>>> US Close

Closing Market Summary: Nasdaq Composite Leads Stocks Higher

The stock market finished Thursday on a higher note with the Nasdaq Composite (+1.3%) and S&P 500 (+0.8%) posting solid gains while the Dow Jones Industrial Average (+0.4%) ended the day closer to its flat line.

Equity indices spiked at the start, responding to overnight strength in the futures market. Shortly after yesterday's close, Intel (INTC 29.90, +0.21) and Netflix (NFLX 115.81, +17.68) reported better than expected results, which led to a surge in Nasdaq futures in particular.

Earnings notwithstanding, Nasdaq and S&P 500 futures received a second boost after the Greek parliament voted 229-64-6 in favor of austerity measures that will allow bailout negotiations to continue with the country expected to receive EUR86 billion in rescue funds. Furthermore, the European Central Bank, which held a policy meeting today, raised the country's allowance to Emergency Liquidity Assistance by EUR900 million, which will pave the way for Greek banks to open as soon as Monday.

As the U.S. opening bell approached, the focus shifted back to earnings with Citigroup (C 58.59, +2.13) and Goldman Sachs (GS 211.18, -1.78) reporting better than expected results. However, Goldman Sachs spent the day in negative territory, snapping its five-day streak. Still, the financial sector (+1.0%) ended among today's leaders, but Goldman's relative weakness kept the Dow under pressure.

Likewise, UnitedHealth (UNH 124.93, -0.93) also pressured the Dow despite reporting better than expected results. The stock narrowed its loss to 0.7% by day's end after being down as much as 3.1% following yesterday's record close. Furthermore, UnitedHealth pressured the health care sector (+0.5%), but hospital names also weighed. For instance, Community Health (CYH 60.99, -1.42) and Universal Health (UHS 141.25, -1.18) lost 2.3% and 0.8%, respectively, after Keybanc Capital Markets downgraded both listings to ‘Sector Weight' from ‘Overweight.' Biotechnology, however, picked up the slack with iShares Nasdaq Biotechnology ETF (IBB 395.67, +4.91) climbing 1.3%. That strength, combined with a solid showing from the technology sector (+1.3%) kept the Nasaq ahead of the broader market throughout the day.

Large cap technology components like Apple (AAPL 128.51, +1.69), Google (GOOGL 601.78, +17.82) and Microsoft (MSFT 46.66, +0.90) climbed between 1.3% and 3.1% while Intel alternated between gains and losses before settling higher by 0.7%. Other chipmakers struggled, evidenced by the PHLX Semiconductor Index, which eked out a modest gain (+0.2%).

Overall five sectors ended ahead of the broader market, but only two cyclical groups displayed relative strength while consumer staples (+1.0%), telecom services (+1.4%), and utilities (+1.5%) outperformed on the countercyclical side.

On the downside, the materials sector (-0.3%) spent the day in negative territory amid broad weakness while the energy sector (+0.1%) was able to stay in the green even though crude oil fell 1.0% to $50.91/bbl.

Treasuries displayed losses during overnight action, but a morning recovery returned the benchmark 10-yr yield to unchanged by the close (2.35%).

Today's participation was a bit lighter than yesterday with 723 million shares changing hands at the NYSE floor.

Economic data included Initial Claims, NAHB Housing Market Index, and Philadelphia Fed Survey:
  • The initial claims level declined to 281,000 for the week ending July 11 from a downwardly revised 296,000 (from 297,000) while the consensus expected a decline to 283,000 
    • The four-week moving average increased to 282,500 from 279,250, which is the first time that the four-week moving has surpassed 280,000 since the end of April 
    • The continuing claims level decreased to 2.215 mln for the week ending July 4 from a downwardly revised 2.327 mln (from 2.334 mln) while the consensus expected a decrease to 2.285 mln 
  • The NAHB Housing Market Index for July rose to 60 from 59 while the consensus expected the index to hold at 59
  • The Philadelphia Fed's Business Outlook Survey declined to 5.7 in July from 15.2 in June while the consensus expected a drop to 12.5 
    • There was a general softening in manufacturing conditions across all areas with four out of the nine survey subcomponents contracting in July 
    • The Shipments Index declined to 4.4 in July from 14.3 while Employment conditions were notably weak 
      • The Number of Employees Index turned negative, falling from 3.8 in June to -0.4 in July 
      • The Average Employee Workweek Index dropped to 4.0 from 4.7 
Tomorrow, June CPI (consensus 0.3%) and June Housing Starts (consensus 1.12 million)/Building Permits (expected 1.15 million) will be reported at 8:30 ET while the preliminary reading of the Michigan Sentiment Index for July (consensus 96.5) will be released at 10:00 ET.
  • Nasdaq Composite +8.3% YTD 
  • Russell 2000 +5.4% YTD 
  • S&P 500 +3.1% YTD 
  • Dow Jones Industrial Average +1.6% YTD

>>> Ferrari : Amedeo Felisa, 69, reputed CEO of Ferrari since 2008, would be wil


According to the attached article, Amedeo Felisa, 69, reputed CEO of Ferrari since 2008, would be willing to leave the

company in September 2015 since he wouldn’t like the way the new chairman Sergio Marchionne manages the company.


We know that Mr Felisa played a key role in re-launching Ferrari together with former chairman Luca di Montezemolo.

Mr Felisa – a mechanical engineer who did not take part in the 2014 fight between Marchionne and Montezemolo - is

reportedly very appreciated by Sergio Marchionne, new Ferrari chairman since October 2014.


We know that Mr Felisa was recently asked to remain at Ferrari for another couple of years. The news of his step down

could have clearly negative consequences at a time when FCA plans to IPO a 10% Ferrari stake in October 2015 and

distribute the remaining 80% stake to FCA shareholders in Q1 2016.


We remind you that we value the Ferrari stake around EUR 5.3 per FCA share; our current target price when excluding

any M&A premium is EUR 16.8.

WSJ : BT Investors Should Brace for Openreach Static

BT Investors Should Brace for Openreach Static

Loosening BT’s hold on its infrastructure arm won’t necessarily result in better services for customers

Openreach is set to become thornier for BT Group PLC, with or without a forced spinoff by regulators.

The U.K.’s Office of Communications, or Ofcom, on Thursday said it would consider forcing the separation of the incumbent telecoms group’s infrastructure arm, as part of its review of the sector. Shares fell only slightly on a day when the sector was up; the decision was largely expected.

The regulator also pointed to several good reasons why BT’s Openreach ties may not be cut. Among them is that the existing model isn’t necessarily broken. The U.K. is one of the most competitive broadband markets in Europe: the average price of a residential broadband package has fallen 40% over the past 10 years.

The problem for Ofcom is that loosening BT’s hold on Openreach won’t necessarily result in better services for customers and may even raise prices, as occurred in New Zealand after authorities there separated its telecoms infrastructure. An independent Openreach wouldn’t face more competition and so wouldn’t necessarily invest more in infrastructure.

Nevertheless BT investors can’t sit comfortably. The unit contributed a third of the group’s operating profit last year to March and continues to be its largest contributor of free cash flow, boosting BT’s financial muscle to go on buying sprees elsewhere. Even if Ofcom doesn’t recommend that the unit be separated, it could still spur changes that ultimately dampen BT’s earnings power.

The two main threats center on service quality and infrastructure investments. Ofcom could require BT to improve services, such as setting targets for faster line installations and imposing fines if it fails to meet these.

And while the regulator can’t tell BT how much to invest, it can apply pressure. Regulators have already said more investment is needed to provide ultrafast broadband and to extend services to some rural areas. Meanwhile strict rules on how much BT can charge rivals restrict its ability to pass on costs, potentially squeezing margins.

BT’s operating margin is currently about 20%, well ahead of peers such as Deutsche Telekom and Orange. One reason is that capital expenditure for Openreach has stayed stubbornly flat since BT’s fiscal year 2008, even as revenue has doubled, according to FactSet.

In one form or another, Openreach is likely to impose higher fees on BT investors.

>>> US Gapping Up

Gapping up
In reaction to strong earnings/guidance: NFLX +11.5%, ANFI +7.6%, ONDK +5.3%, EBAY +4%, C +2.5%, INTC +2.4%, KEY +2.3%, PM +2%, CPSS +1.3%, UMPQ +1.1%, KMI +1%, BBT +0.9%, DPZ +0.8%

Select financial related names showing strength: SAN +1.9%, ING +1.6%, DB +1%

Select metals/mining stocks trading higher: BHP +2.1%, AKS +2%, RIO +0.7% (reports Q2 production of iron ore rose 9% YoY), CAS +0.7%.

Select auto related names showing strength after good data out of EU: TTM +2.3%, FCAU +3%, TM +2.1%, ALV +1.6%

Other news: STV +16.6% (provides updates on its asset restructuring with Shanghai Tongda Venture Capital; Tongda has received an approval in principle from the Ministry of Commerce in China), NVGN +7.7% (confirms receipt of Orphan Drug Designation from the FDA for its Anisina treatment for neuroblastoma ), FTNT +4.4% (still checking), GLW +2.2% (announced $2 bln share repurchase program), RDUS +2.1% (reports positive preclinical data for its investigational drug RAD1901 in combination with CDK and mTOR inhibitors), MGA +2.1% (confirms it will acquire the Getrag Group of Companies for EUR 1.75 bln), STM +2% (in sympathy with INTC), PVA +1.9% (sells its East Texas assets to an undisclosed buyer for $75 million), SDRL +1.8% (still checking), BLPH +1.7% (entered into an amendment to the transition services agreement with Ikaria to advance the termination date of the Services Agreement from February 8, 2016 to September 30, 2015), NBG +1.7% (Greek Parliament passes bailout deal), GPRO +1.4% (still checking), MU +1.1% (in sympathy with INTC), MDXG +0.9% (scientific study demonstrates that MiMedx allografts stimulate cellular proliferation and migration in a variety of adult stem cells), KMI +0.9% (to purchase 100% of Shell's Equity Interest in the Elba LNG Liquefaction JV; KMI's expected incremental investment resulting from this transaction is ~$630 mln; co also reported earnings)

Analyst comments: ORAN +2.6% (upgraded to Buy at Berenberg), STO +2.1% (upgraded to Buy from Neutral at Citigroup), AVGO +1.4% (initiated with an Outperform at BMO Capital ), WBA +1.1% (upgraded to Outperform from Neutral at Credit Suisse), GOOGL +1% (upgraded to Outperform at BMO Capital Mkts
)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: GRMN -11.6%, FCS -8.6%, BKMU -3.8%, SHW -3.7%, TSM -2%, BX -1.4%, HCA -1.2%, GS -0.7%, FBRC -0.6%, UNH -0.5%

Other news: ANR -41.2% (WSJ reporting that co is in talks to obtain bankruptcy financing), SYN -19.1% (prices its offering of common stock), ROVI -9.4% (provides an update on ongoing litigation; committed to enforcing its intellectual property against Netflix (NFLX)), RLGT -5% (Radiant Logistics and certain shareholders commenced an underwritten public offering; size not disclosed ), FPI -3.2% (prices offering of 3,000,000 shares of its common stock $11.00 per share), RARE -2.9% (prices offering of 2,200,000 shares of its common stock at $120 per share), NAV -1.9% (disclosed a lawsuit filed against to co by the EPA relating to allegations that various heavy-duty diesel engines it introduced did not meet the EPA's emissions standards)

Analyst comments: GM -1% (downgraded to Equal Weight from Overweight at Barclays), UA -1% (hearing of a couple of cautious broker notes ahead of earnings next week), CYH -0.8% (downgraded to Sector Weight from Overweight at Keybanc Capital Mkts)