>>> Asian Update

Asian Market Update: Equities mixed as investors assess Portugal contagion risks

***Economic Data***
- (AU) AUSTRALIA MAY HOME LOANS M/M: 0.0% V -0.5%E; INVESTMENT LENDING: -0.9% V +1.3% PRIOR; OWNER-OCCUPIED LOAN VALUE: -0.7% V +1.3% PRIOR
- (NZ) NEW ZEALAND JUN FOOD PRICES M/M: 1.4% (1-year high) V 0.6% PRIOR
- (NZ) NEW ZEALAND JUN NON-RESIDENT BOND HOLDINGS: 64.2% V 64.6% PRIOR
- (PE) PERU CENTRAL BANK CUTS REFERENCE RATE BY 25 BPS TO 3.75% (vs EXPECTED HOLD AT 4.00%)

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.3%, S&P/ASX +0.5%, Kospi -0.5%, Shanghai Composite +0.5%, Hang Seng +0.2%, Sept S&P500 +0.1% at 1,958

***Commodities/Fixed Income/Currencies***
- Aug gold flat at $1,339, Aug crude oil flat at $102.91/brl, Sept Copper flat at $3.27/lb
- GLD: SPDR Gold Trust ETF daily holdings falls 0.2 tonnes to 800.1 tonnes (first decline since June 17th)
- (JP) BOJ offers to buy ¥300B in 1-3yr JGB, ¥200B in 3-5yr JGB, ¥100B in 10-25yr JGB, ¥30B in JGB with maturity over 25-yr as well as ¥3T in T-bills
- (AU) Australia MoF (AOFM) sells A$500M in 3.25% bonds due 2018; Avg yield: 2.8022%; Bid-to-cover: 4.61x
- Weekly Fed Balance Sheet Total Assets Week ending July 9th: $4.38T v $4.38T prior; Reserve Bank Credit: $4.34T v $4.33T prior; M1 y/y change: 10.9% (10-month high) v 10.7% w/w; M2 y/y change: 6.4% (7-month high) v 6.3% w/w

***Market Focal Points/Key Themes***
- Cautious sentiment remains prevalent in the final trading session of the week, with turmoil in Portugal adding to valuation concerns. The yield on the Portuguese 10-year bond spiked over 20bps (up for the 4th session) after Banco Espirito Santo SA suspended trading in its shares due to a missed debt payment. Portugal central bank said it can avoid contagion risks, while a separate press report stated BES is defending itself by announcing it has a €2.1B capital buffer above minimum Common Equity Tier 1 threshold.

- In his first address since being confirmed as the Fed vice chair, Fisher spoke on financial reform, stating it may be appropriate for the Fed to raise big bank capital surcharges and offering support for stress tests and tighter capital rules. In the Q/A segment, he noted he does not think US faces serious asset price problems, which could potentially diminish market perception of Fisher being much more hawkish than Fed chair Yellen.

- Australia's 3rd biggest iron ore miner Fortescue announced Q4 shipments of 38.7Mt. This is up from 31.5Mt in Q3, however the final FY volume of 124.2Mt is below the most recent target of 127Mt. FMG shares were down nearly 1% in Sydney. In Tokyo, Canon started higher by over 3% after a Nikkei report that it would post a 10% increase in Q2 op profit - a 5th consecutive quarter of rising profitability.


***Equities***
US markets:
- JOEZ: Reports Q2 $0.01 v -$0.02e, R$48.2M v $49.0Me; +15.5% afterhours
- CUDA: Reports Q1 $0.07 v $0.03e, R$66.2M v $64.2Me; Guides Q2 $0.03-0.04 v $0.03e, R$66-67M v $64.4Me; Guides FY15 $0.14-0.18 v $0.14e, R$270-274M v $270Me - slides; +1.5% afterhours
- CVX: Issues interim Q2 update: Earnings to be higher than Q1 (implies >$2.36 v $2.78e); +0.2% afterhours
- GPS: Reports June SSS -2% v -0.8%e; -1.3% afterhours
- PSMT: Reports Q3 $0.70 v $0.70e, R$615M v $626Me; -4.4% afterhours
- RCII: Reports prelim Q2 $0.36-0.38 (Ex $0.05 restructure charge) v $0.49e, R$773M v $788Me; launches rent-to-own smartphone offering; -11.4% afterhours
- BABA: May start IPO roadshow as early as the end of July - financial press

Notable movers by sector:
- Consumer Discretionary: Fast Retailing 9983.JP -0.8% (Q3 results); Anhui Jianghuai Automobile 600418.CN +10.0% (announces asset restructure)
- Financials: Sinolink Securities 600109.CN +1.9% (H1 guidance)
- Materials: Sichuan Shuangma Cement 000935.CN +3.3% (H1 guidance); FMG.AU -0.6% (Q4 shipment results)
- Energy: Datang International Power Generation 991.HK -1.0% (H1 power generation results); Roc Oil ROC.AU +4.0% (received 2nd proposal)
- Technology: Canon 7751.JP +2.5% (speculation on Q2 results); Unilumin Group 300232.CN +10.0% (H1 guidance); Pegatron 4938.TW +2.5% (June results); Taiwan Semiconductor 2330.TW +1.9% (press speculation on cooperation with Apple on processor development)

>>> US Close Dow -0,42% S&P-0,41% Nasdaq -0,52%

Closing Market Summary: Stocks Retreat Amid Concerns About Earnings and Europe

The stock market stumbled on Thursday, but a daylong rebound off the opening lows helped the major averages erase the bulk of their losses. The Russell 2000 was the weakest performer, falling 1.1%, while the S&P 500 settled lower by 0.4% after being down as much as 1.0% at the open.

The early stumble was not brought upon by any specific headline, but rather a series of developments that caused investors to reduce their exposure to equities. In Asia, China reported below-consensus exports (7.2% versus expected 10.6%) and imports (5.5% versus expected 5.8%), while Japan's Core Machinery Orders tumbled 19.5% against the expectations of an uptick of 0.7%.

As the night continued, news from Europe caused an exodus from regional equities (mainly financials) amid worries about Portugal's banking system after the parent company of Banco Espirito Santo missed a bond payment. Portugal's PSI 20 fell 4.2%, while Germany's DAX and Spain's IBEX lost 1.5% and 2.0%, respectively.

Domestically, participants received a sliver of good news on the economic front as weekly initial claims decreased to 304,000 (consensus 311,000); however, headlines out of the corporate world were not nearly as upbeat.

With the second-quarter earnings season set to heat up next week, two consumer discretionary components primed the market for disappointing results. Shares of Potbelly (PBPB 10.97, -3.68) plunged 25.1% to a new record low after the company said it expects its revenue to come in below estimates, while also guiding for a 1.6% decline in comparable store sales.

Yesterday, the CEO of The Container Store (TCS 24.58, -0.22) provided some cautious comments about the retail environment as a whole, and today his remarks were echoed by Lumber Liquidators (LL 55.25, -15.17). The home improvement retailer said that customer traffic during the quarter was well below expectations, which will result in disappointing results. The stock sank 21.5%, while peers Home Depot (HD 79.40, -1.33) and Lowe's (LOW 47.20, -0.66) both lost near 1.5%.

The relative weakness of the discretionary sector (-0.9%) was not enough to scare dip-buyers away. After putting in a session low during the first 15 minutes of the action, the S&P 500 spent the trading day in a steady rally that allowed the index to reclaim more than half of its losses. A rebound in the heavily-weighted health care (unch) and technology (-0.3%) sectors contributed to the partial recovery, but energy (-1.0%) and financials (-0.6%) were reluctant participants in the bounce, which prevented the S&P 500 from turning positive.

Treasuries, meanwhile, rallied throughout the night, registered their highs shortly before the start of the session, and spent the remainder of the day in a retreat. The 10-yr note trimmed its gain to four ticks, while the benchmark yield slipped two basis points to 2.54%.

Participation was below average with 640 million shares changing hands at the NYSE floor.

Economic data was limited to weekly initial claims and the Wholesale Inventories report for May:
  • The initial claims level fell to 304,000 from an unrevised 315,000, while the Briefing.com consensus expected the claims level to fall to 311,000 
    • Over the past several weeks, claims have stabilized between 310,000 and 320,000. While claims came in below this level, it was likely due to normal volatility stemming from the Independence Day holiday and not a change in trend 
    • The continuing claims level increased to 2.584 million from a downwardly revised 2.574 million (from 2.579 million), while the consensus expected continuing claims to slip to 2.567 million 
  • Wholesale inventories increased 0.5% in May following a downwardly revised 1.0% (from 1.1%) in April. The consensus expected wholesale inventories to increase 0.5% 
    • The increase in inventories came predominantly from a 1.9% increase in automotive inventories and a 2.1% increase in metals 
Tomorrow, the June Treasury Budget (consensus $70.00 billion) will be reported at 14:00 ET.
  • S&P 500 +6.3% YTD 
  • Nasdaq Composite +5.3% YTD 
  • Dow Jones Industrial Average +2.0% YTD 
  • Russell 2000 -0.1% YTD

>>> Closing Commodities: Nat Gas Slides 1.2% On Inventory Data

Closing Commodities: Nat Gas Slides 1.2% On Inventory Data
* Precious metals traded higher today, gaining support on concerns over Portugal's banking system after the parent company of Banco Espirito Santo missed a bond payment.
* Aug gold touched a session high of $1346.80 per ounce in early morning action and settled with a 1.1% gain at $1339.50 per ounce.
* Sep silver advanced as high as $21.61 per ounce and eventually closed at $21.51 per ounce, or 2.1% higher.
* Aug crude oil chopped around slightly below the unchanged line in morning action but lifted into positive territory later in the session despite strength in the dollar index. The energy component touched a session high of $103.04 per barrel after trading as low as $101.86 per barrel. It settled with a 0.7% gain at $102.92 per barrel.
* Aug natural gas fell into the red from its session high of $4.19 per MMBtu following inventory data that showed a build of 93 bcf when a build of 90-92 bcf was anticipated. It eventually settled with a 1.2% loss at $4.12 per MMBtu, just above its session low of $4.11 per MMBtu.

>>> SYMC - Strength attributed to M&A blog highlighting renewed Private Equity i

Strength attributed to M&A blog highlighting renewed Private Equity interest 

**NOTE Apr 15th: SYMC: Management problems at the company still said to be attracting the interest of activists and potential suitors - financial press 
- Bain, Blackstone and Carlyle said to be interested in potentially conducting a leverage buyout of all or part of the company. PE firms are said to have made preliminary approaches to management but sources say no serious discussions are currently underway.

>>> ECB's Nowotny: Reiterates there is no need for further ECB action in the nea

ECB's Nowotny: Reiterates there is no need for further ECB action in the near future, inflation expectations are well anchored 
- ECB measures are responsible for freezing EUR appreciation 
- Reiterates ECB needs to stop and watch results from June decision 
- ECB needs to either agree on an ABS plan or drop ABS proposals before the end of 2014 
- Monetary policy has its limits 
- ECB needs to stick to forward guidance in the low inflation environment

>>> FDO - Carl Icahn: In light of its record and looming competition, Family Dol

Carl Icahn: In light of its record and looming competition, Family Dollar needs a partner; feeling cautious about the broader US stock markets - press 
- Icahn believes its about time to be cautious about the US stock market, being selective about which firms he buys 

**Reminder: On June 6th, Icahn said he would push for FDO to look for merger, possibly with DG. On June 19th, Icahn disclosed an amended stake and new letter to the company, urged the immediate sale of the company and asked for three board seats

WSJ : No End to Jetliner Boom, Says Boeing

No End to Jetliner Boom, Says Boeing
Aeropace Group Raises its 20-Year Market Forecast to $5.2 Trillion from $4.8 Trillion Seen a Year Ago

LONDON— Boeing Co. BA -0.80% says there is no end in sight for the boom in demand for new passenger jets.

The U.S. aerospace has raised its forecast for growth in the market for new jetliners to nearly 37,000 planes worth $5.2 trillion over the next 20 years compared with its previous 20-year forecast of around 35,000 jets worth $4.8 trillion.

Boeing said on Thursday that the main driver of growth is airline demand for smaller passenger jets as operators scramble to order smaller, more fuel-efficient aircraft to cater for rising volumes of budget travelers notably in Asia.

Boeing's 20-year estimate of a $2.56 trillion market for 25,680 single-aisle aircraft like its own 737 jetliner and Airbus Group's A320 is up 4.1% from its 2013 forecast.

The plane maker expects three billion people to travel by air in 2014, and that number to double to more than seven billion people in 2033, largely in the Asia Pacific region.

Jetliner demand is "strong and resilient" despite industry concerns about over-ordering, said Boeing's vice president of marketing, Randy Tinseth.

Around 40% of that demand will go to fast-growing low-cost carriers across the globe, said Mr. Tinseth.

Boeing also anticipates air travel inside of China will overtake the U.S. as the single busiest market sometime between 2023 and 2033 in the second half of its forecast. About 40% of the 13,460 aircraft needed in Asia will go to China, estimates Boeing.

The company's enthusiasm will get its first test next week when the aerospace industry gathers at the Farnborough Air Show, to be held near London. Deloitte's consulting arm expects 500 jetliners will be ordered at the show, which kicks off on July 14.

The jetliner market can be difficult to forecast and Boeing acknowledges its earlier long-term expectations have underestimated demand.

Airlines looking to grow their fleets will account for 21,270, or 58%, of deliveries, with the balance going for the replacement of existing aircraft. Airbus is equally bullish about demand. It last issued its own forecast in September.

Boeing and Airbus, which are building jets at record rates, as well as manufacturers in Brazil, Canada, Russia, China and Japan are vying for about 16,000 orders for single-aisle aircraft that will need to be placed to match Boeing's 20-year expectation.

Still, growth in the market for new planes will be uneven, Boeing said.

For the third year running, Boeing has reduced its 20-year expectation for the market for the biggest jets in the world. The Airbus A380 superjumbo and 747-8 have been slow sellers in recent years and U.S. plane maker now expects passenger and cargo airlines will only need 620 of the largest jets, down from 760 forecast in 2013.

A sluggish cargo market has depressed orders in recent years for dedicated freighter aircraft built by Boeing and Airbus. The market recently has shown signs of recovery, but Boeing now forecasts 4.7% average annual growth in cargo traffic, down from its 5% expectation last year.

>>> NESN - Completes acquisition of Valeant rights to aesthetic dermatology prod


Completes acquisition of Valeant rights to aesthetic dermatology products in the US and Canada 
- As a result of the successful conclusion of the regulatory process and customary closing conditions, Nestltoday completed its acquisition of Valeant Pharmaceuticals International's commercialisation rights to several key injectable aesthetic dermatology products in the US and Canada, as announced on 28 May 2014. These rights will be integrated into NestlSkin Health and commercialised by Galderma.