Gold Tumbles With Silver to Lowest Since 2010 – $1,000 Gold ?

Gold and silver slumped to the lowest level since 2010 as the dollar strengthened after the Bank of Japan unexpectedly boosted unprecedented stimulus and the Federal Reserve ended asset purchases.

Bullion for immediate delivery lost as much as 2.6 percent to $1,167.49 an ounce, the lowest since July 2010, and traded at $1,177.26 at 4:13 p.m. in Singapore, Bloomberg generic pricing shows. Silver slid as much as 3 percent to $16.0009 an ounce, the lowest since February 2010. They fell as the dollar rose to the highest in more than six years against the yen.

The Fed is weighing the timing of interest-rate increases as other central banks add to stimulus to boost their economies. The Bank of Japan said it’s targeting an 80 trillion yen ($726 billion) expansion in the monetary base, up from 60 to 70 trillion yen before. Gold yesterday erased the year’s advance after U.S. gross domestic product beat estimates and China probed a surge in precious-metals exports.

“People are generally looking at the direction of the dollar, which moved higher against the yen after the BOJ announcement, although the news itself is neutral for gold,” said Wallace Ng, a Shanghai-based trader at Gemsha Metals Co. “A higher dollar depresses prices and sentiment in the gold market was already weak because of the Fed.”

Bullion is heading for a decline of 4.4 percent this week, the most since September 2013. The metal is also set for the first consecutive monthly loss in 2014. Holdings in the SPDR Gold Trust shrank for a third day to 741.2 metric tons yesterday, the least since Oct. 2008.

Double-Whammy

Gold rose 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent. Prices slumped 28 percent last year, the most in three decades, on expectation that the central bank will scale back its bond-buying program that was put in place to fuel growth while failing to stoke inflation.

The U.S. central bank, which has held its key rate at zero to 0.25 percent since 2008, this week cited an improving job market in deciding to end bond buying, while maintaining a commitment to keep rates low for a considerable time. It also said inflation is running below its 2 percent target.

“Precious metals cratered, hit by a double-whammy of the rather hawkish Fed policy statement, coupled with a stronger-than-expected U.S. GDP report,” Edward Meir, an analyst at INTL FCStone Inc., wrote in a note. “Gold is again confronting the specter of a stronger dollar, rising equity prices and tame inflation, a trifecta that does not bode well for price prospects going into 2015.”

Futures for December delivery fell as much as 2.7 percent to $1,166.20 an ounce on the Comex inNew York, the lowest level since July 2010, before trading at $1,175.80.

$1,000 Gold

The collapse of oil prices into a bear market amid rising global supplies has also cut inflation concerns. The chances of bullion dropping to $1,000 are increasing as cheaper energy “means lower inflation and adds to the bearish gold story,” said Michael Haigh, head of commodities research at Societe Generale SA, who correctly forecast the metal’s 2013 rout.

The bank isn’t alone in predicting more losses for gold, which is Morgan Stanley’s least preferred metal. Jeffrey Currie, Goldman Sachs Group Inc.’s head of commodities research who also correctly forecast 2013’s slump, said last month that the worst isn’t over yet for gold. He expects prices to drop to $1,050 by the end of year.

Concern that demand may falter in the world’s largest users also hurt prices. China sent investigators to probe a seven-fold surge in September’s precious-metals exports. In India, the biggest consumer after China, imports are set to drop in October after a more than four-fold jump last month.

Gold of 99.99 percent purity on the Shanghai Gold Exchange, the benchmark, sank as much as 3.1 percent to 230.05 yuan per gram ($1,172.35 an ounce), the lowest level this year. Volumes tumbled to a one-month low today.

Silver for immediate delivery slid 2.4 percent to $16.1078 an ounce, set for a fourth monthly decline that’s the worst run since June 2013. An ounce of gold bought as much as 73.3154 ounces of silver today, the most since April 2009.

Spot platinum decreased as much as 1.8 percent to $1,223.05 an ounce, the lowest since Oct. 6. It’s heading for a fourth month of losses that’s the longest stretch since June 2013. Palladium slipped 0.1 percent to $779.67 an ounce.

Chen’s Letter To Blackberry Fans- old and new

BlackBerry* (BB : TSX : $11.78), Net Change: -0.14, % Change: -1.17%, Volume: 2,293,041
BlackBerry* (BBRY : NASDAQ : US$10.52), Net Change: -0.13, % Change: -1.22%, Volume: 8,159,305

John Chen, CEO of BlackBerry,

 

wrote an open letter to current and former BlackBerry users

hoping to create some buzz for the company’s “new/old” BlackBerry Classic device, set for release later this year.

Here are some of the more notable lines from his letter:

“To our loyal (current and former) BlackBerry users: BlackBerry is driven by an
urgent, obsessive focus on what matters: you. When we lose sight of what you want and you need, we lose you. It’s tempting in
a rapidly changing, rapidly growing mobile market to change for the sake of change – to mimic what’s trendy and match the
industry-standard, kitchen-sink approach of trying to be all things to all people. But there’s also something to be said for the
classic adage, if it ain’t broke don’t fix it. BlackBerry Classic reflects that. It is classic BlackBerry – complete with a top row of
navigation keys and a trackpad. It’s the device that has always felt right in your hands and always felt right in your busy
day…Innovation is a word that gets used too often and carelessly. Innovation is not about blowing up what works to make
something new – it’s about taking what works and making it better…You don’t reinvent yourself every day; you take what you
learned yesterday and sharpen it today. You drive change – often on your terms, but sometimes not. That you keep going
regardless is what distinguishes you as a grown-up. You’re in it for the long haul. So is BlackBerry. The things you remember
about BlackBerry that made you better are better than ever with BlackBerry Classic. BlackBerry Classic is for you, as is
everything we do every day.

Chen’s complete letter can be found here: http://blogs.blackberry.com/2014/10/classic-john-chen/

Akamai Technologies

AKAM : NASDAQ :

US$56.21

BUY 
Target: US$68.00 

COMPANY DESCRIPTION:
Akamai provides content delivery and cloud
infrastructure services for accelerating and improving the
delivery of content and applications over the Internet,
ranging from live and on-demand streaming videos to
conventional web content, to c-commerce tools. The
company is headquartered in Cambridge, Massachusetts

Telecommunications
3Q14 ABOVE EXPECTATIONS, 4Q14 GUIDANCE IN LINE; BUY
Investment recommendation
Akamai reported 3Q14 results after the close that once again exceeded
expectations even though the quarter appeared to lack of a meaningful
benefit from the company’s largest customer who released a new
software application in the quarter that was responsible for such strong
volume and revenue growth in 3Q13. Once again Akamai has managed
to defy logic and manage the transition of traffic from large scale
customers who decided for the do-it-yourself option. Akamai again
demonstrated its ability to participate in the dramatic growth of Internet
volumes and increasingly important security applications at a time when
large volumes of traffic are being redirected to direct-connect paid
peering arrangements between content providers and ISPs. We believe
growth will remain strong for Akamai, especially in its media segment.
We retain our BUY rating and $68 price target.

Investment highlights

 Solid quarter and outlook – We believe the 3Q14 report that was
above expectations is the direct result of the demand for the
company’s industry-leading services in the face of intense
competition. We expect it will continue in 2015.
 Outlook in line with expectations – Despite the better-than-expected
3Q14, guidance for 4Q14 is essentially in line with expectations
which might imply that we have not fully worked through the
aforementioned large customer transition.
 Solid valuation – With continued strong double-digit growth
expected with the secular tailwinds, we believe our $68 target
remains reasonable.

Gold Plunges

Gold Heads for Biggest Drop in Three Weeks as Fed Ends QE

Gold prices fell as the Federal Reserve ended its bond-purchase program, cutting demand for the metal as hedge against inflation.

The Fed maintained its pledge to keep interest rates near zero percent for a “considerable time,” while citing improvements for the American labor market as it ended its asset buying at the conclusion of its two-day policy meeting today.

“People will not see the need for gold in an environment of low inflation and solid job growth,” Chris Gaffney, the senior market strategist at EverBank Wealth Management in St. Louis, said in a telephone interview. “While it was expected, the ending of the asset-purchase program added to the negative sentiment.”

Bullion fell to this year’s low on Oct. 6 amid waning demand for a store of value. Holdings in global exchange-traded products backed by gold are at the lowest in five years, and measures of volatility for the metal have pared recent gains. The U.S. economy isn’t in danger of a major pullback even as Europe languishes and China’s growth slows, Treasury Secretary Jacob J. Lew said today.

Gold for immediate delivery dropped 1 percent to $1,215.69 an ounce at 2:16 p.m. New York time, heading for the biggest drop since Oct. 3. Prices touched $1,215.47, the lowest since Oct. 8.

Bullion climbed 70 percent from December 2008 to June 2011 as the U.S. central bank bought debt and held borrowing costs near zero percent in a bid to shore up growth. Prices slumped 28 percent last year partly because the gains for consumer prices investors were concerned about after the increase in money supply failed to materialize.

Low Inflation

Fed policy makers said that while inflation in the near term will probably be held down by lower energy prices, it repeated language from its September statement that “the likelihood of inflation running persistently below 2 percent has diminished somewhat.”

Inflation expectations, measured by the five-year Treasury break-even rate, this month reached the lowest since October 2011.

Gold prices will drop to $1,050 over the next 12 months as the U.S. economy accelerates,Jack A. Bass, author of The Gold Investors Handbook has said.

Applied Micro Circuits

AMCC : NASDAQ : US$6.88 BUY 
Target: US$11.00

Technology — Hardware — Semiconductors and Related Technologies
SOFT NEAR-TERM SERVICE PROVIDER SPENDING IMPACTS CONNECTIVITY SALES; X-GENE AND
HELIX GROWTH OPPORTUNITIES UNAFFECTED
Investment recommendation:

We maintain our belief APM is well
positioned for long-term growth and significant operating leverage as the
first vendor with 64-bit ARM chips designed specifically for the $13B+
server market. While our legacy business estimates were Street-low into
results, lower Connectivity sales in the face of softer service provider capital
spending levels were even below our estimates. We remain cautious on
near-term legacy business trends, but continue to believe in the long-term
ARM server opportunity and HeliX design wins provide a path for embedded
sales recovery in C2016. We reiterate our BUY rating, PT to $11 from $12.
Investment hInvestment highlights
Results/guidance recap: APM report Q2/F2015 revenue of $41.0M and
non-GAAP LPS of $(0.06) or below our estimates of $42.1M/$(0.04) due
to disappointing Connectivity sales of $24.9M, down 20% Q/Q. While we
had anticipated softer Connectivity sales for the next few quarters with
softer service provider spending (particularly in North America), SeptQ
sales and DecQ guidance were below our expectations. With 4-5 month
lead times typical in these markets, we believe a book-to-bill of 1.2x in
the quarter indicates DecQ Connectivity sales have bottomed
X-Gene ARM server opportunity unaffected

 HeliX embedded design wins provide path for C2016 base business
recovery:
:APM recently announced a family of HeliX embedded ARMv8
chips targeted at Networking, Storage, Industrial, and Imaging markets.
We believe tier-1 design wins have already been secured, and we
anticipate first material sales in Q1/C’16 should begin to regrow APM’s
embedded processor business back toward $25M/quarter run rates

Valuation:

Our $11 price target (was $12) is based on shares trading at
roughly 14x our F2017 non-GAAP EPS estimate of $0.80.

Arch Coal – Still Down and Dirty ; Peabody Sees Rebound

Arch Coal Inc. (ACI) reported a narrower third-quarter loss and better-than-expected sales figures as it continues to cut costs in the face of slumping prices for the power plant and steelmaking fuel.

The net loss narrowed to $97.2 million, or 46 cents a share, from $128.4 million, or 61 cents, a year earlier, the St. Louis-based company said in statement today. Quarterly sales beat estimates as Arch increased output from western mines because of improved rail service.

Arch hasn’t turned a quarterly adjusted profit since 2011 amid coal’s worst downturn in decades. Faced with a six-year low for the price of metallurgical coal, Arch idled its Cumberland River complex in Central Appalachia in July. There’s a global surplus of the steelmaking ingredient after a slowdown in Chinese demand.

“We are further reducing our expectations for corporate administrative expense and capital spending in 2014, and expect to end the year with approximately $1 billion in cash and short-term investments,” John T. Drexler, Arch’s chief financial officer, said in the statement. “This strong liquidity position, coupled with no debt maturities until mid-2018, provides Arch with the financial flexibility needed to navigate current coal market conditions.”

‘No Surprises’

Other coal producers, including James River Coal Co. and Patriot Coal Corp., have filed for bankruptcy in the past two years as North American natural gas output soared, causing prices to drop to 12-year lows. Coupled with more stringent pollution measures, utilities are burning less coal to generate electricity.

The company reported $742.2 million in revenue, more than the $722.9 million average estimate and less than the $791.3 million it made during the same period last year.

“Overall, we see no surprises in the print, the company continues to hoard liquidity and aggressively cut costs,” Daniel Scott, a New York-based analyst for Cowen & Co., wrote in a note to clients today.

Arch climbed 9.5 percent to $1.96 at 10:54 a.m. in New York. The shares have declined 56 percent this year.

Excluding one-time items, the loss was 45 cents a share, exceeding the 41-cent average of 18 analysts’ estimates compiled by Bloomberg.

Other U.S. coal producers rose today. Walter Energy Inc. advanced as much as 11 percent before ending 1.3 percent higher, while Peabody Energy Corp. closed 1.8 percent higher. Alpha Natural Resources Inc. increased as much as 9.4 percent before closing 3.5 percent lower.

Investors see that the worst may be over for the coal market after a series of output cuts around the world

- said the chairman and chief executive officer of Peabody Energy Corp. (BTU), the largest U.S. producer.

“We’ve had essentially flat pricing now for about nine months,” Greg Boyce said in an Oct. 24 phone interview. “All of the investors are encouraged that that represents kind of a bottom to the commodities cycle, but they’re waiting to see what happens in terms of the timing of that uptick.”

Peabody and most of its publicly traded domestic competitors have posted losses amid the worst slump in the coal industry in decades. The price of metallurgical coal used in steelmaking has fallen to a six-year low because of slowing Chinese growth. Thermal coal used to generate electricity has also dropped on tighter emissions regulations and competition from cheap natural gas.

Shares of Peabody have fallen more than 9 percent since the start of trading on Oct. 20, when it reported a third-quarter loss of 56 cents a share. Boyce said Peabody’s stock declined because investors haven’t yet seen evidence that the global oversupply of coal is abating.

Peabody scaled back output of steelmaking coal at its Burton Mine in Australia this year. Glencore Plc and Walter Energy Inc. are among other producers that have made reductions. There have been 30 million tons of metallurgical-coal cutbacks announced globally this year, Boyce said in an Oct. 20 statement.

Rebound ‘Inevitable’

Investors will spend the next couple of quarters looking for signs of a recovery in coal prices, Boyce said. Given the industry’s reduction in new capital investments, a rebound is “inevitable,” he said.

“There’s going to be a long lag where you’ve got less supply than demand,” he said. “That’s going to have a strong, strong pull for the sector.”

Catalysts that coal investors are looking for include rising Chinese demand and an improvement in U.S. railroad capacity to deliver from mining regions such as Wyoming’s Powder River Basin, he said. Peabody, which produces most of its thermal coal in the PRB, said last week rail bottlenecks there are limiting its sales.

Boyce said Peabody will be “very well positioned” when the coal cycle does eventually turn. He doesn’t expect the company to buy up competitors or low-priced mining assets until coal prices start to rebound, he said.

“Right now, there are no tier-one assets on the market, because the people that have them, they’re not interested in selling at the bottom of the cycle,” he said.

 

Apple Pay Slammed by CVS, Rite-Aid, Wal-Mart in favor of CurrentC

The introduction of Apple Pay last Monday was widely described as the dawn of a new era for smartphone payments.

But within a week, two major pharmacy chains, Rite-Aid and CVS, rejected Apple’s version of the future: Both disabled Apple Pay (as well as other tap-to-pay mobile payments systems Google Wallet and Softcard). As expected, customers took to Twitter to complain, and they almost universally sided with the smartphone company over the drug stores.

CVS hasn’t publicly explained itself. Rite-Aid spokeswoman Ashley Flower defended the company in an email to Bloomberg Businessweek. “We are continually evaluating various forms of mobile payment technologies, and are committed to offering convenient, reliable, and secure payment methods that meet the needs of our customers,” she wrote.

That’s not the whole story. Objections to Apple Pay aren’t actually about convenience, reliability, or security—they are about a burgeoning war between a consortium of merchants, led by Walmart, and the credit card companies. Rite-Aid, CVS, Walmart, Best-Buy and about 50 other retailers have been working on their own mobile payments system, called CurrentC. Unlike Apple Pay, which works in conjunction with Visa, Mastercard, and American Express, CurrentC cuts out the credit card networks altogether. The benefit to the merchants is clear: They would save the swipe fees they pay to the credit card companies now, which average about two percent of the cost of transactions.
CurrentC is also likely to allow merchants to gather data about transactions and offer discounts and loyalty programs. This stands in marked contrast to the anonymity built into Apple Pay, which has drawn concerns even from some merchants who are actively supporting the system.

Apple chief executive Tim Cook would be happy to have this fight with MCX’s backers. When he introduced Apple Pay last month, Cook said mobile payments had failed so far because they were built to serve the business models of their creators, rather than to provide a useful experience for customers. Because Apple’s primary goal is to sell more phones, tablets, and laptops, its system is more straightforward.

Rite-Aid and CVS screwed up the optics on this one. It’s hard to argue that you’re doing right by your customers when you stop accepting a form of payment that you’ve already demonstrated presents no technical hurdles. They also don’t have an alternative to offer. CurrentC isn’t expected to be ready until 2015, and the specifics of the system aren’t public.
The irony of this conflict is that Apple, the innovator, is in the position of endorsing the status quo. Walmart and its brick-and-mortar allies, on the other hand, are actively trying to turn the payments industry on its head and challenge the entrenched power of the credit card networks. Apple is happy to help the incumbents make the existing system feel slicker to customers, without touching the underlying economics. In return, American Express, Visa, and Mastercard have been solidly in Apple’s corner.

Service Now BUY

NOW : NYSE : US$58.07
BUY 
Target: US$72.00 

COMPANY DESCRIPTION:
ServiceNow is a leading provider of cloud-based services
that automate enterprise IT operations — this includes a
suite of applications built on the firm’s proprietary
platform that automates workflow and provides
integration between related business processes.
ServiceNow was founded in 2004, is headquartered in
San Diego, CA and has been public since June 2012.

Technology — Enterprise Software — Infrastructure
PREMIUM EXECUTION FROM A PREMIUM COMPANY; REITERATE BUY
Investment thesis
Whether we get a Q4 software rally or not, we continue to believe that the first place
investors will look is going to be open-ended, leading growth firms in relatively
uncrowded segments. This describes ServiceNow. While more than 9x revenues on
2015E is at the high end of where we like to recommend the most premium growth
names, we believe NOW warrants the premium. Indeed, even with a likely
degradation of the multiple, we believe this stock should easily generate more than
20% upside over the coming 12 months. Reiterate BUY.

No surprises here, another upside quarter. NOW reported strong Q3/14 results
with revenue of $178.7M (+61% y-o-y) and operating income of $10.2M, which
were respectively $3.7M and $8.0M ahead of our estimates
Calculated billings of $200.7M (+ 58% y-o-y) were $2.3M better than our Street-high
forecast and well ahead of management’s $190-193M guidance.
 Customer metrics. Average revenue per user was $275K, up 21%

Outlook: momentum continues,

 

inching forecasts higher again. NOW’s Q4/14
guidance set expected revenues roughly $1.5M ahead of our previous estimate
(despite a $4M FX headwind) and calculated billings ~$10M ahead. Our revised
Q4/14 revenue and billings estimates imply respective y-o-y growth of 55% and
50%. We have similarly increased our C2015 revenue and FCF estimates by
$7M and $25M to $940M (+39%) and $127M, or $0.74 per share

Broadcom Update :BUY Target Price $46

BRCM : NASDAQ : US$37.33
BUY 
Target: US$46.00

Technology — Hardware — Semiconductors and Related Technologies
STRONG QUARTER DRIVEN BY CONNECTIVITY GROWTH AND RESILIENT SERVICE PROVIDER
RESULTS; ALL EYES TOWARD ANALYST DAY

Investment recommendation:

Broadcom posted strong Q3/14 results with sales above our estimate driven by strong 20% Q/Q growth in Connectivity
sales with the inclusion of new 802.11ac WiFi solutions in key smartphone
launches including iPhone 6. Further, service provider sales were down only
roughly 2.5% Q/Q, better than feared given recent market commentary.
Finally, faster operating expense reductions post the decision to shut down
the cellular baseband business helped drive a solid beat on the bottom line.
We believe the stock will likely rebound post the recent sell-off in the group
and all eyes will then turn to Broadcom’s December 9 analyst day for future
growth strategy and increased capital returns commentary. We reiterate our
BUY rating and raise our target to $46 from $45 on increased estimates.

Investment highlights

 Q3/14 revenue of $2.26B was above our and consensus estimates of
$2.18B (see Figure 1) driven by a surprising rebound in baseband sales,
20% Q/Q Connectivity growth, and only a roughly 2.5% Q/Q service
provider sales decline in ING versus. Non-GAAP gross margin of 54.3%
was a bit below 55% guidance midpoint, but was very strong
considering the unexpected increase in baseband sales (roughly a 170
basis point gross margin headwind in total) and a greater mix of
Connectivity sales to large customers. We believe additional upside
exists to gross margin into 2015 for Q4/14 guidance of 55%. Non-GAAP
operating expenses were $10M below our estimate at $646M, and
management expects another $50M reduction in Q4/14 as baseband
costs continue to be wound down. Non-GAAP EPS was $0.91, $0.07
above our estimates and consensus.
 Given these significant cost savings of the baseband exit, we believe
gross margin can remain in the mid-to-high 50s and operating margin
will expand into the mid-to-high-20s during 2015. We maintain our
belief Broadcom’s core Home and Infrastructure businesses are well
positioned for solid growth and will benefit further from increased
management attention and investment post the baseband exit.

Valuation:

Our $46 price target is based on shares trading at roughly 14x
our 2015 pro forma non-GAAP EPS estimate.

Apple Update Target Price $ 120

AAPL : NASDAQ : US$99.76
BUY 
Target: US$120.00

Technology — Communications Technology — Wireless Equipment
STRONG RESULTS; RECORD IPHONE 6 UPGRADE CYCLE DRIVES SOLID Q1/F’15 GUIDANCE

Investment recommendation:

Apple reported strong September quarter results above our and consensus estimates. Consistent with our surveys
indicating very strong global iPhone 6 demand with limited supply, Apple
issued strong Q1/F’15 EPS guidance slightly above our estimates as Apple is
currently selling all iPhone 6 devices it can produce. Please see our October
13 report titled “Monthly surveys indicate very strong iPhone 6/6 Plus
demand; limited supply” for more details on our survey work.

We maintain our expectations for a record iPhone 6 upgrade cycle driven by strong
replacement sales to existing iPhone customers and strong high-end
smartphone market share gains due to our surveys indicating a greater mix
of Android smartphone consumers switching to the iPhone 6 smartphones
than during the iPhone 5 series launches. Mac sales were also above our
expectations as Apple gained material PC market share during the important
back-to-school season. We reiterate our BUY rating and increase our price
target to $120 from $115.

Investment highlights

 Apple reported Q4/F’14 sales of $42.1B and EPS of $1.42, above our
$39.7B/$1.28 and consensus of $40.0B/$1.30. The strong results were
driven primarily by stronger iPhone sales of 39.3M units at $606 ASP
versus our above-consensus 37.7M/$574 estimates.
 We believe Apple’s Q1/’15 sales guidance in the range of $63.5-66.5B
was adversely impacted by F/X from the stronger dollar and iPhone
demand well above Apple’s ability to supply throughout the December
quarter. Our updated estimates are at the high-end of Apple’s guidance
due to our surveys indicating an increasing sales mix of higher-ASP
64GB (versus 16GB) iPhone 6/6 Plus SKUs combined with a growing
demand for the higher-ASP iPhone 6 Plus, particularly in China. We
anticipate materially higher iPhone ASPs during Q1/F’15 and maintain
above-consensus iPhone ASP of $680 adjusting for deferred revenue.
 Given the strong results and guidance, we maintain our bullish F2015
product cycle thesis and raise our F’15/F’16 EPS estimates from
$7.77/$8.19 to $8.00/$8.50.

Valuation:

Our $120 price target is based on shares trading at roughly 14x
our F2016 EPS estimate.

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