>>> Europe : Brokers Upgrades & Downgrades - 29th of September 2015

>>> Up
*AUTOLIV RAISED TO NEUTRAL VS SELL AT GOLDMAN SACHS
*BANKIA RAISED TO MARKET PERFORM AT BBVA
*BNP PARIBAS RAISED TO BUY VS HOLD AT HSBC
*DEUTSCHE WOHNEN RAISED TO HOLD VS REDUCE AT HSBC
*ELRINGKLINGER RAISED TO HOLD VS REDUCE AT KEPLER CHEUVREUX
*ENQUEST RAISED TO BUY VS ADD AT NUMIS
*FAURECIA RAISED TO BUY VS HOLD AT KEPLER CHEUVREUX
*GAMESA RAISED TO BUY VS NEUTRAL AT CITI
*PROSIEBENSAT.1 RAISED TO EQUALWEIGHT VS UNDERWEIGHT AT BARCLAYS
*SOCGEN RAISED TO BUY VS HOLD AT HSBC
*SWISS RE RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN
*TERNA RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS

>>> Down
*ATRESMEDIA CUT TO UNDERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*DOGUS OTOMOTIV CUT TO HOLD AT HSBC
*ENAGAS CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
*FLEX LNG CUT TO HOLD AT DNB MARKETS
*GAS NATURAL CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
*HELLA CUT TO NEUTRAL VS BUY AT GOLDMAN SACHS
*MEDIASET ESPANA CUT TO UNDERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*NOKIAN RENKAAT RAISED TO OUTPERFORM AT EXANE; PT EU35
*OTP CUT TO NEUTRAL VS BUY AT GOLDMAN SACHS
*PEKAO CUT TO SELL VS NEUTRAL AT GOLDMAN SACHS
*PENNON RAISED TO BUY VS HOLD AT INVESTEC
*RTL GROUP CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
*SHW CUT TO HOLD FROM BUY AT BANKHAUS LAMPE

>>> PT Change
*ENEL (OW) Raise PT to €5.00 from €4.80 AT BARCLAYS
*ENEL GREEN POWER PT RAISE to €2.50 from €2.40 AT BARCLAYS (Note attached)
*IBEDROLA (UW) Raise PT to €5.30 from €4.30 AT BARCLAYS
*ITV PT LOWER TO 250p from 270p AT BARCLAYS
*M6 METROPOLE PT Lower to €18.50 from €18.75 AT BARCLAYS
*RED ELECTRICA (EW) Raise PT to €74.00 from €65.50 AT BARCLAYS
*REDES ENERGIA (OW) Lower PT to €2.83 from €2.91 AT BARCLAYS
*TELEVISION FRANCAISE 1 PT LOWER to €15.50 from €16.50 AT BARCLAYS

>>> Initiation
*ALDERMORE RATED NEW BUY AT INVESTEC, PT 325P
*ALTEN RATED NEW BUY AT BERENBERG, PT EU55
*ALTRAN RATED NEW BUY AT BERENBERG, PT EU12.60

>>> Call
>> Stock
*BERTRANDT ADDED TO BANKHAUS LAMPE’S ALPHA LIST
*CONTINENTAL ADDED TO GOLDMAN SACHS CONVICTION BUY LIST
*PEUGEOT, FAURECIA REMOVED FROM GOLDMAN CONVICTION BUY LIST
*TECHNOTRANS DELEATED FROM BANKHAUS LAMPE’S ALPHA LIST
*VOLKSWAGEN TO BE REMOVED FROM DOW JONES SUSTAINABILITY INDICES

>>> Asian Update

Asian Mid-session Update: Glencore credit fears, China slowdown crush equities


***Economic Data***
- (AU) AUSTRALIA AUG CORELOGIC RPDATA HOUSE PRICES Y/Y: 0.8% V 0.4% PRIOR; 4th straight increase
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 110.6 v 114.5 prior
- (KR) South Korea AUG Department Store Sales y/y: -6.5% v +0.7% prior; Discount store sales y/y: -7.6% v -1.8% prior

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -2.8%, S&P/ASX -2.8%, Kospi closed, Shanghai Composite -1.9%, Hang Seng -3.6%, Dec S&P500 -0.1% at 1,871

***Commodities/Fixed Income***
- Dec gold flat at $1,132/oz, Nov crude oil +0.1% at $44.46/brl, Dec copper -0.6% at $2.23/lb
- SLV: iShares Silver Trust ETF daily holdings fall to 9,871 tonnes from 9,898 tonnes; 4-month low
- (TH) Thailand Central Bank sells 3-month bills at 1.507% and 6-month Bills at 1.514%
- (JP) Japan MoF sells ¥2.31T in 2-yr JGBs; Avg yield: 0.010% v 0.008% prior; bid to cover: 3.71x v 4.39x prior; Weakest demand since June
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3660 v 6.3729 prior setting (strongest Yuan setting since Sept 18th)
- (CN) PBoC to inject CNY40B in 14-day reverse repos (27th consecutive injection); Offer yield at 2.70%, unchanged from prior

***Market Focal Points/FX***
- Asian equity markets are tracking another heavy dose of selling in US hours, where the overnight pressure from disappointing China industrial profits data was compounded by credit panic driven decline in commodity trading giant Glencore and worries of Clinton price reform in the biotech space. After a 30% drop in Glencore, commodity names such as BHP and Rio Tinto were sharply lower in Australia, sending S&P/ASX along with Australia 3-year bond yields to 3-week lows. Hang Seng led the decliners with an outsized catch-up move following yesterday's holiday. Shanghai Composite also fell just shy of yesterday's 2-week lows below 3,050.

- After yesterday's decline in China industrial profits, researcher with CASS said profitability will turn even more negative in H2 on expected uptick in fixed costs and negative sentiment from stock market volatility. Separately, CASS reiterated China Q3 GDP estimate at 6.9%, while NBS chief Wang remarked China will remain global growth driver. Premier Li was also cited calling external volatility to China's economic fluctuations as excessive, adding China economy is still within a reasonable range.

- Economic calendar remained light ahead of the much more busy sessions for the rest of the week. Australia's house prices rose for the 4th straight month by a wider margin, though CoreLogic noted the price increase was mostly skewed toward Melbourne. Weekly consumer sentiment index fell after last week's bounce on Australian political transition. Tomorrow will bring the release of Japan retail sales and Australia building approvals.

- Outside of Asia, Fed speak continued late in Monday's US session. Evans remarked the Fed should do some three 25bp moves by the end of next year, and moderate voter Williams reiterated liftoff would still be appropriate this year. Williams did acknowledge that inflation is still below preferred levels, though unemployment would fall below 5% later this year and remain there through 2016. Risk-off flows saw predictable reactions in FX space. AUD/USD and USD/JPY were both down about 50pips from the highs around 0.6940 and 119.40 respectively, while EUR/USD crept up about 30pips to test 1.1270.

***Equities***
US equities / ADRs:
- RJET: Deutsche Bank Raised RJET to Buy from Hold, price target: $8; +6.6% afterhours
- ZIOP, XON: To develop graft-vs-host disease drugs; ZIOP +1.5%, XON +1.9% afterhours
- AGN: Guides H2 $6.25-6.65 (no comparable ests), Rev above $8B (no comparable ests); cites adjustments due to divestiture to Teva; +1.0% afterhours
- SNX: Reports Q3 $1.47 v $1.44e, R$3.33B v $3.36Be; -1.1% afterhours
- ESPR: Provides further updates on ETC-1002 global Phase 3 strategy following receipt of End-of-Phase 2 meeting minutes; -10.7% afterhours
- ZSAN: Resumes development of weekly ZP-PTH treatment for severe osteoporosis; -52.5% afterhours

Notable movers by sector:
- Consumer discretionary: Nitori Holdings 9843.JP -5.9% (H1 result); FamilyMart Co 8028.JP -1.5% (H1 result speculation)
- Financials: CITIC Securities 6030.HK -6.4% (Cinda Sinorock cuts stake)
- Industrials: RUSAL 486.HK -2.5% (postpones interim dividend consideration); Suzuki Motor 7269.JP -2.1% (Aug Japan auto data)
- Technology: TDK Corp 6762.JP -3.2% (cooperation with Imation); Alpine Electronics 6816.JP -6.2% (cuts guidance)
- Materials: Beijing SJ Environmental Protection and New Material Co 300072.CN +0.9% (Q1-Q3 guidance); Glencore 805.HK -27.4%, BHP Biliton BHP.AU -6.0%, Fortescue Metals Group FMG.AU -4.9% (momentum); Kobe Steel 5406.JP -11.1% (cuts guidance)
- Energy: PetroChina 601857.CN -1.9%, Sinopec 600028.CN -1.9% (crude oil declines)
- Healthcare: Eisai Co 4523.JP -5.2% (FDA news)
- Telecom: TPG Telecom TPM.AU -3.5% (speculation to sell asset)

>>> US After Hours Summary: AGN +2.0%, CMTL -14.2%, SNX -2.7% fo

After Hours Summary: AGN +2.0%, CMTL -14.2%, SNX -2.7% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: AGN +2.0%

Companies trading higher in after hours in reaction to news: YHOO +4.0% (provided update on Alibaba (BABA) stake spin off; co continues to expect completion in Q4; spin-off no longer conditioned upon receipt of a favorable ruling from the IRS), MWW +3.0% (announced sale of 50.01% owneship position in JobKorea for ~$85 mln), POM +2.4% (co and Exelon (EXC) filed an application for reconsideration with the DC Public Service Commission requesting reconsideration of the order denying the pending merger; EXC +2.1%), XON +2.1% (formed a new Exclusive Channel Collaboration with ZIOPHARM Oncology (ZIOP) to pursue cellular therapy approaches to autoimmune disorder), CANF +1.3% (Mitchell P. Kopin discloses 7.4% passive stake in 13G filing)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: CMTL -14.2%, SNX -2.7%

Companies trading lower in after hours in reaction to news: ZSAN -52.5% (discontinued development of its Daily ZP-PTH treatment for severe osteoporosis; resumed development of its Weekly ZP-PTH product; terminates collaboration with Eli Lilly (LLY)), ESPR -7.4% (lower by ~12.5% following update on ECT-1002 development plan; new wording suggests FDA could require a completed cardiovascular outcomes trial before approval)

>>> Japan Tobacco close to deal to acquire SantaFe Natural Tobacco from Reynolds

Japan Tobacco close to deal to acquire SantaFe Natural Tobacco from Reynolds for about USD 5bn 

Japan Tobacco [TYO:2914] is close to an agreement to acquire New Mexico-based Santa Fe Natural Tobacco, a subsidiary of Reynolds American [NYSE:RAI], for about USD 5bn (JPY 600bn), the Nihon Keizai Shimbun reported.

The Japanese-language report disclosed, without citing any sources, that the two companies are seeking to reach a deal during this week. It would be the largest overseas M&A deal by Japan Tobacco since it acquired UK-based Gallaher in 2007 for USD 14.7bn, the report said.

Santa Fe Natural Tobacco manufactures the Natural American Spirit brand, which is sold in the US, Europe and Japan, the report said, adding that by obtaining the sales rights to the brand Japan Tobacco aims to accelerate global growth. There is a possibility, however, that the rights to sell the brand within the US may not be included in the deal, the report added.

Santa Fe Natural Tobacco had net sales for 2014 of USD 658m, the report said.

Nihon Keizai Shimbun

>>> Morgan Stanley's mea culpa on 'really bad' energy call

Morgan Stanley's mea culpa on 'really bad' energy call

Morgan Stanley is finally moving off its fouled call to buy energy shares – but the investment bank can't be certain the downgrade won't align with a rebound for the embattled sector.

The US investment bank advised investors to "overweight" the energy sector at the beginning of 2015. Their thinking?

Our original thesis when we went overweight the energy sector at the beginning of the year was that they were cyclical stocks that were down a lot, you had to be anticipatory and the valuation was compelling.

It turned out to be terrible timing for the recommendation.

US crude oil prices have tumbled 16.3 per cent, while Brent, the international benchmark, has dropped 17.3 per cent, since the beginning of 2015.

The sharp decline has weighed heavily on energy shares, with the S&P 500 energy sector having lost about a quarter of its value this year.

In a note on Monday explaining its move to downgrade energy stocks from "overweight" to "market-weight," the analysts said they've altered the way they view dynamics in the industry.

Whereas analysts had looked at rig count as the key variable in determining production, it is now looking at technology employed by energy firms that allow them to keep making money - and pumping oil - at lower prices.

"It is clearer now than ever that technology has massively altered the energy landscape. Rig counts are down dramatically but production is not," Morgan said, noting companies can make the same profit margins at $60 oil today that they could at $90 oil a few years ago.

From their report:

We thought the falling rig count would be a catalyst to spark a dream of higher oil. Well, we now think rig counts aren't the way to think about it. It is production, and production isn't down really at all in the US.

While the sector rallied in February and March in anticipation of achievable estimates in April, the sector has lagged massively since because of stronger than expected supply. The valuation argument only works with a dream of a much higher oil price in the future, and that dream has been a bit of a nightmare.

Morgan Stanley reckons oil supply and demand fundamentals may not improve over the next year, meaning investors may be offered a better entry point for energy-related equities over the next six to nine months. Still, the analysts warn "this downgrade could be the beginning of an energy rally."

Morgan also said it has "seen this movie in the gas market."

Natural gas prices traded at more than five times their current value in summer 2008, but have faced pressure amid increasing production

>>> US Close Dow-1.92% S&P-2.57% Nasdaq-3.04% Russell-2.875

Closing Summary: Global Growth Concerns and Biotech Weakness Sideswipe Equity Market

The new week got off to a very poor start for the major indices, which experienced steady selling pressure from the opening bell in a trend-down day.  Global growth concerns were at the heart of Monday's pullback along with another dastardly performance by the biotechnology sector.

The growth concerns were triggered anew by a caustic research note on the business prospects for commodity producer Glencore (GLCNF 1.07, -0.41), an 8.8% year-over-year decline in China's industrial profits, a disappointing 1.4% monthly decline in pending U.S. home sales for August, and a declaration from International Monetary Fund (IMF) head Christine Lagarde that the IMF's forecasts for global growth of 3.3% this year and 3.8% next year are no longer realistic due principally to the weakness in emerging markets.

These factors, and an allegation from famed investor Carl Icahn that there could be another financial catastrophe looming with the persistence of the Federal Reserve's policy rate near the zero bound, cast a pall on investor sentiment that hung over the capital markets all day.

To that end, oil (-2.7% to $44.47 per barrel) and other commodity prices got knocked back noticeably, high-yield bond prices continued to weaken, cyclical sectors like the energy (-3.6%), materials (-3.2%), and consumer discretionary (-2.9%) sectors were among the hardest hit areas, and Treasuries rallied in a flight-to-safety bid.

In turn, investors sought downside protection, evidenced by the 17% surge in the CBOE Volatility Index (VIX 27.58, +3.96), and generally shied away from buying much of anything in the equity market.

All ten sectors finished lower.  The health care sector (-3.8%) fared the worst as price control concerns continued to percolate on the back of reports that lawmakers in Washington are working to get a subpoena to obtain documents from Valeant Pharmaceuticals (VRX 166.50, -32.97) that discuss big price increases for two heart drugs.

That news compounded the recent selling pressure in the biotech group, which had to contend with the double whammy of valuation concerns.  The iShares Nasdaq Biotechnology ETF (IBB 290.61, -19.63) dropped 6.3% and is now down 27.5% from its July high.

The weakness in the biotech space took a heavy toll on the Nasdaq Composite (-3.0%) and Russell 2000 (-2.9%).  Separately, the weight of large losses in market darlings Facebook (FB 89.21, -3.56), Amazon.com (AMZN 504.06, -20.19), Netflix (NFLX 99.47, -2.77), and Google (GOOG 594.89, -17.08) -- the so-called "FANG" stocks -- took a big bite out of the Nasdaq and the broader market.

Today's negative disposition was cemented in the fact that Apple (AAPL 112.44, -2.27) couldn't escape the selling pressure even though it announced record sales of more than 13 million units of its iPhone 6s and iPhone 6s Plus just three days after launch.

The Personal Income and Spending report for August was decent, showing a 0.3% increase in income (consensus +0.4%) and a 0.4% jump in spending ( +0.3%) on top of modest upward revisions to July's data for both series.  The report also revealed subdued inflation pressures, which were painted by a miniscule 0.3% year-over-year increase in the Personal Consumption Expenditures Price Index (PCE) and a modest 1.3% year-over-year increase excluding food and energy.

The latter news also helped underpin the Treasury market and particularly the back end of the curve.  The 10-yr note yield dropped seven basis points to 2.09%.

There were two Fed officials who gave speeches today during market hours -- New York Fed President Dudley and Chicago Fed President Evans.  Both men are voting members on the 2015 Federal Open Market Committee, yet their somewhat opposing views failed to alter today's downtrend.  To wit, stocks traded lower after both presentations in which Mr. Dudley said he thinks the Fed should be able to raise rates before the end of the year and Mr. Evans said a later liftoff would create better positioning for economic challenges.

The major indices closed just off their worst levels of the day on heavy volume.  Reflecting the entrenched negative bias, decliners led advancers by nearly a 9-to-1 margin at the NYSE and a nearly 6-to-1 margin at the Nasdaq.

>>> Allergan - Guides H2 $6.25-6.65 (no comparable ests), Rev above $8B (no comp

Guides H2 $6.25-6.65 (no comparable ests), Rev above $8B (no comparable ests); cites adjustments due to divestiture to Teva 
- H2 EBIT seen at $3.8-4.0B
- The transaction with Teva is expected to close in the first quarter of 2016. 
Following the close of the divestiture of the Generics business to Teva, New Allergan expects to have a powerful financial profile to drive continued long-term growth:
10% branded revenue growth
Non-GAAP gross margins of 77% to 79% with additional long-term expansion anticipated
Non-GAAP SG&A as a percentage of revenue between 21-24%, declining within that range over time
Non-GAAP tax rate of ~15%