>>> Baker Hughes: ValueAct discloses an increased 5.3% active stake; intends to

Baker Hughes: ValueAct discloses an increased 5.3% active stake; intends to have conversations with management, which may include the composition of the Board

ValueAct intends to have conversations with members of the BHI's management and board of directors to discuss ways to enhance shareholder value. The topics of these conversations will cover a range of issues, including those relating to the business of BHI, management, board composition (which may include whether it makes sense for a ValueAct Capital employee to be on the Issuer's board of directors), operations, capital allocation, asset allocation, capitalization, dividend policy, financial condition, mergers and acquisitions strategy, overall business strategy, executive compensation, and corporate governance.

(CS) Initiation Carrefour : Underpeform / Casino : Outperform

* We initiate on Carrefour (TP €23) with an Underperform rating: We
believe the market is being too generous in pricing in continued margin
expansion in France and top-line growth in Brazil. There are integration risks
with the DIA acquisition, a reliance on financial services margin, high capex,
and overall low FCF generation. We are particularly concerned about how
hypermarkets, which represent over 70% of total space, will stay profitable.
We forecast flat sales and a -5bp margin decline for hypermarkets until 2018.
We are 2.5%, 8.5% and 10.0% below consensus on recurring EBIT for FY1,
FY2 and FY3 respectively.

* We initiate on Casino (TP €55) with an Outperform rating: We think the
bad news (margin pressure in France and high exposure to emerging
markets) is largely priced in, while the good news (organic sales growth in all
of its French banners and its relatively small footprint in hypermarkets) is not.
Recent corporate transactions are positive steps in simplifying the corporate
structure and have reduced parent company debt. We are in line with the
most recent consensus numbers for FY1, and are 25% and 15% above
consensus respectively on group share of earnings in FY2 and FY3, driven
primarily by our EBIT margin recovery expectations in France.

* Valuation: For Carrefour, we use a 50/50 weighting of our DCF model and
Credit Suisse HOLT® valuation to arrive at our target price. For Casino, we
use a 50/50 weighting of our sum-of-the-parts methodology and HOLT yo arrive at our
target price


>>> US Gapping Up

Gapping up
In reaction to earnings/guidance
: DD +6.3%, (issues guidance; Chair and CEO of DuPont, announced that she will retire from the company effective October 16), MNK +5.8%, SIMO +3.7%, PEP +2.6%

M&A news: PMCS +32.6% (PMC-Sierra to be acquired by Skyworks (SWKS) for $10.50 per share), STRZA +7.2% (LA Times reporting co and Lions Gate Entertainment (LGF) are in advanced merger talks), SBGL +5.5% (offers $294 mln to acquire Aquarius Platinum Limited; Aquarius board intends to vote in favor of the offer), SWKS +1.8% (acquiring PMCS for $10.50/sh; also reported BTE Q4 guidance), LGF +1.1%

Select metals/mining stocks trading higher: CLF +6.1%, AU +2.7%, HMY +2.1%, GFI +2.1%, X +0.8%

Other news: NVCR +15.5% (receives FDA approval for Optune in Combination with Temozolomide in newly diagnosed glioblastoma patients), EXEL +8.8% (reports positive overall survival results from Phase 3 Trial of Cobimetinib in combination with Vemurafenib), RGLS +8.4% (to present additional preclinical data supporting RG-012 as novel microRNA therapeutic in development for Alport Syndrome at ASN's Kidney Week), ARNA +4.7% (announces that, at the request of the Board, Jack Lief, President and CEO, has retired from the company; Harry F. Hixson appointed interim CEO), ALKS +4.2% (FDA approved ARISTADA for the treatment of schizophrenia), AMDA +3.8% (files for ~29.53 mln share common stock offering by selling shareholders), RKUS +3.2% (to replace CYBX in the S&P SmallCap 600), WPRT +1.8% (co's joint venture Cummins Westport (CMI) announced the new ISL G Near Zero NOx natural gas engine), STM +1.7% (semi peer, in symp with PMCS), PBR +1.2% (adjusts its finnacing planning for 2015, 2016), CONN +0.9% (Director disclosed purchase of 12000 shares, worth total of $291K)

Analyst comments: NUVA +1.6% (upgraded to Outperform from Market Perform at BMO Capital), FDX +0.7% (upgraded to Buy from Hold at Stifel), CSAL +0.6% (upgraded to Overweight from Equal-Weight at Morgan Stanley
)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance
: ILMN -18.5%, HAE -12.2%, TCS -8.8%, RDWR -7.8%, PBF -1.4%

Select fan favorite names showing weakness pre-mkt: FEYE -1.5%, TWTR -1.3%, GILD -1.1%, NFLX -1.1%, BABA -1.1%, AAPL -0.7%, FB -0.5%

Other news: EXAS -32.5% (disappointing USPSTF draft on colon cancer screening recommendations), EXXI -8.3% (filed for $500 mln mixed securities shelf offering), CTRV -4.9% (pulling back following yday's gains), SRPT -4.2% ( to offer up to $125 mln of its common stock in an underwritten public offering ), BBLU -3.2% (disclosed material weakness, says previously issued audit reports should no longer be relied upon), TAP -2.4% (SABMiller plc Management might fight proposed In Bev (BUD) bid, according to NY Post), MT -2.2% (pulling back following recent strength), LGIH -1.7% (reports Q3 closings), PBF -1.4% (commenced an underwritten public offering of 10 mln shares of its Class A common stock), SUNE -1.3% (pulling back following recent strength), BHP -1.3% (may be attributed to Aus Trade Balance, exports to China hit 3-month low), RIO -0.9% (may be attributed to Aus Trade Balance, exports to China hit 3-month low)

Analyst comments: FFIV -2.4% (initiated with a Sell at Citigroup; tgt $105), TSLA -2.2% (target lowered to $450 from $465 at Morgan Stanley)

(The Telegraph) The EU chief with two cars and an usher in tailcoats

The EU chief with two cars and an usher in tailcoats

Martin Schulz, the EU's counterpart to John Bercow, accused of 'setting a bad example' by hiring 35 staff, as European Parliament's accounts come under criticism

He is Strasbourg's answer to 'Two Jags'.

Martin Schulz, the president of the European Parliament, has been accused of extravagance for his private office of 35 and two official cars.

Mr Schulz, a German socialist whose position is akin to that of John Bercow, the Commons Speaker, has a private office that includes a speech writer, two personal drivers, four foreign affairs advisers and a personal usher – a tailcoated aide who helps him to receive guests and briefs him on events.

MEPs said his employment of 35 staff at a time of austerity was “highly questionable” and “sets a bad example”.

The criticism comes in a report of the European Parliament’s accounts for 2013 by MEPs, which was approved before the summer holiday and published in the EU’s official journal last week.

It “questions the availability of two service cars for the President of Parliament”.

It warns that a lack of control on spending is eroding public trust in the institution, which has a €1.7 billion (£1.25 billion) a year budget.

The report “questions the availability of two service cars for the President of Parliament”. Separate statistics show the Parliament spent €6.9 million on transport last year, including maintaining a fleet of cars and even bicycles to ferry MEPs and senior officials around Brussels and Strasbourg. A source close to Mr Schulz said his office was smaller than his predecessors, and said the two cars were needed because it would not be possible to have only one driver while at the same time following laws on rest time.

David Campbell-Bannerman, a Conservative MEP, said: “When the public are having to tighten their belts, the president is living the life of Riley. Our renegotiation must ensure the cost of the EU is significantly slashed.”

The report found a €3.5 million deficit in the catering budget and said it was “deeply worried” that €17.8 million was spent publicising the European election in 2014, only for turnout to slump. A further €448,000 was spent on the Lux Prize – an award ceremony for European cinema modelled on the Oscars.

Some €5.7 million was spent on foreign trips and parliamentary delegations for MEPs, including a single visit costing €493,000. The committee called for a “more economic structure”.

It warns that a quarter of voters have a “very negative image” of the parliament due to spending. “Therefore structural improvements, for example full transparency and the accounting of the general expenditure allowance, are needed to improve trust and support for Parliament.”

It also raises the alarm over two issues that have dogged Westminster politics: second jobs and expenses.

The report recommends the creation of a public database – similar to that in the Commons – setting out all the “on-the-side” work conducted by MEPs.

It also calls for “more precise rules regarding the accountability of expenditures” under MEPs’ controversial regime of expenses, that allows cash to be claimed without receipts.

The Parliament’s pension fund, meanwhile, faces a deficit of €197 million, triggering warnings of an early exhaustion of capital. “It is ultimately impossible to judge whether the Fund is being run efficiently and properly,” it noted.

It also called for an end to the practice of subsidised tour groups being handed cash directly from the parliament, which poses a "high reputational risk and significant security risk".

On paper, Mr Schulz’s job is akin to that of John Bercow, the Speaker of the House of Commons.

However, he appears to play a far more public and politically-charged role than his British counterpart, as the Parliament plays an increasingly powerful role. He regularly holds private audiences with European heads of government and frequently gives public addresses – including with Recep Erdogan, the Turkish president, yesterday.

The parliament's support will be essential to pass any legislation the British renegotiation demands.

However, Mr Schulz was fiercely critical of Mr Cameron’s reforms following a meeting in Downing Street in May, accusing him of being driven by “outright lies” about migrants and “national resentment”.