>>> Brokers Upgrades & Downgrades - 4th of December 2014

>>> Up
*BASHNEFT RAISED TO BUY VS NEUTRAL AT UBS
*ORANGE RAISED TO NEUTRAL VS UNDERPERFORM AT CREDIT SUISSE
*POLYMETAL RAISED TO NEUTRAL VS SELL AT GOLDMAN

>>> Down
*ANGLO AMERICAN CUT TO UNDERPERFORM VS BUY AT BOFAML
*ARCELORMITTAL CUT TO NEUTRAL VS BUY AT BOFAML
*BHP CUT TO NEUTRAL VS BUY AT BOFA
*FERREXPO CUT TO UNDERPERFORM VS BUY AT BOFAML
*FORTESCUE METALS CUT TO UNDERPERFORM VS BUY AT BOFAML
*GULF KEYSTONE CUT TO HOLD AT DEUTSCHE BANK
*JD WETHERSPOON CUT TO SELL VS NEUTRAL AT GOLDMAN
*KUMBA IRON ORE CUT TO NEUTRAL VS BUY AT BOFAML
*NESTE OIL CUT TO NEUTRAL VS BUY AT UBS
*NOVATEK CUT TO NEUTRAL VS BUY AT CITI
*RIO TINTO CUT TO UNDERPERFORM VS BUY AT BOFA
*SURGUTNEFTEGAZ PREF. CUT TO NEUTRAL VS BUY AT CITI
*VALLOUREC CUT TO NEUTRAL VS BUY AT UBS

>>> PT Change


>>> Initiation
*BRAAS MONIER RATED NEW BUY AT JEFFERIES, PT EU19.2
*EMAAR MALLS GROUP RATED NEW BUY AT UBS
*INTESA SANPAOLO RATED NEW BUY AT JEFFERIES, PT EU3
*RESTAURANT GROUP RESUMED BUY, ADDED TO CONVICTION LIST: GOLDMAN
*RTL GROUP RATED NEW BUY AT BANKHAUS LAMPE, PT EU110
*UNICREDIT RATED NEW HOLD AT JEFFERIES, PT EU5.5
*WIENERBERGER RATED NEW BUY AT JEFFERIES, PT EU15.1

>>> Call
>> Stock
*GO-AHEAD REMOVED FROM GOLDMAN CONVICTION BUY LIST, STAYS BUY
*SURGUTNEFTEGAZ PREF. REMOVED FROM CITI'S FOCUS LIST CEEMEA

>>> F1 board lining up former Diageo CEO Paul Walsh to replace Peter Brabeck as

F1 board lining up former Diageo CEO Paul Walsh to replace Peter Brabeck as chairman

Formula One Group’s (F1) board will next week discuss whether to appoint former Diageo CEO Paul Walsh to replace current Chairman Peter Brabeck, the Financial Times reported. The newspaper cited people with knowledge of the situation for the claim.

The buyout group CVC Capital Partners holds a 35.5% stake in F1, the item noted. It is believed that CVC wants Walsh to have an executive role as well as acting as chairman, according to the report.

The item cited one person familiar with the situation who said the potential appointment of Walsh could reduce the influence wielded by F1 chief executive Bernie Ecclestone.

Ecclestone said he had met Walsh and CVC co-founder Donald Mackenzie in November, the article added. The F1 CEO said Mackenzie had floated the idea of Walsh being appointed as chairman should Brabeck decide to step down. Ecclestone added that he would not have any concerns about Walsh performing some executive tasks.

CVC’s advisers have previously informed the private equity firm of their opinion that Ecclestone’s position stands in the way of its plans for an initial public offering of F1, the article noted. The IPO plans have been suspended but CVC wants to resume preparations for a listing, according to the newspaper.

Background:

A Bloomberg report on 4 October cited people with knowledge of the situation who said CVC is working with the investment banks UBS, Morgan Stanley and Goldman Sachs on a potential IPO to take place early next year. The people cited by the report estimated that a flotation could value Formula One Group at up to USD 3bn (EUR 2.44bn).

Financial Times, previously reported intelligence

>>> Asian Update

Asian Market Update: Shanghai at fresh 42-month high; Aussie rallies on retail sales, trade balance

***Economic Data***
- (NZ) NEW ZEALAND NOV QV HOUSE PRICES: 5.1% V 5.9% PRIOR
- (KR) SOUTH KOREA Q3 FINAL GDP Q/Q: 0.9% V 0.9% PRELIM; Y/Y: 3.2% V 3.2% PRELIM
- (AU) AUSTRALIA OCT RETAIL SALES M/M: 0.4% V 0.1%E (5th month of increase)
- (AU) AUSTRALIA OCT TRADE BALANCE (A$): -1.3B V -1.8BE; 7th consecutive trade deficit
- (BR) BRAZIL CENTRAL BANK (BCB) RAISES SELIC TARGET RATE BY 50BPS TO 11.75%; AS EXPECTED

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.8%, S&P/ASX +0.5%, Kospi +0.9%, Shanghai Composite +1.6%, Hang Seng +0.5%, Dec S&P500 flat at 2,073

***Commodities/Fixed Income***
- Feb gold -0.3% at $1,205, Jan crude oil 1.0% at $68.02/brl, Mar copper flat at $2.89/lb
- USD/CNY: (CN) PBoC sets yuan mid point at 6.1411 v 6.1376 prior setting (weakest Yuan setting since Nov 23rd)
- GLD: SPDR Gold Trust ETF daily holdings rise 2.4 tonnes to 720.0 tonnes; First rise since Nov 17th
- SLV: iShares Silver Trust ETF daily holdings fall to 10,737 tonnes from 10,806 tonnes prior (lowest since Nov 12th)
- (JP) Japan investors net bought ¥3.4B in foreign bonds v sold ¥32.5B in prior week; Foreign investors net sold ¥53.0B in Japan stocks v bought ¥734.9B in prior week

***Market Focal Points/Key Themes/FX***
- Aussie dollar got a brief moment of respite from the soft GDP-driven decline, trading up by about 25pips on better than expected trade balance and retail sales data. Australia posted its 5th month of increase in retail sales, while the 7th consecutive trade deficit of A$1.3B was below A$1.8B expected. Imports fell 2% and exports rose 2%, as shipments to China improved by over 5% from last month. The rally did not hold, and AUD/USD traded lower in the latter part of the session on general strength in USD. Meanwhile, an analyst at Goldman Sachs reiterated expectations for two RBA cuts in 2015, forecasting AUD/USD to drop to $0.83 in 3 months, and to $0.79 in the next 12 months.

- Shanghai Composite continued to trade higher today, reaching a fresh 42-month high. Brokers led the gains, with China's largest broker CITIC Securities traded higher by 10% at limit. Major energy names also soared, with PetroChina higher by over 8% and Sinopec up by 7% on recovering oil prices. Trading volumes cooled down a bit after hitting fresh record highs overnight.

- Brazil central bank raised its Selic target rate by 50bps to 11.75%, as expected by a narrow majority of analysts. This marks the 10th rate hike in Brazil tightening cycle since April 2014, and the second hike after the Presidential elections. Unlike last month's 25bps tightening that saw a significant dissenting camp, today's decision was also unanimous.

- Volatility in other USD majors is subdued ahead of the ECB rate decision later today. Market generally expects ECB to hold off on expanded QE. ECB chief Draghi is however likely to convey a more dovish tone at the press conference amid lower inflation expectations, and also reiterate that the central bank is prepared for unconventional measures.

***Equities***
US markets:
- ARRY: To Regain Worldwide Rights To Binimetinib and receive up to $85M upfront payment from Novartis; +22.8% afterhours
- HE: NextEra announces combination agreement with Hawaiian Electric; $4.3B deal values HE at about $33.50/shr; +17.1% afterhours
- PRA: Approves $2.65 special dividend (5.9% yield); increases dividend 3.3% to $0.31 from $0.30; approves $100M in share repurchases (3.8% of market cap); +1.8% afterhours
- ONNN: Announces New Distribution Channel Partners to Expand Business and Support Customers in Japan and Asia-Pacific; +1.5% afterhours
- GES: Reports Q3 $0.24 v $0.18e, R$590M v $596Me; +0.6% afterhours
- DIS: INCREASES DIVIDEND 34% TO $1.15 FROM $0.86; +0.5% afterhours
- ENB: Guides initial FY15 $2.05-2.35 v $2.00e; Raises dividend by 33% to $0.465/shr, implied yield 3.9%; flat afterhours
- PVH: Reports Q3 $2.56 v $2.49e, R$2.23B v $2.26Be; -1.9% afterhours
- SEAC: Reports Q3 -$0.07 v -$0.08e, R$30.0M v $30.4Me; -11.4% afterhours

Notable movers by sector:
- Consumer Discretionary: Vocation Ltd VET.AU -52.0% (cuts FY15 guidance); Ryohin Keikaku 7453.JP +1.6% (press speculation on 9-month)
- Energy: Liquefied Natural Gas LNG.AU +6.6% (shareholder raises stake)
- Industrials: Leighton Holdings LEI.AU +6.9% (analyst action; awarded contract); Nufarm Ltd NUF.AU +4.4% (FY15 guidance); Takata Corp 7312.JP -3.0% (auto recall expands )
- Healthcare: REVA Medical RVA.AU +29.3% (update on Fantom Scaffold product)

Global Relative Value: Oil - integrated and E&P

Global Relative Value: Oil - integrated and E&P

Relative Value Global: Oil – integrated & E&P

LONG (on a relative basis) XLE US: $78.90; IXC US: $37.7; XOP US: 49.00; OIL FP: Eur33.00; PBR US: $9.00; LKOD LI: $46.48; Brent M05: $75.3 December 1, 2014 Following OPEC’s decision not to cut output after the recent fall in oil prices, in particular due to a glut of crude brought about by overproduction in the US (aka the fracking revolution), oil prices collapsed further last Friday, causing a crash in oil/energy related shares on Friday, and this morning in Europe. E&P companies are the most affected, being the high beta stocks in the sector as they are directly linked to changes in the price of crude. One immediate consequence of the oil bear market was the abandonment of the Petroceltic deal by Dragon Oil, with Petro Celtic dropping by almost 40%. Following our positive report on oil drilling and services, we are positive on oil/energy stocks in general, and particularly on E&P companies which are reaching ridiculous levels of valuations, exceeding (on the downside) the lows of 2008/09 when crude collapsed to $40.

1. OIL in the global valuation context As highlighted in our global strategy report (Oct 8), out of the top 50 best value stocks, 18 are energy stocks highlighting the undervaluation of the sector. In the US, of the top 25 best value stocks, 13 are energy, including 10 oil stocks (4 integrated; 6 E&P) and 3 oil services stocks. In Europe, out of 14 top undervalued stocks, 4 are energy. The story is the same in emerging markets where Russian oil stocks, Petrobras, and CNOOC (China) feature prominently amongst the best value opportunities. Even in Japan, Inpex is ranked #1 in terms of value vs. margins In fact on a global basis, of the top 10 best value vs. margins stocks, 9 are oil stocks (Inpex, 6 Russians, Statoil, Sasol). In terms of relative performance, the oil sector, be it on a global basis, or market by market is not only significantly oversold, but is selling on relative lows that are overshooting the preceding lows of 2008-09 when oil collapsed to $40. This would suggest that either the oil price is on for another significant leg down, or that on the contrary, if oil prices were to stabilize, the energy sector is due for a significant rally. E&P E&P are the high beta stocks in the energy sector. The following two charts are showing the relative performance of US E&P stocks to the US Energy sector and to the Oil Services sector. As can be seen, E&P are massively underperforming in the current oil rout. In fact as the chart below shows, the relative underperformance of the E&P sector vs. Energy is similar to the 2008 relative collapse. However, again the 2008 move took place in an environment where oil collapsed from over 140 to $40 CONCLUSIONS & TRADE RECOMMENDATIONS As demonstrated above, oil stocks are undervalued relative to world equity markets, and particularly so in the US and Europe. Relative performance of energy stocks to indices would tend to indicate that either oil stocks are extremely oversold (relative), or oil prices should plunge further. As such, we would overweight energy stocks in any long equity portfolio. This sector allocation bet was also highlighted in our last strategy report where we highlighted through a bottom-up stock selection based on relative values and profitability trends and cycles that the energy sector was the most attractive in all markets. CORE LONG OIL STOCKS ENI (ENI IM): Eur 16.7 STATOIL (STL NO): NOK 126 ENCANA (ECA CN): C$ 17.80 PETROBRAS ON (PBR US): $9.12 (we recommend Petrobras in US$) Russian Oil or Market Vector Russia (RSX): $19.60 (Gazprom, Novatek, Lukoil, Bashneft) KMG EP (KMG LI): $ 15.25 DRAGON OIL (DGO LN): GBP 5.02 OIL & NATURAL GAS (ONGC IN): INR 364.4 OIL INDIA (OINL IN): INR 571 INPEX (1605 JP): JPY 1219 BEACH ENERGY (BPT AU): A$ 0.98

SPECIAL SITUATIONS: BAKER HUGHES (BHI US): US$ 56.5 long the US sector with a 15% cushion/kicker PETROCELTIC (PCI LN): GBP 1.14 collapsed deal more than 100% higher; co. is for sale. PETROBRAS ARGENTINA (PZE US): $ 6.0 potential minority buyout; at a fraction to YPF TALISMAN ENERGY (TLM CN): C$ 5.14 ultra-cheap Canadian E&P co. Icahn main shareholder. PACIFIC RUBIALES (PRE CN): C$ 10.18 stake building by Alfa Group above C$20. High probability of a take-out BASHNEFT (BANE RM): RUB 1219 (US$ 23.6) majority stake expropriated by Russian gvt from Sistema. Significantly undervalued; stake could be resold later at a much higher price.

LONG / SHORT MEAN REVERTING / RELATIVE VALUE TRADES: The following tables are showing the MRI for the various possible pair trades in the global energy sector. Highly mean reverting trades are highlighted in yellow. Of these we recommend the following trades based on relative values and price dislocation: Long E US (ENI ADR), Statoil (STL NO) / Short IXC US Long Oil futures (CLH5) /Sshort CNOOC (883 HK) Long Lukoil (LKOD LI), Novatek (NVTK LI) / Short XLE US Long XOP US, (OXY US, APC US) / Short RDSA LN Long Petrobras (PBR), OIH US, RSX US / Short CNOOC (883 HK) Long Lukoil (LKOD LI) / Short Sinopec (386 HK) Long Gazprom (OGZD LI) / Short RSX US Long RSX UX, Lukoil (LKOD LI), Gazprom (OGZD LI) / Short Schlumberger (SLB) We note that the Russian stock market (RTSI$ or ETF RSX) is most mean reverting with crude oil prices and a large number of oil stocks. Russian oil stocks have been among the best performing energy stocks in the last 3 months.

>>> US After Hours Summary: TLYS +20.5%, PSUN +11.8%, AVGO +6.3%, ARO

After Hours Summary: TLYS +20.5%, PSUN +11.8%, AVGO +6.3%, ARO -2.5%, GES -0.1% following earnings/guidance; ARRY +22.8% on binimetinib news

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings:
TLYS +20.5%, PSUN +11.8%, AVGO +6.3%,

In reaction to M&A: CACH +31% ($0.29 stock - co announced a review of strategic alternatives), HE +9.9% (NextEra Energy (NEE unched) and HE to combine in a $4.3 bln deal), 

Companies trading higher in after hours in reaction to news: ARRY +22.8% (to regain worldwide rights to binimetinib), OXF +19% (disclosed that on December 2, 2014, it was notified the NYSE that it regained compliance with the share price continued listing standard of the NYSE), APPY +5.3% (light volume; will provide business update on Monday, Dec 8 at 4:30 following FDA request for additional info on APPY1 direct de novo submission), BMRN +2.1% (CEO appears on CNBC's Fast Money), PRA +1.8% (has authorized a special dividend of $2.65 per common share, increased its regular dividend by 3.3% to $0.31/share and adds to share repurchase authorization ), HDNG +1.1% (light volume; Privet Fund disclosed 7% stake; has engaged in discussions with management regarding the operations and strategic direction), DIS +0.1% (increases annual dividend 34% to $1.15 per share).

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: SEAC -7.3%, VRNT -3.2%, ARO -2.5%, GES -0.1%,

Companies trading lower in after hours in reaction to news:  KIN -26.4% (has re-assessed its atopic dermatitis program and the atopic dermatitis market and has decided to discontinue its AtoKin study in favor of directing resources toward other programs in its portfolio), ADC -2.7% (commenced underwritten public offering of 2.1 mln newly issued shares of common stock) 

(BN) Avanir’s Takeover Price Leaves Room for Counteroffers: Real M&A



Avanir’s Takeover Price Leaves Room for Counteroffers: Real M&A
2014-12-04 00:00:01.3 GMT


(For a Real M&A column news alert: {SALT REALMNA <GO>}.)

By Tara Lachapelle
Dec. 4 (Bloomberg) -- Avanir Pharmaceuticals Inc. may be
leaving some money on the table.
The Aliso Viejo, California-based company, which makes a
drug to control symptoms of Alzheimer’s disease, agreed to sell
itself to Japan’s Otsuka Holdings Co. for $3.2 billion, or $17 a
share. That’s 4 percent lower than analysts’ average projection
for where the stock would have traded in a year. Jefferies Group
LLC’s Thomas Wei said he would have valued Avanir at $26 to $31
a share in a takeover. That implies Avanir may have been able to
negotiate for at least an additional $1.7 billion for its
shareholders.
Counterbidders are still possible. Just one month ago, JMP
Group Inc. said Eli Lilly & Co., H. Lundbeck A/S, Mallinckrodt
Plc and Shire Plc all could be logical acquirers of Avanir. And
they’re among more than a dozen suitable buyers that Wei
highlighted this week.
The catch is that Avanir agreed not to seek out other bids,
and should it walk away from this deal, it will have to pay
Otsuka $90 million. Avanir shareholders also don’t get to vote
on the transaction, so to get more money they’ll need another
drug company to make an unsolicited higher bid.
Otsuka’s offer is “underwhelming,” Ritu Baral, a New
York-based analyst for Cowen Group Inc., wrote in a Dec. 2 note.
“While we see no evidence of other potential bidders at this
point, we think there might have been interest from other
pharmas with portfolios in Alzheimer’s” and related neurologic
disorders.
“We will be paying close attention to the upcoming merger
filings” for details on the transaction such as the timing of
the talks and other potential bidders, she said.

Tight Spread

While Avanir’s stock closed yesterday 8 cents below
Otsuka’s offer at $16.92, which usually implies investors aren’t
anticipating a bidding war, it’s also a very tight spread for a
deal that was just announced. The average spread for pending
acquisitions of U.S. companies is currently 5.7 percent below
the offer price and the median is 2.4 percent, compared with
Avanir’s 0.5 percent, according to data compiled by Bloomberg.
Avanir’s stock price had risen 344 percent this year
through last week, before the deal was made public. The company
makes a drug called Nuedexta that treats uncontrollable crying
or laughing believed to be caused by neurologic conditions such
as Alzheimer’s. It won a patent case in April that will stave
off generic competition for Nuedexta for 12 years.
Positive phase 2 study data on Sept. 15 for another version
of the medicine contributed to much of the stock gains. The new
version is being tested to treat agitation in Alzheimer’s
patients, a much larger market.

Past Talks

Avanir had been in talks in September -- before the study
data was released -- about a merger or sale to a specialty drug
company, according to a person with knowledge of the matter. But
when the trial results spurred a one-day surge of 85 percent, it
put the deal out of range for Avanir’s potential partners, the
person said, asking not to be named because the matter was
private.
Less than three months later, Avanir has agreed to sell
itself to Otsuka. The merger filing with the U.S. Securities and
Exchange Commission this week didn’t provide details about
Avanir’s sale process or whether it received interest from other
buyers. Ian Clements, a spokesman for Avanir, said he couldn’t
comment further.
While it agreed to end any talks with other companies and
not solicit higher bids, the agreement says Avanir’s board can
change its mind if the company receives a better proposal and
determines that ignoring the offer would be inconsistent with
its fiduciary duties to shareholders.

Possible Counterbidders

As far as other potentially interested acquirers, Cowen’s
Baral cited Teva Pharmaceutical Industries Ltd.’s recent
investments in products for central nervous system disorders, as
well as Actavis Plc’s purchase of Forest Laboratories Inc.
earlier this year to gain the Alzheimer’s treatment Namenda.
Indianapolis-based Eli Lilly may also be interested in regaining
its lead in CNS drugs, she said.
Lundbeck, Mallinckrodt and Shire were also logical
acquirers, Jason Butler, a New York-based analyst at JMP Group
Inc., said in an interview in October. Copenhagen-based Lundbeck
and Dublin-based Mallinckrodt both have products to treat brain
diseases. Shire, also based in Dublin, focuses on rare diseases
and has a treatment for attention deficit hyperactivity
disorder. Shire has said it will continue seeking deal
opportunities after AbbVie Inc. unexpectedly dropped plans to
buy the company.
Representatives for Shire, Lundbeck, Mallinckrodt, Petach
Tikva, Israel-based Teva, Dublin-based Actavis and Eli Lilly
declined to comment on whether their companies are planning to
bid for Avanir.

Deal Windfall

For investors who bought Avanir shares before May, when
they were trading at or below $5 apiece, Otsuka’s offer may be
just fine.
“It’s unbelievable,” Peter Zeuli, chief investment
officer of Voorhees, New Jersey-based Philadelphia Investment
Partners LLC, said in a phone interview. “We started buying the
stock when it was around $4 or $5. The portfolio manager in me
says, ‘Don’t get greedy.’ But you never know.”

For Related News and Information:
Avanir Inroads in Alzheimer’s Market Justify Offers: Real M&A
NSN NE9XSN6JTSF4 <GO>
Japan’s Otsuka Agrees to Buy Avanir Pharma for $3.54 Billion
NSN NFYB2J6JIJV3<GO>
Merger-Arbitrage Spreads: MARB <GO>
Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>

To contact the reporter on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman

>>> US Close Dow +0,18% S&P +0,38% Nasdaq +0,39% Russell +0,90%

Closing Market Summary: Russell 2000 Leads Stocks Higher

The stock market ended the midweek session on an upbeat note with the Russell 2000 (+1.0%) pacing the advance for the second day in a row. Meanwhile, the S&P 500 posted a more modest gain of 0.4% with seven sectors ending in the green.

Similar to yesterday, equities were essentially left to their own devices amid a lack of market-moving news. Cyclical sectors were responsible for the bulk of the advance as all six growth-sensitive groups ended in the green while health care (+0.2%) was the lone gainer on the countercyclical side.

The materials sector (+1.4%) settled in the lead after showing relative strength throughout the session. The group benefitted from strength among steelmakers and miners with Market Vectors Steel ETF (SLX 39.15, +0.90) and Market Vectors Gold Miners ETF (GDX 19.60, +0.40) climbing 2.4% and 2.1%, respectively.

Meanwhile, another commodity-related sector—energy (+1.2%)—settled just behind materials, which represented the third consecutive day of relative strength for the recently-battered sector. Today's advance occurred amid a 0.5% gain in crude oil ($67.30/bbl) and helped the sector extend its week-to-date gain to 3.2%.

Elsewhere, the industrial sector (+1.3%) was the only other group to add more than 1.0%. The top-weighted sector component—General Electric (GE 26.38, +0.33)—spiked 1.3% while transport stocks also displayed relative strength. The Dow Jones Transportation Average settled higher by 0.8% with Alaska Air (ALK 56.76, +1.51) setting the pace.

Also of note, the technology sector (+0.5%) underperformed in the morning, but powered to new highs during the final hour. The sector was underpinned by chipmakers and its strength helped the S&P 500 to a new high just ahead of the close. As for chipmakers, the group rallied broadly after Microchip Technology (MCHP 46.59, +1.94) said it is confident the small correction experienced in the third quarter is now in the past. The stock spiked 4.3% while the PHLX Semiconductor Index jumped 2.0%.

Over on the countercyclical side, consumer staples (-0.8%), telecom services (-0.8%), and utilities (-0.3%) ended in the red while health care (+0.2%) turned positive in the early afternoon. Biotechnology contributed to the rebound with the iShares Nasdaq Biotechnology ETF (IBB 308.25, +1.38) climbing 0.5%.

Treasuries spent the bulk of the session near their flat lines before ending close to highs. The 10-yr yield slipped one basis point to 2.28%.

Participation was a bit below average with just over 755 million shares changing hands at the NYSE floor.

Economic data included ADP Employment Change, Q3 Labor Productivity Data, ISM Services, and the MBA Mortgage Index:
  • The ADP report revealed that employment in the nonfarm private business sector rose 208K in November, which was below the increase of 225K expected by the consensus. 
  • Q3 nonfarm business productivity was revised up to 2.3% from an originally reported 2.0% gain while the consensus expected a revision to 2.4% 
    • Unit labor costs were revised down and now show a 1.0% decline in the third quarter after initially showing a small 0.3% increase. The consensus expected a flat reading. 
      • This was the second consecutive quarterly decline 
  • The ISM Services Index for November rose to 59.3 from 57.1 while the consensus expected an uptick to 57.5 
  • The weekly MBA Mortgage Index fell 7.3% to follow last week's 4.3% decline 
Tomorrow's data will be limited to the Challenger Job Cuts report for November, which will be released at 7:30 ET while weekly Initial Claims will cross at 8:30 ET (consensus 295K).
  • Nasdaq Composite +14.3% YTD 
  • S&P 500 +12.2% YTD 
  • Dow Jones Industrial Average +8.1% YTD 
  • Russell 2000 +1.4% YTD

WSJ : Pentagon Officials Believe Iran Attacked Islamic State Forces in Iraq

Pentagon Officials Believe Iran Attacked Islamic State Forces in Iraq
U.S. Not Coordinating With Iran on Airstrikes

Iran launched airstrikes in recent days against Islamic State forces along its border with Iraq, American and Iranian officials said in the first public disclosure that the biggest U.S. rival in the region has used its own air force to attack the Sunni extremist group.

The airstrikes by Iranian Air Force F-4 jets marked a step up in the country’s direct military involvement in Iraq to influence the outcome of the U.S.-led fight to defeat the regional threat.

The scope and impact of the attacks remained unclear, and U.S. officials offered muted support for the limited strikes against Islamic State, also known as ISIS and ISIL.

“I think it is self-evident that if Iran is taking on ISIL in some particular place, and it’s confined to taking on ISIL, and it has an impact, the net effect is positive,” Secretary of State John Kerry said in Brussels during a meeting of nearly 60 nations that have joined forces with the U.S. to combat Islamic State.

In Tehran, Iranian politician Hamid Reza Taraghi said in an interview that the nation’s jet fighters had inflicted significant damage on Islamic State forces in an operation carried out without consulting the U.S.

“Iran bombed [Islamic State] independently, without coordination with the coalition led by the Americans,” he said.

America and its allies have relied heavily on airstrikes to battle Islamic State forces in Iraq and Syria. The coalition has carried out more than 1,000 strikes across the region since August.

On the ground in Iraq, Iran has played a pivotal role in the fight against Islamic State forces by providing Baghdad with aircraft, battlefield support and strategic advice from Gen. Qasem Soleimani, the commander of the powerful Revolutionary Guard’s overseas operations known as the Qods Force.

During a string of major battles, Mr. Soleimani has been photographed openly meeting, eating, praying and directing Shiite militia fighters and even Iranian regulars during battle.

The U.S. has gone to great lengths to avoid coordinating with Iran in the fight against Islamic State forces in Iraq. On Wednesday, American military officials expressed concerns that increased Iranian involvement could fuel sectarian tensions.

“The message to Iran hasn’t changed: If you’re going to play in this, then you need to do it in a way that doesn’t further inflame sectarian tensions,” one senior defense official said.

U.S. officials said they weren't currently coordinating with Iran on these strikes.

White House press secretary Josh Earnest said that policy is one he’s “confident will be evaluated on an ongoing basis. “But at this point our calculation on the wisdom of cooperating with Iran is unchanged. We’re not going to do it,” Mr. Earnest said.

He said he has no reason to doubt the accuracy of reports that Iran struck targets in Iraq. While the U.S. is deeply concerned about the safety of American military personnel also carrying out airstrikes in Iraq, the administration still believes it is “not necessarily in the best interests of our military personnel to be sharing intelligence or cooperating militarily” with Iran.

IHS Jane’s Defense Weekly, an online magazine, said footage shown on Al Jazeera appeared to show an F-4 Phantom II jet hitting Iraq’s eastern Diyala Province along the Iranian border. In the region, only Iran and Turkey have such fighter jets, Jane’s said, and Turkey’s reluctance to get involved in the regional war makes it likely the jet came from Iran.

Iran has already provided Iraq with ground-attack aircraft believed to be piloted at times by Iranian pilots. The footage provided the first video evidence of direct Iranian Air Force involvement, Jane’s said.

“There appear to be two parallel military campaigns being waged against the Islamic State, with the United States and its allies conducting their air campaign over Iraq and Syria, and Iran pursuing its own military agenda in Iraq at the same time,” wrote IHS Jane’s analyst Gareth Jennings. “Should they happen to cross paths over the coming weeks and months it would no doubt muddy still further an already complicated conflict.”

In recent months, influential voices in Tehran have expressed concerns that Islamic State militants could endanger Iran’s security, including its oil riches.

In a June study, the Institute for International Energy Studies—a key government research center—warned of a “threat of ISIS’s advancement to Iran’s borders and [of] possible disruption in oil fields production and development in western Iran.”

Iran’s Khuzestan province, which borders Iraq, is home to much of the country’s oil production, which is generating the majority of export revenue.

The regional Shiite powerhouse has played an important role in Iraqi politics since the U.S. invasion in 2003—sometimes by working at odds with Washington, and at other times with Washington’s with tacit encouragement.

During the nearly decadelong U.S. occupation of Iraq, Iran actively worked to destabilize its neighbor through proxy militias and puppet political parties.

Shiite-dominated militias such as the Badr Corps—which was founded in Iran during the country’s war with Iraq in the 1980s—attacked U.S. troops as well as the country’s Sunni minority, which cooperated with Sunni jihadist groups such as al Qaeda and remnants of the fallen regime of Saddam Hussein.

As the U.S. withdrew, the Badr Corps transformed itself into a political party known as the Badr Organization, a group whose loyalists populate important positions throughout the security services.

After Islamic State began its aggressive assault in June, a Badr leader was elected to the powerful post of Interior Minister, giving Iran a direct channel of influence into Iraq’s fight against Islamic State.

Beyond Badr, Iran also enjoys considerable influence through its funding of a smaller militias that have played essential roles in the latest fight against Islamic State.

While U.S. officials claim to not coordinate directly with Iran, Iranian-backed groups have often picked up where U.S. airstrikes have left off. That is mostly because Iraq’s U.S.-trained military remains incapable of challenging Islamic State on its own.

There was little immediate reaction from other countries in the region, many of whom are wary of any Iranian advances.

The Saudi Foreign Ministry didn’t immediately respond to a request for comment on Wednesday. But the kingdom, which has joined airstrikes against Islamic State militants, said that fighting the militant group would take a long time and continued efforts.

“We believe that these efforts require the presence of combat troops on the ground,” Saudi Foreign Minister Prince Saud Al Faisal said at a ministerial meeting for the U.S.-led anti-ISIS coalition in the Belgian capital Brussels. “To this end, moderate forces in Syria, represented by the Free Syrian Army, must be strengthened.”

As Islamic State militants first made advances in Iraq over the summer, Saudi Arabia gave an apparent warning to Iran by saying outside powers shouldn’t intervene in the conflict.

(BFW) *RARE TURNER PAINTING IN PRIVATE COLLECTION FETCHES $47.5M


BFW 12/03 20:44 *RARE TURNER PAINTING IN PRIVATE COLLECTION FETCHES $47.5M
BN 12/03 20:43 *TURNER SALE SETS AUCTION RECORD FOR ARTIST AT SOTHEBY'S
BN 12/03 20:43 *RARE TURNER PAINTING IN PRIVATE COLLECTION FETCHES $47.5M

Rare Turner Painting in Private Collection Fetches $47.5 Million
2014-12-03 20:45:56.164 GMT


By Mary Romano
Dec. 3 (Bloomberg) -- One of the few works by British
artist J.M.W. Turner held in a private collection sold for 30.3
pounds ($47.5 million), the first time the painting had come to
auction in 130 years.
“Rome, From Mount Aventine,” a 200-year-old landscape of
the Italian city viewed from Aventine Hill looking north across
the city, sold today at Sotheby’s in London, setting an auction
record for the artist. The work was estimated at 15 million
pounds to 20 million pounds.

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Mary Romano at +1-212-617-5552 or
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