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October 21, 2014 4:42 AM EDT
Updated: Oct 20, 2014 7:24 AM EDT  

Cantor Morning News®



Today's Stories From Cantor Fitzgerald

 Dogukan Aksoy  (212) 610-2348

        Nick Cernero (212) 610-3629

        Monday October  20th     2014



o  US equity futures are trading modestly above fair value, though are below earlier reported levels. Global sentiment is mixed with Europe generally lower whilst Asia closed in the black. Focus before the open will be on earnings, headlined by Halliburton, IBM and VF Corp, whilst Apple, Chipotle and Texas Instruments are among those expected after the close. There are no major macro-economic releases scheduled for today.

o  FX: FX markets were relatively quiet given last week's volatility. The USD saw some slight gains evaporate as the session progressed. The focus will be on some key Chinese data due out on Tuesday including Q3 GDP data. Outside of weaker JPY, other USD majors are generally "risk-on" with higher AUD and NZD against the greenback. AUD/USD was up some 40pips from Friday close above $0.8780, and NZD/USD also rallied about 40pips to session-high of $0.7960. EUR/USD is little changed in a 30pip range around $1.2750.

o  GOLD: Gold futures rose as the dollar weakened and stocks declined, boosting demand for the metal. Gold for December delivery climbed 0.2 percent to $1,241.90 an ounce by 6:42 a.m. on the Comex in New York.

o  CRUDE:WTI Gains for Third Day as Iran Seeks Halt to Price Drop. Brent crude traded for a fifth day close to a level that’s prompting speculation that OPEC will respond by cutting supply. West Texas Intermediate, which fell into a bear market this month, extended a rally.

o  TREASURIES:Treasuries fell for a third day before a report tomorrow economists forecast will show home sales picked as signs central banks are willing to provide stimulus underpinned demand for higher-yielding assets

o  European Markets:

o  European equity markets continue to trade mixed to lower. Corporate announcements were mixed this morning. Amongst the limited macro newsflow, the Bundesbank's latest monthly report due ~11:00BST (6ET) will be closely watched. Peripheral debt spreads edged wider vs bunds. Portugal leads the worst performers, currently (1.3%) lower, whilst Greece outperforms +1.7%. Decliners lead advancers 16-3 with technology (2.1%), oil & gas (2.0%) and chemicals (1.0%) amidst most notable fallers whilst personal & household goods +0.2%, travel & leisure +0.3% and real estate +0.1% as sole gainers.

o  Asian Markets:

o  Chinese stocks rose on Monday, with the Shanghai Composite Index adding 0.66%. The Nikkei rallied on Monday, closing +4.0% higher. A number of factors cited for the buying including GPIF expectations, strong US market session Friday, and weaker yen as $-¥ crossed back above 107. There was also some attention on Abe hinting that the planned sales tax increase for next year could get pushed back, and although not a directional driver for markets the resignation of two newly appointed cabinet ministers also garnered a lot of media attention.


o  Widespread Complacency Points to Further Short-Term Downside for U.S. Stocks: U.S. Equity MFs and ETFs: October has been a rough month for stock market bulls.  The S&P 500 is down 4.3%, while the Nasdaq is down 5.2%.  Given such sharp declines, one would expect fund investors to be selling hard.  But that is not happening, which suggests the U.S. stock market has more work to do on the downside in the short term. Outflows this month are not even close to the year-to-date peak in July, when they reached $13.9 billion (0.2% of assets). -TRIMTABS

o  PBoC to inject capital into ~20 joint stock banks:  Bloomberg cited a government source Friday who said the PBoC will inject up to 200B yuan ($32.7B) into ~20 joint-stock banks. Note "joint-stock banks are mid-sized national banks with mixed ownership." The article said that the injection was to assist the banks in preparing for year-end liquidity needs.-BBG

o  China growth seen slowing sharply over decade:The  WSJ noted that a report from the Conference Board said China's growth will slow sharply during the coming decade to 3.9% as its productivity falls and the country's leaders fail to push through tough measures to remake the economy.-WSJ

o  China 10-yr yield falls most in a month: Bloomberg reported that China's 10-year government bonds rose, pushing the yield down the most in a month, on speculation the PBoC will add more funds to the system. The yields on the notes due September 2024 declined 10 bps to 3.80%, the biggest drop since 19-Sept.-BBG

o  45% of Japanese companies want government intervention when dollar hits ¥110: A  Reuters-Nikkei poll found that 45% of companies want the government to defend the yen when the $-¥ hits 110. 23% said they would like to see the government take action when the yen hit ¥115 vs the dollar, and 20% when it hits ¥120 to the dollar. 60% of companies surveyed forecast the $-¥ between 100-110 in the next 12 months, while 35% expect it to be in the 110-120 range. 20% of companies said that the economy could withstand another sales tax hike, 33% said it could not, and the rest did not give an answer.-Reuters

o  Kuroda says core inflation likely to hold around ~1.25% in the near term:  ForexLive cited statements from BoJ governor Haruhiko Kuroda who said that core inflation would likely hold around ~1.25% in the near term. Recall there has been a lot of speculation that given falling oil prices, inflation could dip below 1%. Note core inflation in Japan excludes fresh foods but includes energy prices. Kuroda made the statements in a meeting of regional BoJ managers. Otherwise, he broadly reiterated his optimistic economic outlook.-ForexLive

o  Dividend outlook darkens for large UK groups: The FT noted that the outlook for dividends for the UK's biggest companies has deteriorated due to the strong pound and the sluggish performance of the global economy. It said that underlying payments made in the three months to the end of September slipped compared with the same time last year, while at the headline level there has been next to no growth.-FT

o  Russia, Ukraine edge closer to natural gas deal:The WSJ reported that officials from both Ukraine and Russia confirmed that a preliminary agreement has been reached on a price for winter gas supplies. It said that officials from Ukraine, Russia and the European Union will meet on Tuesday to try to settle on final terms.-WSJ

o  Hedge Funds Cut Bullish Bets on Crude as Prices Tumble:Money managers cut net-long positions in West Texas Intermediate by 8.1 percent in the week ended Oct. 14. Short positions jumped to the highest level in 22 months, U.S. Commodity Futures Trading Commission data show.-BBG

o  ECB starts to buy covered bonds:  Bloomberg cited people familiar with the matter, who said that the ECB bought French covered bonds in the short end of the curve as part of its asset purchase scheme. It said that policy makers are seeking to use the regions covered bond market, which is worth ~$3.3T as part of its efforts to stimulate the economy.-BBG

o  Germany and France in secret deal on budget:  Reuters cited an article in the German weekly Der Spiegel, which said that Germany and France are secretly discussing a deal to enable the European Commission to approve Paris' draft budget. It said that the two governments are working on a written agreement under which France will provide a road map on deficit reduction and reforms in return for Germany dropping its opposition to France's repeated flouting of deficit-cutting commitments.-Reuters

o  France urges Germany to boost investment spending:  Reuters cited comments by French Economy Minister Macron, who called on Germany to spend an additional €50B on investment over the next three years to support the European economy. It said the comments came as Macron and French Finance Minister Sapin are due to discuss reforms in Berlin with German counterparts today.-Reuters

o  Brazil's President Rousseff admits to Petrobas wrongdoing: The FT reported that Brazi's President Rousseff has admitted wrongdoing at Petrobas when she headed the company before taking office in 2010. It said that Rousseff was attempting to put a corruption scandal at the state-owned oil company behind her before the final vote in the country's presidential election next Sunday.-FT

o  Hong Kong Protests: Over the weekend, situation in Hong Kong continued to deteriorate as clashes between students and police resulted in 70 people injured and dozens arrested. Subsequent reports indicate talks between the two camps will take place on Tuesday, though some 70% of protesters surveyed do not anticipate any compromise from the govt. Meanwhile, chief exec CY Leung put some of the blame for the crisis on "external forces."-TTN

o  IBM Said to Reach Deal to Offload Chip Unit for $1.5 Billion: International Business Machines Corp. agreed to pay Globalfoundries Inc. $1.5 billion to take an unprofitable chip-manufacturing unit off its hands, according to two people with knowledge of the matter.-BBG

o  Investors Plan $2.2 Billion Bid for Adidas’s Reebok: A group of investors are planning to bid about 1.7 billion euros ($2.2 billion) for Adidas AG’s Reebok unit, the Wall Street Journal said, citing people familiar with the matter.-BBG

o  Yahoo CEO Mayer Said to Refresh Turnaround Plan:  Yahoo CEO Marissa Mayer will seek to fend off a challenge from activist investor Starboard Value by detailing a refreshed plan for turning around the business, WSJ said, citing people familar.-BBG

o  Tesoro Acquires QEP Pipeline Assets in $2.5 Billion Deal: Tesoro Logistics LP agreed to buy QEP Resources Inc.’ natural-gas pipeline and processing business for $2.5 billion in cash to expand in the Rocky Mountain region and North Dakota.-BBG

o  Boeing Seeks Revised Schedule for $51 Billion U.S. Aerial Tanker:  Boeing Co. is revising its master schedule for developing the new U.S. Air Force aerial tanker, adding to uncertainty about a plane that already has run up an estimated $1 billion in excess costs for the contractor.-BBG

o  Sprint Job Reductions Will Include 452 at Kansas Headquarters: Sprint Corp. said its previously announced job cuts will include 452 positions in Overland Park, Kansas, where the company is headquartered, according to a filing yesterday with the Kansas Department of Commerce.-BBG



o   M&A

o  PAH Platform Specialty Products Corp. confirms it will acquire Arysta LifeScience for ~$3.51B

o  IBM GLOBALFOUNDRIES to acquire IBM's microelectronics business

o  CNL Cleco enters agreement to be acquired for $55.37/sh cash by N. American Investor group led by Macquarie Infrastructure (MIC) and real assets and British Columbia Investment Management Corporation

o  VIP VimpelCom's subsidiary sells operations in Burundi and Central African Republic for $65M



o  IPO

o  BOOT Boot Barn files amended S-1; to offer 5M shares in the range of $14-16/sh through JP Morgan, Piper Jaffray and Jefferies

o  SIEN Sientra, Inc. files amended S-1; to offer 5M shares in range $14-$16/sh through Piper and Stifel

o  LC LendingClub files amended S-1; applies to list on the NYSE under the symbol "LC"


o  HTCH Hutchinson Technology announces $37.5M convertible debt offering and private exchange

o  TLLP Tesoro Logistics to offer 19.35M common units through BofAML, Barclays, Citi, Morgan Stanley, UBS, Wells Fargo, Credit Suisse, J.P. Morgan and RBC

o  SHLD Sears Holdings files mixed shelf of indeterminate amount

o  LGCY Legacy Reserves files $300M mixed shelf


o  TWTR Twitter to try to win programers over - WSJ

o  AAPL WSJ previews Apple Pay

o  Global infrastructure funds eyeing Eurostar stake - Sunday Times

o  YHOO Yahoo! considering acquiring one or more large technology startups with Alibaba (BABA) profit - WSJ

o  HTCH Hutchinson Technology announces $37.5M convertible debt offering and private exchange

o  CNIT China Information Technology to install 20,000 units of the company's new media terminals

o  IBM GLOBALFOUNDRIES to acquire IBM's microelectronics business



o  GS Goldman Sachs refusing to join UK's Banking Standards Review Council - WSJ

o  Lloyds Banking Group short-lists three bidders for €2B Project Parasol loan portfolio - Irish Times

o  FNFV Fidelity National Financial initiated outperform at Keefe, Bruyette & Woods

o  ARCP American Reality Capital Properties completes sale of shopping center portfolio to Blackstone and DDR Corp

o  IGD - Immobiliare Grande Distribuzione announces 99.75% take-up rate in €200M capital increase


o  VTAE Vitae Pharmaceuticals initiated buy at Stifel Nicolaus

o  SIEN Sientra, Inc. files amended S-1; to offer 5M shares in range $14-$16/sh through Piper and Stifel 

o  VTAE Vitae Pharmaceuticals initiated market outperform at JMP Securities

o  CYTR CytRx Phase 1b/2 aldoxorubicin clinical data in soft tissue sarcoma published in journal Cancer

o  APRI Apricus licenses US development, commercialization rights for fispemifene from Forendo Pharma

o  RNA Prosensa upgraded to overweight from underweight at JPMorgan

o  ALGN Align Technology upgraded to outperform from neutral at Credit Suisse

o  HSIC Henry Schein invests in Iwase Dental Supply; terms undisclosed

o  FOLD Amicus announced additional positive data from Phase 3 study of migalastat in Fabry disease patients with amenable mutations

o  BGMD BG Medicine suspends payments to non-employee directors

o  NEOT Neothetics files $63.25M IPO through Piper Jaffray, Guggenheim and Needham   

o  WCG Wellcare Health Plans notes amended Florida MMA contract setting kick payment rates for Sovaldi therapy

o  PFE FDA approves labeling with abuse-deterrent properties for Pfizer's Embeda

o  NVLX Nuvilex, Inc. files $50M mixed shelf


o  CNNX CONE Midstream Partners initiated outperform at RBC Capital

o  TLLP Tesoro Logistics expects to increase quarterly dividend by 4.5%

o  QEP QEP Resources enters definitive agreement to sell midstream business to Tesoro Logistics for $2.5B

o  LGCY Legacy Reserves files $300M mixed shelf

o  QEP "BREAKING: Williams said to be among bidders for QEP's Entrada pipeline unit" - Tweet by @BloombergTV


o  No news in this sector.


o  SHLD Sears Holdings announces seven lease agreements with Primark

o  SHLD Sears Holdings files mixed shelf of indeterminate amount

o  MJN Mead Johnson Nutrition downgraded to hold from buy at Deutsche Bank; removed as 2014 "Top Pick"

o  USNA USANA initiated buy at Pivotal Research

o  HLF Herbalife initiated buy at Pivotal Research

o  NUS Nu Skin Enterprises initiated buy at Pivotal Research

o  STZ Constellation Brands initiated buy at Pivotal Research

o  SJM J.M. Smucker increases share repurchase authorization by 5M shares


o  CNL Cleco enters agreement to be acquired for $55.37/sh cash by N. American Investor group led by Macquarie Infrastructure and real assets and British Columbia Investment Management Corporation

o  GM General Motors announces $12.5B revolving credit facility


o  CCL Carnival Corp releases new Ebola guidelines for all brands - CNBC 

o  SNOW Intrawest Resorts upgraded to buy from neutral at Goldman Sachs

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