>>> What to look at today - 9th of December 2015

Dow-0.92% S&P-0.54% Nasdaq-0.07% Russell-0.35%
US Market was underpressure but manage to recover part of its loss by the close, with Nasdaq outperforming. Disapp. Chinese data raised concerns about global growth, oil traded lower by more than 2% before recovering, finishung -0.3% @37.51, Oil rebound helped market to recover but not to close above 200d MA. Nine of ten sectors ended in the red while health care (+0.2%) eked out a slim gain thanks to relative strength in biotechnology, IBB +2%. Volume continue to ba above average @ 915mil shares. US After Hours AVAV +9.1%, PLAY +6.3%, OXM -2.7%, SWHC -1.3% following earnings/guidance; ONTY -33% following updated trial data, WYNN+10% on CEO Purchase, HTZ+3% on Icahn stake increase, YHOO+2.7% on CNBC report on spinoff, ONTY-33% on drug update...Asian equity markets are mixed, with more benign inflation numbers out of China helping soothe yesterday's decline from soft trade figures and continued commodity rout. Economic data from Japan continues to shine. Leading indicator machine orders grew by over 10% m/m and y/y - a multi-month high rate of growth on both measures. Govt upgraded its assessment for the sector, stating orders are showing a pickup.

Nikkei -0.98% Hang Seng-0.30% Shangai +0.10%

Eur$1.0920 CNY 6.4246 JPY 122.75 GBP 1.5023 CHF 0.9924 RUB$ 69.24 WTI $ 38.26(+2%)

S&P +0.24% EuroStoxx+0.03% Dax+0.02% SMI -0.12%

Macro :
- Emerging Markets Warned of Capital Drought as Fed Nears Liftoff
- China Nov. Consumer Prices +1.5% Y/y; Est. +1.4%

Keep an eye on :
- ARL GY : Aareal Raises 2015 Forecast After Sale of Swedish Property Co
- ABG/P SM : Abengoa to Offer to Capitalize Debt, El Confidencial Reports
- AB FP : AB Science Says Interim Analysis Is Planned for 1Q 2016
- AIR FP : Boeing’s New No-Drama 737 Jetliner Is Ready for Its Public Debut
- AREVA FP : Westinghouse Interested in Areva Assets, CEO Roderick Says: WSJ
- BALSN VX : Basilea Offers CHF175m Senior Convertible Bonds Due 2022
- BAS GY : BASF Faces Challenges, Structural M/T Issues, Credit Suisse Says
- BAYN GY : Bayer Anticoagulant Said to Be Investigated by EMA: Handelsblatt
- GBF GY : Bilfinger Said to Seek Bids for Power Business by Mid-January
- BNP FP : BNP Paribas Fortis Plans to Pay EU2b Dividend to Parent
- EN FP : Bouygues Telecom Seeks EU2.285B From French State, Echos Says
- CSGN VX : Credit Suisse Names Levin as Asia Pacific Asset-Management Head
- EDF FP : EDF Appoints Bruno Lescoeur as Adviser to President and CEO
- EDF FP : Edison Names Benayoun CEO, Sees Risk of ~EU1.5b Impairment
- IAG LN : British Airways May Raise Paris Orly-New York Capacity: Tribune
- IMT LN : *GULF STATES MULL RAISING CUSTOMS DUTY ON TOBACCO BY 100%: MAAAL
- KPN NA : Orange Said to Weigh KPN, Proximus as Acquisition Targets: WSJ
- NDA SS : Nordea Chairman Says 75% Dividend Policy Is Realistic: DI
- ORA FP : Orange Said to Weigh KPN, Proximus as Acquisition Targets: WSJ
- SAB LN : Lee Says AB InBev Hearing Mitigated Concerns About Takeover Deal
- SCYR SM : Sacyr in Talks on Loan for Italian Highway: El Economista
- VOW3 GY : VW Suspended From FTSE4Good Indexes Over Emissions
- VOW3 GY : VW Said to Keep Earlier Emissions Information From U.S.: WSJ

>>> Europe : Brokers Upgrades & Downgrades - 9th of December 201

>>> Up
*AIR FRANCE-KLM RAISED TO OUTPERFORM AT RBC CAPITAL
*EUROTUNNEL RAISED TO BUY VS NEUTRAL AT GOLDMAN
*FINNAIR RAISED TO BUY AT HSBC
*MONEYSUPERMARKET.COM RAISED TO BUY AT JEFFERIES
*PADDY POWER RAISED TO BUY AT HSBC
*SALZGITTER RAISED TO NEUTRAL AT MACQUARIE

>>> Down
*ANGLO AMERICAN CUT TO UNDERPERFORM AT JEFFERIES
*ARCELORMITTAL CUT TO UNDERPERFORM VS NEUTRAL AT MACQUARIE
*ELECTROLUX CUT TO UNDERWEIGHT VS EQUAL WEIGHT AT BARCLAYS
*F5 NETWORKS CUT TO REDUCE FROM NEUTRAL AT NOMURA
*NORDAX GROUP AB CUT TO HOLD AT NORDEA
*SANDVIK CUT TO UNDERWEIGHT VS EQUAL WEIGHT AT BARCLAYS
*SSAB CUT TO UNDERPERFORM AT JEFFERIES
*SSAB CUT TO UNDERPERFORM AT MACQUARIE
*SCHNEIDER ELECTRIC CUT TO EQUAL WEIGHT AT BARLCAYS
*SKF AB CUT TO EQUAL WEIGHT VS OVERWEIGHT AT BARCLAYS
*VOESTALPINE CUT TO NEUTRAL AT MACQUARIE

>>> PT Change


>>> Initiation
*AUTOGRILL RATED NEW OUTPERFORM AT RAYMOND JAMES, PT EU10
*ELIOR RATED NEW OUTPERFORM AT RAYMOND JAMES, PT EU23
*SHOWROOMPRIVE RATED NEW BUY AT GOLDMAN, PT EU25

>>> Call

>>> Asian Update

Asian Mid-session Update: China markets recover on more benign inflation


***Economic Data***
- (CN) CHINA NOV CPI Y/Y: 1.5% V 1.4%E
- (CN) CHINA NOV PPI Y/Y: -5.9% V -6.0%E (45th consecutive month of decline)
- (JP) JAPAN OCT MACHINE ORDERS M/M: +10.7% (19-month high) V -1.5%E; Y/Y: 10.3% (4-month high) V 0.6%E
- (JP) JAPAN NOV M2 MONEY STOCK Y/Y: 3.3% (13-month low) V 3.5%E; M3 MONEY STOCK Y/Y: 2.7% V 2.8%E
- (AU) AUSTRALIA OCT HOME LOANS M/M: -0.5% V -1.0%E; first decline in 3 months
- (AU) AUSTRALIA DEC WESTPAC CONSUMER CONFIDENCE INDEX: 100.8 V 101.7 PRIOR, M/M: -0.8% V +3.9% PRIOR

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -0.8%, S&P/ASX -0.5%, Kospi +0.1%, Shanghai Composite +0.7%, Hang Seng -03.%, Dec S&P500 +0.3% at 2,065

***Commodities/Fixed Income***
- Feb gold flat at $1,075/oz, Jan crude oil +2.1% at $38.31/brl, Mar copper +0.7% at $2.06/lb
- (US) API Petroleum Inventories: Crude: -1.9M v +1.6M prior (1st draw in 3 weeks)
- (CN) China MOF sells 10-yr bonds, avg yield 2.9764%
- USD/CNY: (CN) PBoC sets yuan mid point at 6.4140 v 6.4078 prior; Lowest Yuan setting since Aug 2011
- (JP) BOJ offers to buy ¥400B in 5-10yr JGBs, ¥240B in 10-25yr JGBs, and ¥140B in JGBs with maturity over 25-yr
- (AU) Australia MoF (AOFM) sells A$800M in 4.75% 2027 Bonds; avg yield: 2.9703%; bid-to-cover: 2.30x

***Market Focal Points/FX***
- Asian equity markets are mixed, with more benign inflation numbers out of China helping soothe yesterday's decline from soft trade figures and continued commodity rout. CPI rose to 1.5%, above 1.4% consensus and 1.3% prior, which was a 6-month low. Sequentially, CPI was flat after a negative -0.3% print last month. Food CPI lifted to 2.3% v 1.9% prior, and non-food component also improved to 1.1% v 0.9% prior. Reports of other stimulative policy steps also helped to improve sentiment on the mainland. Automakers rallied on reports of car subsidies in the rural markets. Other reports forecast expanded tariff cut in consumer products next year. On a macro level, China state council is considering increase in 2016 M&A activity in sectors such as materials and clean energy that suffer from "serious overcapacity". Also of note, policymakers continued to weaken the CNY currency to further stimulate exports, with today's USD fix at its lowest level in over 4 years.

- After escaping recession, economic data from Japan also continues to shine. Leading indicator machine orders grew by over 10% m/m and y/y - a multi-month high rate of growth on both measures. Govt upgraded its assessment for the sector, stating orders are showing a pickup. Separately, Japanese press indicated the govt is considering allowing GPIF pension fund to invest directly in stocks to minimize management fees. On the fiscal side, local press report indicated the total bond issuance in FY16 would shrink by about ¥5-10T from FY15, with a 20% increase in the issuance of 40-yr JGBs and a decrease in shorter duration debt, as the govt seeks to reduce debt-servicing cost risks.

- Down under, Australia Westpac consumer confidence index retreated with a slight decline. Resident economist noted speculation about GST tax changes may be unnerving some respondents with a more pessimistic view of the economy also cited. Ahead of tomorrow's RBNZ meeting, NZIER Shadow Board recommends a hold even though fixed income markets are pricing in about a 60% chance of a cut. NZD/USD was under more pressure in today's session ahead of the meeting, falling another 30pips toward 0.6620. In other USD majors, AUD/USD traded sideways in a 30pip range above 0.72, while USD/JPY fell about 40pips from the highs below 122.70.

***Equities***
US equities / ADRs:
- WYNN: CEO purchased 1M shares in open market this week (almost 1% of shares outstanding); +12.7% afterhours
- SBLK: Announces agreement to sell 4 modern capesize vessels for $122M; +12.2%
- AVAV: Reports Q2 +$0.19 v -$0.09e, R$64.7M v $55.9Me; +9.5% afterhours
- PLAY: Reports Q3 $0.12 v $0.03e, R$192.8M v $186Me; +6.2% afterhours
- DOW: SAID TO BE IN ADVANCED TALKS TO MERGE WITH DU PONT; Deal may be announced in coming days - financial press; DOW +5.5%, DD +6.2% afterhours
- HTZ Icahn (High River and other Icahn entities) disclose amended 14.34% stake (vs 11.3% prior) - 13D/A filing; +3.3% afterhours
- YHOO: CNBC's Faber: Company will not move forward with Alibaba spin off; will continue to examine spin off of core business; formal announcement by tomorrow; +2.7% afterhours
- KKD: Reports Q3 $0.19 v $0.21e, R$128.5M v $133Me (1 est); +1.7% afterhours
- MA Approves $4B buyback program (3.7% of market cap); increases dividend 19% to $0.19 (0.77% yield) from $0.16; +0.6% afterhours
- SWHC Reports Q2 $0.25 v $0.20e, R$143.2M v $137Me; -1.4% afterhours
- KMI: Cuts quarterly dividends 76% to $0.125 from $0.51 (indicated yield 3.2%), to use excess cash to fund growth investments; -6.5% afterhours
- ONTY: Announces Phase 1b data for ONT-380 in HER2-Positive Breast Cancer patients with and without Brain Metastases; -28.4% afterhours

Notable movers by sector:
- Consumer discretionary: Skyworth Digital 751.HK +3.1% (Nov result)
- Financials: China Vanke 000002.CN +6.3% (Anbang Insurance raises stake); China Galaxy Securities Co 6881.HK +2.6% (Nov result); Agile Property Holdings 3383.HK +1.6% (Nov result); Yuexiu Property 123.HK +0.8%?(Nov result)
- Industrials: China Railway Construction Corp 1186.HK +0.2% (won project); Doosan Infracore Co. 042670.KR -1.3% (to cut 30% execs); Mitsubishi Heavy Industries7011.JP -1.6% (3rd postponement)
- Technology: Wistron 3231.TW +3.0% (Nov result); NCsoft Corp 036570.KR -1.4% (share buyback); Sharp Corp 6753.JP +0.8%, Samsung Electronics 005930.KR +1.0% (Samsung Electronics speculated as bidder for LCD); Toshiba Corporation 6502.JP +0.9% (ex-presidents may face criminal penalties)
- Materials: China Minmetals Resources 1208.HK +4.0%, Metallurgical Corporation of China 1618.HK -12.9% (impairment, SOE integration); China Steel Corp 2002.TW -0.6% (Nov result)
- Healthcare: Greencross Limited GXL.AU +1.5% (receives interest from private equity groups)
- Telecom: Telstra Corp. TLS.AU -0.9% (plans co-investment)a

>>> US After Hours : AVAV +9.1%, PLAY +6.3%, OXM -2.

AVAV +9.1%, PLAY +6.3%, OXM -2.7%, SWHC -1.3% following earnings/guidance; ONTY -33% following updated trial data

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings:  AVAV +9.1%, PLAY +6.3%, EMKR +2.6%, KKD +2.4%

Companies trading higher in after hours in reaction to news:  SBLK +12.7% (announced it will sell two modern Capesize vessels and two modern Kamsarmax vessels for $122 mln to unaffiliated 3rd parties; expected to be delivered to the Buyers during 1Q16), WYNN +10.2% (announced CEO purchases 1 mln shares on open market), PGN +7.5% (received non-compliance notice from the NYSE relating to the minimum market cap requirement, has 45 days to submit a plan on regaining complaince), FC +6.5% (to conduct a $35 mln modified Dutch auction tender offer for shares of its common stock), HTZ +3.0% (Carl Icahn increased active stake to 14.34%), YHOO +2.7% (following CNBC report that  Yahoo (YHOO) does not plan to move ahead on Alibaba (BABA) spinoff follow up)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings:  OXM -2.7%, SWHC -1.3%

Companies trading lower in after hours in reaction to news:  ONTY -33.3% (presented updated data from its ongoing trials of ONT-380, an orally active, reversible and selective small-molecule HER2 inhibitor being developed for the treatment of HER2-positive metastatic breast cancer), AEZS (-24.6% commenced an underwritten public offering of common shares and warrants to purchase common shares), CHRS -11.7% (updated on its CHS-1701 program, estimates that the follow-on study will cost less than $4 mln and entail about a quarter delay in projected BLA filing timing), KMI -6.2% (announced 2016 outlook; Expects dividends of $0.50 per share from $2.04 per share for 2016; No need to access equity markets for forseeable future), KITE -2.3% (announced $250 mln public offering of common stock), SPLS -1.5% (Staples and Office Depot (ODP) issue open letter after the Canadian Competition Bureau recently announced that it will seek to block Staples' acquisition of Grand & Toy

>>> US Close Dow-0.92% S&P-0.54% Nasdaq-0.07% Russell-0.35%

 Market Summary: S&P 500 Settles Below 200-Day Average

The stock market endured a shaky session on Tuesday, but the key indices managed to recover a portion of their losses by the close. The S&P 500 settled in the middle of its trading range, surrendering 0.7%, while the Nasdaq Composite (-0.1%) outperformed throughout the day.

Equity indices began the day under heavy pressure after the overnight session featured some disappointing economic data from China. Specifically, the country's November trade surplus narrowed to $54.10 billion from $61.64 billion (expected surplus of $63.30 billion) as exports fell 6.8% year-over-year (consensus -5.0%; previous -6.9%) and imports declined 8.7% (expected -12.6%; last -18.8%).

The smaller than expected trade surplus re-invited the same global growth concerns that have been plaguing the market throughout the year. Accordingly, commodities retreated with crude oil falling more than 2.0% before pulling back. The energy component made a brief appearance in the green, but could not avoid a lower close, slipping 0.3% to $37.51/bbl after marking a session low near $36.64/bbl.

The rebound in crude helped alleviate some of the pressure in the stock market, but the S&P 500 could not return above its 200-day moving average (2,064), which served as resistance.

Nine of ten sectors ended in the red while health care (+0.2%) eked out a slim gain thanks to relative strength in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 330.59, +6.31) rallied 2.0%, which helped the Nasdaq end the day near its flat line.

Similarly, the technology sector (-0.2%) contributed to the relative strength in the Nasdaq, but the top-weighted sector could not stay out of the red as high-beta chipmaker names weighed. To that point, the PHLX Semiconductor Index fell 0.9%.

Unlike technology, most of the remaining cyclical sectors ended among the laggards with energy (-1.5%) widening this week's decline to 5.1% while the industrial sector (-1.6%) was pressured by transport stocks. The Dow Jones Transportation Average tumbled 2.8% with Southwest Air (LUV 45.04, -4.47) diving 9.0% after the company lowered its Q4 on unit revenue guidance.

Treasuries notched their highs during the opening retreat in the stock market, but the 10-yr note slipped into the red in the late afternoon, pushing its yield up one basis point to 2.23%.

Today's participation was a bit above average as more than 915 million shares changed hands at the NYSE floor.

Economic data was limited to the October Job Openings and Labor Turnover Survey, which showed that job openings decreased to 5.383 million from a revised reading of 5.534 million (from 5.526 million).

Tomorrow's economic data will include the 7:00 ET release of the weekly MBA Mortgage Index and the October Wholesale Inventories report (consensus 0.1%), which will be released at 10:00 ET.

  • Nasdaq Composite +7.7% YTD
  • S&P 500 +0.2% YTD
  • Dow Jones Industrial Average -1.4% YTD
  • Russell 2000 -3.6% YTD

(ZeroHedge) Meet The Peer 2 Peer Website That Funded The San Bernardino Shoo

Meet The Peer 2 Peer Website That Funded The San Bernardino Shooters

Over the course of the past nine months or so, we’ve documented the rise of online P2P lending. 

Back in May, for instance, we highlighted a Bloomberg piece which suggested the volume of P2P loans is set to hit nearly $80 billion in 2015. “LendingClub, the No. 1 player worldwide, is trading at a market value of about $7 billion even though it lost $33 million last year,” Bloomberg said, before warning that “in a flashback to the subprime mortgage boom, P2P startups have begun bundling and selling off loans through securitizations.”

Well of course they have. When it comes to new, potentially lucrative markets, Wall Street is a bit like Christopher Walken’s character Frank White from the 1990 cult classic “King Of New York”: “Nothing goes down unless I’m involved.” The more demand there is for P2P loans to securitize, the lower will be P2P lenders’ underwriting standards creating a repeat of the originate to sell dynamic that helped create the housing bubble and is now playing out across the auto loan space. But when it comes to P2P loans, there’s another problem. P2P loans create the conditions whereby borrowers can refi high-interest debt via personal loans, transferring credit risk from large financial institutions to private lenders in the process. It’s not entirely clear what the implications of that shift might ultimately be, especially if the market continues to grow rapidly, but one thing is clear: using a relatively low-interest P2P loan to pay off a high-interest credit card is no different in principle than using a new credit card that comes with a teaser rate to pay off an old credit card.

As sinister as all of that sounds, it turns out P2P lending may have an even darker side. Those who follow trends in the ABS market - and let’s face it, who doesn’t, right? - might recall that back in January, BlackRock put together a $327 million deal dubbed “Consumer Credit Origination Loan Trust 2015-1.” The loans in the collateral pool were made through Prosper, the world’s second-biggest P2P lender. In an unprecedented move, Moody’s actually rated the damn thing, giving the senior tranche an investment-grade mark of “Baa3”. Here’s what Bloomberg said at the time: 

The company, on behalf of its clients, scooped up more than $330 million of consumer debt arranged since November 2013 by Prosper Marketplace Inc., the so-called peer-to-peer lending platform that finds investors to fund borrowers, according to bond-offering documents. New York-based BlackRock is seeking to sell most of that debt to other institutions while retaining a risky slice.

 

The purchases represent about a sixth of debt obtained through Prosper during that period, showing how the platform has moved beyond funding from mom-and-pop investors. BlackRock’s bond sale, known as a securitization, could be a harbinger for more such deals, said Matt Burton, chief executive officer of Orchard Platform, a data provider to clients investing through online markets like Prosper’s and one run by LendingClub Corp.

 

“One of the large bottlenecks in this space for institutional investors has been volume,” he said. “That’s all changing.”

Yes, “that’s all changing,” thanks to the proliferation of P2P lending. In fact, loans originated through San Francisco-based Prosper jumped to $1.6 billion, last year, up some 350 percent. 

If you aren’t familiar with P2P, you might be asking yourself: “what kind of loans does Prosper make?” Well, according to their website, they arrange debt consolidation loans, home improvement loans, special occasion loans, and personal loans for business.

We’re not sure which of those categories “jihadist massacre” falls under (we assume “special occasion”), but as Reuters reports, San Bernardino mass shooters Syed Farook and Tashfeen Malik, obtained a $28,500 loan through Prosper not long before killing 14 and injuring nearly two dozen in a bloody rampage last Wednesday. From Reuters: 

Online lender Prosper recently made a $28,500 loan to Syed Rizwan Farook who, along with his wife, killed 14 people at a holiday party last week in San Bernardino, California, according to a source familiar with the matter.

 

One of the Reuters government sources said Farook and Malik apparently pursued a scenario previously followed by U.S.-based militants by draining their bank accounts and maxing out credit lines before embarking on what they believe to be a suicide mission, knowing that they would not have to pay off the debts.


Prosper evaluates borrowers for loans, which are originated by third-party bankWebBank. Prosper then sells the loans off to investors.

As Prosper puts it in the "How It Works" section of its website, "Prosper is the market leader in peer-to-peer lending-a popular alternative to traditional loans and investing options. Prosper allows people to invest in each other in a way that is financially and socially rewarding. We cut out the middleman to connect people who need money with those who have money to invest...so everyone prospers!" 

Well, "everyone" didn't exactly "prosper" here and because this didn't turn out to be one of the site's more "socially rewarding" ventures you can bet the FBI is taking a hard look at just how the company went about evaluating this particular loan prior to approval. More from Prosper: 

Here's how it works:

  • Borrowers choose a loan amount, purpose and post a loan listing.
  • Investors review loan listings and invest in listings that meet their criteria.
  • Once the process is complete, borrowers make fixed monthly payments and investors receive a portion of those payments directly to their Prosper account.

We're reasonably sure Farook didn't list "general terrorist purposes" as the reason for his loan request which begs the question of whether the person who provided the funding was complicit in the plot or whether it was merely some innocent benefactor who bought the story that Farook posted (indeed, given his occuption as an employee of the state, he probably looked, on paper, like a good credit). 

In any event, they'll surely be much more on this story in the very near future but for the time being, we'll simply leave you with two images, the first from Prosper's website, and the second from the aftermath of Farook and Malik's shootout with police. Here's what the pictures have in common: a husband, a wife, a car, and Prosper. We'll leave it to readers to spot the differences.