EFTA Document EFTA02120415

From: Ike Groff Sent Wed 12/11/2013 10:51:39 AM Subject Early Tour 12.11.13 Good Morning ... European Markets up 0-40 bps (France +0.53%, Italy -0.44%) ... NKY -0.62%, SHCOMP -1.49%, HSI -1.71%, KOSPI -0.78%, TWSE -0.11%, ASX -0.76% EUR 1.3761 (unch) JPY 102.48 (+0.35%) EUR/JPY 141.03 (-0.36%) AUD 0.9108 (-0.46%) NZD 0.8258 (-0.65%) US 10yr 2.804% Japan 10yr 0.65% Germany 10yr 1.83% Portugal 10yr 6.03% Italy 10yr 4.04% Spain 10yr 4.01% Futures: Dow -10, Nasdaq -3, S&P -1 DXY $79.96 (unch) Crude S98.52 (+1c) Gold $1254.60 (- $6.50) Copper +0.17% Silver -0.27% Nat Gas -0.42% Asia markets mostly lower overnight with China leading the region lower following a weak handoff from the US. Some reasons used to explain the weakness included speculation from the Workers Conference that China's 2014 GDP target could be set at 7.0-7.5% range (vs current 7.5% target) as well as cautious local sentiment with A-share positions hitting one year low and following the second consecutive week of decline in local trading accounts ahead of the January IPO resumption. There was also a report out in the China Securities Journal that China could phase out its proactive fiscal policy approach in favor of sticking to the principle of keeping fiscal revenue & spending in basic equilibrium to gradually lower the deficit. China November New Yuan Loans were out after the close and came in better at 624.6B vs est 580.0B. The Nikkei also finished lower as the Yen firmed overnight (102.48 last) and Japanese machine orders for October came in at +0.6% vs est +0.7%. European markets generally up a touch in very light volume (tracking 70% of 3m average). News out overnight that US House & Senate negotiators (led by Paul Ryan & Patty Murray) have officially reached a modest budget deal that will peel back some of the automatic sequestration spending cuts, fund the government through the fall of 2015, and reduce the deficit by net $22.5B over the next 10 years thru a mix of policies that include changes to federal employee and military pension programs as well as higher security fees for airline passengers. There are technically no new taxes baked into the deal (although there are some increased "user fees") and it does not extend unemployment insurance for the long-term unemployed. It doesn't address the corporate tax breaks that Democrats wanted to get rid of nor does it raise the debt ceiling. Neither side got what they wanted but it represents a compromise that has been so elusive in Washington in recent years. Nevertheless it is already drawing criticism from some conservatives in the House and remains to be seen if it can get enough votes EFTA_R1_00753764 EFTA02120415 there when it hits the floor in the next few days (but expectations arc that it will). SPA's traded up — 5 handles to the 1808 level overnight following the budget deal but have since rolled over and are lower on the session. The odds of a Fed taper in December or January seem to be increasing given the v strong labor report last week now coupled with fiscal policy progress in DC (yet the US 10yr yield has actually backed up 5bps this week to 2.8043% last). SPA's -I handle = 1801.80 last. "'COST & JOY report pre-open, Mortgage Apps @ 7am, Treasury Budget Statement © 2pm•" • MasterCard 10-for-1 stock split, 83% dividend increase & $3.5B share buyback (trading +4.5%) • Variety reports Discovery Communications considering bid for Scripps Networks Variety (trading +4%) • H&R Block trimmed loss on higher tax benefit but wider than estimates & revs missed (trading -1%) • Smith & Wesson guides up (sees Q3 eps 28-30c vs est 26c & net sales $140-145M vs $135.9M est) • Urban Outfitters in-line sales (comps to date up in mid-single digits) (Free People/Anthropologie strength) • Inditex 9m sales E11.9 billion vs estimate E12 billion, ebitda E2.8 billion (inline), gm's 59.9% (trading +0.96%) • Fraport Group good traffic numbers, November passengers rise +4.6% to 6.67 million (trading +0.37%) • HSBC sells 8% stake in Bank of Shanghai to Spain's Banco Santander for undisclosed amount (trading +0.18%) • RBS finance director Bostock resigns after 2 months on the job --> going to Santander (RBS LN - 2.1%) • Firstgroup rejects Sandell Asset Management's plan for asset disposals as not compelling (trading +2.5%) • Alfa Laval books another large order, wins SEK 100 million oil & gas order in Canada (trading +1.5%) • Clas Ohlson reports strong Q2 figures, EBIT 18% ahead of consensus, Nov sales +6% vs est +4% (trading +10.5%) • Lundbeck: Brintellix study showed "statistically significant improvement in cognitive performance" (trading +2.3%) • Stagecoach ytd trading inline with company expectations, eps beats estimates, raises dividend (trading +3.2%) EFTA_R1_00753765 EFTA02120416 • Air Liquide CMD: sees sales growth of 5-7% in 2015 versus 8-10% at previous CMD in 2010 (trading +0.92%) • EDF may have to raise nuclear decommissioning provisions according to Les Echos (trading +0.21%) • Imagination Tech IMS weaker across the board, revs light and guiding shipment growth down (trading -16%) • Bunzl says total trading consistent with expectations, sees 2013 rev growth +12% in constant fx (trading +0.21%) • Air France: Etihad may want to buy as much as 49% of Alitalia says Corriere della Sera (trading +1.7%) Leading European Sectors: Media +0.88%, Construction +0.65%, TravlLes +0.63% Lagging European Sectors: Basic Res -0.82%, Real Estate -0.17%, Insurance -0.08% AVNR trial missed — LH guides down — MCP board appointments CENT revolving credit facility — MIND #'s light — CBOE special div, boosts buyback Notable Options Activity Yesterday: P ($29.25 +3.7%) with the company presenting at several conferences this week, one investor seems to be taking a view that the stock could be the subject of a significant pullback in the next few days, purchasing 10,000 December $25 puts for $0.15 to open a new position. The puts expire next Friday and would need the stock down 14.5% to finish in the money. FNF ($30.34 +2.7%) following an announcement by the company that it had hired JP Morgan to explore strategic alternatives with respect to its portfolio company investments, one trader sold to close 6000 March 28 calls, and rolling to a higher strike, buying 6000 March 31 calls. As part of today's trade the 28 calls were sold at $2.65, and were originally bought on 10/25 for $1.45. The roll seems to indicate that the trader does in fact see more upside in the stock beyond $30.00. CTB (23.5 -.8%) opening cust actively buying dec 24 calls into earnings first 10k traded .75 with 4k more throughout the day for as much as 1.15 CTB is trading near 52 week lows and reports Thursday in addition CTB is also awaiting a court ruling on a merger with Apollo Tyres EFTA_R1_00753766 EFTA02120417 ABX (16.87 +5.4%) continued bullish option trading today we note longer term jan2015 20/25 call spread buyer 15k for .95 (similar to a size jan2015 20/30 call spread buyer we saw weeks ago) ABX is down -50% ytd cust possibly looking for notable rebound in 2014 Secondaries (announced/priced): TRLA ($150M convert), ALSN, GASS, TA, AMID, EJ (convert), AWAY, YNDX ($600M convert), BPOST BB, MED IM, O2C GY, NPN SJ IPO's: Autohome (ATHM) 7.8M shares priced at $17 (above range), Moncler Spa expected to price tonight (begins trading on Monday), Hilton Worldwide expected to price tonight, Energa (ENG PW) priced @ PLN 17 US Key Research: • GS cuts O1 & upgrades FE and BCC/XRAY (buy) & initiates COT (neut), MS initiates TIBX (ew) Mizuho reinstates JNPR (buy) & initiates MSI/NOK/CSCO (neut) and ERIC (buy) & cuts AVNR ▪ B. Riley initiates OSTK (neut), Raja upgrades CRL, BMO cuts MWV, Wells upgrades RDWR • Jefferies initiates DDD/SSYS/XONE (buy) & VJET/ARCM SS (hold), Janney initiates EOPN (buy) & CSOD (neut) Citi initiates FFIV/NOK/QCOM/RVBD (buy) & BBRY/BRCD/CSCO (sell) & CIEN/GLW/ERIC/GRMN/JNPR/MSI/BLOX/PLCM (neut) Europe Key Research: • Citi assumes/upgrades NOK1V FH & ALU FP, Nomura downgrades RMG LN and initiates WDF IM (buy) • UBS removes AHT LN from most preferred list. GS removes MAERSKB DC & AW LN from conviction buy • Barclays on Nordic banks (prefer SEBA SS, NDA SS, DNB NO over SHBA SS & SWEDA SS) Natixis upgrades EN FP to OP, UBS downgrades GBF GY, BofA reits buy VOD LN (raise base case fv to 250p) • Bernstein upgrades VIV FP, Vontobel upgrades NESN VX, Nordea downgrades NOBI SS Mizuho initiates NOK1V FH (neutral), ABN initiates BRNL NA (buy), Canaccord upgrades CSR LN EFTA_R1_00753767 EFTA02120418 r Cantor initiates TPK LN (buy), DB downgrades ENI IM, GS upgrades MAU FP & downgrades SIA LN r HSBC upgrades GAM SM, Liberum downgrades KENZ LN, MS upgrades ELI BB, Banca IMI upgrades G IM r RBC downgrades IAG LN, UBS initiates ALRS RU (buy), GS reits sell NOBN VX & STMN SW Reporting Pre-Open: COST, JOY Reporting Post-Close: ASYS, CWTR, MNR, MW, NDSN, OXM, SGU, SIGM, VRA Economic Data: MBA Mortgage Applications @ 7am, Treasury's Monthly Budget Statement @ 2pm DOE crude oil inventories © 10:30am Conferences: UBS Media & Communications (NYC), BMO Tech, Media, & Entertainment (NYC), GS Fin Services (NYC) Conferences: JPM SMid Cap (Chicago), Opco Healthcare (NYC), Wells MLP, Pipeline, & Energy (NC) Conferences: Bofa Basic Materials, Cantor Internet (NYC), Imperial Security Investor (NYC), Wedbush CA Dreamin' Consumer (NYC) Analyst/Investor Days: CNI, CBI, CW, DAL, HRB, MRO, HD, HSIC, CCG, ELLI, MEIP Non-Deal Roadshows: AFL, AGO, AMSF, ARCC, BAGR, CBF, CDE, COG, CPXX, COB, CVD, DDXS, DY, FEIC, FLS, FOR, GZT, HIMX, ICFI, KLAC, MLNX, MPEL, SANM, SIVB, SWI, TXI, Z, CRM Shareholder Meetings: CGI, TO, PERF, SED, ARL, MPET, PLL, MXWL Equity/Mixed Shelfs: EXA ($75M), CBLI ($50M), CEMP ($100M) EFTA_R1_00753768 EFTA02120419 Other Newspaper Articles & Stories WSJ positive: General Motors (GM) WSJ • Deal Brings Stability to U.S. Budget WSJ • Volcker Rule Challenges Wall Street WSJ • Unraveling the Lies Madoff Told WSJ • End of Fee Fillip Will Slow Costco's Growth WSJ • Discovery Weighs Bid for Food Network Owner WSJ • China Spins New Lesson From Soviet Union's Fall WSJ • Spain Expects Primary Budget Surplus in 2015 WSJ • Japan Tops World In Mobile Apps Revenue WSJ • Putin's Latest Hunting Trip WSJ • Steven Rattner: Congress Avoids Reality, Again NYT • Study Finds Federal Contracts Given to Flagrant Violators of Labor Laws NYT • Ukrainian riot police raid protest camp FT • Banking union framework set out by EU FT • BoE policy maker backs bogeyman' of bundled debt FT • Volcker vote ushers in new world order for banks FT • JPMorgan files patent for Bitcoin-style payment system FT • Brussels criticised for paying non-working Gaza civil servants FT • Corporate social networking takes advantage of captive audience FT • Breathe in that dirty doublethink FT • Asset managers could blow us all up FT • Russia, like Ukraine, will become a real democracy FT • Australia coal: Beggars can't be choosers Lex • Volcker rule: Overruled Lex EFTA_R1_00753769 EFTA02120420 • Prudential: target tapering Lex • General Motors: new driver at the wheel Lex • Chancellor comes knocking for fat foreign incomes: Government moves to clamp down on tax loophole The Times • Chris Blackhurst: Anxious shopkeepers study the runes as Christmas rush gets a late start Independent • George Osbome's U-turn could add £200bn to energy bills Independent • Dead in the water: MoD shake-up plans ditched Independent • Pay rises are making a comeback - here's how we make sure they stay Telegraph • CML downplays risk of housing bubble Telegraph • Should the state be allowed to collect everyone's data? Telegraph • David Cameron hints he wants to cut the top rate of income tax to 40 per cent Telegraph • Selfie-gate: Why do Cameron and Obama feel the need to behave like idiots? Telegraph • 3D printing: not yet a new industrial revolution, but its impact will be huge Guardian • The Mandela coverage and the banality of goodness Guardian • Make no mistake: lain Duncan Smith wants the end of social security Guardian • You always spend your own money better than any government CitvAM • Against the Grain: Silicon Valley, Steve Jobs and the economics behind the Top One Per Cent CityAM Key Events This Week Thursday: Retail Sales, Import Price Index, Jobless Claims, Eurozone IP, ECB monthly report, GS Emerging Tech Research Symposium (NYC), Earnings (LULU, ZOK) Friday: PPI, Congress budget deal deadline Key Events on the Horizon EFTA_R1_00753770 EFTA02120421 Dec 18 — FOMC rate decision Jan 15 — Current CR runs out Jan 21 — State of the Union Address Feb 7 — Debt ceiling deadline (Treasury can use extraordinary measures for — 1 month past this date) Ike Groff 680 Washin ton Blvd 'Stamford, CT 06901 1 This e-mail and any files transmitted with it are confidential and intended only for the person or entity to which it is addressed. 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