>>> US Gapping up

Gapping up 
In reaction to strong earnings/guidance: APIC +11.3%, DTEA +5.5%, SIGM +5.4%, PANW +5.2%, OLLI +2.3%, BOX +0.8%

M&A news: ENVI +114.7% (to be acquired by Ericsson (ERIC) for $4.10/share in cash, or ~$125 mln), CNW +33.3% (to be acquired by XPO Logistics (XPO) for $47.60/share, or ~$3 bln)

Other news: CYTX +23.5% (announced the publication of the results from the 12 month clinical follow up of patients enrolled in the Scleradec-I clinical trial), APRI +16.5% (announces it has licensed the U.S. development and commercialization rights for Vitaros from Allergan (AGN)), MNOV +13.6% (receives Fast Track designation from the FDA for MN-001, to treat patients with idiopathic pulmonary fibrosis), CERE +13.5% (revises upwards, the number of acres planted with its improved forage sorghum hybrids, saying that early performance results this season have been favorable), VVUS +5.2% (cont strength), VNDA +4.4% (announces favorable Markman Ruling in Fanapt patent infringement litigation), PLUG +3.5% (announced Prelodis as its recent European GenDrive customer. Co has fully shipped and commissioned units for Prelodis to use at its new-construction (greenfield) logistics facility located in Saint Cry en Val, France), RDUS +3.1% (named David P. Snow as Chief Commercial Officer), AIZ +2.4% (confirmed  sale of its Employee Benefits Business to Sun Life Financial (SLF); raised quarterly dividend to $0.50/share from $0.30/share; authorized new $750 mln share repurchase program), CSTE +1.9% (published a presentation in response to the short report from Spruce Point Capital; says report is a misleading and otherwise factually inaccurate description of Caesarstone) AZN +1.9% (Healthcare/defensive stocks strong in Europe), SUNE +1.2% (cont strength), NVS +1.2% (Healthcare/defensive stocks strong in Europe), LYV +1.1% (named Carrie Davis as Chief Communications Officer), PAH +1.1% (announced that Alent plc shareholders have approved its acquisition of the company; closure expected in late 2015 or early 2016), GPRO +1% (slightly rebounding following recent decline), FEYE +1% (trading in symp with PANW), BMY +1% (announces that the European Commission has approved an updated label for Daklinza for the treatment of genotype 3 chronic hepatitis C), TOT +0.9% (divests interest in Geosel Manosque), GSK +0.8% (Healthcare/defensive stocks strong in Europe)

Analyst comments: TERP +6.1% (initiated with a Buy at Janney), SWI +1.6% (upgraded to Overweight from Equal-Weight at Morgan Stanley), HMHC +1.4% (upgraded to Buy from Neutral at Citigroup), SUNE +1.2% (initiated with a Buy at Janney), SIG +0.7% (initiated with a Outperform at RBC Capital Mkts), LNC +0.7% (upgraded to Buy from Neutral at Goldman ), CBS +0.7% (upgraded to Buy from Hold at Deutsche Bank)

>>> Appaloosa's Tepper: flat is not a bad place to be right now; stocks not high

Appaloosa's Tepper: flat is not a bad place to be right now; stocks not high enough to short - CNBC 
- If Fed does not raise rates and stocks rally I might look to short
- Profit expectations for 2016 are very high and earnings may not rise as much as expected
- This is a time to not lose money, not a time to take risks. Stock valuations are somewhere between right and too rich- Would buy on a 15-20% correction
- Currently more apt to sell into rallies than to buy into dips
- Notes sold last of BABA position in early July (held 1.4M shares as of June filings) 
- Apple stock is cheap, don't have a large position

FT : Glencore has a mogul in denial

Glencore has a mogul in denial

Glasenberg is having to retrench at the time when he should be able to snap up mining bargains

Ivan Glasenberg, co-founder and chief executive of Glencore, delights in telling his rivals in the commodities industry that they are wrong, and in trying to prove it by running his business differently. So it takes quite an upheaval to persuade Mr Glasenberg that he, and not someone else, is mistaken.
He tacitly admitted it this week by reversing course as his share price fell, Standard & Poor’s warned about Glencore’s debt rating and hedge funds ganged up. Instead of defying others as usual, he did what he had been told by implementing a plan to cut $10bn in debt and shore up Glencore’s balance sheet. I wonder, though, whether the message has entirely sunk in.

Someone who starts a stock exchange statement with the word “notwithstanding”, and lists all the reasons why everything is fine before announcing a change of tack, has not yet reached “acceptance” in Elisabeth Kübler-Ross’s psychological model of the five stages of grief following loss. Mr Glasenberg is still flirting with “denial”.
In one sense, he has surrendered and had no alternative. The slowdown in China, the plunge in the price of copper and industrial metals, and the chatter that Glencore would be in serious financial straits if the copper price kept on falling shocked him into action. Losing a paper fortune — his 8 per cent stake in Glencore is down to a mere £1.5bn — grabs one’s attention.
But the market, it seems to me, is signalling more to Mr Glasenberg than discomfort at Glencore’s $30bn of net debt (compared with a market capitalisation that has dropped to £19bn this week from £37bn at its London initial public offering in 2011). It is conveying a lack of conviction about Glencore itself.
Glencore has been an industry outlier since its post-IPO acquisition of Xstrata in 2012: a trading outfit integrated with a mining company that digs things out of the ground. While traders such as Trafigura (also descended from the late Marc Rich’s commodities trading business) mostly do one thing, and miners such as BHP Billiton and Rio Tinto mostly do another, Glencore does both.
This is reminiscent of banking. Investment and retail banks used to be different businesses, run by different kinds of people, with different attitudes to risk and capital. In the 2000s boom the two sides converged, often to be run by risk-hungry traders and investment bankers rather than sober retail bankers. In the 2008 crash, the flaws in this innovation became obvious.
Mining companies are not banks — Glencore’s debt leverage is far lower than any bank’s and linking a copper trader to a copper mine is less of a stretch than putting credit cards and credit derivatives under one roof. But Glencore’s travails show the tensions, especially in a downturn, in the model that Mr Glasenberg pioneered.
The first tension is financial. Trading is a volume business with thin margins, in which leverage creates a high return on equity. The risk is limited by finance not being tied up for long — it is repaid when copper or oil is delivered — so traders use bank and short-term debt and do not need high ratings.
Mining, in contrast, is a long-term, capital-intensive, cyclical business in which a good credit rating is essential. That protects a company such as BHP Billiton or Rio Tinto from a liquidity crisis when prices fall and many of its assets are still buried in the ground. A mining company’s balance sheet is inherently inflexible.

Holding a lot of capital curbs returns in boom times but it comes into its own in a downturn, when a mining company can acquire assets that are going cheap, as many mines are now. Having miscalculated what the market would tolerate, Mr Glasenberg is having to retrench at the time when Glencore should be able to snap up mining bargains.
The second tension is managerial. Like different breeds of banker, commodities traders have contrasting skills and attitudes to the mining engineers who explore for reserves and run mines. The trader specialises in risk taking and financial creativity; the engineer in risk mitigation and discipline.
Trading is the dominant culture at Glencore. Mr Glasenberg initially agreed thatMick Davis, Xstrata’s former chief executive, would have that job in the merged company — and then took the role himself. Glencore’s mines are run by engineers not trading whizz-kids — even its rivals say they are efficient — but its heart is in trading.
This combination has never been tried, and the way you discover whether an innovative business model works is to put it under pressure, which is what Glencore is experiencing now. Its head office in Switzerland must be suffering quite a stress test, given that its former partners have lost hundreds of millions in net worth, and it has had to shut some mines temporarily.
The rebound in its shares this week suggests that its shareholders are less worried about the finances since Mr Glasenberg altered course. Well, it is a start. He may have to change his mind about other things, too.

>>> ABB's new structure could lead to spin-off of Power Grids division

ABB's new structure could lead to spin-off of Power Grids division 

ABB [VTX: ABBN], the Swiss industrial giant, may spin off its new Power Grids division, according to Dagens Industri.

This is after yesterday's announcement that ABB is to restructure its organisation into four new divisions in which large parts of ABB's power operations and some of its automation operations are to be placed into a division named Power Grids. ABB also announced that Power Grids will be subject to a strategic portfolio review.

The Swedish business daily cited unnamed sources who believe the reorganisation will likely lead to all or some of Power Grids being spun off in the future.

Meanwhile, the paper also cited ABB's Managing Director, Ulrich Spiesshofer, who said that while nothing can be excluded, he denied that ABB is planning a spin off. He said the company conducted a review of its robot operations in 2009 and despite speculation the unit might be sold, ABB decided to keep it and change it. Spiesshofer said the strategic review of Power Grids will be concluded in 2016, the article added.

The item noted ABB's other three new divisions, Electrification Products, Discrete Automation and Motion and Process Automation are all far more profitable than Power Grids and that the group as a whole would be more profitable without Power Grids.

Power Grids is the largest of the four new divisions with a turnover of SEK 106bn (EUR 11.3bn).

Dagens Industri

>>> What to look at today - 10th of September 2015

Dow-1.45% S&P-1.39% Nasdaq-1.15% Russell-1.16%
US Market closed on lows after opening on highs. Equity indices hit their highs shortly after the opening bell with the early move fueled by strengthening risk appetite overseas. To that point, Asian markets posted solid gains with China's Shanghai Composite jumping 2.3% amid continued speculation about government involvement in the market while Japan's Nikkei soared 7.7%, registering its largest one-day gain since October 2008, after Prime Minister Shinzo Abe pledged to lower the corporate tax rate by at least 3.3% but as usual such moves are not very reassuring these last few days...Apple long awaited keynote was a bit disappointing for the investors, AAPL closed lower by 1.9%. energy sector (-1.9%) struggled throughout the day as renewed weakness in oil prices took its toll on the commodity-sensitive sector. The energy space is now down 0.5% for the week while crude oil tumbled 3.9% today to $44.15/bbl. Volume were above average with 905mil shares, and we continiue to see more participation on down mkt that up ones. US After Hours SIGM +7.2%, PANW +4.8%, BOX +3.5%, KKD -17.4%, MTH -8.0%, PPHM -2.5% following earnings/guidance CNW +32.9% (to be acquired by XPO Logistics (XPO) for $47.60/share, or ~$3 bln, EWZ -5.2% (Brazil ETF lower following rating cut at S&P)...Asian indices were on the defensive again after yesterday's outsized rally, tracking the aggressive selling in the US markets that were jolted by the record high JOLTS jobs data boosting expectations of September Fed liftoff. After yesterday's 7%+ jump in Tokyo, Nikkei225 is leading the downside with a near 3% drop in the afternoon session. Sept S&Ps were down another 10pts at the lows of 1,935 in early electronic trade before regaining composure. China Asian indices were on the defensive again after yesterday's outsized rally, tracking the aggressive selling in the US markets that were jolted by the record high JOLTS jobs data boosting expectations of September Fed liftoff. After yesterday's 7%+ jump in Tokyo, Nikkei225 is leading the downside with a near 3% drop in the afternoon session. Sept S&Ps were down another 10pts at the lows of 1,935 in early electronic trade before regaining composure. S&P became the first rating agency to cut Brazil status to junk, lowering credit rating one notch to BB+. S&P said credit profile has weakened further since July 28, citing revision to budget proposals late last month. Based on the fiscal target cited, S&P said, Brazil would remain in deficit for the next 3 years. Brazil ETF EWZ, along with PBR and VALE, were down sharply afterhours following the rating cut.

Nikkei -2.47% Hang Seng -1.93% Shnaghai -0.55%

Eur$ 1.1219 CNY 6.3846 JPY 120.79 BRL 3.78 RUB $68.62 WTI $43.95

S&P +0.27% EuroStoxx -1.16% Dax -0.97% SMI -0.82%

Macro :
- Brazil ETF Falls 4.6% Post-Mkt as Country Cut to Junk by S&P
- Fed Likely to Wait Past Sept W/ Hike Given Turmoil:DB’s Lavorgna
- Li Says China Confident to Achieve Growth Target This Yr
- China Aug. Auto Sales Fall 3.4% Y/y

Keep an eye on :
- ACA FP : Credit Agricole Close to $900m Agreement in U.S. Probe: Reuters
- DBK GY : Deutsche Bank Raised to Hold; Berenberg Sees Break With the Past
- DIA SM : Dia Says Warehouse Blockade Continues; Asks Govt to Help
- EAON GY : EON Sees 3Q Impairments in ‘Higher Single-Digit’ Billions
- ING FP : Ingenico Said to Make Revised Worldpay Bid for Over GBP6b: Sky
- KPN NA : America Movil Offers Bonds Exchangeable Into KPN Shrs
- LOGN SW : Logitech Holders Approve Proposals, Including Div at AGM
- LHA GY : Lufthansa to Offer Schedules Virtually Normal Tomorrow
- ML FP : Michelin Hires Investment Co. for Buyback Program
- MRW LN : Morrison Interim Div. Misses, to Close Another 11 Supermarkets
- NOVN VX : Novartis’s Afinitor, J&J’s Xarelto Get Paragraph IV Challenges
- PHIA NA : Philips Said to Be Interested in Taking Stake in Coway: Yonhap
- ROG VX : Roche’s Zelboraf Works in Hairy-Cell Leukemia Studies
- ROG VX : Roche Holdings Starts Tender Offer for Up to $1b of Notes
- RDSA NA : Shell CEO Said to Reassure Investors on Closing of BG Deal: WSJ
- RWE GY : RWE Municipal Holders Want Mueller as Spvy Board Head, FAZ Says
- MF FP : Wendel NAV/Share EU146.3 at Aug. 31, Up 13% on Year

>>> Europe : Brokers Upgrades & Downgrades - 10th of September 2

>>> Up
*BP RAISED TO OUTPERFORM VS MARKET PERFORM AT BERNSTEIN
*DELHAIZE RAISED TO OUTPERFORM VS NEUTRAL AT EXANE
*DEUTSCHE BANK RAISED TO HOLD VS SELL AT BERENBERG
*LECTRA RAISED TO BUY VS HOLD AT SOCGEN
*L’OREAL RAISED TO BUY AT HSBC
*METRO RAISED TO OUTPERFORM VS NEUTRAL AT EXANE (Note attached)
*MOBISTAR RAISED TO HOLD AT HSBC
*PROXIMUS RAISED TO BUY AT HSBC
*RIO TINTO RAISED TO OVERWEIGHT VS NEUTRAL AT CBA
*SKF RAISED TO BUY AT GOLDMAN
*SKY RAISED TO BUY VS NEUTRAL AT NOMURA
*TALKTALK RAISED TO OUTPERFORM VS NEUTRAL AT MACQUARIE

>>> Down
*KOENIG & BAUER CUT TO HOLD VS BUY AT HSBC
*SAP CUT TO HOLD VS BUY AT SOCIETE GENERALE
*TECNICAS CUT TO SELL VS NEUTRAL AT CITI
*VALEO CUT TO UNDERPERFORM FROM NEUTRAL AT EXANE (Note Attached)
*VOLKSWAGEN PFD CUT TO NEUTRAL FROM OUTPERFORM AT EXANE
*WILLIAM HILL CUT TO REDUCE AT HSBC

>>> PT Change


>>> Initiation
*ALFA LAVAL RATED NEW UNDERWEIGHT AT MORGAN STANLEY, PT SEK148
*CAPITA RATED NEW NEUTRAL AT GOLDMAN, PT 1,295P
*DX GROUP RATED NEW BUY AT NUMIS, PT 110P
*GEA GROUP RATED NEW EQUALWEIGHT AT MORGAN STANLEY, PT EU38
*KONE RATED NEW EQUALWEIGHT AT MORGAN STANLEY, PT EU39
*NORDAX GROUP RATED NEW NEUTRAL AT CITI, PT SKR42.20
*WARTSILA RATED NEW OVERWEIGHT AT MORGAN STANLEY, PT EU45

>>> Call
>> stock
*FLUGHAFEN ZURICH REMOVED FROM KEPLER MOST PREFERRED STOCKS LIST
*RYANAIR ADDED TO KEPLER CHEUVREUX MOST PREFERRED STOCKS LIST

>>> Asian Update

Asian Mid-session Update: RBNZ cuts rates, flags more easing; Australia employment beats estimates; China CPI hits 1-year high on rising pork prices


***Economic Data***
- (CN) CHINA AUG CPI Y/Y: 2.0% V 1.8%E; 1-year high
- (CN) CHINA AUG PPI Y/Y: -5.9% V -5.6%E; (42nd month of decline)
- (AU) AUSTRALIA AUG EMPLOYMENT CHANGE: +17.4K V +5KE; UNEMPLOYMENT RATE: 6.2% V 6.2%E
- (AU) AUSTRALIA SEPT CONSUMER INFLATION EXPECTATION: 3.2% V 3.7% PRIOR; 3-month low
- (JP) JAPAN AUG PPI M/M: -0.6% V -0.4%E, Y/Y: -3.6% V -3.3%E
- (JP) JAPAN JULY MACHINE ORDERS M/M: -3.6% (2nd month of decline) V 3.0%E; Y/Y: 2.8% V 10.3%E; Govt cuts assessment of machine orders to "pickup is stalling"
- (NZ) NEW ZEALAND JULY RETAIL CREDIT CARD SPENDING M/M: 0.5% V 0.3%E; TOTAL M/M: 0.1% V 1.1% PRIOR
- (UK) UK AUG RICS HOUSE PRICE BALANCE: 53% V 46%E

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -2.9%, S&P/ASX -2.1%, Kospi -0.1%, Shanghai Composite -1.0%, Hang Seng -2.2%, Sept S&P500 -0.1% at 1,940

***Commodities/Fixed Income***
- Dec gold +0.4% at $1,106/oz, Oct crude oil -1.3% at $43.55/brl, Dec copper -0.2% at $2.43/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 4.2 tonnes to 678.2 tonnes; 2-week low
- JGB: (JP) Japan MoF sells ¥2.27T in 0.1% coupon 5-year JGB bonds; Avg yield: 0.067% v 0.089% prior; Bid-to-cover: 3.49x v 3.45x prior
- (JP) Japan investors bought net ¥1.12T in foreign bonds v bought ¥902B in prior week; Foreign investors sold net ¥986B in Japan stocks v sold ¥627B in prior week
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3772 v 6.3632 prior setting; Weakest Yuan setting since Aug 31st

***Market Focal Points/FX***
- Asian indices were on the defensive again after yesterday's outsized rally, tracking the aggressive selling in the US markets that were jolted by the record high JOLTS jobs data boosting expectations of September Fed liftoff. After yesterday's 7%+ jump in Tokyo, Nikkei225 is leading the downside with a near 3% drop in the afternoon session. Sept S&Ps were down another 10pts at the lows of 1,935 in early electronic trade before regaining composure.

- China inflation data dominated an otherwise active Asian economic calendar. Aug CPI hit a 1-year high of 2%, mainly driven by food CPI rising to 3.7% v 2.7% prior, as non-food component remained little changed at 1.1%. PPI meanwhile declined faster and for the 42nd straight month. Economists with Soc Gen noted more aggressive fiscal stimulus would be needed to curb the pressure on manufacturing investment. At the world economic forum, China Premier Li reiterated he was confident Japan could achieve 2015 GDP target, maintain yuan rate stable, and seek to avoid currency war.

- Late in the day, JPY fell sharply by about 90pips above 121.20 as LDP party official Yamamoto called on BOJ to boost QE in late October so as to ensure Japan inflation objectives could be met. Earlier, Japan's forward looking machine orders data showed a 2nd straight month of sequential decline, prompting the govt to cut its assessment of the sector. Despite the data, BOJ Gov Kuroda said fundamentals are sound and inflation trends improve steadily.

- Down under, RBNZ cut rates for the 3rd straight time as widely expected but also featured a more dovish than anticipated policy statement. RBNZ said some further easing in OCR is warranted and further depreciation of exchange rate was appropriate, as it revised its GDP, CPI, and 90-day bill rates lower. Traders priced in additional RBNZ easing after the statement, sending NZD/USD down by some 2% or over 130pips below 0.6260. In Australia, employment data was slightly better than expected, albeit some volatility in data was expected on methodology revision. Nonetheless, AUD/USD spiked up over 50pips above $0.70.

- S&P became the first rating agency to cut Brazil status to junk, lowering credit rating one notch to BB+. S&P said credit profile has weakened further since July 28, citing revision to budget proposals late last month. Based on the fiscal target cited, S&P said, Brazil would remain in deficit for the next 3 years. Brazil ETF EWZ, along with PBR and VALE, were down sharply afterhours following the rating cut.

***Equities***
US equities / ADRs:
- CNW: XPO acquires Con-way in $3B transaction for $47.60/shr cash; +33.0% afterhours
- PANW: Reports Q4 $0.28 (adj) v $0.25e, R$283.9M v $256Me; +4.8% afterhours
- SIGM: Reports Q2 $0.12 v $0.05e, R$58.1M v $55.8Me; +6.3% afterhours
- BOX: Reports Q2 -$0.28 v -$0.29e, R$73.5M v $69.3Me; +3.2% afterhours
-MTH: Guides Q3 $0.70-0.85 v $0.98e; Cuts FY15 $3.30-3.75 v $3.68e (prior $3.60-3.90) ; -8.0% afterhours
- KKD: Reports Q2 $0.15 (adj) v $0.18e, R$127.3M v $132Me; Authorizes $50M (4.4% of market cap) share repurchase; -19.4% afterhours

Notable movers by sector:
- Consumer discretionary: McDonald's Holdings 2702.JP +0.5% (Aug result); Shimamura 8227.JP +3.1% (H1 result speculation)
- Financials: Beijing Capital Development Co 600376.CN +0.6% (Aug result); Greentown China 3900.HK -1.2% (Aug result); Poly Property Group Co 119.HK -3.2% (Aug result)
- Industrials: Shenzhen Airport Co 000089.CN -1.7% (Aug result)
- Technology: Wistron 3231.TW +4.1% (Aug result); Asustek Computer 2357.TW -1.0% (Aug result); Hon Hai Precision Industries 2317.TW -1.2% (Apple Sept event ); Compal Electronics 2324.TW +0.8% (Aug result); InnoLux Corp 3481.TW -2.6% (Aug result)
- Materials: Chongqing Iron & Steel Co. 601005.CN -7.7% (private placement); China Steel Corp 2002.TW -0.3% (Aug result)
- Energy: Santos STO.AU -4.0% (speculation on asset sales)
- Healthcare: China National Medicines Corp 600511.CN +1.7% (to submit SOE reform plan); Sigma Pharmaceuticals SIP.AU -2.0% (H1 result)