>>> Asian Update

Asian Mid-session Update: Shanghai remains in retreat; BOK to lower CPI target


***Economic Data***
- (AU) Australia OCT Conference Board Leading Index m/m: -0.2% v -0.6% prior; 3rd consecutive decline
- (KR) South Korea Dec Consumer Confidence: 102 v 103 prior (3rd straight decline and 15-month low)
- (VN) Vietnam Dec Consumer Price Index (CPI) Y/Y: 1.8% v 2.1%e; 2014 average inflation 4.0% v 6.6% in 2013

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +1.2%, S&P/ASX +0.3%, Kospi +0.4%, Shanghai Composite -1.9%, Hang Seng +0.2%, Mar S&P500 +0.1% at 2,080

***Commodities/Fixed Income***
- Feb gold flat at $1,178, Feb crude oil -0.8% at $56.66/brl, Copper flat at $2.87/lb
- (US) API PETROLEUM INVENTORIES: CRUDE: +5.4M (3rd consecutive build; largest build since Oct 15th) v -2.3Me, GASOLINE: +5.5M v +0.5Me, DISTILLATE: +1.1M v -1.0Me
- SLV: iShares Silver Trust ETF daily holdings fall to 10,333 tonnes from 10,517 tonnes priors (lowest since Aug 29th)
- GLD: SPDR Gold Trust ETF daily holdings fall 11.7 tonnes to 712.9 tonnes; Lowest level since Sept 2008; largest decline since June 2013
- (CN) China MoF sells 2-yr bonds at 3.39% yield
- USD/CNY: (CN) PBoC sets yuan mid point at 6.1247 v 6.1230 prior setting (weakest setting since Dec 8th)

***Market Focal Points/Key Themes/FX***
- After a 3% slump overnight, Shanghai Composite remains in year-end profit-taking mode, falling another 2% and testing below the psychological 3,000 level. Financials are again under pressure following CBRC report that November-end non-performing loan ratio rose another 15bps to 1.31%. Brokers were also heavily sold on press reports indicating that some firms have raised margin thresholds on concerns over rising volatility.

- Nikkei225 returned from holiday break with a catch-up rally, even though USD/JPY has come off its late US-session high of 120.80 to trade in the 120.30s. Fin Min Aso reiterated the govt will proceed with Abenomics policies, but also added the upcoming budget needs to be mindful of Japan's fiscal target. Automakers Nissan, Mitsubishi, and Honda reported double-digit y/y declines in domestic output, reflecting the high base-effect of strong demand last year going into the April sales tax hike. Separately, local press also reported that Honda's domestic production would fall short of the company's target by about 15%.

- Report out of the Bank of Korea announced it will be lowering its inflation target next year to account for changing economic conditions - presumably the falling oil prices. Recall the most recent CPI figure of 1.0% in November was a 9-month low and also marked the 25th straight month below central bank's target band of 2.5-3.5%. BOK added the domestic economy would maintain a modest recovery trend, even as financial and fx markets see increased volatility.

***Equities***
US markets:
- SEE: Discloses restructuring; sees aggregate costs of approximately $275M to $285M - filing

Notable movers by sector:
- Financials: Greentown China 3900.HK +19.6% (China Communications Construction to subscribe stake at premium)
- Materials: Silver Lake Resources SLR.AU -6.1% (shareholder cuts stake) - Energy:
- Industrials: Gansu Dayu Water-saving Group 300021.CN +1.5%, Anhui Water Resources Development 600502.CN +3.0%, Chongqing Three Gorges Water Conservancy 600116.CN +3.1%, Beijing Originwater Technology 300070.CN +2.7% (China Fin Min comments on water conservancy projects); Honda Motor 7267.JP +1.9%, Nissan Motor 7201.JP +1.7%, Toyota Motor 7203.JP +1.6% (Yen moves lower

LeTemps.ch : Ethos rallie 11 caisses de pension pour s’opposer au rachat de Sika

Ethos rallie 11 caisses de pension pour s’opposer au rachat de Sika

La fondation a réuni assez d’actions nominatives pour déposer une résolution lors de la prochaine assemblée générale du groupe zougois. Mardi, la holding de la famille Burkard a refusé cette demande


Nouveau rebondissement dans la prise de contrôle de l’entreprise zougoise Sika par le groupe français Saint-Gobain. Mardi, la fondation Ethos et 11 caisses de pension, réunissant 1,7% du capital de la société, ont annoncé déposer une résolution d’actionnaires à l’ordre du jour de l’assemblée générale extraordinaire de Sika.

Après l’annonce du rachat début décembre, la société Schenker Winkler Holding (SWH), qui représente la famille Burkard issue des fondateurs de Sika, avait appelé le 10 décembre à la tenue d’une assemblée extraordinaire, à une date non communiquée, dans le but d’évincer trois administrateurs opposés au projet.

Principal objet de la résolution présentée hier par Ethos: demander la suppression de la clause d’opting-out qui a permis à Saint-Gobain de pouvoir racheter à la famille Burkard 16% du capital de Sika (correspondant à 52% des droits de vote) sans devoir faire une offre sur l’ensemble du capital de l’entreprise.

Pourquoi déposer cette résolution, alors que la date de l’assemblée n’est pas encore connue? «En intervenant vite, il nous a été possible d’amener ce point à l’ordre du jour de l’assemblée. Lorsque celui-ci est déjà publié, les choses sont plus compliquées», a expliqué Dominique Biedermann, directeur de la fondation Ethos.

Pour celle-ci, le premier obstacle à surmonter était de réunir assez d’actions pour atteindre une valeur nominale minimale de 10 000 francs, comme le prévoient les statuts de Sika. L’occasion pour Dominique Biedermann de souligner que des caisses de pension de droit privé l’ont aussi suivi. Outre celle de Migros, il y a la Caisse inter-entreprises de prévoyance professionnelle à Genève et la banque Raiffeisen. Il explique ce soutien par le fait que tous ces investisseurs institutionnels ont été «très choqués par la manière avec laquelle un fleuron de l’industrie suisse a pu être racheté».

La résolution déposée hier comporte deux autres conditions. Premièrement, elle juge que SWH ne devrait pas pouvoir s’exprimer lors du vote sur cette résolution en raison du «conflit d’intérêts majeur» dans la décision de suppression de la clause d’opting-out. «Seuls les 48% des voix des actionnaires minoritaires devraient pouvoir décider du maintien ou non de cette clause», demande Ethos. En réaction, SWH a indiqué hier n’avoir fait qu’usage des droits qui lui sont accordés par les statuts de Sika. «Le contenu des statuts, y compris celle de la clause d’opting-out, était connu de tous les actionnaires», selon un porte-parole. En conséquence, SWH rejette les propositions d’Ethos. Dans l’immédiat, sa demande n’a donc aucune chance, car les actionnaires minoritaires peuvent réunir, au plus, 48% des voix.

Mais la fondation n’entend pas en rester là: «Si notre demande est refusée lors de l’assemblée générale, on se réserve le droit de porter l’affaire devant la Commission des offres publiques d’acquisition (COPA).» Avec quelles chances de succès? Dominique Biedermann se réfère à l’exemple d’Advanced Digital Broadcast (ADB) qui a voulu, en 2012, introduire une clause d’opting-out dans ses statuts. Aura-t-il l’appui des grandes sociétés de conseil aux investisseurs anglo-saxonnes, comme ISS ou Glass Lewis? «Ces sociétés sont entièrement indépendantes», rappelle Dominique Biedermann. Mais il observe que la Suisse est le seul pays où la clause d’opting-out continue d’être appliquée, ce qui n’est guère apprécié à l’étranger.

Deuxièmement, la fondation demande aussi à la famille Burkard de «reconsidérer» la vente de la part de Schenker Winkler Holding à Saint-Gobain. «La famille des fondateurs a peut-être encore les moyens de trouver un autre acheteur. Saint-Gobain est un concurrent direct de Sika, ce qui implique certainement des suppressions de postes», souligne-t-il.

>>> US Close Dow+0,36% S&P+0,17% Nasdaq-0,33% Russell+0,05%

Closing Market Summary: Dow Jones Settles Above 18,000

The Dow Jones Industrial Average (+0.4%) and S&P 500 (+0.2%) rallied to new record highs on Tuesday with the Dow crossing above the 18,000 mark for the first time. However, widespread losses in the biotechnology group prevented the Nasdaq Composite (-0.3%) from taking part in the rally.

Equity indices began the day in the green after a better than expected revision to Q3 GDP (5.0%; Briefing.com consensus 4.3%) provided a pre-market boost. The GDP report was a bright spot among a torrent of mostly disappointing data, which was taken in stride by the market.

Nine of ten sectors registered gains with the energy space (+1.3%) ending in the lead. The growth-sensitive sector opened ahead of other groups and held the lead into the close. Crude oil, meanwhile, settled higher by 3.1% at $57.09/bbl and continued its advance in electronic trading with the move taking place even as the Dollar Index (90.13, +0.36) climbed 0.4%.

The energy sector was followed closely by materials (+0.8%) while the remaining cyclical groups also settled ahead of the broader market. Consumer discretionary (+0.6%) and financials (+0.6%) enjoyed broad support while the technology sector (+0.3%) rallied behind its top components like Google (GOOGL 538.77, +6.47), Intel (INTC 37.43, +0.22), and Microsoft (MSFT 48.45, +0.47). The three names gained between 0.6% and 1.2%, but the largest component—Apple (AAPL 112.54, -0.40)—shed 0.4% and kept the Nasdaq pressured.

However, Nasdaq's woes were not isolated to its largest member. Biotech names retreated across the board with the iShares Nasdaq Biotechnology ETF (IBB 294.70, -14.38) dipping below its 50-day average (294.47). The biotech ETF was able to reclaim that level ahead of the close, but still ended the day lower by 4.7%. For its part, the health care sector (-2.2%) was the only group that ended behind the S&P 500.

The underperformance of biotechnology prevented the S&P 500 from extending its gain, while the price-weighted Dow Jones Industrial Average benefitted from containing just four health care names with two of the four priced below $60/share. In total, only five Dow components registered losses while the two largest listings—Visa (V 265.26, +1.05) and Goldman Sachs (GS 195.50, +1.06) gained 0.4% and 0.6%, respectively. Today's outperformance extended the Dow's year-to-date gain to 8.7%, but the index remains behind the S&P 500, which has added 12.7% so far in 2014.

Elsewhere among Dow members, shares of Coca-Cola (KO 42.97, +0.62) gained 1.5% after The Wall Street Journal reported the company plans to cut between 1,000 and 2,000 jobs globally. As for the broader consumer staples sector (+0.8%), the countercyclical group ended among the leaders.

Treasuries ended near their lows with the 10-yr yield spiking ten basis points to 2.26%.

Today's participation was below average with fewer than 700 million shares changing hands at the NYSE floor.

Economic data was plentiful, including GDP, Durable Orders, FHFA Housing Price Index, Michigan Sentiment, Personal Income/Spending, and New Home Sales:
  • Third quarter GDP was revised up to 5.0% in the third estimate after an originally reported 3.9% gain, which was the largest increase since a 6.9% spike in Q3 2003 
    • The consensus expected GDP to be revised up to 4.3% 
    • Real final sales were revised up to 5.0% from 4.1%, which was the largest increase since Q1 2006 when sales climbed 5.5% 
    • Consumption was revised up to 3.2% from 2.2% after increasing 2.5% in Q2 2014 
  • Durable goods orders declined 0.7% in November after increasing a downwardly revised 0.3% (from 0.4%) in October 
    • The consensus expected an increase of 2.7% 
    • A large portion of the miss was a result of seasonal adjustments impacting nondefense aircraft orders 
    • Excluding transportation, durable goods orders declined 0.4% while the consensus expected an increase of 1.0% 
  • The October Housing Price Index from the FHFA rose 0.6%, which followed an unchanged reading in September 
  • New home sales in November hit an annualized rate of 438,000, which was down from the revised October rate of 445,000 (from 458,000) and worse than the rate of 460,000 that had been broadly expected by the consensus 
  • The University of Michigan Consumer Sentiment Index was virtually unchanged at 93.6 (from 93.8) in the final December reading while the consensus expected no change 
    • The December sentiment reading marked the highest point since January 2007 
  • Personal income increased 0.4% in November while the consensus expected an increase of 0.5% 
    • Personal spending increased 0.6% in November while the consensus expected an increase of 0.5% 
    • Core PCE prices were flat in November while the consensus expected an uptick of 0.1%
There is no economic data on tomorrow's schedule with the session scheduled to end early at 13:00 ET.
  • Nasdaq Composite +14.1% YTD 
  • S&P 500 +12.7% YTD 
  • Dow Jones Industrial Average +8.7% YTD 
  • Russell 2000 +3.4% YTD

Stryker Said to Plan Smith & Nephew Takeover Bid Within Weeks

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BFW 12/23 17:46 Stryker Said to Plan Smith & Nephew Takeover Bid Within Weeks

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Stryker Said to Plan Smith & Nephew Takeover Bid Within Weeks 2014-12-23 17:43:08.645 GMT

By Manuel Baigorri, David Welch and Dinesh Nair (Bloomberg) -- Stryker Corp. is planning a takeover offer for U.K. medical device maker Smith & Nephew Plc that could happen in the coming weeks, according to people with knowledge of the matter. The U.S. producer of surgical implants plans to offer a significant premium to Smith & Nephew’s current share price, with one of the people saying it could be about 30 percent. Shares in London-based Smith & Nephew have climbed 26 percent this year, valuing the company at about 9.7 billion pounds ($15 billion). The Kalamazoo, Michigan-based company is not planning a so- called tax inversion because of the limited tax benefits and political risk, said one of the people, who asked not to be identified because deliberations are private. The U.S. government is clamping down on inversions to stop companies from moving their addresses abroad through deals to cut taxes. The bid is still being finalized and the timing could change, said the people. There’s also a chance that Stryker decides against an offer, one of them said. Representatives for Stryker and Smith & Nephew declined to comment. Medical-device companies are looking to consolidate as hospitals and insurers demand better prices from suppliers to tame rising costs. Two large manufacturers of surgical products and medical supplies, Medtronic Inc. and Covidien Plc, are in the process of completing a merger that was announced in June. Last month, Stryker was discussing the financing of a deal and potential antitrust hurdles with advisers, people familiar with the matter said at the time.

For Related News and Information: Stryker Said to Weigh Smith & Nephew Bid as Standstill Ends NSN NFJQVN6JTSEU<GO> Medtronic Agrees to Buy Device Maker Covidien for $42.9 Billion NSN N78QPT6S972F<GO> Top Stories: TOP<GO> Top Deal Stories: DTOP<GO>

--With assistance from Sonja Elmquist in New York and Makiko Kitamura in London.

To contact the reporters on this story: Manuel Baigorri in London at +44-20-3525-4457 or mbaigorri@bloomberg.net; David Welch in New York at +1-248-455-2343 or dwelch12@bloomberg.net; Dinesh Nair in London at +44-20-3525-3212 or dnair5@bloomberg.net To contact the editors responsible for this story: Aaron Kirchfeld at +44-20-3525-8830 or akirchfeld@bloomberg.net Elizabeth Fournier

>>> Philadelphia Fed Dec nonmanufacturing survey general activity index: 47.5 (h

Philadelphia Fed Dec nonmanufacturing survey general activity index: 47.5 (highest since June) v 41.2 prior 
- New orders 25.0 v 29.4 prior
- Prices paid 5.0 v 23.5 prior
- Wages and benefits 45.0 v 35.3 prior

- 65% of the respondents reported increasing activity at their own firms this month, up from 56 percent last month. Responding firms were less positive about activity in the region. Half of the respondents indicated increasing activity in the region compared with 18 percent that indicated decreasing activity, and the general activity index for the region decreased 9 points, to 32.5

>>> US Gapping Up:

Gapping Up:
In reaction to strong earnings/guidance: JRJC +17.7% (Q3 non-GAAP net income of $1.1 mln; rev +61% ), WAG +2.7%

M&A related: PRLS +24.9% (to be acquired by Mobius Acquisition for $7.00 per share).

Other news: CYTK +27.6% (announced expansion of collaboration for development of CK-2127107; CYTK will receive $55 mln from Astellas (ALSMY)), VNDA +17.5% (to regain US and Canadian rights to Fanapt; Novartis (NVS) to purchase $25 million of Vanda common stock), ICLD +11.3% (announces $6.2 mln professional services contract for a Tier 1 Carrier), OSIR +5.6% (announces exclusive, worldwide partnership with Stryker Corp (SYK) for the commercialization and development of Osiris' viable bone matrix tissue form), CHK +5.5% (announced the closing of its asset sale to Southwestern Energy, authorized a $1 bln common stock repurchase program), ARIA +2.7% (Co and Otsuka Pharma announced agreement on Iclusig in Japan and nine other Asian countries), TASR +2.3% (announced purchase from Pasco County, FL), SDRL +1.9% (still checking), GILD +1.8% (partially rebounding from yesterday's selloff), BCRX +1.6% (announced results from a proof-of-concept study of its antiviral BCX4430 for the treatment of experimental Ebola virus), NBG +-3.6% (Greek elections fell short of electing PM).

Analyst comments: SBUX +0.6% (named a Top Pick for 2015 at Piper Jaffray), GPRO +0.3% (positive analyst comments; co has smaller lockup expiration today), JAH +0.3% (target raised to $56 from $51, maintain Overweight at Piper Jaffray).

>>> US Gapping Down:

Gapping Down:
In reaction to disappointing earnings/guidance: SCS -5.1%.

Other news: NBG -3.6% (Greek elections fell short of electing PM), GMCR -3.1% (to recall MINI plus brewing systems due to burn hazard).

Analyst comments: ACHN -2.5% (downgraded to Neutral at RW Baird), AVP -2.1% (downgraded to Underperform at BMO).

>>> Russia PM Medvedev: Russia faces the risk of a deep recession

Russia PM Medvedev: Russia faces the risk of a deep recession 

- On Nov 26th Russia Fin Min Siluanov stated that he saw oil between $80-90/barrel in the medium term and perhaps the long-term. Urged adjustment to budgetary spending; must optimize the budget while maintaining social spending. Saw risk that 2015 GDP might miss target of +1.2%