FT : AstraZeneca, Pfizer and the public interest test

AstraZeneca, Pfizer and the public interest test

Sir, Politicians and others prompted to think about the public interest by Pfizer’s offer for AstraZeneca would do well to consider a long-ago report of the Monopolies Commission which reported in 1972 on the hostile bid by Beecham for Glaxo Group.

Put briefly, Beecham and Glaxo were both medium-sized pharmaceutical companies with some overlapping research interests. Glaxo was considered to be the stronger force in pharmaceutical research whilst Beecham had a stronger (and more profitable) business in over-the-counter remedies and consumer products. There was widespread concern that the combined group would wind down scientific research and put greater effort into proprietary products.
Applying the public interest test, the commission found that there were no significant competition concerns. It nevertheless blocked the merger on the ground that it would reduce the number of independent centres for research and that the “adverse consequences of the merger in the field of R&D would affect the future size of the British-owned pharmaceutical industry”. Given the contempt in which industrial policy is now held it is interesting to note that within a few years, Glaxo’s research team yielded a series of blockbuster drugs. Beecham languished by comparison, later merging with Smith Kline and being subsequently subsumed within the GSK group.
The postscript to this is that some 30 years later, the Labour government abolished the public interest test in the Enterprise Act 2002, except in narrow circumstances. During consultations on the Bill I drafted submissions for the Labour Finance and Industry Group in which we argued for retention of the public interest on a “you-never-know-when-you’ll-need-it” basis. We cited (some might say presciently) Beecham/Glaxo and BSkyB/Manchester United as cases in point. It is my opinion that competition lawyers and economists adopted then (and continue to adopt) the view that competition is the universal panacea and any non-competition criteria such as the public interest are anathema. The government acceded to this universal wisdom and the result is the competition legislative test which Mr Miliband now belatedly deplores.
After the dust has died down (whatever the outcome) on the proposed AstraZeneca takeover it would be timely if politicians of all parties were to do some hard thinking about the public interest.
Laurie Elks, Former Competition Commission member

>>> Anchorage Capital - 13F -VTG, SNV, GPK, CSTM, SALT, NEM, CETV

Anchorage Capital earlier disclosed updated portfolio positions in 13F filing: New 4.5 mln share position in VTG, decreases position in SNV to ~20 mln shares from ~30 mln shares
Highlights from 2014 Q1 filing as compared to 2013 Q4 filing:
  • New positions in: VTG (4.5 mln), LBTYA (~2.3 mln), GPK (~4.6 mln), CSTM (~3.5 mln)
  • Increased positions in: CQP (to ~3.1 mln from 1.5 mln)
  • Decreased positions in: SNV (to ~20.0 mln from ~30 mln), SALT (to ~480k from ~4.8 mln), NEM (to ~2.1 mln from ~5.3 mln)
  • Closed positions in: CETV (from 3 mln), RDN (from 2 mln)

>>> What to look at today - 17/05/2014

US Market Closed lower & tresuries Higher, Out of the six growth-sensitive sectors, four posted losses larger than the broader market. Energy, financials, industrials, and materials lost between 1.0% and 1.5%, while consumer discretionary (-0.7%) and technology (-0.8%) outperformed, CSCO +6% on better earnings, volume were above average @ 732mil shares...VIX @ 13,17 +8,22%...US after Hours KGJI +33.3%, OVRL +31.4%, JCP +18.9%, WWE -20.2%, YOD-4.1%, PAYC -3.6% following earnings/guidance...- Nikkei225 is leading the regional Asian indices lower, dragged down by the third consecutive session of stronger Japanese Yen. USD/JPY, approaching 3-month lows near 101.20, is weighed by the falling US Treasury yields after a surprising slump in US industrial production...China completed the release of its economic data for April with mixed FDI prints - YTD annual growth slowed to 5% while y/y April FDI returned to growth with 3.4% increase. A report out of Fitch was generally unimpressed with the entire set of April figures, noting "latest Chinese macro data releases for
April indicate a further economic deceleration in the second quarter...- India elections have sparked a rip-roaring 5% rally in early Sensex trade...Rupee is also sharply higher, with USD/INR falling to 10-month low below INR59 level....Nikkei -1.72% HS-0.63%...Shanghai -0.42%

Eur$1.3716 S&P fut: -0.01% European Fut. : +0.29%

Macro
- MOROCCO OUTLOOK TO STABLE FROM NEGATIVE AT S&P
- Romania Raised to Investment Grade at S&P, Outlook Stable

Keep an eye on :
- AIR FP : Airbus Helicopter Sees Higher Demand in S. Korea: Chosun Biz
- ALO FP : France’s Montebourg Says Law Can Be Used to Block GE Alstom Bid
- ALO FP : French AMF's Rameix Sought More Transparency From Alstom: Echos
- AZN LN : Swedish Government Prepared to Meet With Pfizer on AstraZeneca
- EN FP : Bouygues 1Q Rev. EU6.84b vs Est. EU6.56b, could be a target for Orange ( Les Echos)
- EN FP : Bouygues CFO Says ‘All Scenarios Are on the Table’ in Telecoms, focus on stand alone for now
- BES PL : Espirito Santo to Raise as Much as EU1.045b From Rights Offering
- CFE BB : CFE 1Q Rev. Rises 16% at Comparable Scope; Net Debt Increases
- CU FP : Edizione Won’t Tender Its Club Med Shrs in Gaillon Offer
- CU FP : Club Mediterranee’s Summer Income May Drop on Lower Bookings
- CSGN VX : Credit Suisse Nears Guilty Plea, to Pay ~$2.5b in Tax Probe: WSJ
- GEO IM : Geox 1Q Rev. Beats Ests., Ebit Misses, Confirms Forecast
- HMB SS : H&M Not Planning to Buy Italian Brands, CEO Tells Repubblica
- ILD FP : Iliad 1Q Rev. EU1b vs Est. EU995m; Rev. +11% Y/y
- MONC IM : Moncler 1Q Rev., Ebit Beat Ests.
- MRW LN : SPecualtion of Private Equity interest - £275/share -Daily Mail
- MT NA : ArcelorMittal Said to Consider Offer for Zimbabwe Alloys Chrome
- NOK1V FH : Nokia Corp. Raised to BB From B+ by S&P
- NUM FP : *NUMERICABLE GROUP IN EXCLUSIVE TALKS TO BUY VIRGIN MOBILE
- ORA FP : Orange Studying Purchase of Bouygues Telecom, Les Echos Reports
- ORA FP : Orange Explores Opportunities in Changing French Telecom Market
- PFC LN : Petrofac International UAE Wins $976m Contract in Algeria
- RDSA NA : Shell Lifts Force Majeure on Nigeria Forcados Crude Exports
- ROSN LI : State May Sell 19.5% Rosneft Stake in 2014-2015, Vedomosti Says
- SAP GY : SAP Planning to Cut 1,500-2,500 Jobs: Reuters, Seeks Higher Margin in Cloud Business, Euro am Sonntag Says
- SCAB SS : Svenska Cellulosa CEO Looking for U.S. Acquisitions, DI Reports
- SU FP : Schneider Accepts Carlyle-PAI Offer for Custom Sensors Unit
- FP FP : De Margerie Says Total Culture Is Internal Succession: Tribune
- TUI1 GY : TUI AG 2Q Underlying Ebita Loss Widens, Confirms Forecasts
- VIE FP : Veolia to Renew Singapore Cleaning Contracts, Echos Says

>>> Brokers Upgrades & Downgrades

>>> Up
*ANGLOGOLD ASHANTI RAISED TO NEUTRAL VS SELL AT UBS
*ANGLOGOLD ASHANTI RAISED TO NEUTRAL AT MACQUARIE
*ANGLO AMERICAN CUT TO NEUTRAL AT MACQUARIE
*NATIONAL BANK RAISED TO OVERWEIGHT AT JPMORGAN
*POUNDLAND RAISED TO OUTPERFORM AT CREDIT SUISSE
*RWE RAISED TO BUY VS NEUTRAL AT GOLDMAN SACHS
*VOLKSWAGEN PREF RAISED TO NEUTRAL VS SELL AT UBS

>>> Down
*EVRAZ CUT TO EQUALWEIGHT VS OVERWEIGHT AT MORGAN STANLEY
*FLSMIDTH CUT TO SELL VS NEUTRAL AT UBS
*TELKOM SA CUT TO HOLD VS BUY AT RENAISSANCE CAPITAL
*VODACOM CUT TO SELL VS HOLD AT RENAISSANCE CAPITAL

>>> PT Change
*BUZZI UNICEM PT CUT TO EU16 VS EU16.2 AT GOLDMAN; KEPT AT BUY
*GENERALI PT RAISED TO EU16 VS EU15 AT NOMURA; KEPT AT REDUCE
*Hera PT Raised to EU2.55 vs EU2.5 at Goldman
*Prysmian PT Cut to EU19 at Morgan Stanley; Kept at Overweight

>>> Initiation
*MERCK KGAA RATED NEUTRAL AT GOLDMAN, WAS NOT RATED; PT EU135
*PUBLICIS RESUMED NEUTRAL AT CITI
*PUBLICIS GROUPE RATED EQUALWEIGHT AT MORGAN STANLEY; PT EU66.5

>>> Call
>> Stock
*MICHELIN REMOVED FROM MOST PREFERRED EUROPE AUTOS AT UBS
*POUNDLAND ADDED TO CREDIT SUISSE SMALL CAP FOCUS LIST
*VOLKSWAGEN PREF EXITS LEAST PREFERRED EUROPE AUTOS AT UBS

WWD : Consumers Squeezed, and Retail Feels Pain

Consumers Squeezed, and Retail Feels Pain

    It’s not just the weather.

    A string of retailers reported first-quarter results Thursday — including Wal-Mart Stores Inc., Kohl’s Corp., J.C. Penney Co. Inc., Nordstrom Inc. and Dillard’s — and the numbers reflected the tough winter weather in the first two months of the year and later Easter.

    But there are deeper issues.

    “The big macro issue we all face is that we have a consumer that is stressed,” Kevin Mansell, chairman, president and chief executive officer of Kohl’s, told WWD at the company’s annual meeting in Menomonee Falls, Wisc. “Real incomes haven’t risen much, and [costs of] nondiscretionary items like fuel and food have increased. We’re all fighting for a smaller dollar amount. There’s definitely been this bifurcation [of incomes].”

    Higher-end retailers such as Nordstrom have been less impacted because “luxury” customers are doing better in the current economy, Mansell added.

    Four of the five companies on Thursday reported lower profits for the quarter, while Penney’s registered slightly larger losses although outperformed Wall Street expectations in every other area, including sales, comparable-store sales and earnings per share. As a result, the retailer’s shares soared almost 20 percent in after-hours trading to above $10.

    Craig Johnson, president of Customer Growth Partners, tied retailers’ weak results to a lack of disposable income. “In the middle of the last decade, real income growth was about 3.6 percent, and today we’re lucky if it gets to 0.6 percent,” he said. “It’s almost flatlined and you can only expect minimal growth under those circumstances. Weather can only explain some of what’s been going on, and it’s been going on since the middle of last year.”

    Adding to the pressure is a still-difficult jobs picture, with only 48 percent of working-age adults holding a full-time job, and signs of inflation in areas including food and gasoline. “That’s contributed to a depressingly promotional atmosphere as it’s rotated spending — there’s less left for discretionary purchases like apparel because so much is being taken up by utilities and now with the upward movement in food prices,” he said. “That had a crushing effect on apparel anddepartment stores.”

    He continues to believe, like many in the apparel sector, that there will be improvement in the second half of the year based both on better consumer confidence and the weak comparisons against which many stores will be up against from the second half of 2013.

    Mark Cohen, a retail veteran who’s now a professor at Columbia Business School, felt that the best performances from the first quarter will come from those who approached the quarter cautiously and with an emphasis on control of expenses and inventories.

    “Business was really tough in the fourth quarter and it’s never good in the first quarter when it’s bad in the fourth,” he said. “Any reasonable expectation of problems suggests taking a conservative view of inventory and expenses, and there were more than a few of them in the way the second quarter moved along last year.”

    David Bassuk, managing director of AlixPartners, said there’s certainly been an improvement in business conditions since the arrival of spring weather, but he’s reluctant to make too much of it.

    “There is a fundamental reshaping of the market going on,” he said. “The decline in traffic and its changing patterns are here to stay. The ability to shift gears into social, digital and e-commerce — this is what will separate the winners from the losers.”

    Mansell agreed, saying Kohl’s and other midmarket retailers are hustling to keep up with changes in technology and how they have affected consumer shopping behavior. Kohl’s has spent $600 million on technology in 2013 and 2014 and will be focused on mobile and in-store technology this year, Mansell said.

    “The transformation of shopping is a big issue,” he said. “We need to be online. We need to be in-store. And we need to be seamless if they shop online and decide to come in and buy in-store. The money we’ve spent on technology is an acknowledgment that this is a changed world. It’s very different than it was five years ago.”

    Here, Highlights From the Results Reported Thursday >>



      WAL-MART STORES INC.

      Weak demand and severe weather drove down profits and comparable-store sales at Wal-Mart while overall revenues eked out a small gain. Net income in the three months ended April 30 was $3.59 billion, or $1.11 a diluted share, 5 percent below the year-ago mark of $3.78 billion, or $1.14 a share. Analysts, on average, had expected earnings per share of $1.15 from the Bentonville, Ark.-based retail giant.

      Revenues also missed analysts’ estimates, rising 0.8 percent to $114.96 billion from $114.07 billion. Wal-Mart U.S. sales were up 2 percent to $67.85 billion, international sales down 1.4 percent to $32.42 billion and Sam’s Club sales up 0.1 percent to $13.89 billion.

      In the U.S., comp-store sales were down 0.2 percent, with Wal-Mart down 0.1 percent and Sam’s Club off 0.5 percent. Wal-Mart traffic decreased 1.4 percent and average ticket increased 1.3 percent. Excluding fuel, Sam’s Club traffic fell 0.2 percent with average ticket down 0.3 percent.

      E-commerce sales grew 27 percent on a global basis during the quarter.

      Wal-Mart is testing the next wave of supply-chain efficiency — tethering smaller stores to Supercenters. The first fully tethered Wal-Mart Express opened on May 2 in North Carolina. Shoppers can order Supercenter merchandise and receive it at a rural Express store the same day. “Customers are buying products such as bicycles and swimming pools, which they can’t usually get in a 10,000-square-foot box,” said Bill Simon, president and ceo of Wal-Mart U.S.

      During the quarter, the retailer opened 13 of its smaller-size Neighborhood Markets and 25 Supercenters. It’s on track to deliver by year’s end 115 Supercenters, 180 to 200 Neighborhood Markets and 90 to 100 Express units.

      David Cheesewright, president and ceo of Wal-Mart International, said same-store sales declined in four of the five largest markets, the U.K., Mexico, Canada and China, but Brazil delivered a positive comp for the quarter.

      In guidance, the company said it expected EPS from continuing operations of between $1.15 and $1.25 in the second quarter, below the analysts’ consensus expectation of $1.28.


      KOHL’S CORP.

      The fast-changing retail landscape has lit a fire under Kohl’s Corp. — which weathered sales and profit declines in the first quarter, but is striving for improvement with a “greatness agenda.”

      “We’ve built a new leadership team across the company over the last year and a half,” said Mansell on a conference call with analysts prior to the firm’s annual meeting. “Frankly, that’s been driven by the need to drive better results, particularly on the top line. And evolve our business more fully and with much greater speed. The only remaining leadership role to be filled is our chief merchandising officer position, which we will fill externally.”

      Mansell has been said to be under pressure himself, but so far the executive changes have taken place outside the corner office. Last year, the often-insular firm hired Starbucks Corp. veteran Michelle Gass to be chief customer officer.

      But Mansell said new merchant talent will be key to the company’s success.

      Kohl’s said first-quarter profits dropped 15 percent to $125 million, or 60 cents a share, from $147 million, or 66 cents a year earlier. Sales for the three months ended May 3 fell 3.1 percent to $4.07 billion.

      The ceo said he expects “greatness” and has a plan to get there. “Our greatness agenda is a multiyear vision built on five pillars; ideas that are fundamental to the way we do business,” he said. “They are amazing product, incredible savings, easy experience, personalized connections and winning teams.”
      Kohl’s, like other retailers, has developed a laser focus on technology and the Web.

      After the company’s annual meeting, Mansell said about 10 percent of the company’s business is done online, much of which is shipped directly from the company’s 1,200 stores nationally rather than dedicated warehouses. In the fall, 100 Kohl’s stores will launch a buy-online-pick-up-in-store program.

      The growth of online means the company won’t be opening nearly as many stores as in the past, although Mansell doesn’t expect to close many, either.


      J.C. PENNEY CO. INC.

      Penney’s reported results that beat Wall Street’s expectations, driving its shares up sharply after the market closed. For the three months ended May 3, the company widened the net loss slightly to $352 million, or $1.15 a share, from a loss of $348 million, or $1.58, last year. Analysts’ consensus estimates was a loss of $1.25 a share. Operating income for the quarter improved to a loss of $247 million compared with a loss of $486 million a year ago.

      Net sales rose 6.3 percent to $2.8 billion from $2.64 billion. Analysts were expecting net sales of $2.71 billion. Top categories include men’s and women’s apparel, home and fine jewelry.

      The company said same-store sales rose 6.2 percent. Penney’s also said going forward it will simplify its same-store sales calculation, such as excluding certain items such as sales-return estimates and liquidation sales. Under this new calculation, comps for the quarter rose 7.4 percent, which includes online sales that grew 25.7 percent over the same period last year.

      The retailer also said gross margin rose to 33.1 percent of sales, compared with 30.8 percent in the year-ago quarter, mostly due to the increase in private-label merchandise.

      Penney’s guided second-quarter comps to a midsingle-digit increase. For full-year 2014, it also said liquidity is expected to be in excess of $2 billion at yearend, with free cash flow expected to be “breakeven.”

      Penney’s also has a fully committed $2.38 billion senior secured asset-based lending credit facility to replace the existing $1.85 billion ABL bank line that was set to mature in April 2016. The company said the line will provide better pricing terms and add $500 million of incremental liquidity during peak seasonal needs. The facility will close in the second quarter.

      Myron E. “Mike” Ullman, 3rd, ceo, said during a conference call to Wall Street that the “turnaround at J.C. Penney is taking place in three stages.” The first was the stabilization phase and the second was the rebuilding phase. “And now we’re in the third and final stage, which we call the go-forward phase, during which we are positioning J.C. Penney for long-term profitable growth.”

      The ceo added, “Overall, our first-quarter performance was in line with our plans to grow the business and take back market share from our competitors.”

      Ullman said April was the first time in the past 30 months that the company saw positive traffic trends.

      The ceo noted during the call that “we continue to see the business environment as pretty tough and promotional.”


      NORDSTROM INC.

      Nordstrom’s profits slipped in the first quarter but sales grew solidly as the company’s Web business continued to march on.

      And the company, which already has plans to spend $3.9 billion over the next five years to develop its business, particularly on a technology front, might have some more cash to play with. Nordstrom said it hired Goldman, Sachs & Co. and Guggenheim Securities to help it sell its $2 billion credit-card receivables business. The chain is one of the last retailers to still own the back end of its credit-card business.

      Nordstrom’s first-quarter net earnings dipped 3.4 percent to $140 million, or 72 cents a diluted share, from $145 million, or 73 cents, a year earlier. Even so, profits per share came in 4 cents better than the 68 cents analysts had anticipated.

      Revenues for the three months jumped 6.6 percent to $2.93 billion from $2.75 billion. The company’s comparable-store sales dipped 1.9 percent at the full-line stores, underscoring the importance of the company’s Rack outlet division as well as nordstrom.com. Online sales through the firm’s direct unit increased 33 percent in the quarter, while Rack sales rose 20 percent.

      Apparel, which had been a laggard, has bounced back at Nordstrom.

      Peter Nordstrom, executive vice president and president of merchandising, told investors that the women’s apparel business is “pretty much” in line with the company average. But there’s more work to do.

      And the merchandising chief noted, “When you look at women’s apparel in totality…we’ve got to figure out a way of improving the junior’s part of the business. That’s a big business for us and it serves more than just the teenage customer. It serves young women as well. And I think that we’ve got to make that better, and when we do I think it’ll benefit the entire women’s results.”


      DILLARD’S INC.

      At Dillard’s, net profits for the quarter slipped 4.7 percent to $111.7 million from $117.2 million. EPS, however, rose to $2.56 a share from $2.50 as the company bought back stock.

      Revenues for the three months dipped 0.1 percent to $1.59 billion with a 2 percent rise in comparable-store sales.

      >>> US AFter Hours

      After Hours Summary: KGJI +33.3%, OVRL +31.4%, JCP +18.9%, WWE -20.2%, YOD -4.1%, PAYC -3.6% following earnings/guidance

      After Hours Gainers: Companies trading higher in after hours in reaction to earnings: KGJI +33.3%, OVRL +31.4%, JCP +18.9%, XGTI +11.5%, JWN +9.6%, DCIN +8.3%, WYY +6%, ADSK +4.3%, ZBB +3.4%, AMAT +3.3%, QUNR +2.2%, DDS +1%, NVFY +0.7%

      Companies trading higher in after hours in reaction to news: OVRL +31.4% (to be acquired by Sphere 3D in deal valued at ~$4.43 per share), XGTI (announced it has been awarded an important telephony patent in Mexico), RAX +6.1% (Bloomberg reporting that co has higher Morgan Stanley to pursue strategic alternatives), UNP +1.7% (announced 2-for-1 stock split; increases 2014 capital expenditures by $150 mln to $4.1 bln), VZ +1.7% (Berkshire Hathaway disclosed new 11 mln share stake in 13F filing; other well know hedge funds also disclosed new position in the company), ENZY +1.4% (reported a request for arbitration by AarhusKarlshamn AB, or AAK, a Sweden-based, global producer of specialty oils that is Enzymotec's joint venture partner in Advanced Lipids AB), AHC +1.2% (declared a special cash dividend of $1.50 per share)

      After Hours Losers:

      Companies trading lower in after hours in reaction to earnings: WWE -20.2%, YOD -4.1%, PAYC -3.6%, ASTM -2.6%, ICLD -2.5%, KOOL -0.7%, VJET -0.5%, TRTC -0.1%

      Companies trading lower in after hours in reaction to news: NAVB -2.9% (announced restructuring of pipeline development; Michael Goldberg appointed as Interim CEO; co is refocusing its resources to better align the funding of the pipeline programs with the expected growth in Lymphoseek rev), GTIV -1.1% (Board rejected unsolicited proposal from Kindred Healthcare (KND); determined proposal significantly undervalues company and its prospects)

      >>> Asian Update

      Asian Market Update: Nikkei slumps as USD/JPY eyes 3-month lows; Fitch cautious on China

      ***Economic Data*** - (CN) CHINA APR ACTUAL FOREIGN DIRECT INVESTMENT (FDI) YTD: 5.0% V 5.5% PRIOR; Y/Y: +3.4% V -1.5% PRIOR - (SG) SINGAPORE APR ELECTRONIC EXPORTS Y/Y: -8.7% V -7.5%E; NON-OIL DOMESTIC EXPORTS M/M: 9.0% V 4.6%E; Y/Y: +0.9% V -3.4%E - (CL) CHILE CENTRAL BANK LEAVES OVERNIGHT TARGET RATE UNCHANGED AT 4.00%, AS EXPECTED

      Market Snapshot (as of 03:30 GMT): - Nikkei225 -1.7%, S&P/ASX -0.5%, Kospi -0.6%, Shanghai Composite -0.4%, Hang Seng -0.6%, Jun S&P500 flat at 1,866, Jun gold +0.2% at $1,296, Jun crude oil +0.5% at $101.96/brl

      ***Highlights/Observations/Insights*** - Nikkei225 is leading the regional Asian indices lower, dragged down by the third consecutive session of stronger Japanese Yen. USD/JPY, approaching 3-month lows near 101.20, is weighed by the falling US Treasury yields after a surprising slump in US industrial production, with the benchmark falling to 6-month lows below 2.5%. Renown bond investor Jeffrey Gundlach of DoubleLine warned that the US treasury market may be setting up for an accelerating short-covering rally on premature expectations of rising interest rates.

      - Fed Chair Yellen spoke at the US Chamber of Commerce as part of National Small Business Week. Remarks did not make specific reference to monetary policy, but Yellen did note that while "we have come far, it is also true that we have further to go to achieve a healthy economy." Yellen also promised the Federal Reserve will "continue to do our part in promoting the recovery so that you (small business) can continue to help America grow and prosper."

      - China completed the release of its economic data for April with mixed FDI prints - YTD annual growth slowed to 5% while y/y April FDI returned to growth with 3.4% increase. A report out of Fitch was generally unimpressed with the entire set of April figures, noting "latest Chinese macro data releases for April indicate a further economic deceleration in the second quarter, and is in line with Fitch Ratings' forecast for growth to fall to 7.3% for full-year 2014 - marking the slowest annual rate of growth since 1990." Fitch believes the slowdown in he property market poses the greatest risk of a sharper-than-expected downturn. China financial largely tracked the modest decline in the broader market despite the overnight report from CBRC announcing Q1 NPLs rose by CNY54B to CNY646B - the biggest increase in bad loans since 2005 and the highest volume of bad loans since Sept 2008.

      - India elections have sparked a rip-roaring 5% rally in early Sensex trade, as opposition BJP-led coalition was headed toward a resounding victory in the lower house of Parliament. Rupee is also sharply higher, with USD/INR falling to 10-month low below INR59 level.

      ***Fixed Income/Commodities/Currencies*** - (US) Weekly Fed Balance Sheet Total Assets Week ending May 14th: $4.34T v $4.30T prior; Reserve Bank Credit: $4.29T v 4.26T prior; M1: +$31.6B (biggest increase in 9 weeks) v -$10.5B prior; M2: $22.6B v $51.2B prior; M1 y/y change: 10.4% v 10.4% w/w; M2 y/y change: 6.2% v 6.2% w/w - (AU) Australia MoF (AOFM) sells A$700M in 3.25% 2018 Bonds; avg yield: 3.1196%; bid-to-cover: 4.62x - GLD: SPDR Gold Trust ETF daily holdings rise 1.8 tonnes to 782.3 tonnes (first rise since Apr 15th) - (CN) China Qinhuangdao coal price at CNY530-540/t (first rise since late Dec, 2013) v CNY525-535/t w/w - (JP) Japan utilities Apr coal consumption at 4.31M tonnes +11.8% y/y (record high; 13th consecutive month of gains) - USD/CNY: (CN) PBoC sets yuan mid point at 6.1628 v 6.1640 prior setting (2nd consecutive firmer setting)

      ***Equities*** US markets: - JCP: Reports Q1 -$1.16 v -$1.27e, R$2.80B v $2.72Be; SSS +6.2%; +18.3% afterhours - JWN: Reports Q1 $0.72 v $0.67e, R$2.84B v $2.88Be; +10.9% afterhours - DCIN: To be acquired by Carmike Cinemas in all stock transaction; +8.3% afterhours - ADSK: Reports Q1 $0.32 v $0.21e, R$592.5M v $569Me; +4.8% afterhours - VZ: Berkshire Hathaway discloses quarterly holdings as of 3/31: took 11M share stake in VZ - 13F filing; +1.7% afterhours - AMAT: Reports Q2 $0.28 v $0.28e, R$2.35B v $2.36Be; +1.7% afterhours - GTIV: Board of Directors Rejects Unsolicited Proposal from Kindred Healthcare, says it undervalues GTIV; -1.1% afterhours - WWE: Confirms multi-year renewal of NBCU broadcasting deal; does not expect to make up for lost pay-per-view, streaming demand business until 2015; -23.7% afterhours

      Notable movers by sector: - Consumer Discretionary: Goodman Fielder GFF.AU -2.2% (provides bidding update) - Financials: Greentown China 3900.HK +3.5%, Sunac China 1918.HK -8.0% (Sunac China in talks to acquire 30% stake in Greentown China); Dai-ichi Life Insurance 8750.JP -1.1% (FY13/14 results); T&D Holdings 8795.JP -1.1% (FY results) - Energy: GCL.Poly Energy 3800.HK -4.0% (Q1 production results) - Industrials: Leighton LEI.AU -1.0% (in negotiation to settle class action suit); Amada 6113.JP +16.0% (FY13/14 results) - Technology: Sumco 3436.JP +5.6% (Q1 results)

      >>> Berkshire Hathawat - 13F - VZ, LBtYA, MA,..

      Berkshire Hathaway 13F filing highlights: New stake in VZ, increased positions in LBTYA, MA, WMT, DVA...

      Highlights from 2014 Q1 filing as compared to 2013 Q4 filing: - New positions in: VZ (11.0 mln) - Increased positions in: LBTYA (to ~14.7 mln from ~2.9 mln), MA (to ~4.0 mln from ~405K), WMT (to 58.0 mln from 49.5 mln), DVA (to 37.6 mln from 36.5 mln), IBM (to 68.4 mln from 68.1 mln), USB (to 80.0 mln from (79.3 mln), 

      - Decreased positions in: GM (to 30 mln from 40 mln), DTV (to 34.5 mln from 36.5 mln), PSX  (to ~9.7 mln from ~27.2 mln), STZA (to 1.9 mln from 4.5 mln)

      >>> Maverick Capital - 13F - AER, MDRX,...

      Maverick Capital discloses updated portfolio positions in 13F filing

      Highlights from 2014 Q1 filing as compared to 2013 Q4 filing: - New positions in: AER (2.5 mln), MDRX (5.3 mln), ASH (2.2 mln), CXP (3.8 mln), CTRP (2.4 mln), CBST (1.7 mln), BKW (312K), KMX (738K), CSLT (450K) - Increased positions in: RDN (to ~26.2 mln from ~8.8 mln), LBTYA (to ~8.5 mln from ~1.6 mln), MTG (to ~16.5 mln from ~10.3 mln), CCI (to 3.8 mln from 1.3 mln), BIDU (to 1.6 mln from 695K), RL (to 2.0 mln from 1.0 mln), YNDX (to 4.4 mln from 3.3 mln)

      - Decreased positions in: CYH  (to ~2.5 mln from ~5.6 mln), QLIK (to 5.4 mln from 8.7 mln), QCOM (to 1.9 mln from 3.3 mln), NOV (to 1.7 mln from 2.7 mln) Closed positions in: ZTS (from 7.6 mln), EBAY (from 5.7 mln), YHOO (from ~2.5 mln), CBS (from ~1.6 mln), CAM (from ~1.4 mln), ADSK (from 1.9 mln), CHTR (from 1.2 mln), LNG (from ~2.5 mln), C (from ~1.6 mln), COMM (from ~2.2 mln), DG (from 3.2 mln), FFIV (from 1.4 mln), FB (from 433K), HUM (from 833K), MET (from 1.8 mln), TMH (from 1.5 mln),  

      >>> GMT Capital - 13F - DF, HTZ, ENTR, KRA

      GMT Capital discloses updated portfolio positions in 13F filing: New 1.1 mln share position in DF, increases position in HTZ

      Highlights from 2014 Q1 filing as compared to 2013 Q4 filing:

      * New positions in: DF (~1.1 mln shares) * Increased positions in: HTZ (to ~2.1 mln from ~1.1 mln) * Decreased positions in: ENTR (to ~19k from ~2.6 mln), KRA (to ~470k from ~1.8 mln)