TheChek News Flow

Gapping down
In reaction to disappointing earnings/guidance: VNCE -36.9%, UTIW -19.6%, ESL -6%, PAY -3.3%

Select pharma names displaying early weakness : ILMN -2.1%, GSK -1.8%, LLY -1.7%, BIIB -1.2%, GILD -0.9%

Select fan favorite names showing weakness: NFLX -2.8%, TSLA -1.8%, GPRO -1.7%, SUNE -1.3%, MSFT -1.1%, V -1%, TWTR -0.8%, FB -0.8%, AAPL -0.8%

Select oil/gas related names showing early weakness: RDS.A -2%, STO -1.9%, PBR -1.8%, TOT -1.3%, COP -0.6%, CHK -0.5%

Other news: INFY -3.6% (Sensex mkt down over 2% overnight), AMBA -2.9% (cont weakness), IVAC -2.6% (announced the order of an INTEVAC MATRIX thin-film processing system, by a Tier 1 solar cell manufacturer), GPS -2.3% (Aug same store sales -2.0% vs -0.4% Retail Metrics consensus), ABIO -2.2% (disclosed that its common stock will commence trading on a post-split basis tomorrow following today's seven-for-one reverse split), TTM -2% (Sensex mkt down over 2% overnight), PGN -1.6% (announces borrowing of substantially all remaining capacity under senior secured revolving credit facility), VTL -1.4% (announces a workforce reduction of ~30% and plans to institute across the board expense reductions to conserve capital)

Analyst comments: BP -2.5% (downgraded to Underperform at BofA/Merrill), CAT -1.5% (downgraded to Neutral at Robert W. Baird), DSX -0.8% (downgraded to Sell at UBS)

In reaction to strong earnings/guidance: ENVI +9%, STRM +8.1%

M&A news: AVOL +5.5% (to be acquired by Bohai Leasing for $31/share in cash in an ~$7.6 bln deal)

Other news: GBSN +13.2% (provides update on preferred stock conversions), TICC +4% (announced material changes to proposed new investment advisory agreement with Benefit Street Partners; new agreement includes a permanent annual base management fee reduction), ZNGA +3.1% (still checking, light volume), NBG +3.1% (cont volatility in name), FOGO +0.5% (to open five new Company-owned restaurant locations in the United States)

Analyst comments: BPMX +1.4% (initiated with a Buy at Sterne Agee CRT), DLTR +0.9% (upgraded to Buy at BofA/Merrill)

June 26 peak of €32.25, and back into line with our target price, we upgrade the

stock to Neutral from Sell. We remain of the view that from here deals need to be

larger to make an impact, sellers will be more cognisant of the potential value and

financing could require equity or be constrained by higher financial leverage post

the PT and (if approved) Suddenlink acquisitions. However, we see the valuation

balance between organic and inorganic growth as more reasonable now.

* Rump multiples more reasonable, target price remains €24 — The implied EV

multiples for Altice excl Num-SFR, on our 2016 estimates, have fallen to 11.9x

EBITDA and 18.4x OpFCF (Figure 2). Our SOP-based target price remains €24 and

prices the stake in Numericable at our target price of €49. We are not revising

forecasts and include closed or announced acquisitions except NextRadioTV.

* We expect Num-SFR post-paid churn to ease — Using the company’s disclosure,

we estimate SFR’s consumer post-paid churn was 25% in 2Q15, up from probably

under 20% in 1Q15. We expect this to moderate from here but feel that churn

warrants more emphasis at the next results presentation. Consumer post-paid gross

adds perked up in June to 201k from an average of 137k in each of April and May.

Num-SFR’s revenue decline also eased qoq to -2.4% yoy proforma in 2Q15.

* French spectrum auction presents a risk — Late in 2015 France will auction six

2x5MHz spectrum blocks at 700MHz with a reserve price of €416m per block and

we expect Num-SFR to acquire two blocks for €1bn. Applications are to be

submitted by noon on 29 Sep 2015. We see a risk that the price is bid up quite

aggressively, especially if Bouygues seeks competitive advantage by trying to

squeeze Iliad out. We also see very little prospect of an in-country consolidation

move in French mobile before the pending 700MHz spectrum auction completes

and expect Bouygues to try to improve its FCF organically and take advantage of

the expiry of the Iliad roaming deal on the Orange network due on 20 Dec 2017.

We downgrade Kering to Sell (from Neutral) as we believe I/B/E/S consensus expectations for a revenue and margin recovery are a stretch. We believe the key Gucci brand remains at risk from its over-expanded store network, similar to other luxury brands (Prada). We also believe the current turnaround strategy will take time to meaningfully impact revenue while committed cost and capital in stores will pressure underlying margins; we reduce FY15-17E EPS 4%-13%. We see limited offsets from the rest of the portfolio and believe consensus expectations for 7% group revenue growth and 130 bp margin uplift (FY15-17E) as a challenge.

The market is questioning the sustainability of the Chinese economy, with selective positive consumption data at odds with negative industrial data. Luxury is at the crosshairs of the debate. We visited Tokyo, Shanghai, Hangzhou and Hong Kong, to ask the big questions for investors in Luxury & the Chinese consumer more broadly. Our key takeaways are as follows:

1) Travel & FX: A rare & short-lived opportunity to buy lux on the cheap.

2) Wealth effects: Bad when it was good, bad when it is bad.

3) Brands of the Future driving digital divergence.

4) China’s new luxury: Starting from the entry price, all over again.

5) Outlook: Hold on to your hats, it will be a bumpy ride.

RSA Insurance Group’s share price slipped 1p to 508.5p yesterday, 3 September on concerns that Zurich Insurance Group’s GBP 5.6bn (EUR 7.67bn) takeover bid for the listed UK-based insurer might not proceed, the Daily Express reported. The newspaper’s market report section did not cite a source for the information.

RSA’s market capitalisation stood at GBP 5.17bn at the close of trading in London yesterday.

The report appeared on page 47 of the print edition of the Daily Express on 4 September

Source Daily Express

* Equities: $10.7bn inflows (largest in 8 weeks) (caveat: outsized $7.2bn inflow via SPY)

* Bonds: $1.2bn outflows (4 straight weeks)

* Precious Metals: $0.3bn outflows (first outflows in 4 weeks)

* Money-markets: $29bn outflows (first outflows in 5 weeks)

* EM: $5.2bn outflows (8 straight weeks)

* US: $8.4bn inflows (all via ETFs)

* Europe: $4.2bn inflows (largest in 6 weeks)

* Japan: $2.3bn inflows (inflows in 26 out of past 28 weeks)

* By sector: healthcare snaps back with $0.9bn inflows; conversely, consumer funds see another $0.8bn outflows

* $3.0bn outflows from EM debt funds (6 straight weeks)

* $0.9bn outflows from HY bond funds (6 straight weeks)

* $0.5bn outflows from bank loans (5 straight weeks)

* $0.6bn outflows from muni funds (4 straight weeks)

* $2.5bn inflows to govt/tsy funds (9 straight weeks) (longest inflow streak since Sep’11)

* $0.8bn inflows to IG bond funds (first inflows in 4 weeks)

* $0.8bn inflows to MBS funds (largest since Jan’15)

>>> An EM Equity Buy Signal: EM Flow Trading Rule contrarian “buy” signal triggered ; 4-week outflow = $24bn = 2.94% of AUM; last “buy” signal triggered 6/27/13 after which EEM rallied 3.8% in 4 weeks, 13% in 3 months. As noted here (attached), trading rules work except when "financial event” underway, e.g. financial crisis in 2008.