>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: INTC -5.4%, ADI -2.5%, SLP -2.2%, USB -2%, C -1.5%, WYNN-1.5%, WFC -1.3%, RF -1.1%, EURN -0.6%

M&A news: GE -1.4% (to divest its Appliance unit to Haier for $5.4 bln)

Select China related names showing weakness with Shanghai -3.5% overnight: CSIQ -9.7%, FCX -6.4%, JMEI-4.8%, JD -4.3%, WBAI -4%, HSBC -3.6%, BABA -3.2%, BIDU -3%

Select semi/PC related stocks trading lower following INTC earnings: STM -4.3%, SWKS -3.8%, ARMH -3.7%,ASML -3.5%, MU -3.1%

Select oil/gas related names showing early weakness: ETE -8.6%, WMB -7.9%, PBR -7.5%, RIG -6.2%, MRO-6.1%, CHK -5.7%, STO -5.4%, RDS.A -5.4%, SSL -5.2%, BP -5.2%, APC -4.3%, PTR -4.1%, BHI -4.1%, HAL-3.9%, DVN -3.7%, SLB -3.2%

Other news: SDRL -9.5% (agrees to delay delivery of 2 ultra-deepwater drillships), BHP -7.6% (to write down ~$4.9 bln on US oil and gas assets), BIOA -5.1% (commenced public offering of its common stock), AKRX -4.4% (engaged BDO USA as the co's independent registered public accounting firm; estimates of errors resulted in an overstatement to net revenue and pretax income from continuing operations of ~$35 mln), GPRO -4% (cont weakness), NFLX -3.8% (trading lower with the futures), TASR -3.7% (The U.S. patent office has confirmed the validity of Co's '292 patent on body camera auto-activiation technology; Co also files lawsuit against TASER (TASR)), ATVI -3.2% (Vivendi (VIVHY) sells remaining stake in ATVI), EPR -3% (prices offering of 2,250,000 of its common shares; terms not disclosed),FCAU -2.5% (reports Dec sales), MRK -1.6% (resolves previously disclosed securities class action lawsuit related to Vioxx for ~$680 mln), GS -1.4% (confirms settlement with RMBS working group; will reduce earnings Q4 earnings by $1.5 bln)

Analyst comments: CNHI -5.9% (initiated with a Underperform at Credit Suisse), GRMN -5.3% (downgraded to Underperform from Neutral at Credit Suisse), H -4.2% (downgraded to Sell from Neutral at Goldman), DIS -3.2% (downgraded to Underweight at Barclays)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: SEED +12.5%, SKY +2.4%, EDUC +2.2%, FAST +2%

M&A news: CDRB +16.1% (enters into a non-binding Letter of Intent to engage in a merger with Aegis Identity Software ),SYT +2.4% (Bloomberg reports that Syngenta's (SYT) Board would support a potential deal with ChemChina)

Select metals/mining stocks trading higher: HMY +9.4%, AU +4.7%, MTL +3.5%, MTL +3.5%, ABX +2.4%, GDX+2%, NEM +1.6%, GLD +1.1%

Other news: BSI +24% (receives additional offer to purchase its holdings in Blue Square Real Estate), DGLY +8.8% (The U.S. patent office has confirmed the validity of Co's '292 patent on body camera auto-activiation technology; Co also files lawsuit against TASER (TASR)), LVS +2.8% (in symp with WYNN), AE +2.1% (subsidiary acquired a 30% member interest in Ben Cap for $2.2 mln), BTG +1.4% (reported Q4 gold production +18% y/y to of 131,469 ounces and issues 2016 production outlook for gold production of 510-550K ounces), MGM +1.4% (in symp with WYNN), LEI +0.9% ( schedules conference call to discuss planned Mid-Continent acquisition and strategic objectives on January 21 at 11am ET)

Analyst comments: ESL +5.4% (upgraded to Outperform from Neutral at Credit Suisse), EA +1.2% (upgraded to Buy from Neutral at BofA/Merrill), SHPG +0.8% (upgraded to Buy from Neutral at BofA/Merrill)

>>> Wells Fargo reports EPS in-line, revs in-line --> WFC -2.21%

Wells Fargo reports EPS in-line, revs in-line
  • Reports Q4 (Dec) earnings of $1.03 per share, in-line with the Capital IQ Consensus of $1.03; revenues rose 0.7% year/year to $21.59 bln vs the $21.75 bln Capital IQ Consensus.
  • Total loans were $916.6 bln at Dec 31, 2015, up $13.3 bln from Sept 30, 2015. Q4 loan growth was broad-based across all portfolios (other than real estate 1-4 family junior lien mortgages) and did not include any loan portfolio acquisitions. Core loan growth was $15.4 bln, or 2%, as non-strategic/liquidating portfolios declined $2.1 bln in the quarter. Total average loans of $912.3 bln, up $62.9 bln, or 7%
  • During Q4, residential mortgage loan originations were $47 bln, down $8 bln linked quarter on seasonality. The production margin on residential held-for-sale mortgage loan originations5 was 1.83%, compared with 1.88% in third quarter. Net mortgage servicing rights (MSRs) results were $417 mln, compared with $253 mln in third quarter 2015.
  • Net interest income in Q4 increased $131 mln from Q3 to $11.6 bln, largely driven by growth in earning assets. Net interest margin was 2.92%, down 4 bps QoQ.
  • Credit quality: "The quarterly loss rate (annualized) remained low at 0.36% and nonperforming assets declined by $497 mln, or 15% (annualized), from the prior quarter. The allowance for credit losses in the fourth quarter was stable (no reserve build or release) as continued credit quality improvements in the residential real estate portfolio were offset by higher commercial reserves reflecting continued deterioration within the energy sector. Future allowance levels may increase or decrease based on a variety of factors, including loan growth, portfolio performance and general economic conditions." Book value +0.4% QoQ to $33.81/share.

>>> Citigroup reports EPS in-line, beats on revs --> C US -1.98% pre open

Citigroup reports EPS in-line, beats on revs
  • Reports Q4 (Dec) earnings of $1.06 per share, in-line with the Capital IQ Consensus of $1.06; revenues rose 3.1% year/year to $18.46 bln vs the $17.93 bln Capital IQ Consensus.
  • Citigroup revenues of $18.6 billion in the fourth quarter 2015 increased 4%, driven by a 61% increase in Citi Holdings, partially offset by a 2% decrease in Citicorp revenues.
  • Citigroup's net income increased to $3.4 billion in the fourth quarter 2015, primarily driven by the higher revenues and lower operating expenses, partially offset by a higher cost of credit. Citigroup's operating expenses decreased 23% to $11.1 billion in the fourth quarter 2015.
    • Operating expenses in the fourth quarter 2015 included legal and related expenses of $411 million, compared to $2.9 billion in the prior year period, and $313 million of repositioning charges, compared to $655 million in the prior year period.
    • Citigroup's cost of credit in the fourth quarter 2015 was $2.5 billion, a 25% increase, with a net loan loss reserve build of $588 million, primarily in Institutional Clients Group (ICG), compared to a net loan loss reserve release of $441 million in the prior year period, and partially offset by a 22% decrease in net credit losses.
    • ICG cost of credit was primarily driven by a net loan loss reserve build of $549 million, including approximately $250 million related to the energy portfolio, with the remainder reflecting volume growth and macroeconomic conditions.
  • Citigroup's allowance for loan losses was $12.6 billion at quarter end, or 2.06% of total loans, compared to $16.0 billion, or 2.50% of total loans, at the end of the prior year period.
  • Citigroup's loans were $618 billion as of quarter end, down 4% from the prior year period, and down 1% in constant dollars.
  • Citigroup's book value per share was $69.46 and tangible book value per share was $60.61, each as of quarter end, representing 5% and 7% increases, respectively.
  • Institutional Clients Group
  • ICG revenues of $7.4 billion increased 4%, driven by a 9% increase in Markets and Securities Services revenues. Banking revenues of $4.2 billion increased 3% .
  • Investment Banking revenues of $1.1 billion increased 6%.
    • Advisory revenues increased 15% to $303 million, debt underwriting revenues increased 12% to $616 million, and equity underwriting fell 18% to $206 million, reflecting lower industry-wide underwriting activity during the current quarter.
    • Markets and Securities Services revenues of $3.2 billion increased 9%.
    • Fixed Income Markets revenues of $2.2 billion in the fourth quarter 2015 increased 7%, reflecting improved trading conditions in spread products as well as continued strength in rates and currencies.
    • Equity Markets revenues of $606 million increased 29%, driven by growth across products and improved performance in EMEA.