>>>Asian Update

Asian Market Update: China non-manufacturing PMIs retreat, Australia retail sales growth slows

***Economic Data*** - (CN) CHINA MAR NON-MANUFACTURING PMI: 54.5 V 55.0 PRIOR - (CN) CHINA MAR HSBC SERVICES PMI: 51.9 (highest reading since Nov 2013) V 51.0 PRIOR; COMPOSITE PMI: 49.3 V 49.8 PRIOR - (HK) HONG KONG MAR HSBC PMI: 49.9 V 53.3 PRIOR (lowest reading and first contraction since Aug 2013) - (AU) AUSTRALIA FEB TRADE BALANCE (A$): 1.2B (4th consecutive month of surplus) V 800ME - (AU) AUSTRALIA FEB RETAIL SALES M/M: 0.2% V 0.3%E (7-month low) - (AU) AUSTRALIA MAR AIG PERFORMANCE OF SERVICES INDEX: 48.9 V 55.2 PRIOR (3-month low) - (JP) JAPAN MAR MARKIT PMI SERVICES: 52.2 (highest reading since Oct 2013) V 49.3 PRIOR; PMI COMPOSITE: 52.8 (15th consecutive month of expansion) V 52.0 PRIOR - (JP) Japan investors sold net ¥763.6B in foreign bonds last week (2nd straight week of net sales) vs sold net ¥395.5B in prior week; Foreign Investors sold net ¥515.5B in Japan stocks (net sellers for 3rd week) v sold net ¥191.0B in prior week - (KR) SOUTH KOREA MAR FOREIGN RESERVES: $354.3B V $351.8B PRIOR - (BR) BRAZIL CENTRAL BANK (BDB) RAISES SELIC TARGET RATE BY 25BPS TO 11.00%, AS EXPECTED

Market Snapshot (as of 03:30 GMT): - Nikkei225 +0.9%, S&P/ASX +0.2%, Kospi +0.3%, Shanghai Composite -0.2%, Hang Seng +0.4%, Jun S&P500 flat at 1,883, Jun gold +0.1% at $1,291, May crude oil -0.2% at $99.42/brl

***Highlights/Observations/Insights*** - Shanghai Composite has reversed from the higher open, as soft non-manufacturing PMI prints appear to overshadow the "targeted stimulus" announced by policymakers overnight. Rail names rallied after China Cabinet unveiled accelerated investment in the sector along with tax reduction for small companies. However the index retreated, as both HSBC Composite Services PMI and non-manufacturing official PMI fell 0.5pts in March. HSBC chief economist noted that "combined with the weaker manufacturing PMI reading, the underlying strength of the economy is softening... which should ultimately weigh on the labour market."

- Softer growth in Australia retail sales drove AUD/USD down over 30pips below $0.9220, as modest 0.2% m/m increase marked a 7-month low. JPMorgan economists noted that while the drop-off is not disastrous, coming after several strong months, but the cautious spending does reflect a "soggy" labor market. Traders also shrugged a higher than expected trade surplus, with a look into the components showing a slowdown in exports to China to A$8.18B v A$8.39B prior and also a near-10% dro in shipments of coal. RBA Gov Stevens was similarly cautious in his remarks, indicating that despite some promising signs, the transition away from mining remains challenging.

- Brazil raised rates for the 9th time in the current tightening cycle, meeting expectations of a 25bp hike to 11% but also removing a passage reflecting "continuity" in policy adjustment from its statement.

- Chile experienced more strong aftershocks in the same region following last night's 8.2 quake - 7.4 and 7.7 - prompting more orders of evacuation of northeast parts of the country. May copper contract remained steady around $3.02, having erased much of the overnight gains.

***Fixed Income/Commodities/Currencies*** - (CN) PBoC to drain CNY50B in 14-day repos, CNY40B in 28-day repos (13th consecutive drain); drains net CNY62B this week v drained CNY98B prior (8th week of drain) - SLV: iShares Silver Trust ETF daily holdings fall to 10,208 tonnes from 10,212 tonnes prior

***Equities*** US markets: - GILD: Reports positive results from phase III study of Sofosbuvir among Hepatitis C patients in Japan; showed 97% response rate; +1.9% afterhours - CY: Guides Q1 Rev "to exceed the higher end" of previous guidance of $169-171M v $165Me; CFO Brad Buss to retire; +1.1% afterhours - ONNN: Acquires Truesense Imaging for $92M in cash; expects immediate accretion; +1.1% afterhours - CAH: To Acquire AccessClosure, a Leading US Manufacturer of Extravascular Closure Devices for $320M; -0.4% afterhours - JNPR: Determined to cease development of application delivery controller technology; To reduce global headcount by 6% - filing; -1.1% afterhours - CACI: Cuts FY14 $5.12-5.51 v $5.78e, Rev $3.5-3.6B v $3.69Be (previously guided $5.59-5.98, R$3.65-3.80B on 1/29), cites reduced and delayed government spending; -8.9% afterhours

Notable movers by sector: - Consumer Discretionary: ABC-MART 2670.JP +2.2% (press speculation on FY13/14 results); Fonterra FCG.NZ +1.5% (announces partnership with Woolworths for Victoria) - Financials: Steadfast Group SDF.AU flat (acquires asset); Sealand Securities 000750.CN +5.6% (private placement plan); Yango Group 000671.CN -2.8% (FY13 results) - Industrials: Zhejiang East Crystal Electronic 002199.CN -4.6% (FY13 results); China Railway Construction Corp 1186.HK +8.9%, China Railway Group 390.HK +6.7%, CSR Corp 1766.HK +3.7% (China announces targeted stimulus) - Technology: Sharp Corp 6753.JP +2.8% (to increase LCD shipments to China) - Telecom: Coolpad Group 2369.HK +2.1% (comments from CFO)

>>> Fed's Bullard (dove, FOMC non-voter in 2014): Taper has gone better than exp

Fed's Bullard (dove, FOMC non-voter in 2014): Taper has gone better than expected
- FOMC not yet decided on prodedure once balance sheet returns to normal. 
- Discussed with the FOMC need for regular press conferences. 
- Exit most difficult part of Fed's role, more discussions required. 
- Weather impact on economy should lift this spring; winter impact to be seen in spring data. 
- Sees low real US rates for a while to come. 
- US farm prices plateaued due in part to softer commodity prices. 
- Farm sector seems able to adjust to lower land prices.

>>> Gilead Sciences Inc Reports positive results from phase III study of Sofosbu

Gilead Sciences Inc Reports positive results from phase III study of Sofosbuvir among Hepatitis C patients in Japan; showed 97% response rate

- Announced topline results from a Phase 3 clinical trial (Study GS-US-334-0118) in Japan evaluating the once-daily nucleotide analog polymerase inhibitor sofosbuvir in combination with ribavirin (RBV) for the treatment of genotype 2 chronic hepatitis C virus (HCV) infection. The study met its primary efficacy endpoint of superiority compared to a predefined historical control sustained virologic response (SVR) rate. In the study, 97 percent (n=148/153) of genotype 2 HCV-infected patients receiving 12 weeks of an all-oral regimen of sofosbuvir plus RBV achieved a sustained virologic response 12 weeks after completing therapy (SVR12). SVR12 rates among treatment-nave and treatment-experienced patients were 98 percent (n=88/90) and 95 percent (n=60/63), respectively. Of the 153 patients who received treatment, 11 percent (n=17) had documented cirrhosis. 
- Japan has one of the highest rates of liver cancer of any industrialized country, and the majority of cases are due to chronic HCV infection. An estimated two million people in Japan are living with HCV infection, and approximately 20-30 percent have the genotype 2 strain of the virus. Current treatment options for genotype 2 HCV infection in Japan involve up to 48 weeks of therapy with pegylated interferon injections, which may not be suitable for certain patients. 
- In Study GS-US-334-0118, 153 patients (100%) became HCV undetectable by treatment Week 4 and remained undetectable through the remainder of the 12-week treatment period. Post-treatment relapse accounted for five virologic failures. There were no treatment discontinuations due to adverse events and all patients completed the 12 week post-treatment follow-up visit. The most common side effects observed in the study, consistent with the population and safety profile of RBV, included nasopharyngitis, anemia, headache, malaise and pruritis. Full study results will be presented at a future scientific meeting. 
- Gilead established operations in Japan with the formation of Gilead K.K. in Tokyo in September 2013. If approved by the PMDA, sofosbuvir would be the first product to be launched and marketed by Gilead in Japan.

(BFW) Credit Suisse Changes M&A 15 List, Increases Exposure to Tech

Credit Suisse Changes M&A 15 List, Increases Exposure to Tech
2014-04-02 15:47:06.457 GMT


By Gaurav Panchal
     April 2 (Bloomberg) -- Corporate cash piles remain at
elevated levels, and in a low interest rate environment, this is
inefficient capital management, says Dan Scott, head of event
driven research at Credit Suisse.
  * Credit Suisse: Low corporate yields provide inexpensive form
    of financing, CEO confidence levels are rising
    * Overall M&A volumes remain abnormally low, even after a
      strong start to 2014
    * Maintains conviction M&A activity will trend higher as
      all main drivers remain supportive
    * Makes changes to “M&A 15” target list, adds exposure
      to telco, tech
    * Adds: Qlik Technologies, ThyssenKrupp, Bouygues
    * Removes: Meyer Burger, Mondelez, Actelion
    * Maintains Vodafone on list, says co. could be attractive
      asset for a telco major looking to gain exposure to
      Europe
    * M&A 15, a component of 2014 top investment idea “Cash-
      rich companies,” vs MSCI World: 12-mo. up 44.51% vs
      18.38%
  * April 25: Credit Suisse says drivers remain in place for
    increase in 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:
Gaurav Panchal in London at +44-20-7392-0511 or
gpanchal2@bloomberg.net
James Ludden

>>> US Close Dow+0,24% S&P+0,29% Nasdaq+0,20%

Closing Summary: S&P 500 Notches Fresh Record High
The stock market meandered inside a narrow range on Wednesday after posting solid gains on Monday and Tuesday. The S&P 500 added 0.3% and notched a fresh record closing high at 1890.90 while the Nasdaq (+0.2%) struggled to stay in the green throughout the session.

Equity indices began the day near their flat lines and maintained narrow ranges into the afternoon before breaking out to fresh highs during the final 30 minutes of action. That thrust placed the Dow Jones Industrial Average above its 2013 closing high of 16576.66 for the first time this year, but the index returned below that level by the close.

Meanwhile, the Nasdaq and S&P 500 extended their respective 2014 gains to 2.4% and 2.3%, but the Nasdaq had a tough time keeping pace with the benchmark index today as large cap tech names and biotechnology lagged.

The technology sector (-0.02%) spent the bulk of the trading day at the bottom of the leaderboard before clawing its way back to the flat line the close. Chipmakers lagged throughout the session with Intel (INTC 25.89, -0.10) falling 0.4% while the PHLX Semiconductor Index lost 0.2%.

For its part, biotechnology displayed strength at the open, but was unable to revisit its morning high as the day wore on. The iShares Nasdaq Biotechnology ETF (IBB 241.60, -0.05) ended little changed while the broader health care sector (+0.4%) finished a bit ahead of the S&P 500.

Elsewhere among influential sectors, financials (+0.1%) lagged while the discretionary sector (+0.7%) finished among the leaders. Homebuilders posted gains with the iShares Dow Jones US Home Construction ETF (ITB 24.71, +0.10) climbing 0.4% while retailers also displayed strength. The SPDR S&P Retail ETF (XRT 86.74, +1.24) jumped 1.5%.

Also of note, the smallest cyclical sector, materials (+0.6%), outperformed amid strength in miners. The Market Vectors Gold Miners ETF (GDX 24.32, +0.63) rose 2.7% while gold futures rose 0.9% to $1290.80/ozt.

Treasuries finished just above their lows after spending the entire morning in a steady retreat. The benchmark 10-yr yield added five basis points to 2.80%.

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

Today's economic data included just two reports:
According to the ADP National Employment Report for March, employment in the nonfarm private business sector rose by 191K, which was below the increase of 215K expected by the consensus. The February reading was revised up to 178,000 from 139,000.
Factory orders increased 1.6% in February after falling a downwardly revised 1.0% (from -0.7%) in January. The consensus expected an increase of 1.1%. The upside surprise in factory orders was a result of stronger-than-expected nondurable goods orders. Nondurable goods orders increased 1.0% in February, which more than offset the 0.7% decline in January. Durable goods orders were unrevised from the advance report, up 2.2% in February after falling 1.4% in January. Excluding transportation, durable goods orders increased 0.1% in February, down from an originally reported 0.2% gain in the advance report.
Tomorrow, the Challenger Job Cuts report for March will be released at 7:30 ET while weekly initial claims (consensus 320K) and the February Trade Balance (consensus -$39.30 billion) will cross the wires at 8:30 ET. The final report of the day—ISM Services (consensus 53.5)—will be released at 10:00 ET.

Russell 2000 +2.6% YTD
Nasdaq Composite +2.4% YTD
S&P 500 +2.3% YTD
Dow Jones Industrial Average -0.02% YTD

>>> Fed's Lockhart (moderate, FOMC alternate): Reiterates first Fed rate hike wi


Fed's Lockhart (moderate, FOMC alternate): Reiterates first Fed rate hike will likely be in second half of 2015
GDP of around +3% is needed to justify rate hike
- Expects US GDP to approach 3% in Q2 of 2014 and beyond.
- At current rate, taper will be finished by the end of 2014. 
- Weather impacts on US data were meaningful in Q1. 
- There is still a considerable amount of slack in the economy, especially in the job market. 
- Inflation should firm up and be higher over the medium term.

(BFW) TeliaSonera CEO Says ‘Not Ruling Out’ Tele2 Norway Assets

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TeliaSonera CEO Says ‘Not Ruling Out’ Tele2 Norway Assets 2014-04-02 16:58:33.247 GMT

By Adam Ewing April 2 (Bloomberg) -- TeliaSonera CEO Johan Dennelind declines to comment on whether the company is considering buying Tele2’s Norwegian assets, saying it’s “keen” to be part of European consolidation. * “We are evaluating options and opportunities where we are to strengthen our footprint. When the opportunity is there we will look,” Dennelind says in interview after AGM NOTE: Tele2 Considers Norway Asset Sale a Year After Russia Exit NSN N1YL3C6KLVRE<GO> March 5

Link to Company News:TEL2B SS <Equity> CN <GO> Link to Company News:TLSN SS <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: Adam Ewing at +46-8-610-0706 or aewing5@bloomberg.net

(BFW) UBS Placing 4.88m Jenoptik Shares, Terms Show

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BFW 04/02 16:36 *UBS PLACING 4.88M JENOPTIK SHARES, TERMS SHOW

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UBS Placing 4.88m Jenoptik Shares, Terms Show 2014-04-02 16:42:36.114 GMT

By Francesca Cinelli April 2 (Bloomberg) -- Meag Munich Ergo and Ergo Versicherung selling shrs at between EU12.15 and market close in accelerated bookbuild, according to terms obtained by Bloomberg News. * Stake is 8.5% of co.’s share capital * Shrs closed at EU13.08 today * UBS is sole bookrunner * NOTE March 28: Thuringia May Take Jenoptik Blocking Minority: Manager Magazin {NSN N35IOT6JIJWO <go>}

Link to Company News:{JEN GR <Equity> CN <GO>}

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

To contact the reporter on this story: Francesca Cinelli in Milan at +39-02-80644-252 or fcinelli@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at +44-20-7073-3722 or arummer@bloomberg.net

(BFW) Vivendi Says Bailiff Attempted to Enter Its Offices Over SFR

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BN 04/02 16:31 *VIVENDI: BAILIFF TRIED TO ACCESS DOCUMENTS RELATED TO SFR SALE BFW 04/02 16:31 *VIVENDI: LAWYERS HAVE DECIDED TO OPPOSE THIS INTRUSION BFW 04/02 16:30 *VIVENDI: BAILIFF ATTEMPTED TO ENTER INTO VIVENDI’S OFFICES BN 04/02 16:30 *VIVENDI: LAWYERS HAVE DECIDED TO OPPOSE THIS INTRUSION BN 04/02 16:29 *VIVENDI: BAILIFF ATTEMPTED TO ENTER INTO VIVENDI’S OFFICES

+------------------------------------------------------------------------------+

Vivendi Says Bailiff Attempted to Enter Its Offices Over SFR 2014-04-02 16:42:38.770 GMT

By Kenneth Wong April 2 (Bloomberg) -- Followed request from Colette Neuville, who heads an association defending the rights of minority shareholders: Vivendi * Bailiff attempted to gain access to documents relating to SFR sale: Vivendi * Vivendi lawyers decided to oppose this intrusion “after considering the extravagant nature of this procedure,” and will apply to a judge for a summary judgment. * EARLIER: Bouygues Says Its Earlier Offer for Vivendi’s SFR Remains Valid {NSN N3E63Z6TTDSD <go>} Link to Company News:{VIV 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: Kenneth Wong at +49-30-70010-6215 or kwong11@bloomberg.net

>>>(SeekingAlpha) Why AT&T Will Not Bid For Vodafone

Summary
  • An AT&T bid for Vodafone has been widely expected, as AT&T thinks it can grow in Europe investing on 4G LTE.
  • Vodafone's latest acquisition of a cable company in Spain clearly shows the different view its has for its future.
  • This move may have turned AT&T away from Vodafone, which seems to be supported by AT&T's recent boost to its share buyback program.


As I've analyzed before, there has been considerable speculation that AT&T(T) may bid for Vodafone (VOD) in the near future, as AT&T has been looking for growth abroad and targets mainly Europe. This is because the company thinks that exists significant growth for operators who have the financial backbone to invest in technology, namely 4G LTE (long-term evolution) infrastructure. As customers switch from traditional mobile phones to smartphones, the network quality is one major factor driving data revenue growth as other traditional services like voice or messaging are increasingly being less used by customers.
However, Vodafone thinks otherwise and has chosen a different path. Vodafone bought Kabel Deutschland in Germany last year and more recently reached an agreement to buy Spanish cable operator ONO. The acquisition of ONO for €7.2 billion ($9.9 billion) is the first since Vodafone sold to Verizon Communications (VZ) its stake in Verizon Wireless for $130 billion. This means Vodafone is changing its strategy. Instead of being mainly a mobile operator it is now becoming a convergent operator, offering mobile services but also internet and TV-services to customers. This explains Vodafone's recent push on cable, both through its Project Spring program and acquisitions.
Vodafone's bid for ONO is another step towards deeper consolidation in the European telecommunications sector. In France, Vivendi (OTCPK:VIVHY) is currently selling SFR, a move that could lead to the reduction from four to three mobile operators if it decides to sell it to Bouygues (OTCPK:BOUYY). There is also speculation that Orange (ORAN) may bid for Jazztel in Spain, with the same rational of Vodafone's acquisition of ONO. This reflects a trend towards the convergence model, which seems to be the new market standard in Europe and any operator not present throughout the services chain will be at a competitive disadvantage compared to competitors. This rising demand for landline assets reflects the need to offer combined broadband, TV and wireless packages. This is a distinctive factor of the European telecoms market in Europe compared to the U.S., and may be one the main reasons why AT&T may back away from its intention to buy some European operator.
Vodafone has also said it is interested in small cable companies in Portugal, if they are available for sale. If not, the company would build fiber in their areas. The same logic may be applied to other markets where Vodafone is already present, namely in Italy. Thus, as Vodafone has a stronger balance sheet after the disposal of its Verizon Wireless stake, more acquisitions may be likely and turn AT&T definitively away. This is reinforced by AT&T's recent stock buyback announcement.
AT&T's board has authorized the repurchase of additional 300 million shares, or about 6% of its total outstanding shares. This is worth about $11 billion and is a significant amount of cash even for a giant company like AT&T. While AT&T has bought back a lot of shares over the past few years, this latest round gives a signal that a large takeover may be out of sight. In January, AT&T denied to the U.K. Takeover Panel of bid plans for Vodafone, and that means an offer is constrained for 6 months, unless Vodafone invites AT&T to bid. However, these recent events (Vodafone bid on ONO and AT&T share buyback) clearly shows that Vodafone and AT&T are increasingly away from each other, so a takeover bid from AT&T seems now much less likely.
For AT&T's shareholders this may be good news, given that a Vodafone bid would be dilutive for its earnings-per-share [EPS] and would increase the company's balance sheet leverage. AT&T will now return more cash for its shareholders through buybacks and will maintain its balance sheet leverage under control, so this seems to be a smarter move than a takeover at least in the short-term. For Vodafone's shareholders, this means a takeover premium is now unwarranted. Nevertheless, Vodafone is currently trading at about 11x its 2015 estimated earnings and has a forward dividend yield of 5.6%, which seems to be relatively undemanding compared to some of its closest peers like Orange or Telefonica (TEF) that are trading at 10.6x and 16.6x 2015 earnings, respectively.