Early Tour 9.24.14

Good Morning ... European Markets mixed +/- 50 bps (Russia +1.04%, Greece -1.02%) ... NKY -0.24%, SHCOMP +1.47%, HSI +0.37%, KOSPI +0.33%, TWSE +0.15%, ASX -0.74%

EUR 1.2847 (unch) JPY 108.58 (+0.28%) EUR/JPY 139.49 (-0.29%) AUD +0.37% NZD +0.25% RUB +0.60% US 10yr 2.533%

Futures: Dow +20, Nasdaq +6, S&P +3 DXY $84.69 (+3c) Crude $91.52 (-3c) Gold $1224.00 (+$2.00) Copper +0.03% Silver -0.47% Nat Gas +0.52%

Asia was mixed overnight with China A-Shares the clear outperformer. Brokers led gains on local press reports that the Shanghai-Hong Kong connect pilot program may include over 50 brokers while other reports highlighted retail investors opened 2171 accounts during the week. Rails also rallied after Li Keqiang said China wants to participate in Russia's high-speed rail development as well as their current rail network. Japan was lower as it came back online following yesterday's holiday and the Yen strengthened back to the mid-108 levels. Softbank (-3.5%) continues to weigh following the Alibaba IPO. Australia underperformed with banks leading declines on concerns of regulatory changes after the RBA said it might take additional steps to tighten bank lending. European markets opened heavy again following the ugly US close yesterday (very big S&P futures volume in the last 10min of trading yesterday), but have since rallied and now mixed on the session. Greece underperforms -1.02% as its 10yr spread is widening out. Germany's IFO Business Climate Index sees its 5'h consecutive decline to 104.7 in September (est 105.8 and prior 106.3). Very little single-stock news flow today. TNT Express - 11.2% after scrapping its 2015 guidance. And Bed Bath & Beyond +7.0% after the close on better numbers. SPA's +3 handles = 1975.30 last.

MBA Mortgage Applications @ 7am, New Home Sales @ 10am
ACN,PAYX,KBH reporting pre-open / JBL,FUL,WOR #'s after close

• Bed Bath & Beyond topped estimates as eps/comps/profit & sales higher (trading +7.0%)

• Starbucks to buy remainder 60.5% stake of its Japanese operations for -$913.5M

• GrafTech Intl cut 2014 Ebitda, operating cash flow & capex (new restructuring) (trading -23%)

• Steelcase profit rose in O2 on higher revenues in the Americas (eps view below) (trading higher)

• AAR Corp earnings light (eps/revs missed) & guidance below ests (trading -3.5%)

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• KCG to cut workforce by 4% sees completion by early Oct (had 1,229 employees at yr end)

• The SEC is investigating whether returns were artificially inflated for an ETF at PIMCO (WSJ)

• Maple Leaf Foods (MFI CN): activist holder West Face Capital out of the name (Globe & Mail)

• TNT Express overall conditions in Europe have deteriorated, scraps 2015 guidance (trading - 11.2%)

• Adecco sales +5.0% organically in July/Aug, Sep seasonal pick up slightly weaker (trading -3.6%)

• United Utilities (UU/ LN) trading statement inline with company 6-month expectations (trading +0.98%)

• RBS: Citizens Financial Group IPO in the US priced below the range at $21.50/share (trading - 0.78%)

• Building Materials/Construction: U.S. ABI index dipped to 53.0 in August from 55.8 in July

Leading European Sectors: Oil & Gas +0.50%, Telco +0.48%, Healthcare +0.38% Lagging European Sectors: Media -0.56%, Autos/Parts -0.51%, Construction -0.46%

Secondaries (announced/priced): SDLP, GLOP, MMLP, LAND, NVGS, EVHC, SCTY (convert), BGEO LN

IPO's: Citizens Financial Group (CFG) priced @ $21.50/share (below range), Smart & Final (SFS) priced @ $12/share, CyberArk (CYBR) priced i @ $16/share, Medley Management (MDLY) priced $18/share, Rocket Internet price range set €35.50-€42.50 (books covered within range), XXL NO books covered within range (books close Oct 7)

US Key Research:

• B. Riley initiates FARM (buy), CS initiates RNA (neut) and SRPT (op), Brean initiates WGBS (buy)

• GS downgrades MDVN/ASNA & upgrades SAGE/WX (buy), Exane initiates ALV (op)

• Citi initiates STT (buy) and BK/NTRS (neut), JMP upgrades MRVL, JPM downgrades MS

• Piper initiates CLGX/FNF/RLGY (ow) & FAF/FNFV (neut), MS upgrades RIO, UBS downgrades ERIC

• Wells downgrades TRS & initiates HP/NBR/PTEN (op) and CAM/FTI/NOV/PGN (mp)

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• Wells assumes BHI/CJES/HAL/SLB (op) and ESV/HERO/NE/RDC/WFT (mp) and DO/RIG/TDW (up)

• Topeka initiates IMS (buy), William Blair upgrades FCN

Europe Key Research:

• MS upgrades RIO LN, Exane downgrades EKTAB SS, Kepler initiates NHY NO (b) & SIK VX (reduce)

• Commerzbank upgrades MRK GY, Barclays strategy downgrades EM & upgrades Japan, Natixis downgrades IAM FP

• Barclays reinstates ELPE GA (ew), Berenberg downgrades TATE LN, BofA remains cautious Greek Banks

• UBS upgrades TATE LN & downgrades ERICB SS, JPM downgrades TATE LN & THR BB, Jefferies downgrades UNA NA

• UBS adds FRES LN to most preferred list & removes POLY LN from least preferred list, DB downgrades OGKE RX

• Citi downgrades RMV LN, Exane initiates ALIV SS (op), Bernstein upgrades REL LN, Macquarie downgrades TSCO LN

• Davy upgrades WOS LN, Beka upgrades EBRO SM, Equinet downgrades VIH GY, Citi initiates ZPLA LN (n)

• Canaccord upgrades AKSO NO, Citi upgrades JPR LN & TNI LN and resumes COB LN (n), LBBW downgrades ASML NA

• Macquarie upgrades NYR BB, Oddo upgrades ALPHY FP, Warburg initiates INH GR (buy), SocGen downgrades TATE LN

Reporting Pre-Open: ACN, PAYX, KBH, GAGA, TENX, MTN

Reporting Post-Close: JBL, FUL, WOR

Economic Data: MBA Mortgages @ lam, New Home Sales © 10am

DOE energy inventories @ 10:30am, Treasury auction in 5yr notes © 1pm ($35B)

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Fed Speakers: Mester i 12:15pm (Cleveland), Evans t 1pm (Washington)

Conferences: CS Global Steel & Mining (London), Baader Investment Conference (Munich), GS/Berenberg German conference (Munich)

Analyst/Investor Days: MDCO, BRCD, ACTA, CBB, NWL

Non-Deal Roadshows: ABCO, ACI, ADS, ALQA, ALSN, AMC, ARRS, ATHN, BC, BLOX, CEMP, CME, CONE, CRNCY, CYBX, DVN, EARS, EEFT, EGLT, ELLI, ENDP, RCFS, FNSR, GGG, HIBB, HILL, HQY, INAP, IPCM, KNX, MET, MOVE, MPW, MSCC, OREX, OSUR, PTCT, PWR, RIBT, RXDX, SAGE, SKUL, SOL, TXN, UA, WYY, ZSPH, CCRN

Shareholder Meetings: WFT, SNYR, CMSB

Equity/Mixed Shelfs: N/A

Other Newspaper Articles & Stories

WSJ cautious: Freddie Mac (FMCC), Fannie Mae (FNMA) WSJ

• U.S. Reports Significant Damage in Syria Strikes WSJ

• Pimco ETF Draws Probe by SEC WSJ

• Treasury-Bill Yield Tips Into Negative Territory WSJ

• Citizens Financial IPO Prices Under Range WSJ

• Websites Are Wary of Facebook Tracking WSJ

• In the Philippines, a Dream of Green City WSJ

• In Germany, Amazon Keeps Unions at Bay WSJ

• Can Jack Lew Add? WSJ

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• U.S. Is Behind Most ISIS Strikes, Military Officials Say NYT

• For High School Football Coaches and Fans, a New Digital Blitz NYT

• Hedge Funds Are Still Finding Love, Just Not at Calpers NYT

• SEC probes Pimco ETF over pricing irregularities FT

• US says attacks on Isis could last years FT

• Miliband vows to tap the 'privileged few' for £2.5bn boost to NHS funds FT

• India over the moon after Mars satellite success FT

• David Cameron says Queen 'purred' at Scottish referendum result FT

• Sarkozy, President Bling-Bling of France, heeds a nation's call FT

• Commodities: Cereal excess FT

• Curbs on tax inversions fail to convince FT

• Ebola cases could hit 1.4m by January, say researchers FT

• No hard landing yet in China FT

• Barack Obama's halfhearted swipe at tax inversion FT

• Mobile gaming: missing the jackpot Lex

• Yara/CF Industries: reap what you sow Lex

• Philips: ex uno, plures Lex

• Tate & Lyle: hard to swallow Lex

• Recall for MPs on Friday to approve RAF strikes against Isis The Times

• London tops poll as world's most expensive city The Times

• Start-ups lack growth needed for sustained recovery The Times

• We've forgotten one member of the UK family The Times

• James Moore: Dear George, pay rises are the answer to reducing our deficit Independent

• James Moore: Don't bet on Congress tackling bad marriages Independent

• Now's the time to get the public finances in order so the next recession won't hurt as much as the last one Independent

• More than a quarter of mortgage borrowers at risk if rates rise Independent

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• Statins increase weight and blood sugar and raise diabetes risk, study finds Telegraph

• Why Labour's Mansion Tax shows that it has lost touch with financial reality Telegraph

• New Zealand shows the UK how tax cuts can revive our economy Telegraph

• Germany's Ukip threatens to paralyse eurozone rescue efforts Telegraph

• Google may face $6bn EU anti-trust fine Guardian

• Super funds: banks need results, not arguments over union 'gravy trains' Guardian

• Insurers and price comparison sites face shake up after car insurance market investigation CityAM

• Walkers ranch raccoon crisps add flavour to campaign - Brand Index CitvAM

• Labour's misdiagnosis: A larger state is not the way to raise living standards CitvAM

• In charts: Here's what the government's public sector borrowing figures actually mean CityAM

Key Events This Week

Thursday: Rosh Hashanah holiday today & tomorrow, Kansas City Fed, Aug Durable Goods, Services Flash PMI Sept, Earnings (MU, NKE)

Friday: O2 GDP, Michigan Consumer Confidence, China Industrial Profits August, Earnings (FINL)

Key Events on the Horizon

Oct 2 — ECB publishing details of ABS purchases

Oct 5 — Brazil presidential election

Oct 6 — T+2 settlement across EEA countries (plus Switzerland) is implemented (trades on Oct 6 settle on Oct 8) (note Spain will not convert until - O4 2015)

Oct — ECB "Comprehensive Assessment" results for European Banks (mid-October)

Oct 29 — FOMC rate announcement (expected to officially announce the end of monthly bond purchases at this meeting)

Nov 4 — US mid-term elections

Nov 9 — Potential referendum on independence in Catalonia (Spanish PM Rajoy will likely try to block vote from happening)

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