>>> Citi Cuts Global Growth Forecast on Downside Risks From China

Citi cuts 2015 global growth forecast to 2.6% from 2.7%, 2016 forecast to 2.9% from 3.1%, according to note.
  • 4th consecutive downgrade to Citi’s year-ahead global growth forecast; cumulative downgrade (0.6 percentage points) sharpest since 2011
  • Global conditions are likely to remain disinflationary
  • Doesn’t expect EM weakness to be followed by a V-shaped rebound in DM due to:
    • Higher weight of EMs in global growth
    • Relative paucity of monetary policy options in DM
    • Overhang of high public and private debt levels
  • Expects first Fed rate increase in Spring 2016, first by BOE in 4Q 2016; sees further easing in coming months from ECB, BOJ, PBOC

>>> US After Hours Summary: SCS +3.3%, FUL -7.4%, WOR -3.8% foll

After Hours Summary: SCS +3.3%, FUL -7.4%, WOR -3.8% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: SCS +3.3%

Companies trading higher in after hours in reaction to news: CNAT +3.7.8% (announced positive top-line results from Multicenter Phase 2 portal hypertension clinical trial of emricasan in patients with liver cirrhosis; study met various primary endpoints), SNCR +7.0% (reiterated that it has a multi-year contract in place with Verizon Wireless (VZ), focused primarily on the company's Personal Cloud offering and related services; no change in the agreement between Synchronoss and Verizon), MPLX +4.9% (co's Pipe Line unit amended its existing Patoka, Illinois tank farm Storage Services Agreement with Marathon Petroleum (MPC) to increase the shell capacity), WFT +1.0% (co's CFO Shivram Krishna reported purchase of 33,750 shares at an avg price of $8.83), BSQR +0.8% (entered into a two-year, $12 million credit agreement)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: FUL -7.4%, WOR -3.8%

Companies trading lower in after hours in reaction to news: WGBS -9.9% (co filed amended S-1 containing info on previously announced $34.5 mln mixed securities offering; registration statement to allow for an offering of 2,000 of Class A Units consisting of common stock and warrants and Class B Units consisting of shares of Series 2 preferred stock and warrants), VNDA -3.3% (announced that a Fanapt patent is now listed in the FDA's Orange Book), DORM -1.1% (CFO Matthew Kohnke to resign effective February 26 to pursue personal opportunities)

>>> Asian Update

Asian Mid-session Update: Nikkei falls over 2% in catch-up selling; New Zealand trade deficit widens


***Economic Data***
- (JP) JAPAN SEPT MARKIT FLASH PRELIMINARY MANUFACTURING PMI: 50.9 V 51.2E
- (NZ) NEW ZEALAND AUG TRADE BALANCE (NZD): -1.04B V -850ME; 3rd straight deficit and widest deficit in a year

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -2.3%, S&P/ASX +1.0%, Kospi +0.4%, Shanghai Composite +0.8%, Hang Seng -0.6%, Dec S&P500 -0.3% at 1,921

***Commodities/Fixed Income***
- Dec gold +0.2% at $1,133/oz, Nov crude oil +0.8% at $44.82/brl, Dec copper +0.3% at $2.30/lb
- (JP) BOJ offers to buy ¥400B in 5-10yr JGBs, ¥240B in 10-25yr JGBs, and ¥140B in JGBs with maturity over 25-yr
- (CN) PBoC to inject CNY80B in 14-day reverse repos (26th consecutive injection); Injects net CNY40B this week v drained CNY140B prior; Offer yield at 2.70% v 4.10% prior on Feb 26th

***Market Focal Points/FX***
- Asian indices are mixed tracking another down day on Wall St. The selling is led by Nikkei225, where investors caught up with increasingly overwhelming bearish sentiment after 3 days of holidays. US S&P emini futures were also down by about 0.5%, falling below 1,920. FX majors are generally rangebound, though USD/JPY was notably lower by about 50pips below the ¥120 handle. Soft USD has boosted precious metals, with Dec gold up over $5 above $1.135.

- Japan's Sept preliminary manufacturing PMI remained in expansion but was softer than consensus 51.2 and prior 51.7 level. Markit economist said the findings pointed to a general slowdown in the expansion of the Japanese manufacturing sector with moderating new order growth. Respondents generally indicated that much of the decline is due to a fall in sales volumes from China. Survey's employment component levels also declined for the first time since March.

- PBoC open market operation switched to 14-day reverse repo instruments to inject CNY80B in liquidity. For the week, injections were also net positive against prior month's net drain. In notable Chinese press, economists with Bank of China (BOC) estimated Q3 GDP to slow to 6.8% before a bounce of 7% in Q4, resulting in overall 2015 growth of around 7%. Separately, local press speculated the PBoC is considering setting up interest rate corridor, whereby the lower bound of the corridor would represent the rates banks are paid for deposits and the upper bound determines cost of funds that banks borrow from PBoC.

- Down under, BHP was marginally lower by just over 1% after BlackRock trimmed its holdings from the "substantial holder" status of over 5% below that threshold. New Zealand trade balance was in deficit for the 3rd straight month and at its widest in over a year. Both exports and imports were above estimates, with exports to US up over 15% but shipments to Australia down over 2%. NZD/USD had the most volatility after the Fonterra H2 results however, rising over 30pips above 0.6280 once the cooperative raised its FY15/16 payout forecast by 0.75 above NZ$4.60/kg, Economists estimate the higher payout to produce up to NZ$1B in additional revenues for the industry.

***Equities***
US equities / ADRs:
- CNAT: Announces top-line results from multicenter Phase 2 portal hypertension clinical trial in patients with liver cirrhosis; +41.6% afterhours
- SCS: Reports Q2 $0.35 v $0.33e, R$819M v $795Me; +4.9% afterhours
- WMT: Said to be seeking price cuts of 2-6% on China made goods from over 10K suppliers - financial press; +0.1% afterhours

Notable movers by sector:
- Consumer discretionary: Esprit Holdings 330.HK -1.1% (FY15 result); Li & Fung 494.HK +0.6%, WH Group 288.HK +0.7% (Wal-Mart said to seek price cuts); G8 Education GEM.AU -2.9% (Chairperson to step down)l Fonterra FCG.NZ +4.4%(H2 result)
- Consumer staples: Nine Dragons Paper Holdings 2689.HK -0.7% (FY15 result)
- Financials: SOHO China 410.HK +1.0% (To restructure loans); New World China Land 917.HK +1.4% (FY15 result); Fosun International 656.HK -1.3% (acquisition); Nomura Holdings 8604.JP -2.8% (legal settlement)
- Industrials: NWS Holdings 659.HK +0.8% (FY15 result); Shenzhen Auto Electric Power Plant Co 002227.CN +5.6% (China boosts EV charging station construction); Aisin Seiki Co 7259.JP -6.9% (Wal-Mart said to seek price cuts); Honda Motor 7267.JP -3.2%, Toyota Motor 7203.JP -1.4% (investigation related to VW)
- Technology: Tsinghua Unisplendour 000938.CN +0.1% (cooperation with Microsoft); Taiwan Semiconductor Manufacturing 2330.TW +1.2% (raises Q3 outlook)
- Materials: Yunnan Aluminum Co 000807.CN +3.7% (private placement); Brickworks BKW.AU -1.4% (FY15 result)
- Energy: China Coal Energy 1898.HK -1.9% (Chairman resigns); Senex Energy SXY.AU +16.0% (reaffirms outlook)
- Utilities: CGN Meiya Power Holdings Co 1811.HK +1.1% (prelim talk for possible acquisition)

>>> US Close Dow-0.31% S&P-0.20% Nasdaq-0.08% Russell-0.26%

Closing Market Summary: Energy and Materials Pace Midweek Retreat

The major averages registered their second consecutive retreat on Wednesday with the S&P 500 shedding 0.2% while the Nasdaq Composite (-0.1%) ended just ahead.

Overall, the midweek session was a choppy affair that saw the benchmark index spend some time on both sides of its flat line. That trading dynamic resulted from mixed performance among the ten sectors as three top-weighted groups—technology (+0.2%), financials (+0.1%), and health care (-0.1%)—displayed flashes of intraday strength while most of the remaining sectors struggled.

Most notably, commodity-sensitive energy (-1.4%) and materials (-2.1%) finished at the bottom of the leaderboard while the industrial sector (-0.7%) also kept the market under pressure. Altogether, the three sectors responded negatively to last night's release of China's preliminary September Caixin Manufacturing PMI, which fell to a 6.5-year low of 47.0 from 47.3 (expected 47.5).

It is worth pointing out that the energy sector was also pressured by crude oil, which climbed in the morning, but reversed from its best level in a move that coincided with equities retreating from their morning highs. WTI crude continued its retreat into the afternoon, ending the pit session lower by 3.8% at $44.53/bbl.

On the upside, the top-weighted technology sector (+0.2%) settled in the lead thanks to gains among large cap names like Apple (AAPL 114.32, +0.92), Google (GOOGL 653.29, +0.09), Intel (INTC 28.74, +0.07), and Microsoft (MSFT 43.87, -0.03). However, high-beta chipmakers did not fare as well as Intel, evidenced by a 0.7% decline in the PHLX Semiconductor Index.

Elsewhere, financials (+0.1%) and health care (-0.1%) displayed intraday strength, but the health care sector could not stay in the green into the close as renewed weakness in biotechnology took a toll on the countercyclical sector. The iShares Nasdaq Biotechnology ETF (IBB 332.82, -2.58) surrendered 0.8%, extending this week's decline to 6.7%.

Today's choppy action in the stock market had little impact on Treasuries as the 10-yr note spent the day in the red, pushing its yield up two basis points to 2.15%.

Investor participation was on the light side with fewer than 800 million shares changing hands at the NYSE floor.

Economic data was limited to the weekly MBA Mortgage Index, which surged 13.9% to follow last week's 7.0% decrease.

Tomorrow, weekly Initial Claims (consensus 271K), August Durable Orders (expected -2.0%) will be reported at 8:30 ET while August New Home Sales (expected 515,000) will be announced at 10:00 ET.

  • Nasdaq Composite +0.4% YTD
  • Russell 2000 -5.3% YTD
  • S&P 500 -5.8% YTD
  • Dow Jones Industrial Average -8.7% YTD

>>> NCR talks with Blackstone hit wall; reports differ on whether deal still ali

NCR talks with Blackstone hit wall; reports differ on whether deal still alive 

NCR (NYSE:NCR) suitor Blackstone Group (NYSE:BX) has cut off current deal talks, according to reports. Reports differ, however, on whether the talks are dead.

As reported, the New York Post today cited a source close to the situation who said Blackstone had walked away, and described the process as "over." Reuters, however, cited people familiar with the situation who described the talks as "stalled," and said there was a possibility a deal could still get done.

The Reuters report indicated that Blackstone had recently discussed partnering with Bain on the deal, although the parties could not come to an agreement on price. The report also indicated that Blackstone had concerns about the amount of equity required for the deal.

As reported, rival buyout firm Thoma Bravo abandoned plans to acquire NCR in July, after offering about USD 31 per share, below the seller ATM-maker's USD 35 a share asking price.

This news service earlier this month, however, reported that the sale process for the Duluth, Georgia-based ATM and point-of-sale device manufacturer had not concluded, but rather had narrowed, and that it continued to have talks with suitors including Blackstone.

For several months, NCR has been exploring strategic alternatives, including a sale and other options. Financial sponsors struggled this summer to keep up with NCR’s auction schedule for what would have been the largest buyout of the year with an enterprise value of more than USD 9bn.

NCR has been under pressure from Marcato Capital Management to improve results. The activist secured a board seat last year and NCR has said it is working to cut costs and improve free cash flow.

New York Post, Newswire Round-up

>>> US CLose Dow-1.09% S&P-1.23% Nasdaq-1.50% Russell-1.55%

Closing Market Summary: Cyclical Sectors Lead Stocks Lower

The stock market endured a rough trading day on Tuesday with the S&P 500 surrendering 1.2% while the Nasdaq Composite (-1.5%) underperformed.

Equity indices spent the duration of the session in the red after gapping lower at the start. The opening stumble occurred in response to continued concerns about China's economic growth, which was manifested through weakness in commodity prices. Furthermore, European automakers struggled with Volkswagen plunging 19.8% to extend this week's loss to 34.7% after announcing the establishment of a EUR6.50 billion reserve in anticipation of costs associated with the Department of Justice probe into the company's diesel engines. European markets registered losses across the board with Germany's DAX tumbling 3.8%.

Once the opening bell rang on Wall Street, the S&P 500 surrendered more than 15 points in short order and gave up another 20 into the afternoon. The index recovered about ten points during the final hour, but all ten sectors ended the day with losses.

The materials sector (-1.8%) spent the day at the bottom of the leaderboard as losses in commodities like copper (-3.8% to $2.30/lb) and gold (-0.7% to $1124.70/ozt) kept mining stocks under pressure. Accordingly, the Market Vectors Gold Miners ETF (GDX 13.36, -0.64) lost 4.6%.

Meanwhile, another commodity-related sector—energy (-1.1%)—began the day among the laggards, but was able to climb ahead of the broader market. The rebound off session lows was aided by similar price action in crude oil as the energy component ended lower by 1.3% at $46.31/bbl after trading below $45.50/bbl in the morning.

Elsewhere among cyclical sectors, financials (-1.3%), technology (-1.6%), and industrials (-1.4%) underperformed throughout the day, which prevented an intraday rebound from taking shape. To be fair, the health care sector (-0.6%) settled ahead of the broader market, but the same could not be said for biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 335.45, -5.02) ended lower by 1.5%, widening its week-to-date loss to 6.0%.

Biotechnology's underperformance contributed to relative weakness in the Nasdaq while high-beta chipmakers also weighed, evidenced by a 2.3% decline in the PHLX Semiconductor Index.

Switching gears, Treasuries rallied into the afternoon, erasing their losses from yesterday with the 10-yr yield falling seven basis points to 2.14%.

Today's participation was ahead of recent averages as more than 900 million shares changed hands at the NYSE floor.

Economic data was limited to the FHFA Housing Price Index for July, which rose 0.6% to follow last month's 0.2% uptick.

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET.

  • Nasdaq Composite +0.4% YTD
  • Russell 2000 -4.9% YTD
  • S&P 500 -5.6% YTD
  • Dow Jones Industrial Average -8.4% YTD

>>> Bosch said they supply the software to several manufacturer...

GERMANY KNEW MID-YR OF SOFTWARE SIMILAR TO VW'S: WELT - maybe they already knew about this?

"The German auto supplier Bosch says it delivered components for regulating diesel exhaust systems to Volkswagen, which is at the centre of a US investigation into rigged emissions tests.

In a statement the company said ‘we produce the components after specification of Volkswagen’.

Asked whether it had supplied the electronic module central to the probe, Bosch said ‘we supply components for exhaust after-treatment to several manufacturers. The integration is the responsibility of the manufacturer’."