(ZH) China Beige Book, HSBC Manufacturing PMI Paint Diametrically Opposing Pictu

China Beige Book, HSBC Manufacturing PMI Paint Diametrically Opposing Pictures Of China's Economy

S&P 500 futures are jumping exuberantly as Japan and China PMIs print above expectations and back in expansion territory (Japan best in 3 months, China best in 7 months). This is China's best 2-month PMI rise since Oct 2010 (which makes perfect sense amid the collapsing housing market and CCFD ponzi probe) - which provides the perfect propaganda meme that targeted RRR cuts workl. However, while stocks don;t care to scratch the surface, there are 2 glaring similarities that could become a problem. Both China and Japan saw employment drop(Japan's first in 11 months) and furthermore both China and Japan saw input prices rise and output prices decline - not exactly the margin expansion dream everyone is hoping for... and all this as China's Beige Book shows the slowdown deepening on weak investment.
China's Manufacturing PMI saw its best 2 months since Oct 2010... so RRRs work right?
Which is odd given that GDP expectations continue to collapse... (h/t @M_McDonough )
And China and Japan both see employment drop and margin pressures build...
as Japan employment tumbles...
But none of that "fact" details matter - you buy stocks...
As China's Beige Book was anything but positive...
  • CHINA BEIGE BOOK SAYS SLOWDOWN DEEPENING ON WEAK INVESTMENT
  • CHINA BEIGE BOOK SAYS FEWER COMPANIES ACCESSED CREDIT IN 2Q
China’s economy continues to decelerate quarter-on-quarter, driven by “perhaps unprecedented weakness” in capital expenditure, China Beige Book says in its 2Q survey released today.
* Fewest number of firms increasing investment and most pronounced quarter-on-quarter drop in 10 quarters of surveys
* Fewer companies surveyed accessed credit from banks, shadow lenders and the bond market
* Survey finds loan rates inverted, with bank interest rates ticking up in the quarter while non-bank rates saw a “substantial slide” to below levels offered by banks
* Firms appear to be responding to current economic conditions by borrowing and spending less
* Weakness in investment has “sweeping effects” on sectors, regions and gauges of company performance
* Services weakened more sharply while transportation, mining, and retail slowed
* Manufacturing showed year-on-year growth for the fourth quarter in a row and was stable vs previous quarter
* In property sector, residential and commercial realtors “were pummeled,” while builders reported higher starts and rising prices, with stable or larger proportions reporting revenue growth
* Investment slowdown depressed growth in hiring, wages, laboractivism
* Worst-performing sector was minerals as coal producers sawrevenue contraction

(BFW) France’s Energy Shift Will Be Financed by Private Sector: Sapin

 BN 06/23 08:40 *FRANCE'S ENERGY SHIFT WILL BE `PROFITABLE,' SAPIN SAYS
 BN 06/23 08:40 *FRANCE'S ENERGY SHIFT WILL BE PRIVATE SECTOR-FINANCED: SAPIN
France’s Energy Shift Will Be Financed by Private Sector: Sapin
2014-06-23 08:47:43.530 GMT


By Tara Patel
     June 23 (Bloomberg) -- French policy to promote renewable
energies and improved efficiency will mostly be financed by the
private sector, Finance Minister Michel Sapin said today.
  * Policy will be “profitable,” he said in a speech in Paris
  * Loans at heart of policy: Sapin
  * Earlier Energy Minister Segolene Royal said state will
    promote interest-free loans for home improvement projects to
    improve energy efficiency
Link to Company News:{EDF FP <Equity> CN <GO>}

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

To contact the editor responsible for this story:
Tara Patel at +33-1-5365-5058 or
tpatel2@bloomberg.net

>>> Siemens interested in EUR 5bn-EUR 6bn ThyssenKrupp Elevator acquisition

Siemens interested in EUR 5bn-EUR 6bn ThyssenKrupp Elevator acquisition 

German conglomerate Siemens is interested in ThyssenKrupp Elevator, ThyssenKrupp's Elevator Technology unit, Der Tagesspiegel reported.

The German-language report cited unnamed financial sources as saying that Siemens was willing to pay EUR 5bn-EUR 6bn for the unit, which ThyssenKrupp does not want to sell.

The report said that following the failure to reach a deal to acquire Alstom, Siemens CEO Joe Kaeser could now concentrate fully on the 'Vision 2020' project which included acquisitions alongside organic growth.


Source Der Tagesspiegel

>>> What to look at today - 23/06/2014

US Market closed higher, on the Week S&P+1.6%, Energy lead the move with Crude Still strong on Iraq situation, +2.7% on the week. Tech was week with ORCL...VIX @ 10.67 +0.47%, volume were above average thanks to quadruple witching & S&P Rebalancing. 1.7bil shares traded...Asia higher after better June flash Man. PMI, at 6 month high and 1st expansion in 2014...China quarterly Beige Book for Q2 that was slightly more downbeat, indicating fewer companies had access to credit amid weakening investment environment. Beige Book also warned that the economy continues to decelerate q/q, driven by perhaps unprecedented weakness in capex...Oil still strong


Eur$ 1.3609 S&P +0.22% EuroStoxx +0.05% FTSE +0.07% Dax +0.05% SMI -0.14%

Macro
- China Manufacturing Index Rises to Seven-Month High as Li Spurs Recovery
- China Beige Book Says Slowdown Deepens on Weaker Investment
- Barclays Lifts 2014 China GDP Growth Forecast to 7.4% From 7.2%
- ECB unlikely to raise interest rates until 2016 when economic recovery gains momentum - Nowotony
- Obama Warns ISIS Could Destabilize Region
- Most European Banks See No Extra Capital Need After ECB Review

What to look at today :
- AIR FP : ANA Says It Will Spend About 150b Yen Annually on New Aircraft
- ALO FP : GE Says Moving to Next Phase of Alstom Alliance
- ARM LN : ARM Momentum May Be Turning, Royalties Should Accelerate: MS
- ASC LN : ASOS Website Stops Taking Orders After Warehouse Fire
- AV/ LN : Overweight Aviva, JPMorgan Says; Blue Sky Valuation 644p/Shr
- BNP FP : BNP Said Close to $9b Accord With U.S. in Sanctions Case, BNP May Get Ban on U.S. Dollar Transactions
- EN FP : France Reaches Deal With Bouygues for Up to 20% of Alstom
- CCL LN : Buy Carnival, 2Q EPS May Be Above Guidance, Deutsche Bank Says
- CU FP : Club Med bidder Investindustrial conducts due diligence advised by Lazard; Bonomi asks for stay of execution
- DMGT LN : Overweight Daily Mail, Valuation Attractive, JPMorgan Says
- DETNOR NO : Det Norske To Close Gap on Lundin, Credit Suisse Says
- DTE GY : Sprint Gets Commitments for $20b Bridge Loan
- DSM NA : Buy DSM, Nutrition Undervalued, BofAML Says After Meeting
- EDF FP : EDF Needs to Make Productivity Gains, Royal Tells Le Figaro
- EDF FP : France Tariff Freeze Credit Negative for EDF, Moody’s Says
- EIR UK : Eircom Plans to Raise ~EU1B in Share Sale to Trim Debt: Times
- ELIOR FP : Elior Over-Allotment Raises IPO Proceeds to ~EU954m vs ~EU847m
- HL/ LN : Hargreaves May Outperform on Growth Opportunities: Credit Suisse
- IHG LN : Wyndham Worldwide Made Offer for InterContinental: Sky
- IPG US : Interpublic could be a target for Dentsu
- MONC IM : Moncler Chairman Remo Ruffini Says 2Q in Line With Objective
- PSON LN : Pearson Outlook Improved, May See EPS Bouncebank: Morgan Stanley
- RNO FP : Nissan, Honda Add More Than 2 Million Vehicles to Defective Air-Bag Recall
- SHP LN : AbbVie May Raise Shire Bid as High as GBP55/Shr: Jefferies
- SHP LN : Shire Plans Investor Call Tomorrow to Boost Defense: Telegraph
- SHP LN : AbbVie’s Gonzalez Seeks Instant Diversity in Drive to Buy Shire
- SHP LN : Biogen, Eli, Celgene, Allergan May Counterbid for Shire: UBS
- SIE GY : Kaeser Says Siemens Still Open for Negotiation With Alstom: Bild
- SIE GY : *SIEMENS’ KAESER CONTINUES TO LOOK FOR TAKEOVER TARGETS: BILD
- FR FP : Valeo CEO Sees Strong Revenue Growth Until 2018, Figaro Says

>>> Brokers Upgrades & Downgrades - 23/06/2014

>>> Up
*BANKIA RAISED TO NEUTRAL VS UNDERPERFORM AT MEDIOBANCA
*CEZ RAISED TO BUY VS HOLD AT DEUTSCHE BANK
*DAILY MAIL RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*DET NORSKE RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE
*HARGREAVES LANSDOWN RAISED TO OUTPERFORM AT CREDIT SUISSE
*KESKO RAISED TO BUY VS HOLD AT NORDEA
*MOBISTAR RAISED TO NEUTRAL VS REDUCE AT NOMURA

>>> Down
*FONCIERE DES REGIONS CUT TO NEUTRAL VS BUY AT NATIXIS
*LUNDIN PETROLEUM CUT TO UNDERPERFORM VS NEUTRAL: CREDIT SUISSE
*PROVIDENT FINANCIAL CUT TO UNDERPERFORM VS SECTOR PERFORM: RBC
*TAURON CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN

>>> PT Changes
*Eni PT Raised to EU22 vs EU21 at Raymond James
*SAFILO PT RAISED TO EU19.5 VS EU18.5 AT BERENBERG; KEPT AT BUY
*SFS GROUP RATED NEW BUY AT UBS, PT SF74
*SFS GROUP RATED NEW OUTPERFORM AT CREDIT SUISSE; PT SF83
*SLM SOLUTIONS RATED NEW OUTPERFORM AT CREDIT SUISSE; PT EU23
*SLM SOLUTIONS RATED NEW BUY AT DEUTSCHE BANK

>>> Initiation
*APPLUS SERVICES RATED NEW OVERWEIGHT AT JPMORGAN; PT EU19.22
*APPLUS SERVICES RATED NEW BUY AT BERENBERG; PT EU18.6
*APPLUS SERVICES RATED NEW BUY AT UBS, PT EU19
*APPLUS SERVICES RATED NEW OVERWEIGHT AT MORGAN STANLEY
*CAT OIL RATED NEW NEUTRAL AT UBS, PT EU20.50
*FOXTONS RATED NEW NEUTRAL AT GOLDMAN, PT 370P
*HOWDEN JOINERY RATED NEW BUY AT GOLDMAN, PT 425P
*OPERA SOFTWARE RATED NEW OVERWEIGHT AT MORGAN STANLEY, PT NK90

>>> Call
>> Stock
*EURONEXT ADDED TO UBS’S LEAST PREFERRED LIST
*IG GROUP ADDED TO UBS’S MOST PREFERRED LIST

>>> Interpublic could be a target for Dentsu

Interpublic could be a target for Dentsu

Dentsu, the Japanese advertising business, could target Interpublic, the listed global advertising firm headquartered in New York city, according to Martin Sorrell, chief executive of WPP, The Australian reported. The paper cited Sorrell as saying that in the advertising space Interpublic is considered vulnerable to a takeover, while Dentsu is looking to grow outside its core region, Japan.

The paper noted that WPP is the worlds largest advertising business.

Sorrell noted that WPP’s Australian operations have improved significantly and that consolidation is likely among medium-sized ad network holding operations.

Interpublic has a market capitalisation of AUD 8.3bn.


Source The Australian

>>> Club Med bidder Investindustrial conducts due diligence advised by Lazard; B

Club Med bidder Investindustrial conducts due diligence advised by Lazard; Bonomi asks for stay of execution 

Club Med suitor Investindustrial, the private-equity vehicle of Italian tycoon Andrea Bonomi, has engaged Lazard as a bid adviser, The Times reported. According to a person familiar with the situation, Bonomi appears “deadly serious” as he is investing significant time and capital in conducting a due diligence process on the France-based listed leisure group, the report said.

Bonomi is considering an offer which could be worth EUR 750m, and has until the month-end to table a bid rivalling an agreed EUR 700m offer from Hong Kong-listed Fosun International and Axa Private Equity, the item reported. It noted that Fosun and Axa together control close to 20% of Club Med, while Bonomi owns 11% through Strategic Holdings.

As well as Lazard, Bonomi is being advised by McKinsey, KPMG and CBRE, the report said.

Another report from daily Les Echos said that Bonomi has asked the French courts for stay of execution concerning the deadline requested by French stock market regulator AMF. Bonomi has indeed until 30 June to put up a counter-bid for Club Med or shut up. According to French daily Le Figaro, the court is meeting on 2 July to examine the request made by Bonomi.

According to the report, Bonomi bring the file before the courts could be seen as a hint that the Italian financier does not plan to make an offer for Club Med, all the more so that the EUR 17.50 per share tender offer launched by Fosun and Ardian (formerly known as Axa Private Equity) is likely to fail.

AMF and people close to Bonomi did not comment the news.



Source The Times (London), Les Echos, Le Figaro

>>> Shire and AbbVie cautioned against leaks by UK Takeover Panel

Shire and AbbVie cautioned against leaks by UK Takeover Panel 

AbbVie and its prospective takeover target Shire have been warned against leaking strategic data by the Takeover Panel, The Times reported. The unsourced report said the British regulatory body contacted both listed pharmaceuticals groups over the past couple of days to tell them not to leak information regarding their deal strategies, in the wake of American pharma giant Pfizer’s failed offer for UK-based AstraZeneca.

Dublin-headquartered Shire, which is listed in London, is expected to strengthen its defence against Chicago-based AbbVie today by revealing plans to target USD 10bn revenues within the next six years, the report said. It noted that Shire last week announced it had already rejected three AbbVie offers which it considered to undervalue the business.

Shire has a GBP 25.7bn (EUR 32.2bn) market cap.

Source The Times

(BFW) Biogen, Eli, Celgene, Allergan May Counterbid for Shire: UBS

Biogen, Eli, Celgene, Allergan May Counterbid for Shire: UBS
2014-06-23 05:24:52.355 GMT


By Morwenna Coniam
     June 23 (Bloomberg) -- List of potential alternative U.S.
bidders for Shire is limited to Biogen, Eli Lilly, Celgene,
Allergan, UBS says in note dated June 20 published after
AbbVie’s offer was rejected.
  * Cites list as being small enough to benefit from tax
    inversion, sufficiently large enough to make the acquisition
  * NOTE: Shire to hold call for investors at 1pm London time
    today
  * NOTE June 20: AbbVie Said to Weigh Higher Offer for Shire
    After Bid Rejected
  * NOTE: Shire Snubbing AbbVie Makes It Latest Pharma Target:
    Real M&A

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

To contact the reporter on this story:
Morwenna Coniam in Hong Kong at +852-2977-6612 or
mconiam@bloomberg.net
To contact the editors responsible for this story:
Clyde Eltzroth at +1-212-617-1879 or
celtzroth1@bloomberg.net;
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net
Roger Neill, Morwenna Coniam

Asian Update

Asian Market Update: AUD and Copper rally as China HSBC flash PMI returns to expansion


***Economic Data***
- (CN) CHINA JUNE HSBC/MARKIT FLASH MANUFACTURING PMI: 50.8 V 49.7E (highest since Nov 2013, first expansion in 6 months)
- (JP) JAPAN JUN MARKIT/JMMA MANUFACTURING PMI: 51.1 (highest reading since Mar) V 49.9 PRIOR
- (NZ) NEW ZEALAND MAY CREDIT CARD SPENDING M/M: +3.0% V -3.0% PRIOR; Y/Y: 7.5% V 3.2% PRIOR
- (NZ) NEW ZEALAND MAY NET MIGRATION: 4.0K V 4.1K PRIOR

Market Snapshot (as of 03:30 GMT):
- Nikkei225 +0.4%, S&P/ASX +0.8%, Kospi +0.5%, Shanghai Composite +0.1%, Hang Seng +0.4%, Sept S&P500 +0.2 % at 1,958, Aug gold -0.3% at $1,312, Aug crude oil +0.4% at $107.21/brl

***Highlights/Observations/Insights***
- Asian indices traded up nearly across the board in the morning session, cheering a much stronger than expected June flash manufacturing PMI from HSBC. Coming in at a 6-month high and the first instance of expansion in 2014, the data also showed reversal in Input prices (inflationary) and employment decreased at a slower rate, while the growth in new export orders slowed. HSBC chief economist for China indicated the "improvement was broad-based with both domestic orders and external demand sub-indices in expansionary territory", also pointing to evidence of "mini-stimulus filtering through to the real economy" and forecasting that policymakers "continue accommodative policy until the recovery is sustained." AUD/USD hit a 2-month high above $0.9440 in the wake of the data, rising some 50pips, while front month copper rose three-quarters of a percent above $3.14. Sept S&Ps were also up about 5 handles on the release, hitting new highs above 1,959.

- Also out of China, Beijing put out its quarterly Beige Book for Q2 that was slightly more downbeat, indicating fewer companies had access to credit amid weakening investment environment. Beige Book also warned that the economy continues to decelerate q/q, driven by perhaps unprecedented weakness in capex.

- Aug WTI Crude Oil contract opened up nearly a dollar above $107, with turmoil in Iraq unabated. Late on Friday, reports indicated rebel ISIS group had signed a truce with the Kurds in the northern part of the country. Over the weekend, ISIS militants were also reported to have extended their territory in the west of the country after having overrun a border post with Syria. Analysts suggest this risks a more protracted conflict, as it opens up supply routes for the rebels.

***Speakers/Political/In the Papers***
- (CN) China Academy of Social Sciences (CASS) researcher Yi Xianrong: PBoC won't adjust prudent monetary policy in H2 - Chinese press
- (CN) China iron ore port inventory rises to record - Chinese press
- (CN) As of Jun 18th, Beijing city home inventory at 80.8K units, highest level in 18 months - Xinhua
- (CN) According to owner of a small house developer in City of Xiangyang, Hubei Province, extremely difficult for small home developer to get loans now; Difficult even at 5% monthly rate from private loans - Chinese press
- (JP) Japan PM Abe's cabinet support rating is down 6pts to 43% (lowest since Dec 2012) in June - Asahi
- (JP) Japan PM Abe plans to reshuffle cabinet in Sept - Yomiuri
- (JP) According to a Nikkei survey of 144 top executives in Japan, 67% expect return to prior consumption levels in July-Sept quarter
- (KR) South Korea Fin Min Hyun: South Korea production may be affected by ferry sinking accident - financial press
- (IQ) Iran's Supreme Leader Ayatollah Khamenei: US should not intervene in Iraq; Iraqis are able to handle the conflict themselves - financial press
- (IQ) Iraq's ISIS militants said to have expanded and reinforced their territory in the west of the country after having overrun a border post with Syria - financial press
- (UK) BOE's Miles (Dove): Subdued inflation to allow policymakers to raise rates gradually; Increasingly likely he will vote for rate increase before his term expires next May - UK press

***Fixed Income/Commodities/Currencies***
- (JP) BOJ offers to buy ¥400B in 5-10yr JGB, ¥100B in 10-25yr JGB, and ¥30B in JGB with maturity over 25-yr
- (KR) South Korea (MOF) sells KRW900B 20-yr govt Bonds; avg yield 3.38%; bid-to-cover 4.44x
- SLV: iShares Silver Trust ETF daily holdings fall to 10,181 tonnes from 10,262 tonnes prior (lowest since May 1st)

***Equities***
US markets:
- GE: Confirms Alstom board chooses GE offer
- CENT: Harbinger Capital to make $1.1B bid for Central Carden - FT

Notable movers by sector:
- Consumer Discretionary: Takashimaya 8233.JP +0.4% (speculation on Q1 results); eprint Group Ltd 1884.HK -8.7% (FY13 results)
- Financials: Fosun International 656.HK +0.6% (announces acquisition)
- Materials: Rio Tinto RIO.AU +2.9%, FMG.AU +5.6% (comments from Rio Tinto exec calls for softer regulation)
- Industrials: Leighton Holdings LEI.AU +1.2% (said to quick sell John Holland unit); Asciano Limited AIO.AU +2.5% (analyst action)