>>> US Close Dow+0.63% S&P+0.45% Nasdaq+0.45% Russell+0.41%

Closing Market Summary: Abbreviated Trading Week Ends on Higher Not

The stock market finished the abbreviated trading week on a higher note. The S&P 500 added 0.5%, extending its weekly gain to 2.1% while the Nasdaq Composite (+0.5%) outperformed slightly, adding 3.0% for the week.

Broadly speaking, the Friday session was very quiet and did not feature any major macroeconomic or company-specific developments. Instead, stocks began the day under modest pressure as noteworthy weakness in the energy sector (-0.8%) fueled the opening retreat. The energy sector settled not far above its low while the remaining groups fared much better and helped the market erase its early loss.

Staying in the energy sector, the cyclical group represented the lone decliner of the week, losing 0.7% since last Friday. Crude oil contributed to underperformance in the sector as the energy component settled lower by 2.8% at $44.63/bbl after briefly dipping below $44.20/bbl in the morning. For the week, WTI crude surrendered 3.1% with today's decline following cautious comments from Goldman Sachs. Specifically, the investment bank cut its 2015 price forecast to $48.10/bbl from $52.00/bbl and lowered the 2016 outlook to $45.00/bbl from $57.00/bbl.

Elsewhere, the other commodity-related sector—materials (-0.2%)—also settled in the red while other groups posted gains. Notably, consumer discretionary (+0.7%), technology (+0.6%), and health care (+0.7%) gathered steam as the market climbed off its session low.

Thanks to today's gain, the technology sector gained 3.1% for the week, which was good enough for the sector to end ahead of its peers. The influential sector followed Apple's (AAPL 114.02, +1.45) lead as the stock jumped 1.3% on Friday and 4.4% for the week.

The relative strength in technology helped the Nasdaq stay ahead of the broader market through the week, but the tech-heavy index also received a measure of support from health care, and specifically, biotechnology. To that point, the health care sector (+0.7%) finished among today's leaders, extending its weekly gain to 2.8%. As for biotechnology, the high-beta group enjoyed a strong week, evidenced by the iShares Nasdaq Biotechnology ETF (IBB 354.74, +4.02), which climbed 1.2% on Friday to end the week higher by 5.2%.

The afternoon recovery in stocks had little impact on Treasuries as the 10-yr note remained near its high with the benchmark yield ending the day lower by four basis points at 2.18%.

Today's participation was below recent averages as roughly 810 million shares changed hands at the NYSE floor.

Economic data included PPI, Michigan Sentiment, and Treasury Budget:

  • Producer prices were flat in August after increasing 0.2% in July while the consensus expected a decline of 0.1%
    • Energy prices declined 3.3% in August, which was the largest downturn since a 10.1% drop in January, after falling 0.6% in July
    • Food prices increased 0.3% in August after declining 0.1% in July with the aftermath of the bird flu epidemic continuing to wreak havoc on the egg supply, driving egg prices up 32.2%
    • Excluding food and energy, core PPI increased 0.3% for a third consecutive month in August while the consensus expected an increase of 0.1%
  • The University of Michigan Consumer Sentiment Index dropped to 85.7 in the preliminary September reading from 91.9 in August while the consensus expected a drop to 91.5
    • The Current Conditions Index fell to 100.3 in September from 105.1 in August while the Expectations Index declined to 76.4 from 83.4
    • The overall decline in the Consumer Sentiment Index can be traced to the pullback in stock prices that began at the end of August while other measures that typically impact confidence levels --gasoline prices and employment conditions—continued to improve over the past few weeks
  • The Treasury Budget statement for August showed a deficit of $64.40 billion while the consensus expected a deficit of $62.00 billion
    • The Treasury data are not seasonally adjusted so the August deficit cannot be compared to the $149.20 billion deficit recorded in July Investors will not receive any economic data on Monday.
  • Nasdaq Composite +1.8% YTD
  • Russell 2000 -3.7% YTD
  • S&P 500 -4.8% YTD

(Fudzilla.com) Microsoft interested in acquiring AMD

Exclusive: Talks taking place

Our industry sources claim that Microsoft is seriously talking to AMD about buying the chipmaker. The pair have been in talks for a while, but we are unsure if the deal is happening or when something will be announced.

It is no secret that AMD's CPU roadmap is hardly competitive. From late 2015 and through most of 2016 the business has been rubbish. The hope of Zen cores being successful is AMD's only option for survival. Microsoft has a lot of cash in the bank and has a place for AMD under its wing.

In case that Microsoft does acquire AMD, as we suggested a few months back, it will control the development of the next generation console chip for its future Xbox and it would be able to create decent GPUs to promote its DirectX 12 and beyond. Of course Microsoft would have to compete with Nvidia. Linux fans of AMD GPUs would not be too happy about it, although Redmond has been getting more open source friendly lately.

When it comes to CPUs, the future Zen derivative could end up in the future Surface, you know the tablet that iPad Pro copied the form factor, the cover keyboard and the pen. AMD has a server division as well as computational division, everything that Microsoft uses.

The fact that Raja Koduri, a man behind cool things at ART X and ATI Radeon R300 now runs Radeon Technology Group could mean that the company might be acquired in pieces too. We always suggested that one of the solutions is that AMD sells off GPU business to a company that would licence it back to AMD for its APU products.

Our well informed industry sources suggest that Intel is interested in the acquisition of AMD. Before you blast us with your comments, the world changed a few years back and Intel is not a monopoly anymore. Apple has quite big of a stake with iPads and companies like Samsung have their own SoCs that are used for their tablets and phones. Qualcomm and MediaTek got stronger as well. In this changed world Intel would have a chance to acquire AMD if it really wanted.

Desktop, Server, Notebooks will survive but some of these market segments are simply becoming less relevant than five years ago. Yes, the world has changed.

FT : How assets will react to a rate rise

How assets will react to a rate rise

Credit markets may pose highest risk, with investors ill-prepared

What happens when rates rise? We have been asking this question all week, in preparation for next week’s potential decision by the Federal Reserve to raise interest rates for the first time in nine years.
At present, the market judges the chance of such a move as only about one in four, and this sounds accurate to me. A rate rise now seems unlikely, but it is far from out of the question. So, here is a Long View guide to what will happen to different assets when rates rise.

First and most clearly, there are the effects on commodities and currencies. A rate rise — particularly if part of a longer term cycle of rising rates — directly strengthens the dollar, and therefore weakens assets priced in dollars. It would bring money flowing back to the US. The dollar would be strong, while the downward pressure on oil and industrial metals would remain.
As a rate rise would be seen as deflationary, it would weigh on the gold price as well.
In emerging markets, we have already had several dress rehearsals for a rate rise. If it comes, it will accentuate the pressure on emerging market currencies, which is already severe. Since the last round of emerging market crises, there have been moves to lower government dependence on dollar-denominated debt, but there is plenty of corporate dollar debt out there.
The effect would be more differentiated than in previous crises. But those countries with current account deficits could expect to feel the pressure — led probably by Brazil.
With equities in the US, the picture is far more complex. The move has been so widely telegraphed that investors should have prepared for it. Historically, there is no direct correlation between the start of a rate-rising cycle and falls in equities. Such moves normally come when the economy is humming along well. When animal spirits are high, a rate rise can even be seen as a declaration of faith in the economy from the Fed.
But earnings growth has flattened out this year, stocks have already suffered a correction, and a rate rise would not be taken that way. People are nervous.

Ultimately, equities’ reaction will depend on what happens to the fixed income and credit markets. Here, the effect is less open to conjecture. Higher target rates set by the Fed will send bond yields higher, which means bond prices must go down.
With yields already low, the proportionate falls in prices need to be that much greater. Further, the greatest falls will come for the assets with the greatest duration — the technical term for measuring bond price sensitivity to changes in interest rates.
Worryingly, the long-duration assets that would be worst affected tend to be widely perceived as less risky, because they carry a lower risk of default — for example, high quality corporate bonds, or municipal bonds. (High-yield or ”junk” bonds, which carry greater credit risk, should be less sensitive to a rise in interest rates.)
Generally, risks are greatest when they are not perceived. People who have bought a security believing it to be high-risk tend to guard themselves against that risk; those who think they have a low-risk investment do not.
This could therefore amplify the risk of a full-blown financial “accident”. Unexpected and unhedged losses can lead to knock-on effects.
There are countervailing forces. Rate rises would attract capital into the “haven” of Treasury bonds, and this would alleviate the pressure (and support the stock market)
But the credit market is lumpier than the stock market. Rather than trading on an exchange, those who want to buy or sell bonds do so through a dealer, generally at a bank.
When rates rise

The most powerful central bank in the world is considering whether to raise its record-low interest rates for the first time in nearly a decade. Even before the US Federal Reserve makes a move, the effects are reverberating throughout the global economy. Our project explores how.
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Since the financial crisis, banks have cut back drastically on the capital they allow their dealers to spend holding bonds or credit instruments. This has been done in large part under regulatory pressure, and it means there is far less money available for buying bonds.
Meanwhile, the amount of bonds in issue has increased in the years after the crisis, as part of the financial engineering encouraged by low interest rates. Companies have issued debt and used it to buy back stock.
That raises the spectre of many eager sellers failing to find a willing buyer, and watching as prices plummet. Again, there have been dress rehearsals for an incident like this, both in the past few weeks, and during the bond market “flash crash” last October.
Credit markets drive financial crises. If they freeze, then stocks will come thudding down — as happened during the crisis of 2008. That is the imponderable “nightmare scenario” that faces markets. Just how badly would the credit market react to a rate rise? It can only be answered once rates rise.
And that is why many in markets do not want to find out just yet — and why the bet is on that the Fed will decide not to find out either.
Now, all that remains is to wait a few more days and find out what the Fed decides. And those of us who are not central bankers should probably offer up prayers of thanks that we do not have to make the decision.

NY Post : Blackstone Group planning bid for ATM-maker NCR

NCR has reopened the auction to sell itself — and the Blackstone Group is part of a group that plans to make a bid for the ATM maker, The Post has learned.
Having cancelled its investor day on Thursday, NCR sparked speculation it had reopened sales talks — and, in fact, it has, said to two sources close to the situation.
NCR shares spiked 7 percent on the news, to $26.46.
In fact, NCR has already signed a deal with a mystery buyer who has not yet lined up financing, a third source close to the situation said.
As reported exclusively by The Post on July 29, private equity firm Thoma Bravo dropped its bid to buy NCR — quickly ending what had been a belabored sales process.
Thoma Bravo had offered roughly $31 a share, and the seller was looking for $35.
Now, Thoma Bravo is deep in the action to buy Solera Holdings in a $3 billion auction and likely could not afford both, a source said.
The new auction process includes a lower asking price, sources said.
Blackstone, which is led by Chief Exec Stephen Schwarzman, declined comment. NCR did not return calls.

>>> Syngenta sale of vegetable seeds business not sufficient to appease sharehol

Syngenta sale of vegetable seeds business not sufficient to appease shareholders
Shareholders question rationale of vegetable seeds sale
Change of management possible catalyst for renewed Monsanto approach
Syngenta has no plans to detail strategy on R&D day

Some Syngenta [VTX: SYNN] shareholders have expressed discontent with management’s plans to sell its vegetable seeds business following the withdrawal of Monsanto’s takeover approach, it is understood.

The sale of its global seeds business and an initial USD 2bn share repurchase programme was seen as a measure to appease shareholders after Monsanto [NYSE:MON] withdrew its CHF 470 per share bid. The US group pulled its approach after the Syngenta management refused to engage following two improved proposals.

But, the sale of the seeds business is not the best deal for shareholders, according to two sector bankers and two Syngenta shareholders.

“This is a clumsy move from Syngenta management to compensate and make up for their lack of flexibility during the negotiations with Monsanto. There’s nothing for us to gain in the sale of the vegetable seeds business and the share buyback is irrelevant. We were ready for a deal,” said one shareholder.

He also described the sale of the seeds business and buyback plans as dilutive on EPS. “We are massively losing on that one,” he concluded.

A second shareholder described a sale of the seeds business as lacking any business strategy. “I don’t understand why they would do that,” this shareholder said. “The vegetable seeds business is one of the most attractive assets in their portfolio (good margin and good market value), so why would you want to get rid of it.”

Syngenta declined to comment.

The sale of the vegetable seeds business is an attempt by Syngenta management to get back in its shareholders’ good books but it is not the best deal for investors, the first sector banker said. Shareholders would have got more out of a deal with Monsanto, the second banker agreed.

Had Syngenta invited Monsanto or another party to the table, it would have led to a potential bidding war, a third banker added. There were two or three other strategic bidders, including BASF [ETR;BAS] following the situation, but they did not want to go hostile, this banker said.

All three bankers believed Monsanto was still interested in Syngenta and waiting on the sidelines. But, given opposition from the US group’s own shareholders, a renewed approach was unlikely in the near term in the absence of a major catalyst, such as a change of management at Syngenta, they said.

During its pursuit of Syngenta, Monsanto had committed to divest all of the Swiss group’s seeds business to secure regulatory clearance of the proposed merger. Syngenta had received some inbounds for the vegetable business, so some of these suitors will still want to get it, the first banker pointed out.

All the key seeds players, Agrium, Bayer [FRA: BAYN], BASF AG, Limagrain and Vilmorin [EPA:RIM] are said to have showed interest in the business which is thought to be valued at around USD 2.5bn, the bankers said.

The second shareholder had not been contacted by Syngenta’s management since Monsanto announced the withdrawal of its bid last month. The shareholder hoped the sale of the seeds business would be addressed at Syngenta’s R&D day on 16 September. But, Syngenta plans to focus solely on its R&D pipeline and showcase new and existing products it is understood.

“We don’t understand the decision from the board of Syngenta,” said the first shareholder. “With the latest developments they’ve definitely lost popularity and shareholders’ trust along the way.”

Syngenta’s share price slumped from highs of CHF 398 prior to Monsanto’s withdrawal to close at CHF 309.9 on news of the pulled approach on 26 August. The shares have since made some recovery, currently trading at CHF 343.2, giving it a market capitalisation of CHF 31.84bn.

>>> Gamesa potential target if turbine sector consolidates – bankers

Gamesa potential target if turbine sector consolidates – bankers - Analysis

Vestas, Alstom, GE, Xinjiang Goldwind potential consolidators
19.7% shareholder Iberdrola makes hostile bid tough
Spanish wind-turbine manufacturer Gamesa [BME:GAM] will be a potential takeover target if the sector starts to consolidate, bankers following the situation and an industry source said.

The company, based in Zamudio in Spain’s Basque Country, operates in a mature market, the industry source noted. The prices of turbines are falling, meaning deals could produce economies of scale and remove competitors, the source added.

Gamesa would like to take an active role in sector consolidation as the industry becomes more competitive, a person familiar with the company’s thinking said. The likeliest scenario would involve consolidation with a European peer, said the industry source. Gamesa declined to comment.

Large European players include Vestas [CPH:VWS] of Denmark and Alstom [EPA:ALO] of France, the source noted. General Electric [NYSE:GE] in the US and Xinjiang Goldwind [HKG:2208] of China could also make sense as bidders.

Vestas used to be a shareholder in Gamesa and has a technology collaboration agreement with the Spanish company. The historical situation means the two get linked in consolidation talk, said a person familiar with Vestas’ thinking.

Vestas‘ main focus is on organic growth, although the company will consider opportunistic acquisitions across business segments, a spokesperson said. He did not comment when asked about a potential interest in Gamesa.

Gamesa is “more of a target than a bidder”, the source said. It does not have enough cash to be a serious consolidator itself, the source added. Gamesa had net cash of EUR 39m on its balance sheet at the end of June.

Meanwhile, Gamesa's 19.7% shareholder Iberdrola [BME:IBE] holds the key to its future, one Madrid-based banker said.

The presence of a stable, long-term shareholder on Gamesa’s register means it would be difficult to attempt any kind of hostile move, the banker said. Iberdrola might be interested in a deal that rolled over a framework agreement to supply it with turbines over the long term, he said.

Talk of Gamesa being taken over remains speculative at this point, said a person familiar with Iberdrola’s thinking. A successful restructuring means its shares could be argued as quite expensive, the person said, adding that an agreed sale could involve a large windfall for the utility. Iberdrola declined to comment.

There have been a number of rumours about Gamesa being a target over the years, said a second Madrid-based banker. It is “no secret” that the company could be a target, said a London-based banker, adding that no bids have materialised.

If no takeover is forthcoming, Gamesa could also consider a merger, the industry source said. A third consolidation option would be to buy a startup with disruptive technology, said the second Madrid-based banker.

Gamesa is thinking about consolidation, but hasn’t seen any clear opportunities yet, said the person familiar. A deal to buy a startup would be unlikely as the company believes it develops good technology in-house, the person added.

Gamesa’s shares are trading at EUR 12.73, giving a market capitalisation of EUR 3.57bn. The company had net financial debt of EUR 549m at the end of June. Iberdola’s stake would be worth EUR 703.3m at current prices.

The company’s shares started climbing slowly at the beginning of 2013 and began a sharp climb after hitting a 52-week low of EUR 6.44 in October. The stock has fallen slightly since hitting a high of EUR 16.74 on 23 July.

>>> Last day to sell before Rosh Hashana, Yom Kippour is on the 23rd

" Sell at Rosh Hashana Buy at Yom Kippour "

So you need to Sell today and Buy on the 24th of September...means no position for the Fed long awaited 17th meeting...

Rosh Hashanah also kicks off what is known as the Days of Awe, a 10-day period of intense reflection that culminates on Yom Kippur, the Day of Atonement and the holiest day on the Jewish calendar.
In order to concentrate on their prayers instead of their portfolios, there was a time when many Jews would sell their holdings ahead of the Days of Awe, or "Sell on Rosh Hashanah and buy on Yom Kippur."
"The saying goes back to the 1920s, when it was said that this was the strategy of the Loebs and other prominent Jewish financiers, but it has not really been relevant since," says Larry Wachtel of Wachovia securities.
Another possibility, speculates Rabbi Michael Katz of Temple Beth Torah in Jericho, N.Y., is that it makes good financial sense.
"On Rosh Hashanah, things are good, upbeat and positive. We gather together, wish each other a Happy New Year and we feast. That is the perfect time to sell, when times are high. On the other hand, investors like to buy when the market is low, and Yom Kippur is a downer. We worry about being sealed for death, and we fast."