MORNING NEWS CALL

TOP NEWS
• Netflix record subscriber growth dispels Wall Street worries
Netflix hooked 7 million new streaming subscribers from July to September, a third more than Wall Street had expected, reassuring
investors who had worried the company was facing a slowdown in its fast-paced growth.
• Tesla secures Shanghai site for $2 bln China Gigafactory
Tesla has signed an agreement with the Shanghai government for an 860,000 square metre plot of land to build its first overseas
Gigafactory, the electric carmaker said in a Chinese social media post.
• U.S. Bancorp quarterly profit rises 17 pct
Regional lender U.S. Bancorp reported a 17 percent rise in quarterly profit, driven by higher interest income and lower taxes.
• U.S. oil service firms face tough quarter despite high crude prices
Even as crude prices hover near four-year highs, U.S. oilfield service firms' third-quarter results due out in coming days will reflect a
shaky recovery, as their customers face drilling constraints and pressure to hold down spending.
• Express Scripts covers Amgen, Lilly migraine therapies, excludes Teva drug
Express Scripts Holding, one of the largest U.S. prescription benefits managers, will cover new migraine drugs from Eli Lilly and
Amgen , but is excluding a rival medication made by Teva Pharmaceutical Industries after price negotiations with all three manufac-
turers.

BEFORE THE BELL

Stock futures for U.S. stock indexes fell, a day after Wall Street experienced its best one-day rise in eight months amid forecast-
beating U.S. company earnings. The upbeat results improved the mood on Asian equity markets, pushing most shares higher. Eu-
ropean stocks were little changed, putting aside concerns on global growth and trade. The dollar edged higher ahead of the release
of Fed minutes later in the day. Oil prices steadied after three days of gains and gold prices rose. Housing starts and building permits
data are due on the economic calendar.

STOCKS TO WATCH
Results
• CSX Corp (CSX). The company on Tuesday reported quarterly profit that topped Wall Street's view and raised its full-year revenue
forecast, as the No. 3 U.S. railroad operator benefited from ongoing cost-cutting and higher prices for moving freight. Third-quarter
revenue increased 14 percent from a year ago to $3.13 billion.
• IBM Corp (IBM). The company reported a bigger-than-expected drop in revenue on Tuesday, hit by slowing software sales and
wavering demand for mainframe servers, pointing to a bumpy recovery for the technology services giant that is in the midst of a turna-
round. Net income fell to $2.69 billion, from $2.73 billion a year earlier. IBM's cognitive software business, which houses artificial intel-
ligence platform Watson, analytics and cybersecurity services, had sales of $4.15 billion, down 6 percent from a year earlier.
• Netflix Inc (NFLX). The company hooked 7 million new streaming subscribers from July to September, a third more than Wall
Street had expected, reassuring investors who had worried the company was facing a slowdown in its fast-paced growth. Netflix's net
income rose to $402.8 million, or 89 cents per share, in the third quarter. For the current quarter, the company forecast it will add 1.8
million customers in the United States and 7.6 million in international markets. "We want to assure investors that we have the same
high confidence in the underlying economics as our cash investments in the past," Netflix said in its letter.
• United Continental Holdings Inc (UAL). The airline posted solid third-quarter profit on Tuesday and raised its 2018 outlook for the
third time this year, helped by its strategy to add flights at three mid-continent U.S. hubs: Chicago, Denver and Houston. The compa-
ny forecast adjusted profit for the full year at between $8.00 and $8.75 per share, up from its previous range of $7.25 to $8.75 per
share.
• U.S. Bancorp (USB). The U.S regional lender reported a 17 percent rise in quarterly profit, driven by higher interest income and
MORNING NEWS CALL

lower taxes. Net income attributable to the bank's common shareholders rose to $1.73 billion, or $1.06 per share, in the third quarter
from $1.49 billion, or 88 cents per share, a year earlier. Total net revenue rose to $5.7 billion from $5.57 billion.

Deals of the day

• Sprint Corp (S). The U.S. wireless carrier has sold the mobile data and advertising company it created in 2012 to InMobi, which
provides technology for marketers, in an all-stock deal, the companies said. The company is selling the company called Pinsight Me-
dia as it awaits regulatory approval to sell itself to larger rival T-Mobile US. The value of the Pinsight deal was not disclosed. Pinsight
uses data from wireless carriers to help companies better target ads on smartphones to the right audiences.

In Other News
• Alphabet Inc (GOOGL). Google on Tuesday revamped how it distributes its mobile apps in the European Union, introducing a li-
censing fee for device makers to access its app marketplace in a response to regulators' findings that it had broken antitrust law. "The
new arrangement simply changes the implicit exchange of value - access to the Play store in return for preinstalling Google Search
and Chrome - into an explicit one," of license fees, said James Cordwell, a financial analyst at Atlantic Equities. Separately, Google-
owned YouTube said a widespread issue with some of its services has been resolved, almost two hours after several people took to
social media to complain about broadcasting issues. YouTube did not say what caused the outage.
• Baidu Inc (BIDU). The search engine has become the first Chinese company to join an artificial intelligence ethics group led by top
U.S. tech firms, amid wider political clashes over AI competition between China and the United States. "Baidu's admission represents
the beginning of PAI's entrance into China. We will continue to add new members in China and around the world as we grow," said
The Partnership on AI in a statement on Tuesday.
• BHP Billiton Ltd (BHP). The company has not seen a material impact from current global trade tensions on its business but re-
mains cautious in the near term, the world's biggest miner said. "We closely monitor the external environment, in particular the market
volatility triggered by current global trade tensions. Though we have not seen a material impact on our business, we remain cautious
in the near term," Chairman Ken MacKenzie said in prepared remarks released ahead of the company's annual general meeting in
London.
• Equifax Inc (EFX). A former manager of the company was sentenced to eight months of home confinement over insider trading
charges related to last year's data breach at the credit monitoring firm. U.S. District Court Judge Amy Totenberg on Tuesday ordered
Sudhakar Bonthu to forfeit $75,979 and also pay a $50,000 fine.
• Express Scripts Holding Co (ESRX). The company, one of the largest U.S. prescription benefits managers, will cover new mi-
graine drugs from Eli Lilly and Amgen, but is excluding a rival medication made by Teva Pharmaceutical Industries after price negoti-
ations with all three manufacturers. The decision represents a setback for Teva, which is in the midst of a corporate restructuring and
had hoped to capture a sizable stake of the multibillion-dollar migraine market. Express Scripts is also taking steps to limit use to the
patients it says are most likely to benefit from the new Amgen and Lilly migraine drugs.
• Facebook Inc (FB) . The iconic MTV reality series, which ran for 32 seasons between 1992 and 2017, will return as three interac-
tive series on Facebook in the United States, Mexico and Thailand early next year, MTV will announce at Mipcom, the annual televi-
sion industry trade show in Cannes, France. The show will be shown exclusively on the Facebook Watch service, and will include
interactive elements that let viewers shape the show. It will be co-produced by MTV and owned by Viacom and Bunim/Murray Pro-
ductions, the studio behind the original series.
• Target Corp (TGT). The company will dedicate nearly a quarter of a million square feet of new space to its toy business across 500
of its stores, the retailer said on Tuesday, part of an effort to win more holiday sales.The discount chain's customers will also be able
to shop more than 2,500 new and exclusive toys, Mark Tritton, Target’s executive vice president and chief merchandising officer told
reporters on a call.
• Tesla Inc (TSLA). The company has signed an agreement with the Shanghai government for an 860,000 square metre plot of land
to build its first overseas Gigafactory, the electric carmaker said in a Chinese social media post."Securing this site in Shanghai, Tes-
la's first Gigafactory outside of the United States, is an important milestone for what will be our next advanced, sustainably developed
manufacturing site," Robin Ren, Tesla's vice president of worldwide sales, said in a statement.
• Uber Technologies Inc (UBER). The company has increased the size of its debut bond offering to $2 billion as orders for the pri-
vate placement swelled, Bloomberg reported on Tuesday, citing people with knowledge of the sale. The offering includes a $1.5 bil-
lion portion of eight-year bonds, up from an originally planned $1 billion. Separately, the company is considering selling minority
stakes in its costly self-driving car unit as the ride-hailing company tries to address rising cost pressures ahead of its initial public of-
fering, the Financial Times reported. The company also said it will connect passengers and drivers directly to emergency services in

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MORNING NEWS CALL

Europe, the Middle East, and Africa as part of a wider rollout of largely existing safety features over the next few weeks.
• United States Steel Corp(X). The company’s workers are set to get the biggest wage jump in at least six years under a new deal
negotiated with the company, providing early signs that gains from U.S. President Donald Trump's clampdown on foreign imports are
finally trickling down. The agreement, reached on Monday, proposes a cumulative 14 percent wage increase over a four-year period,
three sources familiar with details of the negotiations told Reuters on Tuesday.
• Xerox Corp (XRX). Japan's Fujifilm has won an appeal in its legal battles with Xerox, with a New York court overturning preliminary
injunctions requested by an activist investor that had blocked their planned merger. Its chances of success are, however, unclear as
Xerox's new management, backed by Icahn and Deason, is opposed to the proposed merger.

ANALYSIS
Fintech making inroads, but U.S. bank revenues little changed -report
Financial technology startups and other new entrants are making inroads in the U.S. banking market, but have yet to capture a threat-
ening share of bank revenues, according to research published by Accenture.

ANALYSTS' RECOMMENDATION
• Domino's Pizza Inc (DPZ). Barclays cuts target price to $255 from $262 after the company reported third-quarter results below
expectations amidst intensifying competition from Pizza Hut and other food delivery upstarts.
• J&J (JNJ). Credit Suisse raises target price to $152 from $149 following the company’s strong third-quarter results driven by rising
sales of its cancer drugs Zytiga and Darzalex.
• Morgan Stanley (MS). Evercore ISI cuts target price to $58 from $62 citing weak revenue growth in the company’s investment
banking segment in the third-quarter.
• UnitedHealth Group Inc (UNH): Jefferies raises target price to $315 from $311 citing the company’s assessment on continued 13-
16 percent growth in earnings per share in 2019.

ECONOMIC EVENTS (All timings in U.S. Eastern Time)

0830 Building permits number for Sept: Expected 1.278 mln; Prior 1.249 mln
0830 Build permits change mm for Sept: Prior -4.1 pct
0830 Housing starts number for Sept: Expected 1.220 mln; Prior 1.282 mln
0830 House starts mm change for Sept: Prior 9.2 pct

COMPANIES REPORTING RESULTS

Abbott Laboratories (ABT). Expected Q3 earnings of 75 cents per share
Crown Castle International Corp (CCI). Expected Q3 earnings of 27 cents per share
Kinder Morgan Inc (KMI). Expected Q3 earnings of 21 cents per share
Northern Trust Corp (NTRS). Expected Q3 earnings of $1.61 per share
SL Green Realty Corp (SLG). Expected Q3 earnings of 39 cents per share
United Rentals Inc (URI). Expected Q3 earnings of $4.56 per share

CORPORATE EVENTS (All timings in U.S. Eastern Time)

0900 Abbott Laboratories (ABT). Q3 earnings conference call
0900 Signature Bank (SBNY). Shareholders Meeting
0900 U.S. Bancorp (USB). Q3 earnings conference call
1000 Northern Trust Corp (NTRS). Q3 earnings conference call
1030 United Continental Holdings Inc (UAL). Q3 earnings conference call
1100 M&T Bank Corp (MTB). Q3 earnings conference call
1630 Kinder Morgan Inc (KMI). Q3 earnings conference call
1700 Alcoa Corp (AA). Q3 earnings conference call

EXDIVIDENDS
Acuity Brands Inc (AYI). Amount $0.13

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MORNING NEWS CALL

PICTURE OF THE DAY

U.S. Secretary of Defense Jim Mattis (R) is greeted by Vietnam's Air Force Deputy Commander General Bui Anh
Chung (2nd R) while he visits Bien Hoa airbase, where the U.S. army stored the defoliant Agent Orange during the
Vietnam War, in Bien Hoa city, outside Ho Chi Minh city, Vietnam October 17. REUTERS/Kham

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