>>> US CLose Dow +1,32% S&P +1,23% Nasdaq +1,60% Russell +1,79%

Closing Market Summary: Small Caps Lead Stocks Higher

The stock market ended the Thursday session with solid gains. The Russell 2000 (+1.8%) led the way while the S&P 500 settled higher by 1.2% with eight sectors in the green.

The key indices surged at the start of the trading day after the overnight session featured upbeat economic data from overseas. On that note, Manufacturing PMI readings from China, Japan, and the Eurozone surpassed estimates, but the headline figures masked some weakness below the surface. For instance, China's HSBC Manufacturing PMI (50.4; expected 50.3) came in ahead of estimates, but the output and employment indices contracted.

Additionally, a set of better than expected quarterly results from several large cap names also provided a measure of support. However, stocks fell from their highs during the final 90 minutes of the action amid reports indicating a doctor, who treated Ebola patients in Africa, was rushed to Bellevue Hospital in New York. In all likelihood, the ten-point slip from highs reflected selling by weak-handed longs that entered the market during the recent rally.

For the first time this week, the Dow Jones Industrial Average (+1.3%) was able to settle ahead of the S&P 500 with help from 3M (MMM 145.05, +6.10) and Caterpillar (CAT 99.27, +4.70). The two names reported better than expected results and surged 4.4% and 5.0%, respectively. However, it is worth noting the better than expected results and guidance were primarily a by-product of cost cutting and deft management rather than robust demand. To wit, Caterpillar's revenues were up just 0.9% year-over-year while 3M's revenues were up just 2.8%, yet those two companies reported EPS increases of 12% and 11%, respectively.

The two Dow leaders underpinned the industrial sector (+2.2%), which spent the entire session atop the leaderboard. Transport stocks went along for the ride with the Dow Jones Transportation Average climbing 2.1%. GATX (GMT 60.63, +3.51) spiked 6.1% and had the best showing after its better than expected revenue overshadowed below-consensus earnings. On the downside, JetBlue Airways (JBLU 10.86, -0.32) lost 2.9% after missing bottom-line estimates.

Elsewhere, the energy sector (+1.8%) followed not far behind with help from crude oil. The energy component also climbed 1.8% to $82.01/bbl.

Meanwhile, the other commodity-related sector—materials (unch)—spent the day near its flat line. Fertilizer stocks lagged after Potash (POT 32.54, -0.24) reported disappointing results. Miners lagged in the early going, but the Market Vectors Gold Miners ETF (GDX 20.56, +0.12) turned positive by the close to end higher by 0.6%.

On the countercyclical side, the health care sector (+1.8%) was the only group that was able to outpace the market while consumer staples (-0.1%), telecom services (-1.2%), and utilities (+0.2%) lagged. Health care drew strength from biotechnology after Celgene (CELG 100.40, +5.64) reported strong results while the telecom sector was pressured by AT&T (T 33.66, -0.84), which fell 2.4% in reaction to a one-cent miss.

Treasuries retreated throughout the day and spent the final hour of the action just above their lows. The 10-yr yield rose six basis points to 2.28%.

Today's participation was ahead of average with more than 796 million shares changing hands at the NYSE floor.

Economic data was limited to Initial Claims, FHFA Housing Price Index, and Leading Indicators:
  • Weekly initial claims increased to 283,000 from a revised rate of 266,000 (from 264,000), while the consensus expected a reading of 285,000 
    • Although the increase appears relatively large at first glance, it is worth noting last week's reading represented a 14-year low 
  • The August Housing Price Index from the FHFA rose 0.5%, which followed a revised increase of 0.2% (from 0.1%) observed during the prior month 
  • September Leading Indicators increased 0.8% after a revised unchanged reading in August (from +0.2%), while the consensus expected an increase of 0.5%
Tomorrow's data will be limited to the New Home Sales report (consensus 475,000), which will be released at 10:00 ET.
  • Nasdaq Composite +6.6% YTD 
  • S&P 500 +5.5% YTD 
  • Dow Jones Industrial Average +0.6% YTD 
  • Russell 2000 -4.1% YTD

(BFW) Kering 3Q Total Sales, Puma Beat Ests.; Gucci Sales Lag

Kering 3Q Total Sales, Puma Beat Ests.; Gucci Sales Lag
2014-10-23 15:40:26.306 GMT


By Heather Burke
Oct. 23 (Bloomberg) -- Kering 3Q total sales EU2.61b, est.
EU2.59b (median of 19).
* 3Q total comp sales growth 4.4%, est. 4% (median of 20)
* Total luxury sales EU1.68b, est. EU1.68b
* 3Q organic sales growth:
* Total luxury unit 3.5%, est. 4.2%
* Gucci down 1.9%, est. -0.5%
* Bottega Veneta 10.8%, est. 11.9%
* Saint Laurent 27.5%, est. 21.5%
* Other luxury brands 1.8%, est. 5%
* Other luxury brands 1.8%, est. 5%</li></ul>
* Puma total sales EU847.8m, est. EU832m
* Puma comp sales growth 6.2%, est. 3%
* Said luxury activities “held firm” on strong sales uptrend
in network of directly operated stores; Sport & Lifestyle
activities posted positive sales trends driven by marketing
efforts at Puma, whose relaunch plan beginning to feed
through
* Outlook: “faced with uncertain market conditions, we remain
vigilant”
* Call 6pm CET +4420 3427 1902, pw 5900353
* Preview here

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To contact the reporter on this story:
Heather Burke in London at +44-20-7673-2044 or
hburke2@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net

*C&C SAID TO HAVE MADE APPROACH TO SPIRIT PUB CO: TIMES

The Times

Perhaps the proposed Greene King takeover of Spirit Pub Company isn't all over after all. C&C Group, the Irish drinks group behind Magners cider and Tennent's lager, is understood to have made an approach to the Chef & Brewer operator offering a higher price.

Whereas Greene King is offering only a miserly 8p of cash as part of a 109.5p-a-share offer, the word is that C&C is willing to offer about 115p a share, of which at least a third would be in cash.

The question for the Spirit board will be to determine the value of C&C Group's paper in relation to the likely synergies as it does not currently have any pubs.

At the very least, the move would inject a bit of competitive tension into a process that looked likely to deliver Spirit into the hands of Greene King at a lower-than-expected price.

It will be interesting to see how Rooney Anand, Greene King's ambitious chief executive, responds as he will not want to let the prize slip from his grasp.

FT : Rio Tinto & Anglo American are in the right hands



Rio Tinto and Anglo American: two diversified miners that need stability at the top.

Execution ability is everything when there is upheaval in commodity markets and such change in the mining business.

In their current Aussie CEOs, the miners seem to have both.

First to Rio, which today confirmed that iron ore enthusiast Sam Walsh's existing three-year contract has been turned into an open-ended one. Not that Mr Walsh would have needed much persuasion.

That should put paid to persistent leadership succession doubts and could reduce the urge for Glencore to return with its shelved plan to create GlenTinto.

More to the point, he has become investors' guarantee that Rio will stick to the straight and narrow - and not go off overpaying for assets or lavishing too much capital expenditure on projects that don't warrant it.

It's good too that Rio has given finance director Chris Lynch an open-ended contract.

At Anglo, third-quarter production data earlier today suggest that CEO Mark Cutifani is pulling all the levers he can as he raised full-year output guidance for everything except platinum - its most demanding operational challenge.

Like Rio in Australia, Anglo ramped up its own production at Kumba Iron Ore in South Africa – in its case by almost two-fifths. That was mostly down to a Cutifani-induced rethink of its Sishen pit operations, and also on increased output from its Kolomela mine.

Mr Cutifani has laid the groundwork to shift platinum production away from its more labour-intensive deep-level mines in Rustenberg to lower-cost output at Mogalakwena. Now it just needs to find investors to stump up the cash for the Rustenberg assets.

As with number-three platinum producer Lonmin, production is recovering relatively swiftly from the five-month strike that crippled the entire sector. As expected, however, platinum output is still nearly a third lower than a year ago.

There was reassurance too in copper.

Although production fell 15 per cent from a year ago on lower grades in its Chilean mines, Anglo steered investors to higher output for the full year. Pump up that volume.

Anglo is the sector turnround par excellence – not that any of the big miners is exempt from the need for diligent execution as commodity prices languish and costs rise.

But, just as Rio has attracted the attention of a rampant Glencore, so Anglo cannot afford to put a foot wrong - talking of which, as the year draws to a close, watch its upcoming third-quarter update for detail of progress on its flagship Minas-Rio iron ore project in Brazil.

(BN) Man Group’s AHL Leads Quant Funds’ Comeback as BlueTrend Gains

BFW 10/23 14:20 Man Group’s AHL Leads Quant Funds’ Comeback as BlueTrend Gains
Man Group’s AHL Leads Quant Funds’ Comeback as BlueTrend Gains
2014-10-23 14:19:33.380 GMT


By Lindsay Fortado
Oct. 23 (Bloomberg) -- European hedge funds that rely on
computer models to follow market trends are showing signs of
revival after years of losses, with Man Group Plc’s AHL
Diversified returning to gains for the first time since 2010.
AHL, Man Group’s largest hedge fund, has made about 21
percent from the start of 2014 through last week, according to a
person with knowledge of the performance who asked not to be
identified as the results are private. BlueCrest Capital
Management LLP’s BlueTrend quantitative fund, which is being
spun out to create a new firm, is up about 8.5 percent this
year, according to an update to investors yesterday obtained by
Bloomberg News.
“The recent volatility we’ve seen in markets has proved to
be broadly positive for momentum strategies, with the
opportunities increasing in most asset classes,” said James
Skeggs, who heads the advisory group at Newedge Group, a
brokerage unit of Societe Generale SA, in London. “In October,
this has been most notable in the bond and energy markets.”
European trend-following quant funds at Cantab Capital
Partners LLP and Winton Capital Management Ltd. have also posted
positive returns, according to people with knowledge of the
returns. Newedge’s CTA Index, which tracks 20 large trend-
following funds, has risen about 5.6 percent this year,
outperforming the wider Bloomberg Global Aggregate Hedge Fund
Index, which is up 2.3 percent.
The funds use algorithms to try to capture profitable moves
in stocks, bonds and commodities. Sometimes called managed-
futures funds or commodity-trading advisers, the funds have
their own computer models.

QE Woes

Over the three years ending Dec. 31, the Newedge index fell
an average of 2.2 percent each year, while the Bloomberg
aggregate index rose 2.3 percent annually. The quant funds’
underperformance has been blamed in part on central bank
interventions in markets, such as the bond purchases known as
quantitative easing, that have altered the expected movements of
security prices.
Cantab Capital’s main fund, Aristarchus, returned to profit
after gains in August and September erased previous losses for
the year. The $2.4 billion fund advanced 3.6 percent as of the
end of September, after a decline of 28 percent in 2013,
according to its most recent investor letter. Cantab’s Core
Macro Fund, with assets of $670 million, is also up, with
returns of 10.74 percent through the end of last month.
Man Group shares have risen about 13 percent since it
reported on Oct. 16 that AHL Diversified was up 9.1 percent for
the third quarter. Its AHL Alpha fund was up 6.1 percent for the
period.

Below Peak

The $10 billion Futures Fund run by David Harding’s London-
based Winton Capital has gained 3.1 percent this year, according
to an investor letter sent yesterday. The fund bucked its peers’
trend of losing money last year, returning more than 9 percent.
Still, redemptions in the category have continued,
according to data from eVestment, a data provider.
Investors pulled about $32 billion from so-called managed
futures funds last year and $28.5 billion so far this year, over
half of which came in January, February and March. The firm
estimates that such funds manage about $122 billion globally,
down from a peak of $198 billion in 2010.
Officials at all of the hedge funds declined to comment on
the figures.

Allocation Decisions

“Prior to August and September, the group was not doing
well,” said Peter Laurelli, vice president of research at
eVestment in New York. “If investors are going to show interest
in the group based on relative performance strength, then we
should start to see it next month, or two months after their
large August gains at the earliest, since allocation decisions
take time.”
Systematica, the BlueCrest spinout to be led by Leda Braga,
will begin managing $8.9 billion on its own in January. The
BlueTrend strategy had shrunk almost 50 percent from May of last
year through Aug. 1 of this year, and posted losses of 11.5
percent in 2013, its first annual decline since it was started a
decade ago.
Even with the improved performance, consultants may not
advise institutional investors to allocate to quant funds just
yet, according to Laurelli.
“It is much more difficult to argue for a non-
discretionary systematic approach that is not producing returns
at least in line with other more ‘traditional’ approaches to
security valuation,” Laurelli said.

For Related News and Information:
Man Group Jumps as Inflow Streak and AHL’s Gains Continue
{NSN NDJKUC6KLVRE <GO> }
Hedge-fund news: NI HEDGE <GO>
Hedge-fund rankings: HFND <GO>

--With assistance from Saijel Kishan in New York.

To contact the reporter on this story:
Lindsay Fortado in London at +44-20-3216-4806 or
lfortado@bloomberg.net
To contact the editors responsible for this story:
Edward Evans at +44-20-3525-3190 or
eevans3@bloomberg.net;
Keith Campbell at +44-20-3525-3829 or
k.campbell@bloomberg.net
Keith Campbell

FT : Record outflows from Europe-focused ETFs

US investors’ retreat from Europe has accelerated this month, with the amounts they have pulled from European-focused equity exchange traded funds already exceeding the previous record set in August.

Outflows so far this month from US-listed European equity ETFs have reached nearly $3bn, according to an analysis by Markit, the financial data provider. That was the largest in any month since the first such products were launched more than a decade ago.

The flows were driven by the weaker euro, but they also highlight a global shift in sentiment away from Europe amid fears the continent could slip into a deflationary downswing. “The growth story isn’t really there,” said Simon Colvin, analyst at Markit.

ETFs, which trade like stocks and often track baskets of securities, are used widely by hedge funds as well as retail investors as easy ways to take quick, directional positions on changing economic prospects. Outflows picked up from October 10, after a week of sharp falls in global share prices and continued during last week’s financial market turbulence.

Encouraging US investors to repatriate funds have been transatlantic divergences in monetary policies that have led to the euro falling 9 per cent against the dollar since May. While the US Federal Reserve this month plans to end its quantitative easing, or large scale asset purchases, the European Central Bank is expanding its balance sheet via lending and private sector asset purchases.

This month the International Monetary Fund warned of a 40 per cent chance of a eurozone recession, although purchasing managers’ indices released on Thursday suggested economic activity this month had been stronger than expected.
In depth

The UK, which is not part of the eurozone, has not been immune from the change in sentiment, with this month’s outflows from UK-focused ETFs approaching $700m, also a record.

European equity funds have also seen global investors withdrawing in recent months. Last week saw record outflows of $5.7bn from European equity funds tracked by EPFR, the funds data provider.

However, US investors have not given up on Europe when they can protect against the falling euro. Inflows into US-listed currency-hedged European exposed ETFs have accelerated to $326m this month, which Markit said showed “investors are still keen to gain exposure to the eurozone”.

(BFW) Cutrale-Safra Boosts Chiquita Offer to $14.50-Shr

BN 10/23 12:54 *CUTRALE-SAFRA OFFERS TO BUY CHIQUITA AT $14.50-SHR IN CASH
BFW 10/23 12:53 *CUTRALE-SAFRA SUBMITS BID FOR $14.50-SHR FOR CQB
BN 10/23 12:53 *CUTRALE-SAFRA SUBMITS BID FOR $14.50-SHR FOR CQB
Cutrale-Safra Boosts Chiquita Offer to $14.50-Shr
2014-10-23 12:55:28.459 GMT


By Brad Skillman
Oct. 23 (Bloomberg) -- Chiquita had found $14/shr offer
inadequate, believed future share price range of Chiquita Fyffes
combination is $15.46 to $20.01
* NOTE: CQB holders meeting tomorrow on Fyffes combination

Link to Company News:{CQB US <Equity> CN <GO>}
Link to Company News:{FFY ID <Equity> CN <GO>}

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First Word newswire: {NH BFW<GO>}

To contact the editor responsible for this story:
Brad Skillman at +1-212-617-2763 or
bskillman1@bloomberg.net

WSJ : BOJ Sees Bigger Chance of Fall in CPI Below 1%

The Bank of Japan now sees a much bigger possibility of inflation slipping below 1%, pushed down by falling crude oil prices, according to people familiar with the central bank’s thinking, a development that could rekindle market speculation for additional easing.

While the BOJ recognizes that lower oil prices are ultimately good for the economy as they reduce living costs from imported food to gasoline, the central bank is concerned about their effect over the shorter term.

Viewed from the perspective of the bank’s goal to achieve stable inflation of 2% in about two years, the lower crude prices will likely outweigh recent falls in the yen, slowing down the BOJ’s mission to rid Japan of deflation.

A fall below 1% is now “possible,” said one of the people. Another person cited a “fifty-fifty” chance. The people also signaled that inflation could stay below 1% for more than one month, though one of them said sustained declines after October were unlikely.

Only a few months ago, a drop in price growth below 1% was seen by some economists as a trigger for the BOJ to consider extra stimulus, though the falls in the yen since then largely doused out speculation of imminent easing.

Still, financial markets are closely watching how the consumer price index fares over the coming months to gauge the possibility of whether the central bank will act again. The index, factoring out the effects of an increase in the sales tax in April and volatile perishable food prices, rose 1.1% in August, below its recent peak of 1.5% in April.

Crude oil prices have fallen by more than $20 per barrel over the past few months. The Dubai oil price, the benchmark oil transaction in Asia, fell $3 on Thursday to $82.30 per barrel.

The BOJ sees a $10 drop in crude oil prices weighing on CPI growth by at least 0.1 percentage point, the first person said.

If the recent decline in oil prices is sign of a further slowdown in the global economy, that’s also not good for the Japanese economy just as recent signs point to a pick-up in exports, the people said.

The BOJ is also concerned about the protracted impact of a continued fall in crude oil prices on inflation expectations, something the bank sees as key to eradicating years of deflation, the people said.

Board member Sayuri Shirai argued in a monthly magazine Thursday that various data suggest Japan’s long-term inflation expectations are hovering around 1% compared with around 2% in the U.S. and U.K. For the BOJ to achieve a stable 2% inflation target, those expectations needs to be stabilized at the same level, she said.

Ms. Shirai dissented on the policy board’s view at the previous meeting that inflation expectations appear to be rising on the whole.

Many BOJ watchers don’t expect the central bank to take additional stimulus when the policy board meets on Oct. 31. CPI data for September comes out the same day, with the central bank also slated to release its semi-annual forecasts on prices and growth over a three-year time frame.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: AIRM -24.3%, YELP -12.5%, CAB -9.6%, CLB -6.8%, CTXS -6.6%, IPCM -6.2%, AWH -4.7%, (light volume), CAKE -4.5%, VAR -4.3%, ACAT -4%, UA -4%, OTEX -3.9%, DNKN -3.8%, TER -2.2%, SUSQ -2.1%, UN -1.9%, GOL -1.7%, LRCX -1.5%, WFT -1.5%, CA -1.3%, T -1%, PCP -1%, CCE -0.8%

Other news: ADHD -14.1% ( released a presentation with updated clinical trial results of Metadoxine Extended Release for the treatment of ADHD), FREE -9.1% (filed for 17,500,000 shares common stock, offering by selling stockholder), PT -5.4% (still checking), NMFC -3.8% (commences offering of 5,000,000 shares of common stock), WYY -3.7% (prices public offering of 6,896,552 shares of common stock at $1.45/share), ZAZA -1% (following 40% move higher yesterday), ISNS -0.9% (following 30% move higher yesterday), SPEX -0.8% (provides litigation update)

Analyst comments: MDCO -1.5% (downgraded to Neutral from Buy at BofA/Merrill)