>>> Asian Update

Asian Mid-session Update: Australia trimmed CPI in range, diminishing outlook for rate cut; MAS lowers inflation target in intermeeting move


***Economic Data***
- (AU) AUSTRALIA Q4 CONSUMER PRICES (CPI) Q/Q: 0.2% (2-year low) V 0.3%E; Y/Y: 1.7% (2 1/2-year low) V 1.8%E; TRIMMED MEAN Q/Q: 0.7% V 0.5%E ; Y/Y: 2.2% (2 1/2 year low) V 2.2%E
- (AU) AUSTRALIA NOV SKILLED VACANCIES M/M: -1.0% V -0.7% PRIOR
- (AU) AUSTRALIA DEC WESTPAC LEADING INDEX M/M: 0.0% V -0.1% PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.2 v 113.6 prior
- (CN) China Jan Westpac Consumer Confidence index: 112.1 v 112.5 prior

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.1%, S&P/ASX flat, Kospi +0.1%, Shanghai Composite -0.8%, Hang Seng +0.3%, Mar S&P500 +0.7% at 2,044

***Commodities/Fixed Income***
- Feb gold -0.2% at $1,289, Mar crude oil -1.6% at $45.47/brl, Mar copper +0.8% at $2.47/lb
- (US) API PETROLEUM INVENTORIES: CRUDE: +12.7M (multi-year high build) v +4Me, GASOLINE: -5M v +0.5Me, DISTILLATE: -0.67M v -1.5Me
- GLD: SPDR Gold Trust ETF daily holdings rise 9.3 tonnes to 752.7 tonnes; highest since Oct 16th
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, and ¥400B in 5-10yr JGBs
- (CN) China Finance Ministry (MoF) sells 10-yr bonds at 3.4205%

***Market Focal Points/FX***
- Australian dollar - one of the biggest victims to the 7-month-old USD advance - got some temporary relief from today's quarterly inflation figures. With the case for renewed RBA easing as early as next meeting in early February, the trimmed mean (core) levels held above the 2% floor of the central bank's target range, even though the headline CPI fell to new 2-year lows. ABS noted that most most significant price rises this quarter were for domestic holiday travel and accommodation, while fuel and electronics showed predictable outsized declines. A research note from CommSec said "It is pretty clear that inflation is not a threat to the domestic economy, meaning that the Reserve Bank can comfortably keep interest rates at exceptionally low levels over the medium term." Separately in Australia, Westpac leading index registered a flat December, as resident researcher noted "Australian economy looks set to continue recording below trend growth well into 2015." Skilled vacancies fell further, potentially signalling a slightly tighter labor market. AUD/USD rose nearly 100pips in the wake of the CPI figures, briefly testing the $0.80 mark.

- Singapore Central Bank joined the currency wars of the emerging world with an intermeeting policy easing of its own. In the first unscheduled announcement in 13 years, MAS cut 2015 headline CPI forecasts to -0.5% to +0.5% from 0.5-1.5% prior and core inflation 0.5-1.5% from 2.0-3.0% prior, while also lowering the slope of SGD policy band. MAS noted measured adjustment was consistent with the unfolding inflation trends and was appropriate for mid-term price stability, but also maintained 2015 GDP forecast at 2-4%. USD/SGD spiked up over 150pips above $1.35 - the lowest SGD levels since Aug 2010, simultaneously breaking the downtrend going back to early 2002.

- In Japan, the Cabinet Office maintained its economic assessment for the 4th consecutive month, reiterating the economy is continuing gradual recovery. PM Abe pledged to conduct reform to address a "very severe" fiscal situation. USD/JPY remained in consolidation mode with 7th consecutive session of alternating between advances and declines. Traders are now focused on Wednesday FOMC policy decision and any changes to the "patient" catchphrase in the Fed statement.

***Equities***
US markets:
- FSL: Reports Q4 $0.42 v $0.33e, R$1.10B v $1.14Be; +12.0% afterhours
- X: Reports Q4 $1.82 (adj) v $0.89e, R$4.07B v $3.96Be; +8.8% afterhours
- YHOO: Reports Q4 $0.30 v $0.29e, R$1.18B v $1.18Be; Confirms plans for tax-free spin-off of the remaining stake in Alibaba; Announces Plan for Tax-Free Spin-Off of Remaining Stake in Alibaba Group, as expected; +6.7% afterhours
- AAPL: Reports Q1 $3.06 v $2.60e, R$74.6B v $67.5Be; +5.7% afterhours
- JNPR: Reports Q4 $0.41 v $0.31e, R$1.10B v $1.07Be; +5.2% afterhours
- EA: Reports Q3 $1.22 v $0.92e, R$1.43B v $1.29Be; +4.3% afterhours
- WDC: Reports Q2 $2.26 v $2.10e, R$3.89B v $3.83Be; +3.5% afterhours
- CNI: Reports Q4 C$1.03 v C$0.97e, RC$3.21B; Boosts quarterly dividend 25% to C$0.3125 from $0.25/share; +3.2% afterhours
- VMW: Reports Q4 $1.08 v $1.06e, R$1.70B v $1.69Be; Board approves additional $1B share buyback (approx 2.8% of market cap); +2.3% afterhours
- T: Reports Q4 $0.55 v $0.55e, R$34.4B v $34.3Be; +1.4% afterhours
- ACE: Reports Q3 $2.47 v $2.28e, R$5.75B v $4.52Be; +0.4% afterhours
- AMGN: Reports Q4 $2.16 v $2.05e, R$5.17B v $5.19Be; +0.3% afterhours
- INFA: Reports Q4 $0.56 v $0.51e, R$303.7M v $296Me; announces $500M share repurchase program (10.7% of market cap); +0.1% afterhours
- ILMN: Reports Q4 $1.03 v $0.78e, R$512.4M v $504Me; -0.3% afterhours
- SYK: Reports final Q4 $1.44 v $1.46e, R$2.62B v $2.62Be; -0.4% afterhours

Notable movers by sector:
- Consumer Discretionary: AP Eagers APE.AU +6.4% (prelim FY14 results)
- Materials: Hebei Iron & Steel 000709.CN +1.8% (FY14 guidance); OZ Minerals OZL.AU +4.2% (Q4 production results); St Barbara SBM.AU +4.9% (FY15 production guidance)
- Energy: Karoon Gas Australia KAR.AU +4.9% (provides update); Drillsearch Energy DLS.AU +3.3% (Q2 production results)
- Technology: Dongxu Optoelectronic Technology 000413.CN +10.0% (proposes private placement); Hitachi High-Technologies 8036.JP -3.7% (9-month results); Sharp Corp 6753.JP +4.0% (to partner with Samsung on solar-powered batteries); Sony Corp 6758.JP +3.4% (to cut jobs); LG Display 034220.KR -1.1% (2014 results)
- Healthcare: M3 Inc 2413.JP +5.7% (9-month results)
- Utilities: Chugoku Electric Power 9504.JP +6.5% (FY14 guidance)

>>> US After Hours : ABMD +29.4%, X +8.6%, YHOO +7.2%, AAPL +5.

After Hours Summary: ABMD +29.4%, X +8.6%, YHOO +7.2%, AAPL +5.6%, ETH -13.1%, EZPW -7.5% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: ABMD +29.4%, FSL +11.6%, ZHNE +8.8%, X +8.6%, FTK +8.4%, YHOO +7.2%, MRTN +6%, AAPL +5.6%, JNPR +4%, KTCC +4%, WDC +3.9%, EA +3.9%, CNI +3.2%, MRCY +2.4%, CYT +2.1%, TSS +1.9%, T +1.8%, VMW +1.4%, DOX +1%, POL +0.6%, ACE +0.4%, ILMN +0.4%, INFA +0.3%, AMGN +0.1%

Companies trading higher in after hours in reaction to news: ABMD +29.4% (received FDA approval under a Humanitarian Device Exemption for the Impella RP System; co also reported earnings), REXX +5.5% (announced 2014 proved reserves increased 57% to 1,337 Bcfe), UIHC +5.1% (to replace AKRX in the S&P SmallCap 600), ANIP +2.4% (to replace GTIV in the S&P SmallCap 600), APRI +1.6% (announced issuance of U.S. patent for RayVa), DOX +1.0% (selected by Telefonica (TEF) for multi-channel transformation in Brazil)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: ETH -13.1%, EZPW -7.5%, OTEX -4.4%, IGT -2.9%, UMBF -2.4%, SYK -0.4%

Companies trading lower in after hours in reaction to news: SYRG -3.7% (launched $150 mln common stock offering)

>>> U.S. Supreme Court Grants Shire Petition

U.S. Supreme Court Grants Shire Petition 

Shire plc (LSE: SHP, NASDAQ: SHPG) today announced that the U.S. Supreme Court granted Shire's petition in the Shire v. Watson patent case regarding LIALDA(mesalamine, 1.2 gram). The granting of this petition by the Supreme Court vacates the decision of the U.S. Court of Appeals for the Federal Circuit with respect to the claim construction in the case against Watson (now Actavis). 

In 2013, Shire prevailed in the United States District Court for the Southern District of Florida in a patent litigation against Watson (now Actavis) involving U.S. Patent No. 6,773,720 for LIALDA. On appeal, the Federal Circuit reversed the District Court's claim construction. With the granting of the petition by the Supreme Court, the Federal Circuit's decision on claim construction is vacated, and the case will be remanded back to the Federal Circuit for further consideration under the deferential standard of review announced by the Supreme Court last week in Teva v. Sandoz. 

Shire is pleased with the Supreme Court's recent action and believes that it substantiates Shire's continued confidence in its patent position.

>>> U.S. Steel beats by $1.02, beats on revs --> +7,61% after hours

U.S. Steel beats by $1.02, beats on revs
Reports Q4 (Dec) earnings of $1.82 per share, excluding non-recurring items, $1.02 better than the Capital IQ Consensus Estimate of $0.80; revenues fell 4.6% year/year to $4.07 bln vs the $3.93 bln consensus.
* Despite the lower production levels, the co's Flat-rolled segment still achieved income from operations of $82 per ton. Shipments and average realized prices decreased from Q3 as a result of weaker spot market conditions. Co says its Flat-rolled segment continues to be adversely impacted by the acceleration of imports during 2014, but most significantly by the massive surge of imports during Q4.
* European segment results improved slightly compared to Q3 primarily due to higher shipments; lower raw materials costs, primarily for iron ore; and lower facility repairs and maintenance costs as scheduled maintenance was completed in Q3.
Q4 results for the Tubular segment increased compared to Q3. Average realized prices increased primarily due to improved pricing and mix as a result of increased alloy OCTG shipments.
* In terms of its 2015 outlook, co says it anticipates that the global economy in 2015 will expand at a moderate rate, with U.S. economic growth of approximately 3% and European economic growth of approximately 1%. Steel demand tracks directionally with GDP, and the co's view is that it will continue to see low single digit growth rates in each region, which is broadly consistent with worldsteel Association projections.
* Co expects that the depressed oil prices will have a negative impact on its Tubular segment. Although this will also be a headwind for its Flat-rolled segment, co is encouraged by the potential that improved consumer spending could provide to overall flat-rolled demand.


>>> Apple beats on the top & bottom line led by iPhones well ahead of estimates;

--> AAPL +5,3% closed @ 109,14 trading @ 114,85

Apple beats on the top & bottom line led by iPhones well ahead of estimates; tops Q1 gross margin guidance; guides Q2 revs in-line with estimates

Reports Q1 (Dec) earnings of $3.06 per share, $0.46 better than the Capital IQ Consensus Estimate of $2.60; revenues rose 29.5% year/year to $74.6 bln vs the $67.53 bln consensus with gross margins of 39.9% vs 38.4% est (Guidance of 37.5-38.5%)
* Co issues in-line guidance for Q2, sees Q2 revs of $52.0-55.0 bln vs. $53.75 bln Capital IQ Consensus Estimate; sees Q2 gross margins of 38.5-39.5% vs 38.7% ests.
* International sales accounted for 65% of the quarter's revenue.
* Q1 iPhones 74.5 mln vs 66.8 mln ests 51 mln last year
* Q1 iPads 21.4 mln vs 21.8 mln vs 26 mln last year.
* Q1 Macs 5.5 mln vs 5.5 mln vs 4.8 mln last year.

Possible AAPL suppliers that could see a reaction following earnings include: QCOM, SWKS, AVGO, INVN, MRAAY, NXPI, TXN, CRUS.

WSJ : Yahoo to Spin Off Alibaba Stake --> +6% after Hours

Yahoo to Spin Off Alibaba Stake
Internet Company Reports Lower Earnings, Revenue

 Yahoo Inc. unveiled plans for a tax-free spinoff of its remaining holdings in Alibaba Group Holding Ltd. as the Internet company also reported declines in fourth-quarter earnings and revenue.

After the spinoff, Yahoo will continue to operate its core business and hold its 35.5% interest in Yahoo Japan . The new company will own all of Yahoo’s remaining shares of Alibaba, which are valued at $40 billion. It will assume no debt in the deal, and Yahoo will retain its cash. 

Shares rose nearly 6% in after-hours trading.


After selling shares in Alibaba’s initial public offering, Yahoo still owns 15% of the Chinese e-commerce giant and 35.5% of Yahoo Japan, which together make up the vast majority of Yahoo’s current market capitalization of about $46 billion.

Investors had been eager to see how Yahoo could get value from those assets, without taking a big tax hit.

Tuesday’s plans could help determine whether embattled Chief Executive Marissa Mayer buys herself more time with shareholders. Placating investors could buy also Ms. Mayer more time to turn around the company’s struggling display-ad business.

Activist investor Starboard Value LP had pressured Yahoo to minimize those taxes, calling for the company to essentially break itself into two distinct parts, one for its core business of Internet properties and the other for its holdings in Alibaba and Yahoo Japan.

FT : EasyJet predicts smaller than expected pre-tax loss in firs

EasyJet predicts smaller than expected pre-tax loss in first half

EasyJet on Tuesday predicted it would report lower than expected first-half losses partly because falling oil prices are serving to cut the budget airline’s fuel bill.
Carolyn McCall, easyJet chief executive, said the company expected pre-tax losses of between £10m and £30m in the six months to March 31, compared with £53m in the same period in 2013-14.

Analysts were expecting losses of £57m in the first half of easyJet’s current financial year.
EasyJet generates its profits in the second half, reflecting how this coincides with increased travel in the summer months. Shares in easyJet rose 1.9 per cent to close at £17.89 on Tuesday.
Ms McCall suggested that passengers could soon also share in the benefits of falling oil prices, which have more halved since last summer. “EasyJet expects that lower fuel costs will be beneficial for its customers as fares adjust,” she said.
In a trading update for the three months to December 30, its first quarter, easyJet reported that revenue increased 3.8 per cent to £931m compared with the same period in 2013.
The Luton-based carrier benefited from more UK passengers flying out on holidays and from extra travellers in France, where easyJet has been muscling on territory served by Air France-KLM.
“We enjoyed a strong October across the network — particularly on UK leisure flights to beach destinations and on French domestic routes where we continued to build passenger numbers after a busy September,” said Ms McCall.
The airline was also helped by success in its strategy of winning more business passengers — a key battleground for low-cost airlines — and where it has forced bigger rival Ryanair to follow its lead.
EasyJet said it had seen a record month for business travellers in October after its first television advertisement aimed at the corporate market.
Analysts said the increase in revenue per seat of 3.7 per cent at constant currency in the first quarter was a good performance.
“These are very strong numbers, with easyJet delivering an impressive revenue performance despite a significant increase in competition on its network this winter,” said Oliver Sleath, analyst at Barclays.
At Gatwick airport, where easyJet is the biggest airline, the company grew capacity by about 10 per cent in the first quarter after it started using take-off and landing slots it bought in 2013 from regional carrier Flybe.
The analysts’ consensus forecast for easyJet’s pre-tax profit for 2014-15 is £635m.