>>> US Close Dow +0.50% S&P +0.27% Nasdaq +0.35% Russell +0.46%

Closing Market Summary: Stocks Climb Amid Continued Strength in Energy

The stock market registered its second consecutive gain on Tuesday with the S&P 500 climbing 0.3%. The benchmark index settled a bit behind the Nasdaq Composite (+0.4%) and the Dow Jones Industrial Average (+0.5%) with cyclical sectors pacing the advance.

Equity indices saw modest losses at the start of the trading day, but the market was able to overcome the early weakness thanks to continued leadership from the energy sector as the growth-sensitive group charged higher by 2.5% to extend this week's gain to 5.0%. Today's rally was powered by a 3.8% spike in crude oil, which settled at $47.90/bbl, while top-weighted components like Chevron (CVX 98.14, +3.18) and Exxon Mobil (XOM 86.83, +1.55) posted respective gains of 3.4% and 1.8%.

Similar to energy, most of the remaining cyclical sectors ended the day in positive territory with the influential technology (+0.6%) space showing relative strength. The top-weighted tech sector was underpinned by some of its largest members with Apple (AAPL 122.57, +1.39), IBM (IBM 141.88, +1.51), and Microsoft (MSFT 54.15, +0.91) gaining between 1.1% and 1.7% while Visa (V 77.87, +2.65) surged 3.5% to erase the entirety of yesterday's earnings-driven drop.

Elsewhere among cyclical sectors, the industrial space settled on its flat line as transport stocks lagged. The Dow Jones Transportation Average lost 0.4% with freight carriers struggling. On the earnings front, Expeditors International (EXPD 49.75, -1.05) surrendered 2.1% after reporting a two-cent beat on below-consensus revenue.

Over on the countercyclical side, the utilities sector (+0.3%) settled in-line with the market while health care (-0.3%), telecom services (-0.4%), and consumer staples (-0.5%) lagged throughout the session. The health care sector struggled despite a modest uptick among biotech names, evidenced by a 0.3% gain in iShares Nasdaq Biotechnology ETF (IBB 339.08, +1.02).

That leaves the consumer staples sector (-0.5%), which finished behind the remaining nine groups with Archer-Daniels Midland (ADM 43.15, -3.13) falling 6.8% in reaction to disappointing results.

Today's quiet advance in stocks occurred alongside a modest slide in the bond market with the 10-yr yield rising five basis points to 2.22%.

Investor participation was ahead of average with more than 900 million shares changing hands at the NYSE floor.

Economic data was limited to the Factory Orders report for September, which showed a decrease of 1.0% while the consensus expected a decrease of 0.9%.

The report showed new orders for durable goods declined 1.2%, which was in-line with the advance release in the prior week's Durable Orders report. Excluding transportation, durable goods orders declined 0.6%, which was weaker than the 0.4% decline reported in the advance release.

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET while October ADP Employment Change (consensus 180,000) and September Trade Balance (consensus -$43.00 billion) will be reported at 8:15 ET and 8:30 ET, respectively. The day's data will be topped off with the 10:00 ET release of the ISM Services report for October (expected 56.6).

  • Nasdaq Composite +8.6% YTD
  • S&P 500 +2.5% YTD
  • Dow Jones Industrial Average +0.5% YTD
  • Russell 2000 -1.1% YTD


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>>> Emerson : Guides Q1 underlying sales down 10%, excluding foreign exchange

Guides Q1 underlying sales down 10%, excluding foreign exchange - conf call slides 
- industrial units are experiencing recession
- Orders expected at -10 to-12% pace
- Cost structure alignment and strategic portfolio repositioning will remain a key focus for fiscal 2016
- Restructuring expenses expected to be $50 to $70M in 2016, with most in the 1st half
- Estimated expenses of approximately $300 to $400M related to spinoff of Network Power and potential divestitures of the Motors and Drives and Power Generation businesses

>>> Guides Q1 underlying sales down 10%, excluding foreign exchange - conf call

Guides Q1 underlying sales down 10%, excluding foreign exchange - conf call slides 
- industrial units are experiencing recession
- Orders expected at -10 to-12% pace
- Cost structure alignment and strategic portfolio repositioning will remain a key focus for fiscal 2016
- Restructuring expenses expected to be $50 to $70M in 2016, with most in the 1st half
- Estimated expenses of approximately $300 to $400M related to spinoff of Network Power and potential divestitures of the Motors and Drives and Power Generation businesses

(ZeroHedge) SocGen Explains Why "Shorting During US Reporting Season" Is A B

SocGen Explains Why "Shorting During US Reporting Season" Is A Bad Idea

Three months ago we laid out the best known trick in the public company playbook, i.e., how to beat earnings with atomic watch precision. The answer, presented in the following chart from Deutsche Bank, demonstrated why the average EPS beat in the past 4 years has been about 3.3%. The reason: the average EPS cut just prior to reporting had been -4.0%, or more than the average beat.

 

Today it is the turn of French bank SocGen to look at the earnings "charade" and try to build a case for shorting the market after the season is over as the downgrades resume.

Here is SocGen's Andrew Lapthorne's reasoning why "Equity rally will fade once the reportingcheating season is behind us"

The resurgence in risk appetite can be put down to central bank support, with the ECB and China either cutting rates or intimating that they are prepared to do more, and of course the charade that is quarterly company reporting. As our readers will be well aware, we have long highlighted the game corporate investor relationship departments play with analysts. To the extent that many companies apparently now simply tell analysts what numbers they should submit to the consensus, numbers which inevitably they then beat a couple of weeks later.

 

This relationship is, in our view, clearly seen below:

 

 

During the busy reporting weeks, upgrades rise relative to downgrades only for this to reverse during ‘quiet’ periods when companies revert to guiding numbers back down again. Why is this important? Well a market being “positively” surprised tends to rise; history shows that during the busiest reporting weeks the S&P 500 has risen 60% of the time versus less than 50% during the quietest weeks. The simple message is this: don’t be short during US reporting seasons. However given weak trend earnings momentum (see page 13), shorting the market thereafter could be worth considering.

 

Fair point, however one can quickly counter with another even more "bullish" thesis: once earnings season is over and the buyback blackout period ends, the year-end stock repurchases go all out: after all management teams have to max out those equity-linked bonuses. And, as a reminder, in November and December alone is when nearly a quarter of all annual buybacks take place.

And with both buybacks in 2015 and debt issuance set to make record highs, it is virtually assured that the amount of buybacks at the end of 2015, courtesy of who else but the Fed, will be truly unprecedented as the market does everything possible to close at new all time highs.

>>> ECB chief Draghi: Asset purchases are going smoothly; ECB will meet its pric

ECB chief Draghi: Asset purchases are going smoothly; ECB will meet its price stability mandate; reiterates degree of accommodation to be re-examined at the Dec ECB meeting because of downside risks - comments from Frankfurt 
- Asset purchases are proceeding smoothly and continue to have a favourable impact on the cost and availability of credit for firms and households. But even though domestic demand remains resilient, concerns over growth prospects in emerging markets and other external factors are creating downside risks to the outlook for growth and inflation. In this context, the degree of monetary policy accommodation will need to be re-examined at the Governing Councils December meeting. The Governing Council is willing and able to act by using all the instruments available within its mandate if warranted in order to maintain an appropriate degree of monetary accommodation.
- History shows that deflation can be just as damaging to the prosperity and stability of our economies as high inflation.
- But even though domestic demand remains resilient, concerns over growth prospects in emerging markets and other external factors are creating downside risks to the outlook for growth and inflation
- One concern is low interest rates unfairly punish savers. I fully understand this low interest rates of course lead to low nominal returns on certain types of assets. But I think the extent of disquiet with the ECB about this issue also reflects some misunderstandings
- First, what matters for savers is not nominal returns on liquid assets such as deposits, but real returns i.e. what those returns actually buy on the portfolios of assets that most households hold, which include for example shares
- Second, we need to keep in mind why interest rates are so low today. It is not an arbitrary decision of the central bank; it is because the euro area has been in a long and deep crisis where the economy needed low interest rates to recover. And what would happen if we were to raise rates in that environment? The answer is that it would only push us back into recession, which would mean lower incomes and more job insecurity for everyone. 
- If anybody is to put pressure on governments to enact structural reforms, it has to be other governments within a democratically-agreed framework. Indeed, this is why the ECB has frequently called for stronger European institutions for economic policymaking

>>> Sell TESLA, Next Musk story is the Hyperloop...that's the one to play...


Elon Musk's Hyperloop is about to take one step closer to reality

For the first time in close to a century, mankind may be about to give serious attention to a technology that has the potential to be a true game-changer in transportation.

Elon Musk famously proposed the idea of the Hyperloop a few years ago, and suggested it could be a revolutionary method for travel based on available technology today. The Hyperloop has already created extreme controversy with skeptics citing everything from the cost of land in California to the substantial g-forces that would impact passengers being accelerated from 0 to 700+ miles per hour in a short span of time. Yet while there are reasons to be cautious about the technology, the Hyperloop should also be cheered as the continuation of a long tradition of American innovation and pushing the boundaries of the human experience.

Now Musk’s Hyperloop looks set to take its first tentative steps towards reality as a test version of the track is nearing the construction phase. This begs an interesting question – if the Hyperloop works, how big of a disruptive force would it be for the airline industry? The Hyperloop certainly has other (arguably simpler) market opportunities than moving people, such as disrupting the air freight or trucking industry, but those are issues for another time. For today, it’s useful to just think about the impact of the Hyperloop on the airline industry.

In practice the Hyperloop’s ability to compete with airlines is going to be driven by a combination of price of tickets and travel time. Price, in turn, will be substantially impacted by energy costs for transporting passengers in the Hyperloop. The technology behind the actual test track of the Hyperloop is well proven, but not on the scale that Musk and others need to see for the Hyperloop to actually function. Instead, there are a few possible ways to power a Hyperloop capsule in theory.

The Hyperloop capsule represents something like a cross between the pneumatic tubes found at banks and hospitals today (and which once crossed miles of cities decades ago) and a maglev train. Determining exactly how much power a Hyperloop would require is tricky at this stage but it’s also an important issue. One of the reasons that some previously new transportation ideas, like hovercraft, have never really gotten off the ground is their massive energy requirements.

So how much energy would be needed to “shoot” a Hyperloop canister along the tube? The proposal from Musk originally envisioned a constant energy source in the form of a compressor rather than simple impulse acceleration (like a bullet). It’s not totally clear if the new test tracks will deviate from the original proposal or not, but assuming that the designers stick to roughly what Musk originally proposed, a 436 hp (325 KW) capsule motor would be required.

For comparison, trains’ locomotives frequently have around 4,000 horsepower, while a typical car often has around 150 hp. The biggest challenge here is how much friction the system will face from the air around it. In particular, the system needs to produce a large enough pressure in order to move the capsule along the track. The math behind the mechanics of moving the tube is a little complex, but a back of the envelope calculation based on Force, Pressure, Area and Ideal Gas law calculations suggest Musk’s estimates are reasonable. (For those interested, a good overview of the relevant mechanics properties are here).

Overall, the Hyperloop would use perhaps as little as 27 kW of power per passenger (assuming a very conservative 6 passengers per tube and a 30 minute travel time on the trip). The power requirement increases if the tube size increases of course, but on a per passenger basis that is relatively irrelevant. Essentially the math here suggests that a Hyperloop tube could move passengers for as little as a few dollars each in energy. The real issue that will determine feasibility then is the capital expenditure cost for the Hyperloop. More on that in a future article.

WSJ : Polaroid Maker Sues GoPro Over Tiny, Cubical Camera

Polaroid Maker Sues GoPro Over Tiny, Cubical Camera

C&A Marketing says GoPro’s Hero4 Session violates its patent for the Polaroid Cube camera

The maker of Polaroid cameras is suing action-camera maker GoPro Inc. for allegedly infringing on its patent for cube-shaped cameras, a dispute between old and new in the industry that poses another problem for GoPro’s latest product.

C&A Marketing Inc., the exclusive maker of Polaroid-branded cameras, filed a patent lawsuit against GoPro on Tuesday in U.S. District Court in Newark N.J. C&A says GoPro’s Hero4 Session camera illegally copies the design of C&A’s Polaroid Cube camera, for which C&A obtained a U.S. design patent in May. C&A asked the court to halt sales of the Session and award it an unspecified amount of money, including all of GoPro’s profits from the Session.

In response, GoPro sent the Wall Street Journal its European Union design patents for the Session that were issued in March and said it is still awaiting a U.S. patent it applied for last year. The company declined further comment.

The year-old Polaroid Cube and the four-month-old GoPro Session are both effectively cubes with rounded corners. Both have a camera lens on the front side and large control button on the top. The Session is slightly larger than the 1.4-cubic-inch Cube.

A federal jury might now have to decide whether those similarities mean GoPro infringed on C&A’s vague design patent. The patent has just a 12-word claim—“The ornamental design for a cubic action camera, as shown and described”—and seven illustrations of the Cube. C&A, based in Ridgefield, N.J., applied for the 14-year patent in January 2014 and received it in May this year. The patent doesn’t mention the size of the camera.

If a jury decides the Session infringes on the patent, does that mean C&A owns the rights to any cube-shaped camera? Fuhu Inc. in El Segundo, Calif., and Chinese camera maker SJCam sell similar cube-shaped action cameras, while Canon Inc. is expected to launch a high-end, box-shaped camera in December for $30,000.

The lawsuit is the latest Session-related headache for GoPro. The San Mateo, Calif. company unveiled the camera, a smaller version of its popular Hero cameras, as its top new product of 2015. But sales have lagged behind expectations, and last month GoPro slashed the price from $400 to $300. Weak Session sales dragged down GoPro’s third-quarter results and fourth-quarter guidance, sending shares plummeting nearly 60% over the past three months.

GoPro Chief Executive Nick Woodman has defended the Session, attributing weak demand to a poorly timed launch, strong competition from other GoPro cameras and an initial price that was too expensive. “If we were to start all over again, what type of a GoPro would we develop? [The] Session. And I stand by it. It’s my favorite GoPro,” he said on the third-quarter earnings call last week.

The Session has higher resolution and frame rates than the $150 Polaroid Cube and has generally received better reviews, though some reviewers have noted its similarity to the Cube.

GoPro applied for a patent for the protective case for the Session on Jan. 6, 2014, one day after C&A applied for its Cube design patent, and received the patent in March this year.

C&A’s design patent lists the inventor as Gregoire Vandenbussche, a senior industrial designer at San Francisco-based Ammunition LLC, which C&A hired to design the Cube. Mr. Vandenbussche is listed as the co-inventor on design patents for several headphones and speakers made by Apple Inc.’s Beats unit.

C&A has held exclusive rights to make Polaroid-branded cameras since 2009, a year after Polaroid ceased production in bankruptcy. A parent company called PLR IP Holdings LLC now licenses the Polaroid brand to other businesses.

(Wansquare) Telecom Italia : Xavier Niel entendu par la Consob

Le gendarme de la Bourse italienne a entendu le patron de Free afin d'en savoir plus sur ses intentions vis­à­vis de l'opérateur télécoms italien. Une communication officielle devrait bientôt être publiée. Quelle que soit l'issue
de cette confrontation entre Xavier Niel et Vincent Bolloré, ce dernier est déjà sûr de réaliser une très belle plus­value en cas de cession de ses titres.

En attendant d’avoir le détail des intentions de Xavier Niel après son entrée surprise à hauteur de 15,14% au sein du capital de Telecom Italia, comme le stipule aussi le règlement italien, l’homme d’affaire français a rendu des comptes de visu à la Consob. Le fondateur de Free a ainsi été entendu ce matin à Rome. Il est resté un peu plus d'une heure dans les locaux de l’autorité, avant de s'engouffrer dans une camionnette noire sans faire aucune déclaration, comme a pu le constater l’AFP sur place.

Ce déplacement devrait être le préalable à une communication officielle de la part de la Consob (notamment sur une éventuelle action de concert entre les deux Français) qui suit de très près cette incursion après celle, à hauteur de 20,03%, de Vincent Bolloré. Elle intervient également après que le patron de Telecom Italia, Giuseppe Recchi se soit entretenu avec Xavier Niel, samedi, à Paris. Entretien manifestement fructueux et cordial
puisque depuis, le responsable italien ne cesse d’indiquer à qui veut l’entendre que les intentions du patron de Free sont « amicales ». Et d’ajouter que tout investisseur est le bienvenu au capital de son groupe et « plus encore s'il peut apporter compétences et suggestions ».

Mais Xavier Niel veut­il aller plus loin ? Financièrement déjà, le morceau serait un peu « lourd » à avaler puisque l’opérateur transalpin vaut actuellement 17 milliards d’euros en Bourse. Il a déjà dépensé (ou sur le point de) environ 2,5 milliards d’euros et devrait ajouter 1,7 milliard d’euros pour aller jusqu’à 24,9%, seuil au­delà duquel il serait contraint de lancer une OPA. Il n’a donc pas beaucoup de marge de manœuvre, d’autant que même avec 24,9% de Telecom Italia cela ne lui donnerait pas beaucoup plus de pouvoir que maintenant, surtout avec un autre actionnaire du même poids en face. Car Vincent Bolloré peut, lui aussi, accroître jusqu’à 24,9% sa présente au capital du groupe sachant que le patron breton a amassé sa participation depuis près d’un an et que son prix de revient lui laisse déjà l’assurance de réaliser une belle plus­value, quelle que soit l’issue de cette bataille boursière. Car n’oublions pas qu’il a obtenu 8,24% du capital de l’italien dans le cadre de la vente de ses parts dans GVT à l’Espagnol Telefonica qui possédait ces titres. Du coup, son bloc de 20,03% de Telecom Italia valorisé aujourd’hui un peu plus de 3 milliards d’euros a été acquis sur une base moyenne bien inférieure

Le gouvernement italien de son côté, suit avec attention l'évolution de la situation comme l’a indiqué vendredi soir le sous­secrétaire à la présidence du Conseil, Claudio De Vincenti : « L'intérêt du pays est que tout changement dans la composition de l'actionnariat réponde à des critères de renforcement industriel d'une société, comme Telecom Italia, stratégique pour le développement du système de télécommunications italien ».