>>> Asian Update

Asian Mid-session Update: RBA minutes confirm neutral policy stance; China property prices continue to rebound


***Economic Data***
- (AU) AUSTRALIA JULY NEW MOTOR VEHICLE SALES M/M: -1.3% V +3.9% PRIOR; Y/Y: 3.7% V 4.4% PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.2 v 112.5 prior; 6-week high

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.2%, S&P/ASX +0.1%, Kospi -0.4%, Shanghai Composite -0.9%, Hang Seng +0.3%, Sept S&P500 +0.1% at 2,101

***Commodities/Fixed Income***
- Dec gold -0.1% at $1,117/oz, Sept crude oil -0.2% at $41.79/brl, Sept copper flat at $2.32/lb
- JGB: (JP) Japan's MoF sells ¥1.09T in 1.3% (1.3% prior) 20-year JGBs; Avg yield: 1.144% v 1.188% prior; bid-to-cover: 2.99x v 3.09x prior
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3966 v 6.3969 prior setting; 3rd straight firmer Yuan setting
- (CN) PBoC to inject CNY120B in 7-day reverse repos (16th consecutive injection); largest injection since Jan 2014; Offer yield at 2.50%, unchanged from prior

***Market Focal Points/FX***
- Asian indices are trading softer heading into the afternoon session in spite of the rebound late in the day on Wall St. China's Shanghai Composite is leading the selloff, down 1.5% at its midday break and near session lows. Although the PBoC set Yuan slightly firmer for the 3rd straight day - effectively ending the Yuan devaluation ripple that spooked investors across the globe last week - traders are monitoring Chinese central bank's latest easing efforts. PBoC injected CNY120B in reverse repos - the highest since early 2014 - but the offering yield was unchanged at 2.5%, leading some to conclude that policymakers will calibrate monetary stance primarily through the open market operations. Those worries are magnified by more reports of a slowdown. PBoC adviser Fan Gang remarked that economic growth would remain low for the next few years, while another press report noted there is some disagreement among the drafters of the 13th Five Year Plan (2016-2020) about whether to target GDP of 6.5% or 7.0% for the upcoming 5 years.

- China property prices continue to recover as investors disenchanted with the stock market return to more familiar pastures. July prices fell in 29 out of 70 cities m/m - down from 34 in the prior month, and prices rose in 31 vs 27 prior. Across China's 70 top cities, prices were estimated at +0.3% v +0.4% prior, 3rd straight increase. Y/Y prices were still down for 11th straight month by 3.7%, but this was a slower decline than 4.9% prior.

- RBA policy meeting minutes from earlier this month reflected the less dovish than anticipated stance. Recall RBA removed the language that "further exchange rate depreciation seems both likely and necessary", while adding that economy was "associated with somewhat stronger growth of employment." The minutes also revealed that while RBA is comfortable with accommodative policy, it also sees economic activity as generally turning more positive and the downside risks related to China receding. AUD/USD traded up some 15pips after the initial thrust lower following the RBA comments, while S&P/ASX is heading toward close near its lows, down over 0.5%.

***Equities***
US equities / ADRs:
- FN: Reports Q4 $0.40 v $0.40e, R$206.5M v $198Me; +5.0% afterhours
- A: Reports Q3 $0.44 v $0.41e, R$1.01B v $1.00Be; +0.2% afterhours
- URBN: Reports Q2 $0.52 v $0.49e, R$867M v $884Me; -2.3% afterhours
- SUNE: Teams with invest; -2.6% afterhours
- MTZ: Reports Q2 $0.10 v $0.25e, R$1.07B v $1.02Be; -7.5% afterhours

- NPBC: BB&T to acquire National Penn Bancshares, Inc for about $1.8B or $13/shr

Notable movers by sector:
- Consumer discretionary: Cathay Pacific Airways 293.HK -0.1% (July result); HongKong & Shanghai Hotels 45.HK -0.8% (H1 result); Xinjiang Urban Construction Group Co 600545.CN +2.5% (H1 result); Shenzhen Huaqiang Industry 000062.CN +3.2% (H1 result); Dick Smith Holdings DSH.AU -15.4% (FY15 result); Sydney Airport SYD.AU -0.7% (H1 result, asset sale)
- Consumer staples: Beijing Dabeinong Technology Group Co 002385.CN -4.7% (H1 result)
- Financials: China Merchants Securities Co 600999.CN +2.0% (H1 result); Guotai Junan International Holdings 601211.CN +1.1% (H1 result); Shanxi Securities Co 002500.CN +3.7% (H1 result); Chong Hing Bank 1111.HK -6.3% (H1 result, right issue); SHENGJING BANK CO 2066.HK +1.7% (H1 result); QBE Insurance Group QBE.AU +2.7% (H1 result); Challenger Financial Services Group CGF.AU +4.5% (FY15 result); Shopping Centres Australasia Property Group SCP.AU -1.7% (FY15 result)
- Industrials: Jiangsu Linyang Electronics Co 601222.CN -3.1% (H1 result); Jiangxi Ganyue Expressway Co 600269.CN -3.6% (H1 result); Sufa Technology Industry Co 000777.CN -5.3% (H1 result); Tongfang Guoxin Electronics Co 002049.CN -1.8% (H1 result); Baoding Tianwei Baobian Electric Co 600550.CN -4.8% (H1 result); Monadelphous Group MND.AU +8.3% (FY15 result); Cardno Ltd CDD.AU -5.0% (FY15 result); GWA Group GWA.AU -2.6% (FY15 result)
- Technology: Beijing Baofeng Technology Co 300431.CN -3.5% (H1 result); Ourgame International Holdings 6899.HK -1.2% (H1 result); Hyundai Motor 005380.KR +1.7% (hire new workers)
- Materials: CSG Holding Co 000012.CN -5.6% (H1 result) Yunnan Chihong Zinc & Germanium Co 600497.CN -4.9% (H1 result); Yunnan Yuntianhua Co 000096.CN -6.1% (H1 result); China Nonferrous Metal Industry's Foreign Engineering and Construction Co 000758.CN -5.9% (H1 result); Fortescue Metals Group FMG.AU +6.0% (speculation on asset sale); Iluka Resources ILU.AU +1.8% (H1 result)
- Energy: China Shenhua Energy Co 1088.HK +2.6% (July result); Guanghui Energy Co 600256.CN -4.4% (H1 result)
- Healthcare: Tasly Pharmaceutical Group Co 600535.CN -1.9% (H1 result); Hangzhou Tigermed Consulting Co 300347.CN -6.4% (H1 result); China National Medicines Corp 600511.CN -7.7% (H1 result); Tianjin Chase Sun Pharmaceutical Co 300026.CN +1.1% (H1 result); China Medical System Holdings 867.HK +2.3% (H1 result) Sonic Healthcare SHL.AU -1.3% (FY15 result)

>>> US Close

Closing Market Summary: Biotechnology Leads Stocks Higher

The stock market began the trading week on an upbeat, albeit quiet, note with the S&P 500 climbing 0.5%. The benchmark index turned an opening ten-point loss into an eleven-point gain while the Nasdaq Composite (+0.9%) displayed relative strength throughout the session.

Equity indices faced some short-lived weakness at the start of the session after the August Empire Manufacturing survey came in well below expectations (-14.9; consensus 5.0). The report was met with a rally in the Treasury market while equity futures slipped, leading to the lower open.

Despite the early pressure, the major averages were back in the green just 90 minutes after the opening bell and they continued inching higher during afternoon action. The health care sector (+1.0%) was among the early pockets of relative strength as biotechnology rallied throughout the day. The iShares Nasdaq Biotechnology ETF (IBB 371.67, +7.61) climbed 2.1%, contributing to the outperformance of the Nasdaq.

Unlike health care, the remaining countercyclical sectors could not keep pace with the market. The utilities sector (+0.5%) settled just behind while consumer staples (+0.1%) and telecom services (+0.4%) underperformed.

Over on the cyclical side, energy (-0.1%) and financials (+0.2%) underperformed while the remaining six groups ended in-line with or ahead of the broader market. The consumer discretionary sector (+1.0%) was a noteworthy area of strength thanks to sector-wide support. Retailers climbed with SPDR S&P Retail ETF (XRT 97.60, +0.70) rising 0.7% while homebuilders rallied across the board. The iShares Dow Jones US Home Construction ETF (ITB 29.17, +0.46) gained 1.6%, ending at levels last seen in August 2007.

Stock-specific news was limited today, but it is worth noting that Zulily (ZU 18.74, +6.17) spiked 49.1% after agreeing to be acquired by Liberty Interactive (QVCA 29.80, -0.46) for $18.75/share.

On the downside, the energy sector spent the entire trading day near its flat line as crude oil added to its recent losses, falling 1.5% to $41.87/bbl. Including today's decline, WTI crude is now down 11.9% since the end of July.

As mentioned earlier, today's trading volume was well below average with fewer than 700 million shares changing hands at the NYSE floor.

Economic data was limited to Empire Manufacturing and NAHB Housing Market Index:
  • The Empire Manufacturing Survey for August registered a reading of -14.9, which was below the prior month's reading of 3.9 and below the consensus estimate, which was pegged at 5.0 
    • New orders fell to -15.7 from -3.7 while shipments declined -13.8 from +8.2 
  • The NAHB Housing Market Index for August rose to 61 from 60, which is what thé consensus expected 
Tomorrow, July Housing Starts (consensus 1.200 million) and Building Permits (consensus 1.257 million) will both be reported at 8:30 ET.
  • Nasdaq Composite +7.5% YTD 
  • S&P 500 +2.1% YTD 
  • Russell 2000 +1.7% YTD 
  • Dow Jones Industrial Average -1.6% YTD

(BFW) *CARLYLE, KKR, BLACKSTONE SAID TO BID FOR AIRBUS DEFENSE ASSETS

BN 08/17 15:32 *AIRBUS ASSETS FOR SALE HAVE REV. OF EU1.1B, CO. BROCHURE SAYS
BN 08/17 15:32 *AIRBUS SAID IN SEPTEMBER IT WOULD SELL ASSETS IN DEFENSE SECTOR
BN 08/17 15:32 *RHEINMETALL, THALES ALSO SAID TO MAKE 1ST-RND AIRBUS UNIT BIDS
BN 08/17 15:32 *CARLYLE, KKR, BLACKSTONE SAID TO BID FOR AIRBUS DEFENSE ASSETS
*CARLYLE, KKR, BLACKSTONE SAID TO BID FOR AIRBUS DEFENSE ASSETS
2015-08-17 15:33:01.512 GMT

--PATRICK MCHALE

-0- Aug/17/2015 15:33 GMT

(BBF) Mergers: Another Reason to Think This Boom Isn't Over

Mergers: Another Reason to Think This Boom Isn't Over
2015-08-17 15:13:03.361 GMT


Click on the PDF attachment to open today's Mergers newsletter
from Bloomberg Brief.

EDITOR'S CORNER. As a percentage of GDP, merger activity by U.S.
companies is still well short of peak levels, suggesting this
boom may not be near its end.

INSIGHT. Anheuser-Busch InBev has rebuilt its balance sheet and
is positioned to start making acquisitions again.

M&A WEEK IN REVIEW. Deal multiples have surged this year.
Private equity firms were on one or both sides in five of last
week's top 25 deals.

ACTIVISM IN JAPAN. A new wave of activists sees a chance to
boost shareholder returns.

ACTIVIST SITUATIONS: Starboard Value bought more than 4.8
percent of Boulder Brands, the natural-foods maker also being
targeted by Engaged Capital.


<C> Bloomberg L.P. 2015. All rights reserved. This newsletter is
for the sole use of the intended recipient and not for
redistribution. For permissions and group subscriptions, please
email bbrief@bloomberg.net.
-0- Aug/17/2015 15:13 GMT

>>> Global M&A pushes beyond the $3tn mark

So the $3trn mark is now in the rear view mirror when it comes to M&A this year.

The value of global mergers and acquisitions this year hit the $3tn mark last week, according to Dealogic, which tracks the market.

There have been enough superlatives showered on the M&A industry this year, but Dealogic adds another: it's the quickest pace at which the $3tn mark has been reached since 2007.

And Monday served up another: the $2.4bn deal Liberty Interactive, the owner of the QVC shopping channel, struck for Zulily, the US online apparel retailer.

(TST) Should You Buy Tesla on Uber Rumor?

Should You Buy Tesla on Uber Rumor?
2015-08-17 14:44:47.854 GMT

With rumors of Tesla Motors starting its own "Uber-like" car service the
company's stock surged this morning.

By Jon Kostakopoulos

NEW YORK (TheStreet) -- With rumors of Tesla Motors starting its own
"Uber-like" car service, the company's stock surgedthis morning.

Morgan Stanley analyst, Adam Jonas, increased Tesla's priced target to $465
from $280. This is mainly due to "Tesla Mobility, an app-based, on-demand
mobility service." Jonas also raised speculation after asking Tesla CEO Elon
Musk aboutthe company cutting out a middle-man and going directly to consumers
with a ride-sharing service during an earnings call. Musk declined to answer.

Is Jonas right? Should you buy? Here is the Tesla stock recommendation,
according to TheStreet Ratings,TheStreet's proprietary ratings tool.

TheStreet Ratings projects a stock's total return potential over a 12-month
period including both price appreciation and dividends. Based on 32 major data
points, TheStreet Ratings uses a quantitative approach to rating over 4,300
stocks to predict return potential for the next year. The model is both
objective, using elements such as volatility of past operating revenues,
financial strength, and company cash flows, and subjective, including expected
equities market returns, future interest rates, implied industry outlook and
forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56%
return in 2014, beating the S&P 500 Total Return Index by 304 basis points.
Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5%
return in 2014, beating the Russell 2000 index, including dividends
reinvested, by 460 basis points last year.

Check out which stocks made the list. And when you're done, be sure to read
about which pharmaceutical stocks you should buy now. Year-to-date returns are
based onAugust 17, 2015 prices as of 10:45am.

TSLA data by
Tesla Motors, Inc. TSLA
Rating: Hold, C-
Market Cap: $32.6 billion
Year-to-date return: 12.76%

Tesla Motors, Inc. designs, develops, manufactures, and sells electric
vehicles, electric vehicle powertrain components, and stationary energy
storage systems in the United States, China, Norway, and internationally.

"We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have
impacted our rating are mixed - some indicating strength, some showing
weaknesses, with little evidence to justify the expectation of either a
positive or negative performance for this stock relative to most other stocks.
Among the primary strengths of the company is its robust revenue growth -- not
just in the most recent periods but in previous quarters as well. At the same
time, however, we also find weaknesses including deteriorating net income,
generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

* The revenue growth greatly exceeded the industry average of 7.3%. Since
the same quarter one year prior, revenues rose by 24.1%. This growth in
revenue does not appear to have trickled down to the company's bottom
line, displayed by a decline in earnings per share.
* TESLA MOTORS INC has experienced a steep decline in earnings per share in
the most recent quarter in comparison to its performance from the same
quarter a year ago. The company has reported a trend of declining earnings
per share over the past year. However, the consensus estimate suggests
that this trend should reverse in the coming year. During the past fiscal
year, TESLA MOTORS INC reported poor results of -$2.36 versus -$0.71 in
the prior year. This year, the market expects an improvement in earnings
(-$0.66 versus -$2.36).
* The share price of TESLA MOTORS INC has not done very well: it is down
6.84% and has underperformed the S&P 500, in part reflecting the company's
sharply declining earnings per share when compared to the year-earlier
quarter. The fact that the stock is now selling for less than others in
its industry in relation to its current earnings is not reason enough to
justify a buy rating at this time.
* The gross profit margin for TESLA MOTORS INC is currently lower than what
is desirable, coming in at 31.91%. It has decreased from the same quarter
the previous year. Along with this, the net profit margin of -19.29% is
significantly below that of the industry average.
* Net operating cash flow has significantly decreased to -$159.52 million or
4356.99% when compared to the same quarter last year. In addition, when
comparing to the industry average, the firm's growth rate is much lower.

* You can view the full analysis from the report here: TSLA Ratings Report

This article was originally published by TheStreet. -0- Aug/17/2015 14:44 GMT

>>> Citi : 2 affiliates have agreed to pay nearly $180M to settle charges that t

2 affiliates have agreed to pay nearly $180M to settle charges that they defrauded investors in two hedge funds 

Securities and Exchange Commission today announced that two Citigroup affiliates have agreed to pay nearly $180 million to settle charges that they defrauded investors in two hedge funds by claiming they were safe, low-risk, and suitable for traditional bond investors. The funds later crumbled and eventually collapsed during the financial crisis.
Citigroup Global Markets Inc. (CGMI) and Citigroup Alternative Investments LLC (CAI) agreed to bear all costs of distributing the $180 million in settlement funds to harmed investors. 

- SEC investigation found that the Citigroup affiliates made false and misleading representations to investors in the ASTA/MAT fund and the Falcon fund, which collectively raised nearly $3 billion in capital from approximately 4,000 investors before collapsing. In talking with investors, they did not disclose the very real risks of the funds. Even as the funds began to collapse and CAI accepted nearly $110 million in additional investments, the Citigroup affiliates did not disclose the dire condition of the funds and continued to assure investors that they were low-risk, well-capitalized investments with adequate liquidity. Many of the misleading representations made by Citigroup employees were at odds with disclosures made in marketing documents and written materials provided to investor

FT : No bottom in sight to Brazil's economic woes.

No bottom in sight to Brazil's economic woes.

That's according to the latest survey of 100 economists published by the Brazilian central bank on Monday, which showed that Brazil's recession is now expected to extend into 2016.

Latin America's largest economy is now seen to shrink 0.15 per cent next year as president Dilma Rousseff struggles to shore up the country's public finances and contain the political fallout from the Petrobras corruption probe.

That's a complete reversal of the 1.8 per cent growth forecast at the start of the year and underscores how Brazil's economy has deteriorated sharply in recent weeks amid the continued fall in commodity prices, growing public infighting and rising inflation and unemployment.

Meanwhile the real is now at a 13 year low following a 24 per cent collapse against the dollar this year.

Joaquim Levy, Brazil's finance minister, was forced last month to slash the government's target for balancing the country's budget this year as the steep downturn caused by the end of the commodity super cycle crushed tax revenue.

In response, Standard & Poor's cut its outlook on Brazil's credit rating to negative — raising the risk that the country could lose its current BBB- investment grade rating.

Popular anger over Brazil's recession (the country is now expected to contract more than 2 per cent this year) prompted Brazilians to stage the country's third mass protest this year over the weekend.

As the FT's John Paul Rathbone reports, public anger over perceived economic mismanagement and corruption has driven Ms Rousseff's approval rating down to 8 per cent — the lowest ever for a Brazilian president and many of those protesting on Sunday were calling for her impeachment.

WSJ : Rebuilding Bonds With Greece’s New Bailout--> ECB Buying program ??

Rebuilding Bonds With Greece’s New Bailout

Greece is getting a new bailout, and its bonds could yet qualify for ECB buying


Greece’s government has stepped back from the brink, gaining Europe’s approval for its third bailout since 2010. So have Greek government bonds, which could yet benefit from European support.

Eurozone officials Friday cleared €86 billion ($95 billion) in new loans for Greece. The questions about the viability of the latest program are myriad. Growth assumptions may again be too optimistic, given the damage done to the economy by the summer’s bank closures. Privatization is assumed to produce significant results despite past disappointments. Political risk remains high, with Prime Minister Alexis Tsipras relying on opposition votes to pass the measures needed to unlock the bailout cash. Fresh elections look likely once the dust has settled on the negotiations.

But for Greek bonds, the more important factor may be that the Greek government has shown a commitment to stay in the euro. The biggest risk to private bondholders was an exit from the single currency and a subsequent disorderly default. The debate around debt restructuring that is being promoted by the International Monetary Fund is all about the debt Greece owes to its eurozone peers.

To impose fresh losses on private bondholders would be counterproductive as long as Greece remains in the euro; the ultimate aim of any bailout program should be to return a country to market financing, as has happened with Ireland and Portugal. Private bondholders hold only some 13% of Greece’s outstanding debt; that share will shrink further as cash is disbursed under the third program.

Meanwhile, Greek bonds could yet become eligible for the European Central Bank’s quantitative easing program. Benoît Coeuré, a member of the ECB’s executive board, hinted in an interview last week that this decision could be taken even before a first review of Greece’s progress. ECB buying would be relatively small in scale because of the amount of Greek debt the central bank already holds: Barclays calculates it could buy up to €1.3 billion of bonds after August’s €3.2 billion repayment. But it would still be significant.

And in an odd way, Greek government bonds, due to their idiosyncratic risk, offer some diversity in a market where prices for many instruments are being driven by global macroeconomic concerns such as China. Greek bonds are a bet on Greece, not on external factors.

Greek bonds have already rallied hard: They are up 8% year-to-date, according to Barclays index data, having been down over 40% in July. But two-year bonds still yield just under 10% and are priced well below par. The Greek yield curve remains slightly inverted, with short-dated yields above long-dated yields, a sign of continuing distress. Short-dated bonds should benefit most if Greece manages to stick with its bailout program near term.

Investing in Greek bonds isn’t for the fainthearted; volatility clearly could return. But, with the country steering clear of the abyss, its short-dated bonds again look interesting in a world otherwise starved of yield.

(MS) Tesla : Tesla Mobility? Raising PT to $465 ($252 now - +84% upside)

--> TSLA +3.7% on Upgrade

Ten trillion vehicle miles are driven annually. Firms with expertise in autonomous tech and networked machine learning can exploit the inefficiencies in the current model. TSLA may be uniquely positioned to dominate. Our PT rises to reflect its potential to lead the revolution in shared mobility.

* The race to capture the 10 trillion. 
Which firms can capture the most miles and at what price? Today, nearly 100% of these miles are delivered by companies practicing a 100-year-old business model of human-driven, privately owned, internal-combustion vehicles. This is fundamentally changing. In fact, the shared mobility model, i.e., shared transport empowered by smart technology, is significantly enhanced by autonomous cars, enabling higher vehicle utilization. Higher utilization overcomes the poor payback economics of electric vehicles (EVs). Reinforcing this is our view that EVs should work better in an autonomous, shared model.

* 'Introducing' Tesla Mobility, an app-based, on-demand mobility service. 
Given the pace of technological development both within Tesla and at rival technology and mobility companies, we would be surprised if Tesla did not share formalized business plans on shared mobility within the next 12 to 18 months. This could potentially be followed by commercial introduction in 2018, shortly after the launch of the Model 3, which we think could form the backbone of a possible Tesla Mobility 1.0 urban transport PODS (Position on Demand Service) in 2018. We view this business opportunity as potentially additive to Tesla's existing model of selling human-driven cars to private owners and see potential for this model to conceivably more than triple the
company's potential revenues by 2029. That is, selling miles in addition to selling cars.