- RR/ LN : U.K. Said to Mull Nationalizing Rolls-Royce Nuclear Sub Unit: FT http://on.ft.com/1J6eToX
- RYA LN : ADP Says Ryanair Has Possibility of Getting Slots at Paris CDG
- RYA LN : Ryanair Subject of Tax Investigation: Times Link
- SAB SM : Sabadell Doesn’t Plan Any Acquisitions in Next Year: Telegraph
- SPM IM : Saipem Completes EU4.7b Syndication of Senior Credit Lines
- SHP LN : Shire Said to Hold Talks With Baxalta That May Lead to Deal
- TKA AV : Telekom Austria CEO Eyes ‘Key Role’ in Europe Telco M&A: Wiblatt
- TIT IM : Telecom Italia Notes Vivendi Opinion on Saving Shares Plan
- VIE FP : Veolia Targets 2018 Current Net Above EU800m, Jump in Cash Flow
- VOW3 GY : VW Developing New Technology to Integrate Flat Batteries in Cars
- ZO1 GY : Zooplus CFO Sees Lower Margins Also in 2016: Euro am Sonntag
- ZURN VX : Zurich Insurance Names Gary Shaughnessy CEO Global Life