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October 30, 2014 11:53 AM EDT
Updated: Oct 30, 2014 6:56 AM EDT  

Cantor Morning News®

 

 

 

Today's Stories From Cantor Fitzgerald

 Dogukan Aksoy  (212) 610-2348

        Nick Cernero (212) 610-3629

        Thursday October  30th      2014

TOP NEWS

o   US STOCK FUTURES:

o  US futures are trading near earlier reported levels and remain below fair value amidst a mixed session in Europe. Amidst a busy day in terms of corporate earnings, key releases include AmerisourceBergen, ConocoPhillips, and Kellogg to report before the opening bell, whilst Tesoro, Starbucks and Mylan are publishing their earnings after the close. Macro-data for today include the Initial Jobless Claims weekly update and the advance reading of Q3 GDP at 8:30 ET.

o  FX:USD strength emerged after the FED statement reaffirmed it was moving toward a tighter monetary policy more quickly than its peers. FOMC ended its 2-year bond buying program (QE3) and took on a less dovish tone. It now saw the likelihood of inflation running persistently below 2% diminishing compared to its view from early 2014 and acknowledged the improvement in the labor market. USD/JPY held above the 109 handle throughout the session for 3-week highs and EUR/USD was at 3-week lows below 1.2570 area. The NZD/USD was lower after RBNZ Gov Wheeler post rate decision statement removed the phrase "we expect some further policy tightening will be necessary"

o  GOLD:Spot gold was at 3-week lows and was within striking distance of the pivotal $1,180 area. The level corresponds with the Jun 24th 2013 low of $1,179.83. Dealers noted that a potential measured move of the 12-month consolidation pattern suggested that $1,000 could be tested should the support level give away.

o  CRUDE:WTI retreated from a one-week high after the Fed Reserve ended its asset-purchase program and production rose to the highest in more than three decades. Brent also slid.

o  TREASURIES: The benchmark yield for two-year Treasuries, among the most sensitive to what the Fed does with its main rate, shot up nine basis points yesterday, the biggest increase in 3 1/2 years as bond yields show investors are adding to bets that the Federal Reserve will raise interest raites next year after the central bank said it sees “solid” gains in US employment.

o  European Markets:

o  European equity markets are now generally in negative territory, having drifted off initial highs as market participants assess a raft of macro data and corporate earnings. Denmark +1.3% and Austria +0.1% are the major indices bucking the trend. Capital raising concerns weighs on the peripheral banking sector, and the broader averages, with Greece (2.9%), Portugal (2.2%), Italy (1.9%) and Spain (1.6%) lower. Russian benchmark indices trade between +0.5-1.8%.

o  Asian Markets:

o  The Nikkei rose 0.7% on Thursday. The yen weakened overnight, staying above ¥109 on the back of an incrementally more hawkish FOMC statement. Prime Minister Abe's comments on GPIF reform were cited as a catalyst for the afternoon follow through.Chinese stocks rose again on Thursday, extending its rally with the Shanghai Composite Index adding 0.76% to close at its highest level since February 2013. Reforms announced to support consumption were the widely cited tailwind.

o   BIG STORIES TODAY

o  Cantor Technical Strategy:Our publication today covers technical views on major European equity indices, sectors, and single stock names. Our high conviction ideas are as follows: 1) European equity indices are in sell strength mode post the completion of topping patterns in early/mid October. Having called for ‘a higher probability of a near term relief rally’ in our October 17th note, we now focus toward resistance levels for the month ahead. 2) Reiterate our bearish outlook on the European Oil and Gas Sector (highlighting our bearish BP call) in line with our ongoing negative Brent Crude outlook. 3) Maintain a generally bearish outlook on the Retail sector. 4) Negative outlook on the Construction and Materials sector (highlighting CRH). 5) Negative outlook on the Autos & Parts sector (focus on Daimler and Continental). 6) Neutral outlook on the Banking and Insurance sectors. Guy O’Leary is available to discuss in further detail or to talk through a specific market.

o  Wall Street steps up bond buying as Fed exits: CNBC reported that Wall Street banks are stepping into the Treasury market to replace the Fed as it exits from its QE program due to new regulations requiring them to hold more liquid and safe assets. It cited Fed data which showed since tapering began in December 2013, US commercial banks' holdings of Treasury and agency securities rose to $605B, up 23%. Including mortgage-backed securities, that total rises to $1.97T.-CNBC

o  US oil boom can withstand lower prices:The WSJ reported that oil prices would have to fall another $20/barrel to choke off the US energy boom, though some smaller producers would face serious problems from a smaller decline.The article noted analysts say output can remain steady at current prices because drillers have become more efficient, while they have incentives not to cut back on production and many have hedged to ensure a good price. Also, the debt loads accumulated typically aren't due for several years.-WSJ

o  Tokyo Stock Exchange to attract speed traders by cutting costs: Bloomberg reported that the Tokyo Stock Exchange should further lower price increments to attract high-frequency traders. The piece noted that the exchange has reduced tick sizes for members of the Topix 100 twice this year. Spokeswoman Natsuho Torii said the exchange will review the impact of smaller ticks next year.-BBG

o  GPIF expected to double allocation to domestic stocks: Bloomberg said analysts in its latest survey expect Japan’s $1.2T pension fund to double its allocation target for domestic stocks to 24% from 12%. It added that the estimate is up from 20% in May, but slightly below the 25% target the Nikkei highlighted in a report last week. GPIF currently has 17% in domestic equities, just below the 18% max level. The article pointed out that analysts still expect GPIF to slash its JGB allocation target to 40% from 60%.-BBG

o  Megabanks expanding operations overseas: The Japan Times reported that Japan's three largest banks are developing their overseas businesses as they seek higher margins by lending abroad. The piece noted that the lending environment within the country has been dull as investments have not increased. It pointed out that 20-30% of lending is now overseas. Japan Times

o  EBA chief Enria says banks should not feel to secure after stress test: Reuters cited comments by EBA chief Enria, who said in a speech that banks should not feel too secure after the ECB stress test, even those that passed. He warned that the test was not foolproof and believes that banks should be pushed to diversify sovereign bond holdings. The article noted that some analysts have questioned how tough the tests really were.-Reuters

o  European stocks present challenges for investors: The FT discussed dynamics in the European equity market, which present a challenge for investors. It noted that top-down valuation metrics make some obvious buying opportunities, but macroeconomic sentiment present risks. It noted that it is hard to identify an unambiguous buy when looking bottom up because the risks in Europe have not gone away. It suggested that the key is to look at earnings and cited Thomson Reuters analysis, which suggested that STOXX 600 companies are expected to raise earnings by 10.8% compared with Q3 of last year, even though revenues will decline 0.4%.-Financial Times

o  German unemployment unexpectedly improves:: German October unemployment unexpectedly dropping 22K in October vs consensus for a 5K rise. There was no change in the jobless rate, which remained steady at 6.7%, in line with expectations. The number offers some encouragement that the recent downturn in economic indicators has not impacted the labour market yet. Note that labour market data usually lags other indicators and the recent soft patch in the economy may influence later in the year.

o  China profit growth at biggest banks slowing: The WSJ noted that profit growth at the largest banks is gradually slowing, from double-digit rates as recently as last year to mid-single digits now. The article pointed out non-performing loans are also rising as bills come due for years of stimulus-driven lending. It added that banks are taking provisions to prepare for more losses, but not as quickly as loans are going sour, causing coverage ratios to decline. The Journal said barring a sudden turnaround in the economy, the profit situation doesn't seem likely to improve anytime soon.-WSJ

o  ValueAct’s Ubben Sees Agrium’s Retail Business as ‘Stable Jewel’:  ValueAct Capital Management LLC, the activist hedge fund that amassed a 5.7 percent stake in Agrium Inc., sees the Canadian company’s retail business as the “stable jewel” of its operations.-BBG

o  Container Store Targeted by Apex Capital’s Colen Urging Growth: Container Store Group Inc., the organizational retail chain, has a new activist investor in hedge fund Apex Capital LLC, just shy of a year after selling shares to the public.-BBG

o  Standard Chartered, Mitsubishi UFJ Said to Face Fresh Inquiries: U.S. prosecutors have reopened investigations into Standard Chartered Plc to determine whether the bank, which entered into a deferred prosecution agreement in 2012, withheld evidence of Iran sanctions violations, two people briefed on the matter said.-BBG

o  Barclays Profit Jumps, Sets Aside $799 Million FX Provision: Barclays Plc, the U.K.’s second biggest bank by assets, reported an unexpected jump in third- quarter profit even as it set aside 500 million pounds ($799 million) for the settlement of a currency rigging probe.-BBG

o  Visa Profit Surpasses Estimates as Consumer Card Spending Rises: Visa Inc., the world’s largest payments network, posted fiscal fourth-quarter profit that beat analysts’ estimates as customer spending abroad improved. Shares climbed as much as 4.7 percent in extended trading.-BBG

o  Samsung Has Smallest Profit Since 2011 as Smartphones Stall: Samsung Electronics Co. posted the smallest quarterly earnings in more than two years as profit margins are squeezed by competition from Apple Inc.’s new iPhones and cheaper Chinese devices.-BBG

o  ConocoPhillips quarterly profit up on asset sale:  ConocoPhillips, the largest U.S. independent oil company, on Thursday reported a higher third-quarter profit as results were lifted by the sale of its Nigerian business.

o  Johnson controls quarterly profit triples:  Johnson Controls Inc's profit tripled in the fourth quarter, driven by higher sales of its car seats in North America and a lower income tax provision.

o   TOP STOCK AND SECTOR MOVING STORIES

o   M&A

o  MDT Medtronic and Covidien (COV) expect merger to occur in early 2015

o  GE General Electric in talks to sell stake in Korean finance JV for more than $1B - WSJ

o  EXLS EXL to acquire Overland Solutions for $53M in cash

o  CTCM CTC Media appoints advisers to help company consider options for Russia

o  CBG CBRE Group buys PSM Center Management; terms undisclosed

o  IDXX IDEXX Labs acquires Animana; terms undiclosed

o  PDII Digirad offers to acquire PDI, Inc (PDII); terms not disclosed

o  SBRA Sabra Health Care acquires transitional care portfolio for $41.0M; exercises option on skilled nursing facility for $14.0M

o  LOPE Grand Canyon Education forms committee to explore options aimed at enhancing shareholder value, including conversion to non-profit entity

o  SYNDICATE

o  IPO

o  AXTA Axalta Coating Systems files amended S-1; to offer 45M shares in range of $18-21/sh; applied to list on the NYSE under symbol “AXTA

o  FGEN Fibrogen files amended S-1; to offer 7.1M shares in range of $16-19/share through Goldman Sachs, Citi, and Leerink

o  Seven Generations Energy 45M-share IPO priced at C$18 per share

o  BOOT Boot Barn announces 5.0M share IPO prices at $16.00/sh through JP Morgan, Piper Jaffray and Jefferies

o  FSAM Fifth Street Asset Management 6M share IPO priced at $17/sh through Morgan Stanley, JP Morgan, Goldman Sachs, RBC, and Credit Suisse

o  OTHER

o  SHLD Sears Holdings corporation announces filing of prospectus for rights offering of units

o  CMRX Chimerix files $105M secondary through Morgan Stanley and JP Morgan

o  INGN Inogen 2.1M-share secondary priced at $21.50/sh through JPMorgan

o  AKR Acadia Realty Trust announces 3.4M share common stock offering through BofA/ML and Barclays

o  KRG Kite Realty files mixed shelf of indeterminate amount

o  FB Facebook files mixed shelf of indeterminate amount

o   TECH/MEDIA/TELECOM  

o  SUNE SunEdison wins 150 megawatts of solar photovoltaic projects in Karnataka India

o  DWRE Demandware signs definitive agreement with SunBridge Corporation to establish JV in Japan

o  FINANCIALS/REITS

o  Buyout firms issuing debt to expand –WSJ

o  Aareal Bank AG repays residual amount of €300M to SoFFin

o  CBG CBRE Group buys PSM Center Management; terms undisclosed

o   HEALTHCARE

o  Cantor Research Highlight:AKAO (BUY-$13.00): We are initiating coverage of Achaogen  with a BUY rating and a $13 price target, based on Plazomicin’s expected revenues of $160M worldwide in 2025. AKAO has initiated a phase 3 trial to support approval in both pneumonia and bloodstream infection, which we expect to read out in 1H17. We forecast commercial launch of Plazomicin in 2018. Beyond Plazomicin, AKAO has preclinical assets, including an LpxC inhibitor, which we have not factored into our valuation but are a source of additional upside potential to our valuation.-Daniel Brims

o  Cantor Research Highlight: CLSN (BUY-$7.00): We are initiating coverage of CLSN with a BUY rating and $7 price target based primarily on lead drug candidate ThermoDox’s expected peak revenue of $980M in two indications, hepatic cellular carcinoma and RWC breast cancer. We forecast the commercial launch of ThermoDox in 2020 contributing $5/share to our valuation. CLSN has initiated a phase 3 trial to assess ThermoDox in hepatic cellular carcinoma (HCC) and a phase 1/2 trial in recurrent chest wall breast cancer. Beyond ThermoDox, CLSN is also developing EGEN-001, which is in Phase 1/2 testing for peritoneal cancers, and TheraSilence, a preclinical RNAi delivery platform. We have assigned $1/share each in value, due to the early stage of development of these assets.-Daniel Brims

o  PCRX Pacira Pharmaceuticals reports Q3

o  VICL Vical reports Q3

o  DRAD Digirad reports Q3

o  ARNA Arena Pharmaceuticals discloses Lorcaserin abstract to be presented at The Obesity Society’s Annual Scientific Meeting

o  FGEN Fibrogen files amended S-1; to offer 7.1M shares in range of $16-19/share through Goldman Sachs, Citi, and Leerink

o  Q Quintiles Transnational reports Q3

o  MDT Medtronic and Covidien expect merger to occur in early 2015

o  AUXL Auxilium Pharmaceuticals reports Q3

o  ACOR Acorda Therapeutics reports Q3

o  MD Mednax reports Q3

o  CTRX Catamaran reports Q3

o  CI Cigna reports Q3

o  SSH Sunshine Heart reports Q3

o  DD Bayer to acquire some DuPont Crop Protection Land Management assets; terms undisclosed

o   ENERGY/UTILITIES

o  PBF PBF Energy reports Q3

o  CVRR CVR Refining, LP increases credit facility from $150M to $250M

o  USAC USA Compression reports Q3

o  EMES Emerge Energy Services LP reports Q3

o  EPD Enterprise Products reports Q3

o  CRR Carbo Ceramics reports Q3

o  SWN Southwestern Energy initiated outperform at Imperial Capital

o  NFX Newfield Exploration upgraded to buy from hold at Societe Generale

o  FISH Marlin Midstream Partners reports Q3

o  EROC Eagle Rock Energy Partners reports Q3

o  ESV Ensco PLC reports Q3

o  OII: Oceaneering International guides FY

o   MATERIALS/INDUSTRIALS:

o  AXTA Axalta Coating Systems files amended S-1; to offer 45M shares in range of $18-21/sh; applied to list on the NYSE under symbol “AXTA”

o  SEE Sealed Air upgraded to market perform from underperform at Wells Fargo

o  GTLS Chart Industries enters amended credit facility

o  BLL Ball Corp reports Q3

o  APD Air Products reports Q4

o  GTLS Chart Industries reports Q3

o  RNF Rentech Nitrogen Partners, L.P. signs agreement to supply Tessenderlo Kerley, Inc. with ammonia

o  DD Bayer to acquire some DuPont Crop Protection Land Management assets; terms undisclosed (post-European close, 29-Oct)

o  NPO ENPRO Industries reports Q3

o  RGLD Royal Gold reports Q1

o  CF CF Industries Holdings announces its entire Woodward, OK nitrogen complex is off-line due to a problem in one of the boilers

o  KRA Kraton Performance Polymers reports Q3

o  HWKN Hawkins reports Q2

o  SPW SPX Corp downgraded to neutral from buy at Goldman Sachs

o  HBP Huttig Building reports Q3

o  MDC MDC Holdings reports Q3

o  ORN Orion Marine Group reports Q3 EPS $0.11 vs FactSet $0.09; authorizes share repurchase for up to $40M

o  AEGN Aegion reports Q3

o  TGI Triumph Group reports Q2

o  TEX Terex reports Q3

o  NC NACCO Industries reports Q3

o  HY Hyster-Yale Materials reports Q3

o  DCI Donaldson discloses borrowing available under existing credit facility increases from $400M to $600M

o  PGTI PGT Inc reports Q3

o  IIN IntriCon reports Q3

o  USLM U.S. Lime & Minerals reports Q3

o  TGI Triumph Group announces $330M of contracts

o  FIX Comfort Systems USA reports Q3

o  FIX Comfort Systems USA increases stock repurchase program back up to 1M shares

o  FIX Comfort Systems USA increases quarterly dividend by 9.1%

o  CW Curtiss-Wright reports Q3

o  FBHS Fortune Brands Home & Security reports Q3

o   CONSUMERS/SERVICES:

o  THRM Gentherm reports Q3

o  GE General Electric in talks to sell stake in Korean finance JV for more than $1B - WSJ

o  FSYS: Fuel Systems Solutions announces Steven Becker appointed to the board effective immediately

o  FSYS Fuel Systems Solutions appoints James Nall chairman effective today

o  BOOT Boot Barn announces 5.0M share IPO prices at $16.00/sh through JP Morgan, Piper Jaffray and Jefferies

o  RGR Sturm Ruger reports Q3

o  HDSN Hudson Technologies reports Q3

o  SFLY Shutterfly reports Q3

o  HBI Hanesbrands reports Q3

o  BG: Bunge Ltd reports Q3

o  JMEI Jumei International downgraded to underperform from neutral at Credit Suisse

o  KRFT Kraft Foods downgraded to neutral from outperform at Credit Suisse

o  RELV Reliv International reports Q3

o  BG Bunge Ltd reports Q3

o  INGR Ingredion reports Q3

o  ACCO Acco Brands downgraded to hold from buy at KeyBanc

o  VGR Vector Group reports Q3

o  PPC Pilgrim's Pride reports Q3

o  KRFT Kraft Foods reports Q3

o  IRDM Iridium Communications reports Q3

o  CNSL Consolidated Communication reports Q3

o  KATE Kate Spade & Co initiated neutral at Mizuho Securities USA Inc

o  STRA Strayer Education reports Q3

o  IRM Iron Mountain reports Q3

o  STRZA Starz reports Q3

o  HHS Harte-Hanks reports Q3

o  ALLE Allegion Plc reports Q3

o  TWC Time Warner Cable reports Q3

o  EXLS EXL to acquire Overland Solutions for $53M in cash

o  DWA DreamWorks Animation downgraded to neutral from buy at Janney Capital

o  CTCM CTC Media appoints advisers to help company consider options for Russia

o  SSprint Corp. upgraded to neutral from underperform at Credit Suisse

o  CETV Central European Media Enterprises reports Q3

o  DISCA Discovery Communications downgraded to neutral from buy at Nomura Securities

o   AUTOS/TRANSPORTS:

o  TSLA Tesla Motors initiated buy at Ascendiant Capital Markets

o  ODFL Old Dominion reports Q3

o  CHRW C.H. Robinson downgraded to underperform from neutral at Credit Suisse

o  GBX Greenbrier Companies reports Q4

o  ARII American Railcar reports Q3

o  CGI Celadon Group reports Q1

o  KEX Kirby Corp reports Q3

o  ALK Alaska Air COO Minicucci Benito reports sale of 12.7K shares in Form 4 filing

o  SSW Seaspan takes delivery of fifth 10000 TEU saver containership

o  CPLP Capital Product Partners reports Q3

o  BALT Baltic Trading Limited takes delivery of first of four Ultramax vessels

o  DAC Danaos Corp reports Q3

o  MMLP Martin Midstream Partners reports Q3

o  MIC Macquarie Infrastructure reports Q3

o  CNW Con-way reports Q3

o  RRTS Roadrunner Transportation Services reports Q3

o  GAMING, LODGING, & LEISURE

o  DRIIDiamond Resorts reports Q3

o  HST Host Hotels & Resorts reports Q3

 DISCLAIMER: Prepared by staff of Cantor Fitzgerald & Co. (“Cantor”) and is for information purposes only. It is not intended to form the basis of any investment decision, should not be considered a recommendation by Cantor or any other person and does not constitute an offer or solicitation with respect to the purchase or sale of any investment nor is it a confirmation of terms. Any calculations and valuations presented herein are intended as a basis for discussion. Sources of information are believed to be reliable but Cantor makes no representation and gives no warranty that the information contained herein is accurate or complete. Any opinions or estimates given may change. Cantor undertakes no obligation to provide recipients with any additional information or any update to or correction of the information contained herein. This material is intended solely for institutional investors and investors who Cantor reasonably believes are institutional investors. Cantor, its officers, employees, affiliates and partners shall not be liable to any person in any way whatsoever for any losses, costs or claims howsoever arising from any inaccuracies or omissions in the information contained herein or any reliance on that information. Cantor may have positions in financial instruments mentioned, may have acquired such positions at prices no longer available, and may have interests different or adverse to your interests. No liability is accepted by Cantor for any loss that may arise from any use of the information contained herein or derived here from. This product may not be reproduced or redistributed outside the recipient’s organization. Sources: Cantor Fitzgerald & Co., Reuters, Bloomberg, CNBC, Dow Jones, Marketwatch, Trade-Alert, and the Wall Street Journal. ***All eco data from Bloomberg and DJ]

 

 


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Today's Stories From Cantor Fitzgerald

 Dogukan Aksoy  (212) 610-2348

        Nick Cernero (212) 610-3629

        Thursday October  30th      2014

TOP NEWS

o   US STOCK FUTURES:

o  US futures are trading near earlier reported levels and remain below fair value amidst a mixed session in Europe. Amidst a busy day in terms of corporate earnings, key releases include AmerisourceBergen, ConocoPhillips, and Kellogg to report before the opening bell, whilst Tesoro, Starbucks and Mylan are publishing their earnings after the close. Macro-data for today include the Initial Jobless Claims weekly update and the advance reading of Q3 GDP at 8:30 ET.

o  FX:USD strength emerged after the FED statement reaffirmed it was moving toward a tighter monetary policy more quickly than its peers. FOMC ended its 2-year bond buying program (QE3) and took on a less dovish tone. It now saw the likelihood of inflation running persistently below 2% diminishing compared to its view from early 2014 and acknowledged the improvement in the labor market. USD/JPY held above the 109 handle throughout the session for 3-week highs and EUR/USD was at 3-week lows below 1.2570 area. The NZD/USD was lower after RBNZ Gov Wheeler post rate decision statement removed the phrase "we expect some further policy tightening will be necessary"

o  GOLD:Spot gold was at 3-week lows and was within striking distance of the pivotal $1,180 area. The level corresponds with the Jun 24th 2013 low of $1,179.83. Dealers noted that a potential measured move of the 12-month consolidation pattern suggested that $1,000 could be tested should the support level give away.

o  CRUDE:WTI retreated from a one-week high after the Fed Reserve ended its asset-purchase program and production rose to the highest in more than three decades. Brent also slid.

o  TREASURIES: The benchmark yield for two-year Treasuries, among the most sensitive to what the Fed does with its main rate, shot up nine basis points yesterday, the biggest increase in 3 1/2 years as bond yields show investors are adding to bets that the Federal Reserve will raise interest raites next year after the central bank said it sees “solid” gains in US employment.

o  European Markets:

o  European equity markets are now generally in negative territory, having drifted off initial highs as market participants assess a raft of macro data and corporate earnings. Denmark +1.3% and Austria +0.1% are the major indices bucking the trend. Capital raising concerns weighs on the peripheral banking sector, and the broader averages, with Greece (2.9%), Portugal (2.2%), Italy (1.9%) and Spain (1.6%) lower. Russian benchmark indices trade between +0.5-1.8%.

o  Asian Markets:

o  The Nikkei rose 0.7% on Thursday. The yen weakened overnight, staying above ¥109 on the back of an incrementally more hawkish FOMC statement. Prime Minister Abe's comments on GPIF reform were cited as a catalyst for the afternoon follow through.Chinese stocks rose again on Thursday, extending its rally with the Shanghai Composite Index adding 0.76% to close at its highest level since February 2013. Reforms announced to support consumption were the widely cited tailwind.

o   BIG STORIES TODAY

o  Cantor Technical Strategy:Our publication today covers technical views on major European equity indices, sectors, and single stock names. Our high conviction ideas are as follows: 1) European equity indices are in sell strength mode post the completion of topping patterns in early/mid October. Having called for ‘a higher probability of a near term relief rally’ in our October 17th note, we now focus toward resistance levels for the month ahead. 2) Reiterate our bearish outlook on the European Oil and Gas Sector (highlighting our bearish BP call) in line with our ongoing negative Brent Crude outlook. 3) Maintain a generally bearish outlook on the Retail sector. 4) Negative outlook on the Construction and Materials sector (highlighting CRH). 5) Negative outlook on the Autos & Parts sector (focus on Daimler and Continental). 6) Neutral outlook on the Banking and Insurance sectors. Guy O’Leary is available to discuss in further detail or to talk through a specific market.

o  Wall Street steps up bond buying as Fed exits: CNBC reported that Wall Street banks are stepping into the Treasury market to replace the Fed as it exits from its QE program due to new regulations requiring them to hold more liquid and safe assets. It cited Fed data which showed since tapering began in December 2013, US commercial banks' holdings of Treasury and agency securities rose to $605B, up 23%. Including mortgage-backed securities, that total rises to $1.97T.-CNBC

o  US oil boom can withstand lower prices:The WSJ reported that oil prices would have to fall another $20/barrel to choke off the US energy boom, though some smaller producers would face serious problems from a smaller decline.The article noted analysts say output can remain steady at current prices because drillers have become more efficient, while they have incentives not to cut back on production and many have hedged to ensure a good price. Also, the debt loads accumulated typically aren't due for several years.-WSJ

o  Tokyo Stock Exchange to attract speed traders by cutting costs: Bloomberg reported that the Tokyo Stock Exchange should further lower price increments to attract high-frequency traders. The piece noted that the exchange has reduced tick sizes for members of the Topix 100 twice this year. Spokeswoman Natsuho Torii said the exchange will review the impact of smaller ticks next year.-BBG

o  GPIF expected to double allocation to domestic stocks: Bloomberg said analysts in its latest survey expect Japan’s $1.2T pension fund to double its allocation target for domestic stocks to 24% from 12%. It added that the estimate is up from 20% in May, but slightly below the 25% target the Nikkei highlighted in a report last week. GPIF currently has 17% in domestic equities, just below the 18% max level. The article pointed out that analysts still expect GPIF to slash its JGB allocation target to 40% from 60%.-BBG

o  Megabanks expanding operations overseas: The Japan Times reported that Japan's three largest banks are developing their overseas businesses as they seek higher margins by lending abroad. The piece noted that the lending environment within the country has been dull as investments have not increased. It pointed out that 20-30% of lending is now overseas. Japan Times

o  EBA chief Enria says banks should not feel to secure after stress test: Reuters cited comments by EBA chief Enria, who said in a speech that banks should not feel too secure after the ECB stress test, even those that passed. He warned that the test was not foolproof and believes that banks should be pushed to diversify sovereign bond holdings. The article noted that some analysts have questioned how tough the tests really were.-Reuters

o  European stocks present challenges for investors: The FT discussed dynamics in the European equity market, which present a challenge for investors. It noted that top-down valuation metrics make some obvious buying opportunities, but macroeconomic sentiment present risks. It noted that it is hard to identify an unambiguous buy when looking bottom up because the risks in Europe have not gone away. It suggested that the key is to look at earnings and cited Thomson Reuters analysis, which suggested that STOXX 600 companies are expected to raise earnings by 10.8% compared with Q3 of last year, even though revenues will decline 0.4%.-Financial Times

o  German unemployment unexpectedly improves:: German October unemployment unexpectedly dropping 22K in October vs consensus for a 5K rise. There was no change in the jobless rate, which remained steady at 6.7%, in line with expectations. The number offers some encouragement that the recent downturn in economic indicators has not impacted the labour market yet. Note that labour market data usually lags other indicators and the recent soft patch in the economy may influence later in the year.

o  China profit growth at biggest banks slowing: The WSJ noted that profit growth at the largest banks is gradually slowing, from double-digit rates as recently as last year to mid-single digits now. The article pointed out non-performing loans are also rising as bills come due for years of stimulus-driven lending. It added that banks are taking provisions to prepare for more losses, but not as quickly as loans are going sour, causing coverage ratios to decline. The Journal said barring a sudden turnaround in the economy, the profit situation doesn't seem likely to improve anytime soon.-WSJ

o  ValueAct’s Ubben Sees Agrium’s Retail Business as ‘Stable Jewel’:  ValueAct Capital Management LLC, the activist hedge fund that amassed a 5.7 percent stake in Agrium Inc., sees the Canadian company’s retail business as the “stable jewel” of its operations.-BBG

o  Container Store Targeted by Apex Capital’s Colen Urging Growth: Container Store Group Inc., the organizational retail chain, has a new activist investor in hedge fund Apex Capital LLC, just shy of a year after selling shares to the public.-BBG

o  Standard Chartered, Mitsubishi UFJ Said to Face Fresh Inquiries: U.S. prosecutors have reopened investigations into Standard Chartered Plc to determine whether the bank, which entered into a deferred prosecution agreement in 2012, withheld evidence of Iran sanctions violations, two people briefed on the matter said.-BBG

o  Barclays Profit Jumps, Sets Aside $799 Million FX Provision: Barclays Plc, the U.K.’s second biggest bank by assets, reported an unexpected jump in third- quarter profit even as it set aside 500 million pounds ($799 million) for the settlement of a currency rigging probe.-BBG

o  Visa Profit Surpasses Estimates as Consumer Card Spending Rises: Visa Inc., the world’s largest payments network, posted fiscal fourth-quarter profit that beat analysts’ estimates as customer spending abroad improved. Shares climbed as much as 4.7 percent in extended trading.-BBG

o  Samsung Has Smallest Profit Since 2011 as Smartphones Stall: Samsung Electronics Co. posted the smallest quarterly earnings in more than two years as profit margins are squeezed by competition from Apple Inc.’s new iPhones and cheaper Chinese devices.-BBG

o  ConocoPhillips quarterly profit up on asset sale:  ConocoPhillips, the largest U.S. independent oil company, on Thursday reported a higher third-quarter profit as results were lifted by the sale of its Nigerian business.

o  Johnson controls quarterly profit triples:  Johnson Controls Inc's profit tripled in the fourth quarter, driven by higher sales of its car seats in North America and a lower income tax provision.

o   TOP STOCK AND SECTOR MOVING STORIES

o   M&A

o  MDT Medtronic and Covidien (COV) expect merger to occur in early 2015

o  GE General Electric in talks to sell stake in Korean finance JV for more than $1B - WSJ

o  EXLS EXL to acquire Overland Solutions for $53M in cash

o  CTCM CTC Media appoints advisers to help company consider options for Russia

o  CBG CBRE Group buys PSM Center Management; terms undisclosed

o  IDXX IDEXX Labs acquires Animana; terms undiclosed

o  PDII Digirad offers to acquire PDI, Inc (PDII); terms not disclosed

o  SBRA Sabra Health Care acquires transitional care portfolio for $41.0M; exercises option on skilled nursing facility for $14.0M

o  LOPE Grand Canyon Education forms committee to explore options aimed at enhancing shareholder value, including conversion to non-profit entity

o  SYNDICATE

o  IPO

o  AXTA Axalta Coating Systems files amended S-1; to offer 45M shares in range of $18-21/sh; applied to list on the NYSE under symbol “AXTA

o  FGEN Fibrogen files amended S-1; to offer 7.1M shares in range of $16-19/share through Goldman Sachs, Citi, and Leerink

o  Seven Generations Energy 45M-share IPO priced at C$18 per share

o  BOOT Boot Barn announces 5.0M share IPO prices at $16.00/sh through JP Morgan, Piper Jaffray and Jefferies

o  FSAM Fifth Street Asset Management 6M share IPO priced at $17/sh through Morgan Stanley, JP Morgan, Goldman Sachs, RBC, and Credit Suisse

o  OTHER

o  SHLD Sears Holdings corporation announces filing of prospectus for rights offering of units

o  CMRX Chimerix files $105M secondary through Morgan Stanley and JP Morgan

o  INGN Inogen 2.1M-share secondary priced at $21.50/sh through JPMorgan

o  AKR Acadia Realty Trust announces 3.4M share common stock offering through BofA/ML and Barclays

o  KRG Kite Realty files mixed shelf of indeterminate amount

o  FB Facebook files mixed shelf of indeterminate amount

o   TECH/MEDIA/TELECOM  

o  SUNE SunEdison wins 150 megawatts of solar photovoltaic projects in Karnataka India

o  DWRE Demandware signs definitive agreement with SunBridge Corporation to establish JV in Japan

o  FINANCIALS/REITS

o  Buyout firms issuing debt to expand –WSJ

o  Aareal Bank AG repays residual amount of €300M to SoFFin

o  CBG CBRE Group buys PSM Center Management; terms undisclosed

o   HEALTHCARE

o  Cantor Research Highlight:AKAO (BUY-$13.00): We are initiating coverage of Achaogen  with a BUY rating and a $13 price target, based on Plazomicin’s expected revenues of $160M worldwide in 2025. AKAO has initiated a phase 3 trial to support approval in both pneumonia and bloodstream infection, which we expect to read out in 1H17. We forecast commercial launch of Plazomicin in 2018. Beyond Plazomicin, AKAO has preclinical assets, including an LpxC inhibitor, which we have not factored into our valuation but are a source of additional upside potential to our valuation.-Daniel Brims

o  Cantor Research Highlight: CLSN (BUY-$7.00): We are initiating coverage of CLSN with a BUY rating and $7 price target based primarily on lead drug candidate ThermoDox’s expected peak revenue of $980M in two indications, hepatic cellular carcinoma and RWC breast cancer. We forecast the commercial launch of ThermoDox in 2020 contributing $5/share to our valuation. CLSN has initiated a phase 3 trial to assess ThermoDox in hepatic cellular carcinoma (HCC) and a phase 1/2 trial in recurrent chest wall breast cancer. Beyond ThermoDox, CLSN is also developing EGEN-001, which is in Phase 1/2 testing for peritoneal cancers, and TheraSilence, a preclinical RNAi delivery platform. We have assigned $1/share each in value, due to the early stage of development of these assets.-Daniel Brims

o  PCRX Pacira Pharmaceuticals reports Q3

o  VICL Vical reports Q3

o  DRAD Digirad reports Q3

o  ARNA Arena Pharmaceuticals discloses Lorcaserin abstract to be presented at The Obesity Society’s Annual Scientific Meeting

o  FGEN Fibrogen files amended S-1; to offer 7.1M shares in range of $16-19/share through Goldman Sachs, Citi, and Leerink

o  Q Quintiles Transnational reports Q3

o  MDT Medtronic and Covidien expect merger to occur in early 2015

o  AUXL Auxilium Pharmaceuticals reports Q3

o  ACOR Acorda Therapeutics reports Q3

o  MD Mednax reports Q3

o  CTRX Catamaran reports Q3

o  CI Cigna reports Q3

o  SSH Sunshine Heart reports Q3

o  DD Bayer to acquire some DuPont Crop Protection Land Management assets; terms undisclosed

o   ENERGY/UTILITIES

o  PBF PBF Energy reports Q3

o  CVRR CVR Refining, LP increases credit facility from $150M to $250M

o  USAC USA Compression reports Q3

o  EMES Emerge Energy Services LP reports Q3

o  EPD Enterprise Products reports Q3

o  CRR Carbo Ceramics reports Q3

o  SWN Southwestern Energy initiated outperform at Imperial Capital

o  NFX Newfield Exploration upgraded to buy from hold at Societe Generale

o  FISH Marlin Midstream Partners reports Q3

o  EROC Eagle Rock Energy Partners reports Q3

o  ESV Ensco PLC reports Q3

o  OII: Oceaneering International guides FY

o   MATERIALS/INDUSTRIALS:

o  AXTA Axalta Coating Systems files amended S-1; to offer 45M shares in range of $18-21/sh; applied to list on the NYSE under symbol “AXTA”

o  SEE Sealed Air upgraded to market perform from underperform at Wells Fargo

o  GTLS Chart Industries enters amended credit facility

o  BLL Ball Corp reports Q3

o  APD Air Products reports Q4

o  GTLS Chart Industries reports Q3

o  RNF Rentech Nitrogen Partners, L.P. signs agreement to supply Tessenderlo Kerley, Inc. with ammonia

o  DD Bayer to acquire some DuPont Crop Protection Land Management assets; terms undisclosed (post-European close, 29-Oct)

o  NPO ENPRO Industries reports Q3

o  RGLD Royal Gold reports Q1

o  CF CF Industries Holdings announces its entire Woodward, OK nitrogen complex is off-line due to a problem in one of the boilers

o  KRA Kraton Performance Polymers reports Q3

o  HWKN Hawkins reports Q2

o  SPW SPX Corp downgraded to neutral from buy at Goldman Sachs

o  HBP Huttig Building reports Q3

o  MDC MDC Holdings reports Q3

o  ORN Orion Marine Group reports Q3 EPS $0.11 vs FactSet $0.09; authorizes share repurchase for up to $40M

o  AEGN Aegion reports Q3

o  TGI Triumph Group reports Q2

o  TEX Terex reports Q3

o  NC NACCO Industries reports Q3

o  HY Hyster-Yale Materials reports Q3

o  DCI Donaldson discloses borrowing available under existing credit facility increases from $400M to $600M

o  PGTI PGT Inc reports Q3

o  IIN IntriCon reports Q3

o  USLM U.S. Lime & Minerals reports Q3

o  TGI Triumph Group announces $330M of contracts

o  FIX Comfort Systems USA reports Q3

o  FIX Comfort Systems USA increases stock repurchase program back up to 1M shares

o  FIX Comfort Systems USA increases quarterly dividend by 9.1%

o  CW Curtiss-Wright reports Q3

o  FBHS Fortune Brands Home & Security reports Q3

o   CONSUMERS/SERVICES:

o  THRM Gentherm reports Q3

o  GE General Electric in talks to sell stake in Korean finance JV for more than $1B - WSJ

o  FSYS: Fuel Systems Solutions announces Steven Becker appointed to the board effective immediately

o  FSYS Fuel Systems Solutions appoints James Nall chairman effective today

o  BOOT Boot Barn announces 5.0M share IPO prices at $16.00/sh through JP Morgan, Piper Jaffray and Jefferies

o  RGR Sturm Ruger reports Q3

o  HDSN Hudson Technologies reports Q3

o  SFLY Shutterfly reports Q3

o  HBI Hanesbrands reports Q3

o  BG: Bunge Ltd reports Q3

o  JMEI Jumei International downgraded to underperform from neutral at Credit Suisse

o  KRFT Kraft Foods downgraded to neutral from outperform at Credit Suisse

o  RELV Reliv International reports Q3

o  BG Bunge Ltd reports Q3

o  INGR Ingredion reports Q3

o  ACCO Acco Brands downgraded to hold from buy at KeyBanc

o  VGR Vector Group reports Q3

o  PPC Pilgrim's Pride reports Q3

o  KRFT Kraft Foods reports Q3

o  IRDM Iridium Communications reports Q3

o  CNSL Consolidated Communication reports Q3

o  KATE Kate Spade & Co initiated neutral at Mizuho Securities USA Inc

o  STRA Strayer Education reports Q3

o  IRM Iron Mountain reports Q3

o  STRZA Starz reports Q3

o  HHS Harte-Hanks reports Q3

o  ALLE Allegion Plc reports Q3

o  TWC Time Warner Cable reports Q3

o  EXLS EXL to acquire Overland Solutions for $53M in cash

o  DWA DreamWorks Animation downgraded to neutral from buy at Janney Capital

o  CTCM CTC Media appoints advisers to help company consider options for Russia

o  SSprint Corp. upgraded to neutral from underperform at Credit Suisse

o  CETV Central European Media Enterprises reports Q3

o  DISCA Discovery Communications downgraded to neutral from buy at Nomura Securities

o   AUTOS/TRANSPORTS:

o  TSLA Tesla Motors initiated buy at Ascendiant Capital Markets

o  ODFL Old Dominion reports Q3

o  CHRW C.H. Robinson downgraded to underperform from neutral at Credit Suisse

o  GBX Greenbrier Companies reports Q4

o  ARII American Railcar reports Q3

o  CGI Celadon Group reports Q1

o  KEX Kirby Corp reports Q3

o  ALK Alaska Air COO Minicucci Benito reports sale of 12.7K shares in Form 4 filing

o  SSW Seaspan takes delivery of fifth 10000 TEU saver containership

o  CPLP Capital Product Partners reports Q3

o  BALT Baltic Trading Limited takes delivery of first of four Ultramax vessels

o  DAC Danaos Corp reports Q3

o  MMLP Martin Midstream Partners reports Q3

o  MIC Macquarie Infrastructure reports Q3

o  CNW Con-way reports Q3

o  RRTS Roadrunner Transportation Services reports Q3

o  GAMING, LODGING, & LEISURE

o  DRIIDiamond Resorts reports Q3

o  HST Host Hotels & Resorts reports Q3

 DISCLAIMER: Prepared by staff of Cantor Fitzgerald & Co. (“Cantor”) and is for information purposes only. It is not intended to form the basis of any investment decision, should not be considered a recommendation by Cantor or any other person and does not constitute an offer or solicitation with respect to the purchase or sale of any investment nor is it a confirmation of terms. Any calculations and valuations presented herein are intended as a basis for discussion. Sources of information are believed to be reliable but Cantor makes no representation and gives no warranty that the information contained herein is accurate or complete. Any opinions or estimates given may change. Cantor undertakes no obligation to provide recipients with any additional information or any update to or correction of the information contained herein. This material is intended solely for institutional investors and investors who Cantor reasonably believes are institutional investors. Cantor, its officers, employees, affiliates and partners shall not be liable to any person in any way whatsoever for any losses, costs or claims howsoever arising from any inaccuracies or omissions in the information contained herein or any reliance on that information. Cantor may have positions in financial instruments mentioned, may have acquired such positions at prices no longer available, and may have interests different or adverse to your interests. No liability is accepted by Cantor for any loss that may arise from any use of the information contained herein or derived here from. This product may not be reproduced or redistributed outside the recipient’s organization. Sources: Cantor Fitzgerald & Co., Reuters, Bloomberg, CNBC, Dow Jones, Marketwatch, Trade-Alert, and the Wall Street Journal. ***All eco data from Bloomberg and DJ]

 

 


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