>>> Brokers Upgrades & Dowgrades - 22nd of October

>>> Up
*ARM RAISED TO BUY VS NEUTRAL AT UBS
*OMV RAISED TO NEUTRAL VS UNDERPERFORM AT CREDIT SUISSE
*SMITH & NEPHEW RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS

>>> Down
*EVRAZ CUT TO UNDERPERFORM FROM HOLD AT JEFFERIES
*KLOECKNER & CO CUT TO HOLD FROM BUY AT JEFFERIES
*TEMENOS CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS

>>> PT Changes


>>> Initiation
*ALTICE RATED NEW NEUTRAL AT NOMURA
*BG GROUP RATED NEW BUY AT JEFFERIES; PT 1,340.00P
*TELEFONICA DEUTSCHLAND RESUMED NEUTRAL AT JPMORGAN

>>> Call

>>> US After Hours : UIS +21.3%, IRBT +14.1%, BRCM +6.2%, YHOO

After Hours Summary: UIS +21.3%, IRBT +14.1%, BRCM +6.2%, YHOO +3.0%, NSPH -15.8%, CREE -10.7%, VMW -1.8% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: UIS +21.3%, IRBT +14.1%, SIX +10.1%, AWRE +6.3%, BRCM +6.2%, SMCI +5%, IBKR +4.7%, SONC +3.5%, NBR +3.1%, YHOO +3%, HA +1.5%, RHI +1.2%, ETFC +1%, ISRG +0.3%

Companies trading higher in after hours in reaction to news: BBLU +17.8% (CEO responded to 'false statements and allegations made by the Pump Stopper' in Seeking Alpha), RPRX +11.3% (reported positive results from a long-term safety study comparing Androxal to a placebo), SIX +8.7% (increased quarterly dividend to $0.52 from $0.47/share), NVDQ +7.3% (co appointed Mizuho Medical as PINPOINT distributor for Japan), NKNK +3.0% (CEO appeared on CNBC's Fast Money; said early halt to IMPRESS trial in pancreatic cancer is possible), CLMT +2.6% (declared quarterly cash distribution of $0.685 per unit, unchanged from prior quarter), GEVA +1.3% (co started a rolling submission of a biologics license application to the FDA For Sebelipase Alfa), FITB +0.7% (disclosed that on October 20, 2014, it entered into a share repurchase agreement with Deutsche Bank pursuant to which the company will purchase ~$180 mln of its outstanding common stock)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: NSPH -15.8%, CREE -10.7%, DTLK -3.6%, BGS -2.5%, VASC -2.4%, VMW -1.8%, ACE -0.7%, CVTI -0.5%, DFS -0.4%, EXAC -0.1%

Companies trading lower in after hours in reaction to news: NSPH -15.8% (announced commencement of public offering of common stock; co also reported upside prelim Q3 sales), HIMX -14.3% (announced Google has decided not to exercise its previously issued purchase option to make an additional investment into Himax's subsidiary), TSLA -1.0% (Diamler restructured cooperation with Tesla; sold ~4% stake; continues sourcing powertrain for Mercedes-Benz B-Class Electric Drive from Tesla)

>>> Asian Update

Asian Market Update: Risk-on restored as global investors leave the safety of US treasuries; Australia annual CPI slows to 1-year lows


***Economic Data***
- (AU) AUSTRALIA Q3 CONSUMER PRICES (CPI) Q/Q: 0.5% (matches 5-quarter low) V 0.4%E; Y/Y: 2.3% (1-year low) V 2.3%E; TRIMMED MEAN Q/Q: 0.4% V 0.5%E ; Y/Y: 2.5% (1-year low) V 2.7%E
- (AU) AUSTRALIA SEPT SKILLED VACANCIES M/M: 0.5% V 0.7% PRIOR (5th consecutive increase)
- (AU) AUSTRALIA AUG CONFERENCE BOARD LEADING INDEX M/M: -0.2% V +0.6% PRIOR (1st decline in 4 months)
- (AU) AUSTRALIA SEPT WESTPAC LEADING INDEX M/M: -0.1% V -0.1% PRIOR (3rd consecutive decline)
- (JP) JAPAN SEPT MERCHANDISE TRADE BALANCE: -¥958.3B V -¥780.0BE; ADJ TRADE BALANCE: -¥1.07T (widest deficit in 3 months) V -¥918.5BE

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +1.7%, S&P/ASX +0.9%, Kospi +0.8%, Shanghai Composite +0.2%, Hang Seng +0.6%, Dec S&P500 -0.1% at 1,938

***Commodities/Fixed Income***
- Dec gold -0.2% at $1,249, Dec crude oil +0.2% at $82.67/brl, Dec copper -0.3% at $3.02/lb
- (JP) BOJ offers to buy ¥300B in 1-3yr JGB, ¥200B in 3-5yr JGB, ¥100B in 10-25 yr JGB and ¥30B in JGB with maturity over 25-yr
- (US) API PETROLEUM INVENTORIES: CRUDE: +1.2M (3rd consecutive build) v +3Me, GASOLINE: -0.5M v -1.5Me, DISTILLATE: -0.8M v -1.5Me

***Market Focal Points/Key Themes/FX***
- The yields on the US 10-yr note is back above 2.20% - a 1-week high - as diminishing concerns over Ebola/Hong Kong/Europe have eased investors worries. Nikkei225 is leading the rally on the heels of further modest selling in JPY, with USD/JPY retesting the ¥107 handle. Other USD majors are less volatile, as EUR/USD and GBP/USD remain supported above $1.27 and $1.61 respectively. Cable trading faces event risk in European hours with the release of MPC policy meeting minutes.

- Australia Q3 CPI data were generally in line on the headline basis and slightly lower as gauged by RBA trimmed mean (core). Y/Y both measures hit 1-year lows, briefly helping send AUD/USD down about 20pips toward $0.8750. Fruit price inflation of nearly 15% was particularly notable, in part offset by falls in electricity (-5.1%) and automotive fuel (-2.5%). Also out of Australia, Westpac leading index fell sequentially for the 3rd month, and local economist said the figure "continues to indicate that we can expect growth in the Australian economy to stay below trend in the final quarter of 2014 and into the first half of 2015." Note that economists with Goldman Sachs have held on to the view that RBA will be forced to cut rates again.

- Japan merchandise trade deficit was much wider than expected mainly due to higher than anticipated rise in imports (6.2% v 2.7%e). Export growth of 6.9% was just above 6.5% consensus, as shipments to China and Europe were up by 8.8% and 4.4% respectively. Govt panel discussion saw economic advisor Honda recommend that another sales tax hike is postponed until 2017 vs late 2015 initially planned. Separately, a govt official noted some further stimulus measures will still be considered regardless of the decision on the next round consumption tax.

- China Vice Premier Zhang noted the country continues to attract foreign investment, and that YTD economic growth is still in reasonable range after yesterday's release of slightly better than expected GDP number. Zhang added consumer prices are stable despite the 1.6% CPI - a 4-year low - announced last week. In Hong Kong, the student protest leader said marches will continue and that it was uncertain if more meetings with the govt will take place. Overnight, Chief Secretary Carrie Lam reiterated 2017 chief election will be based on National People's Congress (NPC) ruling following meeting with student leaders.

***Equities***
US markets:
- IRBT: Reports Q3 $0.48 v $0.33e, R$143.5M v $135Me; +14.4% afterhours
- RPRX: Results From Long-Term Study of Androxal Exhibit Positive Safety Profile; +11.0% afterhours
- SIX: Reports Q3 $1.56 (ex items) v $1.51e, R$542M v $535Me, raises dividend; +10.0% afterhours
- ETFC: Reports Q3 $0.29 v $0.22e, R$440M v $424Me; +6.1% afterhours
- BRCM: Reports Q3 $0.91 v $0.83e, R$2.26B v $2.17Be; +6.1% afterhours
- SMCI: Reports Q1 $0.46 v $0.39e, R$443.3M v $418Me; +5.4% afterhours
- YHOO: Reports Q3 $0.52 v $0.31e, R$1.15B v $1.05Be; +3.7% afterhours
- RHI: Reports Q3 $0.63 v $0.59e, R$1.22B v $1.20Be; +1.3% afterhours
- ISRG: Reports Q3 $3.92 v $3.71e, R$550.1M v $516Me; +0.3% afterhours

- DFS: Reports Q3 $1.37 v $1.34e, R$2.19B v $1.83Be; -0.4% afterhours
- TSLA: Daimler restructures cooperation with Tesla; Daimler to sell 4% stake in Tesla; -0.4% afterhours
- BHP: Reports Q1 Iron ore production 57.1M tons v 56.5Me; affirms FY14 production guidance across all operations, businesses; -0.5% afterhours
- VMW: Reports Q3 $0.87 v $0.83e, R$1.52B v $1.50Be; Guides Q4 R$1.67-1.71B v $1.70Be, op margin 33-34%; Affirms FY14 midpoint Rev guidance - conf call; -1.9% afterhours
- CREE: Reports Q1 $0.24 v $0.34e, R$427.7M v $435Me; -11.0% afterhours
- HIMX: Google chooses not to exercise its option to make an additional investment into Himax's subsidiary, Himax Display Inc. ("HDI"); -12.8% afterhours

- GFIG: BGC Group said to take $5.25/shr bid directly to shareholders; may launch tender offer as soon as Wed - financial press

Notable movers by sector:
- Financials: New World China 917.HK +1.4% (Q1 contracted sales results)
- Materials: Mitsui Mining & Smelting 5706.JP -2.2% (press speculation on H1 results); BHP Billiton BHP.AU +1.5% (Q1 production results); Whitehaven Coal WHC.AU +4.0% (CEO comments on coal demand in Asia)
- Industrials: Sumitomo Chemical 4005.JP +3.2% (raises H1 guidance); CSR Corp 1766.HK +2.4% (awarded orders); Nissan Motor 7201.JP +1.2% (partnership with Hertz); Nok Corp 7240.JP +4.7% (raises FY14/15 guidance)
- Technology: FujiFilm Holdings Corp 4901.JP +3.4% (press speculation on H1 results)
- Healthcare: Mitsubishi Tanabe Pharma 4508.JP +1.5% (affirms FY14/15 guidance); Astellas Pharma 4503.JP +2.1% (FDA drug designation)
- Utilities: Huaneng Power 902.HK +1.2% (Q3 results); TEPCO 9501.JP +2.7% (receives funds from Nuclear Compensation)

>>> Daimler restructures cooperation with Tesla; Daimler to sell 4% stake in Tes

Daimler restructures cooperation with Tesla; Daimler to sell 4% stake in Tesla 
- Daimler AG (stock exchange symbol: DAI) has reorganized its cooperation with Tesla Motors Inc. In this context, Daimler has terminated the share-price hedge it initiated in 2013 and has sold its stake in Tesla of approximately 4%. The cooperation between the partners on the automotive projects is unaffected. Development work for the Mercedes-Benz B-Class Electric Drive is completed, the partnership with Tesla remains in place.
- The sale of Daimler's stake in Tesla will result in a cash inflow of around $780 million, which will be used to strengthen Daimler's operational business. The impact on EBIT for the year 2014 is approximately in the same amount.
- Daimler Chairman: We pursue our strategy for emission-free driving consequently. Electric vehicles are one component of this roadmap. In Tesla we do have a bold partner. Together we launched the B-class Electric Drive successfully in the United States this summer. In November, the B-Class Electric Drive will be launched in Europe as well. We are convinced that this powerful electric vehicle for every day use will appeal to a lot of customers.
- Furthermore, the batteries for the first generation of the smart for two electric drive had been from Tesla. The two-seater with electric drive is one of the best-selling electric cars in Germany. "Our partnership with Tesla is very successful and will be continued.

**Daimler initially acquired a 9.1% interest in Tesla in May 2009. 40% of that investment was transferred to Aabar Investments PJSC in the context of a joint strategic project in July 2009. Tesla has been listed on the stock exchange since the end of June 2010. As a result of capital increases at Tesla, Daimler's stake in the company decreased to around 4%, without affecting the two companies' strategic cooperation or joint development projects.

>>> US Close Dow+1,31% S&P+1,96% NAsdaq+2,40% Russell+1,63%

Closing Market Summary: S&P 500 Registers Fourth Consecutive Advance

The stock market enjoyed another broad-based advance on Tuesday with the S&P 500 (+2.0%) posting its fourth consecutive gain. The benchmark index made its biggest jump in more than a year and recaptured its 200-day moving average (1906.95) while the Nasdaq Composite (+2.4%) outperformed throughout the session.

Equity indices began the trading day on an upbeat note with a set of better than expected results contributing to the early strength. However, the futures market received a separate overnight boost from a Reuters report suggesting the European Central Bank will look to begin buying corporate bonds. That report was followed by headlines from the Financial Times indicating the ECB has no plans to implement the aforementioned buying program at this time. The denial did not stop European equities from ending on their highs while the U.S. market built on its early strength throughout the day.

For the second day in a row, the Dow Jones Industrial Average (+1.3%) could not keep pace with the broader market, which was once again due in part to the relative weakness in the shares of IBM (IBM 163.23, -5.87). The third-largest index component lost 3.5% while only two other Dow members finished in the red. To that point, Coca-Cola (KO 40.68, -2.61) and McDonald's (MCD 91.01, -0.58) registered respective losses of 6.0% and 0.6% in reaction to cautious guidance from both consumer companies.

In turn, Coca-Cola pressured the consumer staples sector (+0.4%), which was the second-weakest group of the day. Similarly, telecom services (+0.7%) and utilities (+0.4%) lagged, while the last countercyclical sector—health care (+2.7%)—settled among the leaders.

The health care sector drew strength from biotechnology, which also contributed to the outperformance of the Nasdaq. The iShares Nasdaq Biotechnology ETF (IBB 278.27, +8.68) jumped 3.2% to extend its October gain to 1.7%. For its part, the Nasdaq also received significant support from its largest component—Apple (AAPL 102.47, +2.71)—and chipmakers.

Shares of Apple jumped 2.7% in reaction to better than expected earnings and improved guidance, but the technology sector (+1.8%) could not catch up to the market as IBM weighed. As for chipmakers, the PHLX Semiconductor Index (+3.6%) enjoyed broad strength after Texas Instruments (TXN 46.77, +2.36) reported better than expected earnings. ARM Holdings (ARMH 39.57, -1.99) also surpassed earnings estimates, but could not stay out of the red, falling 4.8%.

Elsewhere among cyclical sectors, energy (+2.9%) finished in the lead even as crude oil slipped from its morning high near $83.20/bbl to settle with a gain of 0.6% at $82.40/bbl.

Treasuries ended on their lows after spending the entire session in the red. The 10-yr yield climbed three basis points to 2.22%.

Participation remained above average with more than 795 million shares changing hands at the NYSE floor.

Economic data was limited to the Existing Home Sales report for September. After declining for the first time since March, existing home sales rebounded, rising 2.4% to 5.17 million SAAR from an unrevised 5.05 million SAAR. The consensus expected an increase to 5.11 million SAAR.
  • Sales in the Midwest declined 5.6% in September while all of the other regions -- Northeast (1.5%), South (5.0%), and West (7.1%) -- saw increased demand 
    • A portion of the increase in sales resulted from more investor demand with all-cash sales accounting for 24% of all transactions, up from 23% in August. 
    • Individual investor demand grew to 14% from 12% 
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the CPI report for September (consensus 0.0%) will cross the wires at 8:30 ET.
  • Nasdaq Composite +5.8% YTD 
  • S&P 500 +5.0% YTD 
  • Dow Jones Industrial Average +0.2% YTD 
  • Russell 2000 -4.3% YTD

>>> Biomarin : Now that AbbVie deal is dead, Shire could spend the $1.6B breakup

TheStreet.com's Feuerstein: Now that AbbVie deal is dead, Shire could spend the $1.6B breakup fee on various small biotechs, including Biomarin "If BioMarin is too much to chew, Shire could seek smaller targets to grow its orphan drug business. Let's throw out some names, including the usual suspects often mentioned as takeover bait: NPS Pharmaceuticals (NPSP) Synageva Pharma (GEVA) , Hyperion Therapeutics (HPTX) or Ultragenyx Pharma (RARE)."

"Shire is probably too risk-averse for something like this, but buying Duchenne muscular dystrophy drug makers Sarepta Therapeutics (SRPT) or Prosensa (RNA) in front of next year's expected FDA advisory panel and approval decisions would be an epic roll of the dice."