>>> What to look at today - 4th of June 2021

Asian stocks and U.S. equity futures stabilized Friday after Wall Street sagged amid robust U.S. economic data that stoked concerns about a pullback in central bank stimulus. Treasury yields and the dollar held gains.
Shares pared losses in Japan and turned higher in China and Hong Kong. S&P 500 and Nasdaq 100 futures were little changed after the gauges fell overnight but came off lows on signs President Joe Biden may be willing to compromiseon corporate taxes. Strong U.S. jobs data and record service-sector growth underscored the recovery from the pandemic.
China’s markets weathered Biden’s order amending a ban on U.S. investment in Chinese companies. The order named 59 firms with ties to China’s military or in the surveillance industry, including Huawei Technologies Co.
Gold remained lower after coming under pressure as yields and the dollar pushed higher, while the rally in crude oil has stalled. Meme stocks including AMC Entertainment Holdings Inc. had another volatile U.S. session. Bitcoin dipped after a cryptic Elon Musk tweet hinting at a split with the token.
US After Hours SENS +37% rises on PROMISE study results while NGL -16% declines on earnings

Nikkei -0.39% Hang Seng +0.14% CSI +1% Shanghai +0.14% Shenzen +0.65%

Eur$ 1.2111 CNH 6.4032 CNY 6.4053 JPY 110.28 GBP 1.4088 CHF 0.9046 RUB 73.2806 TRY 8.8127

S&P -0.11% Nasdaq -0.08% EuroStoxx -0.20% FTSE -0.15% Dax -0.16% SMI -0.12%

Macro :
- U.K. May Car Sales Rose Sevenfold From Depressed Year-Ago Level
- Active Funds Crushed Equity Benchmarks in May Like Never Before
- Germany Wins EU Approval for Extending Cogeneration Subsidy
- Biden May Back 15% Tax Floor Instead of 28% Corporate Rate: WaPo
- Fed’s Bullard Says Labor Market ‘Very Tight’ As Growth Picks Up

Spacs:
- Viking Venture Raises NOK600m for First Norwegian SPAC
- Ackman SPAC Is Said to Discuss Taking Universal Music Public

Keep an eye on :
- AIR FP : Boeing Warns China Trade Impasse Threatens Company’s Global Sway
- AAPL US : Apple Working on IPad Pro with Wireless Charging, New IPad Mini
- AMS SW : Acuity Brands to Buy AMS Osram’s DS Business in North America
- AZN LN : Malaysia Grants Nod to AZ Vaccine Manufactured in Thailand
- ASA NO : Atlantic Sapphire Offering Prices at NOK98.6/Share
- AG1 GY : Auto1 to Join Germany’s MDAX; DAX Index Unchanged
- BMPS IM : Italy May Define Monte Paschi Exit Road Map by July: MF
- BBVA SM : BBVA Offers to Scale Back Spain Job Cuts to 2,935: Europa Press
- COFB BB : Cofinimmo Holders Having Combined 54% Opt for Stock Dividend
- COL SM : Colonial Reaches Deal to Enable Purchase of Rest of SFL Unit
- FINGB SS : Fingerprint Cards Withdraws 2Q Revenue Guidance on Sales Delay
- G IM : Generali Affirmed at BBB+ by Fitch on Cattolica Acquisition (1)
- IIA AV : S Immo Rejects Takeover Offer by Immofinanz
- LXS GY : U.K. CMA to Review Lanxess Purchase of Emerald Kalama Chemical
- MS IM : EU May Cite Italy Over Protection for Mediaset: Repubblica
- MONT BB : Montea to Spend EU29m on Dutch Projects at 6.2% Initial Yield
- NOVN SW : Novartis Netter-1 Study Didn’t Reach Statistical Significance
- NOVN SW : Novartis Drug’s Radiation Blast Extends Prostate Cancer Survival
- NN NA : Deutsche Bank’s DWS, Generali Said to Vie for NN’s Asset Manager
- OCDO LN : Ocado Persuades Agency to Take Second Look at AutoStore Patent
- ORA FP : Orange Launches Internal Investigation Into Network Failure
- RNO FP : Nissan Shareholder Wants Master Agreement With Renault Disclosed
- SPM IM : Saipem, Naval Energies Sign Deal on Floating Wind Business
- SGE LN : Holder Offers 16m Sage Group Shares via Goldman Sachs: Terms
- SAN FP : Sanofi Plans Clinical Trial of Covid Vaccine in Japan: Nikkei
- FLY FP : Colonial Reaches Deal to Enable Purchase of Rest of SFL Unit
- TUNG LN : Tungsten Sees Earnings in Line With Guidance
- VIV FP : Pershing Square SPAC Nears Deal With Universal Music Group: DJ

>>> Europe : Brokers Upgrades & Downgrades - 4th June 2021

>>> Up
* Beiersdorf Raised to Buy at Citi
* Syncona Limited Raised to Buy at Peel Hunt; PT 279 pence

>>> Down
* Deutsche Wohnen Cut to Sell at LBBW; PT 52 euros
* Galp Cut to Equal-Weight at Barclays; PT 12 euros
* ING Cut to Underweight at Barclays; PT 9 euros
* Provident Cut to Reduce at Peel Hunt; PT 200 pence

>>> Initiation
* ACS Reinstated Neutral at Oddo BHF; PT 28 euros
* Burford Capital Rated New Outperform at Wedbush
* FCC Rated New Outperform at Oddo BHF; PT 14.40 euros
* Ferrovial Rated New Outperform at Oddo BHF; PT 29.50 euros
* JD Sports Assumed Equal-Weight at Morgan Stanley; PT 1,000 pence
* Kingfisher Assumed Equal-Weight at Morgan Stanley; PT 400 pence
* Ocean Outdoor Rated New Buy at Liberum; PT $9.70
* Singulus Tech Rated New Buy at Hauck & Aufhaeuser; PT 8.20 euros

>>> Call
* Kingfisher Self-Help Priced In, Equal-Weight: Morgan Stanley

FT : Telecoms veteran Lutz Schüler answers a £31bn call of duty

Telecoms veteran Lutz Schüler answers a £31bn call of duty
Chief executive of newly merged Virgin Media O2 vows to take on BT

Lutz Schüler has waited a long time to execute his grand plan of combining a cable company with a mobile phone network to challenge one of Europe’s most powerful incumbent telecoms groups.

About five years ago Unitymedia, the German cable company he had run for several years, was plotting a mobile acquisition with the goal of taking on the might of Deutsche Telekom. A landmark deal that reshaped that market was indeed reached — but it was Unitymedia that was sold, to Vodafone — leaving Schüler restless on the sidelines.

Yet that initial disappointment ultimately paved the way for his chance to create and lead a new group into battle, albeit beyond his home country.

Put in charge of Unity’s UK sister company Virgin Media in 2019 he went on to engineer a groundbreaking £31bn merger with O2, the Spanish-owned mobile network, which was agreed last year and completed this week.

An ebullient Schüler now stands at the helm of a telecoms giant. With 47m connections to its combined broadband and mobile network and £11bn of revenue, he vowed to shake up the British telecoms market and take the fight to BT as the deal closed.

It was a bittersweet moment for the 53-year old, who keeps a racing helmet bearing the Unitymedia name as a memento in his office.

He draws an analogy with his beloved Borussia Dortmund, the second-largest club in Germany that is typically the main opponent to traditional powerhouse Bayern Munich, in describing the opportunity before what is now known as Virgin Media O2: “We are the challenger to BT and I am the coach. We want to win.”

Speaking from O2’s headquarters just outside London in Slough, adjacent to the now demolished Crossbow House that appeared in the UK sitcom The Office, he declared he was “ready to fire” at BT in what promises to become a fierce competition for Britain’s broadband and 5G users.

The fight comes at a moment of profound reshaping in the UK market as billions of pounds pours into fibre and 5G.

BT, under Philip Jansen, has embarked on the biggest investment in British telecoms infrastructure in a generation with the possibility of external investors funding this expansion. Sky has been sold to Comcast, broadband company TalkTalk was recently taken private and mobile players Vodafone and Three both have newly minted chief executives under pressure to improve returns.

Previous attempts to use Virgin Media as a vehicle to compete with a powerful incumbent have fallen flat. The company attempted to take on Sky in 2006 when it changed its name from NTL to Virgin and brought Sir Richard Branson on as a shareholder, in a vainglorious and disastrous attempt to turn the cable company into a US-style media giant that almost bankrupted the business.

Fifteen years on, Schüler must pull off another tricky transformation, one that aims to realise £6.2bn of synergies from the enlarged group while living up to commitments to invest £10bn in expanding its fibre, 5G and digital services by 2026.

Virgin Media has never before opened up its cable network to rivals as the faster broadband speeds it can offer has been its strongest selling point. But with BT, CityFibre and dozens of smaller players spending billions of pounds on laying new full fibre lines across the UK, the new group needs to open up to ensure it doesn’t get left behind.

Another challenge will be transposing O2’s stronger reputation in customer service to Virgin Media, long a whipping boy for telecoms complaints.

Schüler, who served in the German air force before joining the business world, is confident the deal will not end in tears.

A striking figure, who bears a strong resemblance to singer Nick Cave with his lean 6ft 7in frame and long slicked back hair, Schüler was nevertheless not a shoo-in to lead the new Virgin Media O2.

Mark Evans, O2’s former chief executive, has ably led the mobile business during a long period of uncertainty as various attempts to sell and float the company have fallen through.

He seemed a more obvious choice to some industry observers if only to provide a sense of balance given that Liberty Global, Virgin Media’s parent, had already installed its chief executive Mike Fries as chair of the venture.

However Schüler was a known quantity at Telefónica, O2’s parent, having spent more than a decade at Germany broadband company HanseNet that was acquired by the Spanish group. He led the integration following the deal, with the experience in stitching together broadband-to-mobile services and networks helping him land the top job at Virgin Media O2.

Other former colleagues said there has been an ambience of machismo at Virgin Media since Schüler took over and that this will need to be tempered to make the integration with O2 work.

One telecoms veteran described the Liberty Global culture as “like sharks that smell blood in the water” when it came to pursuing opportunities — in stark contrast to Telefónica, which has a slower and more measured approach to corporate strategy.

Schüler is steeped in the Liberty Global world. But he is also described as an “excellent politician” by a former O2 teammate in Germany. Commuting to the UK weekly from Munich where his family still live, colleagues describe him as a warmer and more charismatic personality than the two New Zealanders who preceded him in the Virgin Media chief executive role, and as the right choice to lift the mood at the company during what could be a painful integration.

Evans, who left O2 after five years in charge on the day the deal completed, said he was confident the deal would deliver. “The future is even brighter,” he said, borrowing a famous phrase from the new company’s arch rival.

FT : Nestlé is engineering an exit from the fat years

Nestlé is engineering an exit from the fat years
Food and drink companies now rely on biotechnology to reduce unhealthy ingredients

In a crisis, a therapist often encourages the patient to examine his or her life honestly before moving on, and Nestlé appears to be adopting that attitude. “Is it worth it?” the world’s largest food group asked executives about making its “exciting indulgence” DiGiorno Three Meat Croissant Crust pizza, with lots of salt. The answer was left unsaid.

Nestlé’s latest motto is “Good food, Good life” but it has studied its brands, from KitKat chocolate to Maggi Noodles, and found many wanting. An internal presentation this year acknowledged that more than 60 per cent of its mainstream food and drink products, such as ice cream, snacks and that salty pizza, do not meet a “recognised definition of health.”

It is not exactly a shocking discovery. Nestlé is a Swiss processed food company, not a Danish chef concocting foraged salads. Nestlé, Kraft Heinz and Unilever traditionally made convenient and reliable meals, with a long shelf life and plenty of sugar and salt to whet the consumer’s appetite. They were expert at marketing them and many people were happy to eat them.

After the fat years, consumers and governments have rebelled. Sugar, sodium and saturated fats are no longer acceptable in such quantities, and shoppers peruse labels for additives and E numbers. The edict of the writer Michael Pollan not to buy “products with more than five ingredients, or any ingredients you can’t easily pronounce” has become accepted wisdom.

This leaves Nestlé and its rivals in a bind. “Some of our categories and products will never be ‘healthy’ no matter how much we renovate,” its presentation gloomily observed. Ice creams, or cans of Orange San Pellegrino with more than 7.1g of sugars per 100ml, should be occasional treats, but removing the sugar would eliminate the indulgence.

Nestle could sell the worst offenders to another company that cares less about its image, but it would still face a problem. Shoppers now want healthy, unprocessed products with “clean labels” that taste as good as the old ones, feel the same in the mouth and will last just as long. The truth is, whatever promises producers make, it cannot all be done.

For some years, the company has played an ingredient version of the wood block game Jenga, taking out as many unhealthy elements as possible from their products without the edifice collapsing. It does not always work: Nestlé withdrew its Milkybar Wowsomes, a version of the chocolate with less sugar, in the UK and Ireland after it failed to sell as well as the original.

As food groups reduce ingredients, they have to substitute others to achieve a similar effect. Take sponge cake. One study found that 30 per cent less fat could be used to bake a cake without altering the texture or flavour so much that people who sampled it objected, if OptiSol 5300 was used to replace the fat. Fine, but what on earth is OptiSol 5300?

It turns out to be an ingredient derived from flaxseed that can bulk out baked goods and extend their shelf life, yet qualifies for a clean label because it hails from a plant. It is made by Glanbia Nutritionals, which bills itself as “a science-led, quality-obsessed and down-to-earth provider of innovative nutrition solutions to many of the world’s greatest brands.”

Glanbia started as an Irish dairy co-operative and still makes milk and cheese, but has gravitated to where the action is in the food industry, devising natural substitutes for traditional ingredients. It is not alone: Tate & Lyle, the British company founded as a sugar producer, plans to sell its sweeteners division to focus on making such ingredients for Nestle and others.

The clean label movement has been good for a bunch of nutrition and biosciences groups — Givaudan, Symrise, Corbion, IFF Nourish, Ingredion — whose ingredients fluff out cakes, make biscuits crunch and produce pea protein for plant-based milk. Like car parts suppliers, you may never have heard of them, but their technology plays an increasing culinary role.

These ingredients may be healthier than the chemicals and additives they are replacing, as well as sugar and salt. They also qualify as clean label, and so can be sold as natural to shoppers. But it is hard to argue that they are less processed, or intricately engineered.

This applies to plant-based food more generally. Impossible Foods takes DNA from soy plants and inserts it into genetically engineered yeast to obtain the heme additive that makes its meatless burgers “bleed”. A US appeals court this month upheld the regulatory approval of the technology.

One day, consumers will notice that natural does not equate to unprocessed in new foods. Kiwi fruit purée can be added to cloudy apple juice and the liquid homogenised at high pressure to keep it uniform and accentuate the aroma. It qualifies for a clean label, but is that nature or artifice?

Nestlé will keep renovating, given its own analysis. It is taking on Oatly, the Swedish oat drink maker, in Europe with a pea-based milk alternative called Wunda; it has launched Sensational Vuna vegan tuna in Switzerland. But it still makes processed food, if not as we know it.

WSJ : Carbon Price Boom Attracts Investors to Emissions-Trading Market

Carbon Price Boom Attracts Investors to Emissions-Trading Market
Growth of new ETF signals increasing appetite for carbon-credit investments

Investors have piled into new carbon-credit-trading funds, helping make the upstart market one of the best-performing commodities-related investments of the past year.

The price of carbon credits traded in Europe has jumped 135% over the past 12 months and recently hit a series of records as economic activity rebounded from pandemic lockdowns. Only lumber, driven higher by the housing boom, has proved a better commodities investment.

Tighter government controls, a bitter European winter and low inventories of liquefied natural gas—which required the need to burn more carbon-intensive coal—also played a role.

The soaring market has attracted investor cash from a collection of nascent carbon-only investment funds that seek to profit as economies transition away from fossil fuels. KraneShares Global Carbon ETF, launched in July 2020, has quickly attracted close to $400 million in investor money, most of those inflows this year. It trades under the ticker symbol KRBN.

Jonathan Shelon, chief operating officer at KraneShares, says demand has grown steadily from both retail investors and professionals who see the investment as a way to profit from tighter regulation and investor pressure on companies to reduce carbon emissions.

Other funds aimed at institutional investors are also targeting carbon.


Mark Carhart, the former chief of a Goldman Sachs hedge fund, launched a carbon-transition fund with Kepos Capital that includes emissions allowances, futures, derivatives and equities. The fund manages hundreds of millions of dollars in assets, according to the fund’s investors.

New York-based Aetos Capital is about halfway to its fundraising goal of around $200 million for a carbon fund it launched last year.

In April, Northlander Commodity Advisors LLP, a London-based hedge-fund manager, launched a carbon-only fund that aims to raise $100 million. Carbon Cap Management runs a $54 million World Carbon Fund that tracks European and U.S. carbon markets.

Most of these funds trade in carbon-trading programs set up by governments as a way to curb greenhouse-gas emissions.


The European Union’s carbon-trading program—the world’s largest and most heavily traded carbon market—was launched in 2005 as part of its Kyoto Protocol commitments and is one of the bloc’s key tools in slashing emissions. The European Commission, the EU’s executive arm, grants credits to countries, which then auction them to the factories, power plants and other polluters that are required to buy credits for the carbon they emit.

Intercontinental Exchange, which hosts European and U.S. emissions trading, says the number of participants trading both European and North American carbon markets grew by 85% from 2017 to 2020.

Open interest—or contracts outstanding—on European emissions credits hit a record value of $105 billion on May 25, ICE said.

Intercontinental Exchange European carbon futures—the main European carbon asset—closed Thursday at €50.29 a metric ton, equivalent to $60.99, with prices having slipped from recent record highs of €56.65. Even so, traders are taking bets that carbon prices will rise as high as €100 a metric ton, said Trevor Sikorski, head of energy transition research at consulting firm Energy Aspects.

The other main venue for carbon trading is the cap-and-trade system that California shares with Quebec, known as the Western Climate Initiative. It is a tenth the size of Europe’s market, but is increasingly attractive to traders because it tends to be less volatile.

Built into the WCI’s structure is a minimum carbon price that increases each year by 5% plus inflation, meaning prices are legislated to increase each year.

Carbon trading launched more than a decade ago and at first failed to gain steam, with demand for emissions allowances unable to keep up with supply. For years, carbon prices suffered whipsaw volatility as trading volumes languished at low levels.


European regulators made adjustments to how the market operates a few years ago, which revived interest among investors.

Prices for carbon credits rise when end users, such as power plants and aluminum smelters, need them to increase output. But investors also play a role, bidding up the credits and making it more expensive for carbon-intensive firms to operate.

That may help cut pollution, says Ulf Ek, chief investment officer at Northlander.

He says investors in his fund “want a good return but also want to do something good with their investment.”

Both the EU and the U.S. have set ambitious targets for carbon reduction. Brussels is aiming to be carbon neutral by 2050, while the Biden administration is proposing to halve U.S. emissions by the end of the decade.

“More investors are doing the math and realizing the cost of halving emissions is significantly above where the market is trading,” said Ariel Perez, head of environmental products at commodities-trading company Hartree Partners, which invests directly in credits.

WSJ : William Ackman SPAC Nears $40 Billion Universal Music Deal

William Ackman SPAC Nears $40 Billion Universal Music Deal
Prospective deal puts a valuation on the world’s largest music business at $42 billion with debt

Hedge-fund billionaire William Ackman’s special-purpose acquisition company is nearing a deal with Universal Music Group that would value the world’s largest music business at about $40 billion, people familiar with the matter said.

The deal would be the largest SPAC transaction on record, exceeding the roughly $35 billion that Singaporean ride-hailing company Grab Holdings Inc. was valued at in a similar deal recently, according to Dealogic. It would have a so-called enterprise value, taking into consideration Universal’s debt, of about $42 billion.

It isn’t guaranteed Universal and the SPAC, Pershing Square Tontine Holdings Ltd. PSTH 0.56% , will reach a deal. If they do, it could be completed in the next few weeks and isn’t subject to any additional due diligence, the people said.

The deal, which would hand Mr. Ackman’s entities a 10% stake in a newly public Universal, would have a €33 billion ($40 billion) equity value and a €35 billion enterprise value, a measurement that takes into consideration the amount of debt and cash a company has on its balance sheet.

Universal, a subsidiary of French media conglomerate Vivendi SE, is the record label behind artists including Lady Gaga, Taylor Swift, Billie Eilish and the Weeknd. Its stable also includes classic acts such as Queen and the Beatles, and last year it bought Bob Dylan’s entire publishing catalog.

Tencent Holdings Ltd. owns about 20% of Universal after the Chinese internet conglomerate doubled its stake last year in a deal that valued the business at about €30 billion.

Universal has benefited from an increase in revenue from music streaming on services such as Spotify Technology SA. Universal had about €7.4 billion in revenue last year, accounting for nearly half of Vivendi’s total.

Vivendi said in February it planned to spin off the business and list it in the Netherlands later this year, with 60% of Universal’s shares distributed to the French company’s investors. That plan is still in place. As a result of the Pershing Square transaction, the investment firm and Vivendi would each hold an additional 10%, with Tencent retaining a 20% stake, the people said.

SPACs, or empty shells that raise money with the sole purpose of looking for a target to merge with and bring public, have exploded in popularity as companies seek alternatives to a traditional IPO.

So far in 2021, at least 330 SPACs have raised $104 billion, blowing through last year’s record of more than $80 billion, according to Dealogic. They typically have two years to find a target.

Enthusiasm for SPACs has faded recently among investors, as some of the highest-profile deals haven’t met lofty financial targets and regulators have been increasing scrutiny on the transactions.

Pershing Square Tontine raised about $4 billion in a New York Stock Exchange IPO last year. Vivendi said in a news release last month it was considering selling 10% of Universal’s shares to a U.S. investor, without naming one.

Mr. Ackman made a splash in July when he raised his SPAC and said he was on the hunt for a large private company to take public. Since then, one of the biggest guessing games on Wall Street has been predicting which company might strike a deal with him.

He initially told investors a deal could be made public by the end of March, before recently telling The Wall Street Journal that he had been working on one transaction since November, but needed more time.

Mr. Ackman has experience with SPACs, having helped flip Burger King Holdings Inc. public through one he co-founded in 2012, well before the current SPAC craze took hold. While his firm, Pershing Square Capital Management LP, made its name agitating at companies including Herbalife Nutrition Ltd. and Automatic Data Processing Inc., he has shifted his focus in recent years to friendlier investments in companies such as Starbucks Corp.

His SPAC sought to differentiate itself from other vehicles that have come under fire for appearing to enrich sponsors at the expense of other shareholders.

Mr. Ackman and other executives agreed to pay more for a smaller portion of its shares instead of taking the typical 20% cut for a nominal fee. Analysts have said that should make them more focused on profiting from the company’s long-term performance, rather than the deal itself.

Pershing Square Tontine shares closed Thursday at $25.05 and were trading down around 5% after hours after the Journal reported on the potential deal.

>>> US After Hours Summary: SENS +37% rises on PROMISE study results while NGL -

After Hours Summary: SENS +37% rises on PROMISE study results while NGL -16% declines on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ASAN +10.4%, TLYS +8.2%, FIVE +7.2%, IDT +6.4%, ZUMZ +6.0%, DOCU +5.6%, MDB +5.5%, JOAN +5.1%, PHR +3.0%, NX +2.3%, CHPT +1.9%, SAIC +1.3% (also agreed to acquire Halfaker and Associates)

Companies trading higher in after hours in reaction to news: SENS +36.6% (announced results from PROMISE study evaluating safety and accuracy of next generation Eversense CGM System), TRGP +6.8% (to join S&P MidCap 400), ENV +6.3% (to join S&P MidCap 400), CHRS +3.5% (announced "positive" results from JUPITER-02 study), AEO +2.7% (increased dividend), OSK +2.7% (awarded $940 mln Army contract), JWS +1.8% (closed combination with Cano Health), AZN +1.6% (co and Merck [MRK] announced results from OlympiA Phase III trial of LYNPARZA)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: NGL -16.3%, PD -5.0%, SUMO -2.3%

Companies trading lower in after hours in reaction to news: PSTH -7.7% (nearing deal with Universal Music Group, according to WSJ), AMC -2.9% (continued volatility; released share count information and preliminary proxy statement ahead of Shareholder Meeting), HOLX -0.8% (received updated medical policy for Acessa procedure from Cigna [CI])