>>> Asian Update

Asian Market Update: China industrial profits growth slows further; Fonterra lowers milk price for FY14 by 20%

***Economic Data*** - (CN) CHINA APR INDUSTRIAL PROFITS Y/Y: 9.6% V 10.7% PRIOR; YTD Y/Y: 10.0% V 10.1% PRIOR - (AU) AUSTRALIA APR WESTPAC LEADING INDEX M/M: -0.5% (biggest decline in 5 years) V 0.0% PRIOR - (AU) AUSTRALIA Q1 CBA/HIA HOUSE AFFORDABILITY: 77.2 V 75.6 PRIOR (best affordability in 12 years) - (AU) AUSTRALIA Q1 CONSTRUCTION WORK DONE Q/Q: +0.3% v -0.5%E - (NZ) NEW ZEALAND MAY ANZ ACTIVITY OUTLOOK: 51.0 V 52.5 PRIOR; ANZ BUSINESS CONFIDENCE: 53.5 (3rd consecutive decline; 6-month low) V 64.8 PRIOR

Market Snapshot (as of 03:30 GMT): - Nikkei225 flat, S&P/ASX +0.4%, Kospi +0.5%, Shanghai Composite flat, Hang Seng +0.5%, Jun S&P500 flat at 1,909, Jun gold -0.1% at $1,264, Jul crude oil +0.1% at $104.19/brl

***Highlights/Observations/Insights*** - Fonterra finalizes its milk price for FY13/14 at NZ$8.40/kg, down from NZ$8.65/kg prior estimate, and also initiates FY14/15 forecast at NZ$7.00/kg. Co-op continues to see China demand remaining strong, anticipating about 2% growth in overall milk production for the coming season. ANZ economists noted the price cut was not as steep as markets had feared, briefly sending NZD slightly higher.

- China April industrial profit growth slowed to single digits y/y and also incrementally softer on YTD basis. Research notes from mainland analysts and the CICC varied on the viability of a more aggressive policy easing in the shape of a RRR cut - the former leaning in favor and the latter arguing in support of a more low-profile and targeted monetary easing.

- Commentary accompanying Australia's Westpac leading index from resident economist warned that the data show a "slowdown corroborated across all components (which) is a strong indication that a genuine slowdown is underway." Note Australia will put out its critical private CAPEX survey from the ABS, widely regarded as a powerful gauge of business appetite for risk as well as the health of the mining industry.

***Speakers/Political/In the Papers*** - (CN) China National Development and Reform Commission (NDRC): China's high level of iron ore inventory to continue - financial press - (CN) Slowdown in China housing market adds the chance to a RRR cut; Chance for a loose monetary policy still low - Chinese press - (CN) China Pres Xi Jinping: Both the "invisible hand" and the "visible hand" should be well used - Xinhua - (JP) BOJ Gov Kuroda: critical to balance policy flexibility and commitment in forward guidance - BOJ conf (Tokyo) - (US) Fed's Lockhart (moderate, FOMC alternate): Expects first raise in main rate in H2 2015; Expects Fed to halt QE in Q4 2014; Sees 3% GDP growth over next several quarters

***Fixed Income/Commodities/Currencies*** - (JP) BOJ offers to buy ¥250B in 1-3yr JGB, ¥250B in 3-5yr JGB and ¥170B in JGB with maturity over 10-yr - (AU) Australia sells A$700M in bonds due 2027; Avg yield: 3.9479%; Bid-to-cover: 3.02x - GLD: SPDR Gold Trust ETF daily holdings rise 8.4 tonnes to 785.3 tonnes (first rise since May 15th)

- USD majors were largely confined to thin post-holiday ranges with the exception of the kiwi dollar. NZD/USD initially rose some 30pips above $0.8570 as New Zealand's Fonterra payout cut for the current year and next year were not as steep as feared, but retreated back below $0.8550 later in the day. USD/JPY backed away from the ¥102 handle, sliding some 10pips to ¥101.90, while EUR/USD consolidated the moderate selling in the US session to trade within the $1.3620-40 band. AUD/USD traded about 10pips on either side of $0.9260 amid mixed economic data from Australia and China.

***Equities*** US markets: - WDAY: Reports Q1 $0.13 v -$0.15e, R$159.7M v $153Me; +8.7% afterhours - QIHU: Reports Q1 $0.54 v $0.34e, R$265.1M v $222Me; +6.0% afterhours - URBN: Announces Authorization to Repurchase 10M (7.3% of outstanding) Shares; +0.3% afterhours

Notable movers by sector: - Consumer Discretionary: Sands China 1928.HK -2.2% (shareholder offers shares); Ajinomoto 2802.JP +2.0% (to use marine or rail shipping in long distance) - Consumer staples: Fonterra FCG.NZ +0.3% (announces payout prices) - Financials: Goodpack GPACK.SG +4.3% (KKR makes offer); China Vanke 000002.CN +1.1% (cuts price in Guangzhou) - Industrials: Shanghai Prime Machinery 2345.HK -3.6% (announces acquisition) - Technology: GRG Banking Equipment 002152.CN +10.0%, Guangzhou KingTeller Technology 002177.CN +10.0%, Inspur Electronic Information Industry 000977.CN +10.0% (China bans IBM servers in banks); Tencent Holdings 700.HK +1.4% (JD traded higher by over 14% today in US)

NY Post : Hillshire’s bid for Pinnacle sparks food fight

Hillshire’s bid for Pinnacle sparks food fight

It’s eat or be eaten in this M&A environment.
Pilgrim’s Pride swooped in Tuesday with a $6.4 billion unsolicited bid for rival meat processor Hillshire Brands — likely killing off Hillshire’s $4.3 billion bid for Pinnacle Foods.
Pilgrim’s, the nation’s No. 2 chicken producer, offered $45 a share in cash for Hillshire, a 22 percent premium over Friday’s closing price. Hillshire’s brands include Jimmy Dean sausages and Ball Park franks.
Besides Pilgrim’s Pride, Tyson Foods is also on the prowl for acquisitions — unsuccessfully bidding last month for Michaels Foods — and hinted that it would be interested in Hillshire.
Pilgrim’s Pride is majority owned by Brazilian beef giant JBS SA, which has been on the hunt for deals and is said to have pursued an earlier bid for Hillshire when it was still part of Sara Lee.
As a former suitor, JBS couldn’t buy Hillshire before the two-year anniversary of its spin-off from Sara Lee without incurring a big tax hit, an investment banker told The Post.
By having its US subsidiary pursue a deal, JBS may be seeking to side-step the tax issues, the banker said.
Even before Pilgrim’s offer, Hillshire’s plan for Pinnacle, owned by private-equity firm Blackstone Group, was running into resistance.
A top Hillshire shareholder on Friday told The Post it planned to vote against the Pinnacle deal, joining hedge fund Eminence Capital, which went public with its opposition.
Indeed, some Hillshire shareholders believe management cooked up the Pinnacle deal to keep hungry suitors from circling the company once the spin-off hit the two-year mark.
“We continue to strongly believe in the strategic merits and value creation potential provided by the proposed transaction with Pinnacle Foods,” Hillshire said in a statement on Tuesday.
“Consistent with its fiduciary duties, and in consultation with its independent financial and legal advisors, Hillshire Brands’ Board will thoroughly review the Pilgrim’s Pride proposal.”
The banker said it is highly unlikely that Hillshire can persuade shareholders to approve a Pinnacle merger now that a 22 percent premium for its shares is on the table.
Hillshire shareholders are expected to get to vote on the Pinnacle merger in mid-July.
Shares of Hillshire were up 22 percent in afternoon trading on Tuesday, to $45.19, while Pinnacle’s were down almost 7 percent, to $31.

>>> US CLose Dow+0,42% S&P+0,60% Nasdaq+1,22%

Closing Summary: Bulls Make Another Record-Setting Stand

The stock market picked up where it left off Friday, riding the outperformance of the small-cap and momentum stocks to broad-based gains. In turn, a strong showing from the financial sector and continued strength in the transport stocks carried the S&P 500 and Dow Jones Transportation Average to new record highs.

The bulk of today's gains were achieved shortly after the opening bell. They followed on the heels of a generally positive showing from foreign markets for the two-day period that included the Memorial Day holiday in the US. That showing was underpinned by a seeming hint from ECB President Draghi that the ECB will be easing monetary policy soon and the Ukraine presidential election, which went the way of anti-separatist candidate Petro Poroshenko.

The early bullish bias was ultimately solidified by Pilgrim Pride's (PPC 25.52, +0.42) $6.4 bln cash offer for Hillshire Brands (HSH 45.19, +8.17), Bank of America's (BAC 15.21, +0.49) indication that it will be resubmitting its capital plan, and a batch of better-than-expected economic data out of the US. In particular:
  • Durable orders rose 0.8% in April (consensus -1.3%). Excluding transportation, orders jumped 0.1% (consensus -0.2%).
  • The Case-Shiller Home Price Index showed prices up 12.4% year-over-year in March (consensus +11.8%); and
  • The Consumer Confidence Index for May edged up to 83.0 (consensus 82.7) from 81.7 in April.
From about 10:15 a.m. ET onward, it was mostly a sideways trade. That steady state, however, provided a glimpse of the prevailing bullish bias of late in the stock market as it would not give way to selling interest.

That resilience provided a measure of added support as it presumably left some participants fearful about missing out on another leg higher. The S&P 500 hit a new session high in the final 30 minutes of trading before tipping back below the 1912 level shortly ahead of the close.

The Nasdaq, meanwhile, went out at its high for the day and the Russell 2000 managed a late push to close above its 50-day moving average.

Every sector in the S&P 500 closed higher with the exception of the telecom services sector (-0.2%). The latter lagged throughout the day while the financial (+1.0%) and technology (+1.0%) sectors provided influential leadership. The utilities sector (+0.8%) was the other wining standout.

Frankly, there wasn't much that lagged badly today beyond some individual issues and precious metals. Gold prices dropped 1.9% to $1267.60/oz. while silver prices slipped 1.6% to $19.12/oz. That weakness was attributed to a lessening of geopolitical concerns surrounding Ukraine, although that view wasn't necessarily corroborated by the Treasury market.

The 10-yr note also settled near its best level of the day, up five ticks with its yield dipping two basis points to 2.52%. The strength in the Treasury market was all the more peculiar in light of the aforementioned economic data that produced a slate of headline surprises. A few items perhaps at work beneath the trading surface included the understanding that geopolitical strife is percolating in the South China Sea between China and Vietnam and that non defense capital goods orders excluding aircraft -- a proxy for business investment -- slipped 1.2% in April after increasing 4.7% in March. Shipments of those goods, which factor into the GDP computation, declined 0.4%.

Whatever the case may be, it is safe to say that the Treasury market continued to defy fund flow expectations. Tomorrow's economic calendar features only the latest update for the weekly mortgage applications index. Volume at the NYSE was again on the light side of things, but higher than last week. 646 mln shares traded hands, which is below a recent average of 709 mln shares.
  • S&P 500 +3.4% YTD
  • Nasdaq +1.4% YTD
  • Dow Jones Industrial Average +0.6% YTD
  • Russell 2000 -2.0% YTD

(BFW) Alpha Bank, Altice to Join Stoxx 600; Konecranes Removed

Alpha Bank, Altice to Join Stoxx 600; Konecranes Removed
2014-05-27 20:08:17.24 GMT


By Jim Silver
     May 27 (Bloomberg) -- Billerudkorsnas, Orpea, Hexpol also
to join, all effective at opening of European markets on June
23.
  * Aurubis, Holmen, Hufvudstaden, Suedzucker also to leave
    index
  * Link to statement: http://tinyurl.com/m6xjafa


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Jim Silver in New York at +1-212-617-7342 or
jsilver@bloomberg.net
To contact the editors responsible for this story:
Andrea Snyder at +1-202-624-1831 or
asnyder5@bloomberg.net
Joanna Ossinger

FT : Lagarde and Carney let fire at financial sector

Lagarde and Carney let fire at financial sector

Christine Lagarde, the managing director of the International Monetary Fund, has warned that “a fierce industry pushback” by the financial sector is delaying much-needed reforms and risks destabilising the global economy.
Speaking at a London conference on inclusive capitalism, Ms Lagarde said progress on building a safer financial system had been “too slow”, primarily because of industry attempts to halt the introduction of tougher new rules.

She also hit out at continued misconduct in financial services and said the industry had “not changed fundamentally in a number of dimensions since the crisis”, reeling off a list of scandals including money laundering and the manipulation of benchmarks such as Libor.
“Some prominent firms have even been mired in scandals that violate the most basic ethical norms,” said Ms Lagarde.
“While some changes in behaviour are taking place, these are not deep or broad enough. The industry still prizes short-term profit over long-term prudence, today’s bonus over tomorrow’s relationship.”
Her comments were echoed by Mark Carney, the Bank of England governor, who warned that “unbridled faith in financial markets” before the crisis, rising inequality and recent “demonstrations of corruption” had damaged the “social fabric”.
“When combined with the longer-term pressures of globalisation and technology on the basic social contract, an unstable dynamic of declining trust in the financial system and growing exclusivity of capitalism threatens,” said Mr Carney, who was speaking at the same conference as Ms Lagarde.
Their interventions come as policy makers battle to reform finance in the wake of the financial crisis of 2008-9 and to stem a series of scandals that have damaged the industry’s reputation still further.

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Regulators around the globe have imposed about $5.8bn in penalties for attempts to manipulate market benchmark rates. The sum is expected to climb further as regulators conclude their investigations and as the number of private lawsuits rises.
Mr Carney, who also chairs the International Financial Stability Board, said the scandals highlighted “a malaise in corners of finance that must be remedied” and hinted at potential moves to develop principles of fair markets, codes of conduct for specific markets, and “even regulatory obligations within that framework”.
Several banks have pushed back against action by regulators, delaying settlements or refusing to admit wrongdoing. HSBC, JPMorgan and Crédit Agricole resisted claims that they manipulated the Euribor interest rate before they were charged by the European Commission last week.
Jamie Dimon, chief executive of JPMorgan, has been an outspoken critic of tougher regulation, warning that customers would have to pay more for credit or be denied certain financial products as a result. He has also criticised tougher capital rules for being “anti-American”.
Both Mr Carney and Ms Lagarde also said they needed urgently to solve the problem of banks that were seen as “too big to fail”. “This is the year to complete that job,” said Mr Carney, who is in the vanguard of those regulatory efforts in his role at the FSB.
Ms Lagarde said the lack of tools to unwind large banks that cross national borders was a “gaping hole” in the financial architecture that calls for countries to put the global good of financial stability ahead of their parochial concerns.”
Mr Carney highlighted the vast amount of work regulators and central banks were already doing to try to reform the financial system and make it safer. But he added: “Ultimately ... integrity can neither be bought nor regulated. Even with the best possible framework of codes, principles, compensation schemes and market discipline, financiers must constantly challenge themselves to the standards they uphold.”
“It is important to acknowledge the fundamental and far-reaching improvements – both government mandated and industry initiated – that have taken place since 2009 to make the financial services industry more safe, sound and secure,” said Rob Nichols, head of the Financial Services Forum, the trade association for the biggest banks.
“Large banks continue to make improvements with regard to capital, liquidity, activities, and risk management, while working co-operatively with regulators to ensure that the system is strong, more resilient, transparent, and able to promote economic growth.”

>>> Allergan adopts one-year stockholder rights plan

Allergan adopts one-year stockholder rights plan

Allergan, Inc. (NYSE: AGN) (“Allergan” or the “Company”) today announced that its Board of Directors (the “Board”) has unanimously adopted a one-year stockholder rights plan (the “Plan”) effective 22 April 2014 and declared a dividend distribution of one preferred share purchase right on each outstanding share of the Company’s common stock.

Yesterday, the Company became aware of the recent rapid and previously undisclosed accumulation of a significant amount of the Company’s common stock in connection with an acquisition proposal made today by Valeant Pharmaceuticals, Inc. The Plan is not intended to prevent an acquisition of the Company on terms that the Board considers favorable to, and in the best interests of, all stockholders. Rather, the Plan aims to provide the Board with adequate time to fully assess any proposal.

Under the Plan, stockholders of record at the close of business on 8 May 2014 will receive one right for each share of Allergan common stock held on that date. The distribution of the rights is not taxable to stockholders, and the Plan is scheduled to expire on April 22, 2015.

Subject to limited exceptions, the rights will become exercisable if a person or group acquires beneficial ownership of 10% or more of Allergan’s common stock (including in the form of synthetic equity positions created by derivative securities). In that situation, each holder of a right (other than such person or members of such group, whose rights will become void and will not be exercisable) will be entitled to purchase a number of Allergan’s common shares for USD 500 that have a market value of twice the exercise price of the right.

Stockholders are not required to take any action to receive the rights distribution. Until the rights become exercisable, they will trade with the shares of the Company’s common stock. The Plan will not have an impact on the reported earnings per share of the Company and will not change the manner in which the Company’s common stock is currently traded.

Details about the Plan will be contained in a Form 8-K to be filed by Allergan with the US Securities and Exchange Commission.

Goldman, Sachs & Co. and BofA Merrill Lynch are serving as financial advisors to the Company and Latham & Watkins is serving as legal counsel to the Company.


Source Company Press Release(s)

>>> Fed Discount Rate Minutes: 3 Fed banks reiterate request to increase discoun

Fed Discount Rate Minutes: 3 Fed banks reiterate request to increase discount rate to 1.0% from 0.75%, unchanged from prior meetings
- Federal Reserve Bank directors noted recent improvements in economic activity following a slowdown earlier in the year because of severe winter weather. Overall, most directors expressed positive views that the economy would continue to expand at a moderate pace. While consumer spending had started to pick up, some directors cited uneven activity across income groups. Some directors also reported increased construction activity, particularly for commercial and multifamily residential projects. Commercial lending had expanded moderately, but residential lending continued to slow for both purchases and refinancings 
- Although prices for food and other commodities had increased recently, directors did not note a change in longer-term inflation expectations, which had remained stable 
- Philadelphia had voted on April 17, and the directors of the Federal Reserve Banks of Kansas City and Dallas had voted on April 24, to establish a rate of 1 percent (an increase from 3/4 percent). 

- Reminder: Prior minutes from 4/15: No change in regional bank stances, 3 banks still request raise in rate to 1.0% from 0.75%