>>> Europe : Brokers Upgrades & Downgrades - 31st of May 2021 V2(+)

>>> Up
* Commerzbank PT Raised to 7.60 euros at Bankhaus Metzler (+)

>>> Down
* Endesa Cut to Neutral at JB Capital Markets; PT 26.80 euros (+)
* Iren Cut to Hold at Stifel; PT 2.70 euros (+)
* Marks & Spencer Cut to Equal-Weight at Morgan Stanley

>>> Initiation
* Fielmann Reinstated Hold at Nord/LB; PT 60 euros
* JDE Peet's Rated New Neutral at Oddo BHF; PT 36 euros (+)
* Mr Bricolage Rated New Buy at IDMidcaps; PT 14 euros
* Valneva ADRs Rated New Buy at Guggenheim; PT $35

>>> Call
* Ubisoft’s Far Cry 6 Trailer a Positive Lead Indicator: Jefferies (+)

>>> TradeGate Pre-Market Indications

DAX:
  • Deutsche Bank (DBK TH) -1.2%
    • Fed Admonishes Deutsche Bank for Ongoing Compliance Failures (2)
MDAX:
  • Sartorius (SRT3 TH) +1.1%
  • Rheinmetall (RHM TH) +1%
  • Symrise (SY1 TH) -0.9%
  • K+S (SDF TH) -1.2%
    • Stock gained 15% last week
SDAX:
  • Borussia Dortmund (BVB TH) +2%
  • Hamburger Hafen (HHFA TH) +1.8%
  • Home24 (H24 TH) +1.5%
  • Indus Holding (INH TH) -0.7%

>>> Stoxx 600 Pre-Market Indications

  • Sinch (1I9 TH) +2.1%
    • Stock gained 11% last week
  • Polymetal (PM6 TH) +1.7%
  • Sartorius Stedim Biotech (56S1 TH) +1.7%
  • Carl Zeiss Meditec (AFX TH) -0.8%
  • Nokia (NOA3 TH) -0.8%
  • Stellantis (8TI TH) -0.9%
  • Symrise (SY1 TH) -1%
  • Ryanair (RY4C TH) -1%
    • Ryanair jet makes emergency landing in Berlin over reported threat
  • Deutsche Bank (DBK TH) -1%
    • Fed Admonishes Deutsche Bank for Ongoing Compliance Failures (2)
  • AMS (DQW1 TH) -1.1%
  • Mowi (PND TH) -1.2%

WSJ : China’s Factory Activity Slipped in May, but Consumer Spending Held Up

China’s Factory Activity Slipped in May, but Consumer Spending Held Up
A Holiday spurred spending on travel and accommodation, and construction climbed

BEIJING—An official gauge of Chinese factory activity slipped in May on weaker export demand and higher commodity prices, while the country’s nonmanufacturing sector was bolstered by stronger construction and holiday spending.

China’s official manufacturing purchasing managers index slipped slightly to 51.0 in May from the previous month’s 51.1 reading, according to data released Monday by the National Bureau of Statistics.

The result was largely in line with the 51.1 median forecast expected by economists polled by The Wall Street Journal, and marked the 15th straight month that the gauge came in above the 50 mark that separates expansion from contraction.

A recent surge in prices for raw materials such as iron ore, crude oil and coal sent the subindex for input prices to 72.8 in May, the highest level since November 2010, while output prices notched up a record-high reading of 60.6, according to Monday’s PMI data.

The soaring raw-material costs prompted some factories that benefit from the increased prices to step up output, pushing the subindex measuring production higher.

But not everyone gains from the higher input costs. Total new orders retreated to the lowest level in a year as fewer bookings from overseas markets pushed new export orders into contraction territory, the statistics bureau said.

“The soaring prices will soon dent demand and squeeze profit margins for manufacturers by adding production costs,” said Xing Zhaopeng, an economist at ANZ.

China’s cabinet, the State Council, pledged this month to stabilize high-flying commodity prices by cracking down on speculators and those hoarding raw materials.

Chinese Premier Li Keqiang last week visited a port in the eastern city of Ningbo to send a message about the importance of stable supply-chain operations. Mr. Li also called for more targeted measures to help the smaller manufacturers hit hardest by higher input prices.

Chinese exporters were also under pressure from the yuan’s rally, which makes Chinese goods more than expensive in the global markets. Financial regulators said in a meeting last week that the yuan won’t be used as a tool to support exports via depreciation, or contain imported inflation via appreciation.

Monday’s data showed larger manufacturers performing better while a subindex tracking small enterprises fell into contraction, below the 50 mark.

In response to what he described as “runaway commodity prices,” Nomura economist Ting Lu told clients in a note Monday that he expects Beijing to “take action to secure supplies and adjust some overly ambitious carbon-emission reduction measures.”

Mr. Lu expects China’s economy to face increasing pressure in the second half of the year, as pent-up demand subsides, exports weaken, property-tightening measures begin to take effect and surging raw-material prices suppress real demand.

Separately on Monday, China reported that its nonmanufacturing PMI, which includes services and construction activity, rose to 55.2 in May from 54.9 in the previous month.

The subindex measuring construction activity climbed to 60.1 in May from April’s 57.4, the statistics bureau said, while those for transportation and accommodations marked a second month above 65—indicating a sustained rebound in travel. The retail, catering, cultural, sports and entertainment sectors also remained well in expansion territory in May, reflecting what the statistics bureau described as an accelerating consumer recovery.

Consumption was bolstered by the five-day Labor Day holiday at the beginning of May, during which traveler numbers topped pre-pandemic levels for the first time since the initial coronavirus outbreak.

However, expansion for the service industry as a whole narrowed slightly to 54.3 in March, compared with 54.4 in April, held back in part because of production-linked services, according to the statistics bureau.

Going forward, China’s domestic-consumption recovery faces a fresh challenge in the form of several new Covid-19 outbreaks across China, including in the country’s south and northeast. On Sunday alone, China’s National Health Commission reported 20 new cases of domestic coronavirus transmission, all in the southern province of Guangdong, which abuts Hong Kong.

“The resurgence of local transmission may have dragged May’s consumption, and coupled with soft offline spending, we expect China’s consumption to stay weak throughout the year,” Mr. Xing of ANZ said.

>>> What to look at today - 31st of May 2021

Most Asian stocks retreated Monday and U.S. equity futures were steady after signs China’s economic recovery may be leveling out and as investors continue to weigh global inflation risks.
Japan underperformed amid concern about an extended state of emergency to curb the coronavirus. Shares fell in Hong Kong and China, where a gauge of the manufacturing industry suggested the economy’s recovery momentum might have peaked. U.S. contracts ticked up after the S&P 500 notched its fourth-straight monthly advance. Treasury yields dropped below 1.60% on Friday. There’s no Treasuries cash trading in Asia amid holidays in the U.S. and U.K.
The offshore yuan stabilized in the wake of comments leaning against its climb. Two state-run newspapers flagged risks fueled by rapid gains in the currency. China also set its daily reference rate at a weaker-than-expected level.
Bitcoin traded below $35,000 after a Friday slump as Bank of Japan Governor Haruhiko Kuroda warned about the token’s volatility and speculative trading.

Nikkei -1.15% Hang Seng -0.50% CSI -0.46% Shanghai -0.20% Shenzen +0.46%

Eur$ 1.2199 CNH 6.3574 CNY 6.3611 JPY 109.66 GBP 1.4193 CHF 0.8991 RUB 73.2619 TRY 8.5720 WTI$ 66.74 +0.63% Gold 1,906 .53 +0.14% BTC 34,250 -1500 ETH 2300 -110

S&P +0.06% Nasdaq +0.07% EuroStoxx -0.17% FTSE Closed Dax -0.21% SMI -0.28%

Macro :
- Crypto Assets a Great Concern, Says Central Bank Enforcer
- Goldman to Double Japan Real Estate Investment to $2.3 Billion
- France Is Ready to Start Cutting Back Crisis Aid, Minister Says
- Israel's Netanyahu Faces Growing Threat to Lengthy Rule
- Netanyahu Rivals Move Closer to Ousting Him, Forming Government
Spacs :
- GM-Backed Wejo to Go Public via Merger With SPAC: M&A Snapshot
- SPACs Take Trading Apps Public in a Test of Lay-Investor Loyalty
- Accor SPAC Raises EU300 million in Private Placement of Units

Keep an eye on :
- AC FP : Accor SPAC Raises EU300 million in Private Placement of Units
- AIR FP : Qatar Air Is in a Mystery Spat with Airbus, Will Launch 777x
- ALM SS : Alm Equity Offering of 3m Shares Prices at SEK114/Share
- BSLN SW : Basilea’s Derazantinib Shows Improvement of Survival
- BBED NA : Beter Bed Explores Potential Sale of Sangjatten to Lars Larsen
- BNP FP : BNP Paribas Adds Bankers to Tap Into ‘Incredible’ Nordic Wealth
- BOO LN : Boohoo Shareholders Advised to Block Kane Reappointment:Guardian
- CARR IM : Fly Srl Raises Tender Offer Price for Carraro to EU2.55/Share
- COFB BB : Cofinimmo to Divest EU80m in Office Buildings
- CSGN SW : *CREDIT SUISSE’S RENTECH FUND HOLDS BACK SOME CLIENT WITHDRAWALS
- DBK GY : Fed Admonishes Deutsche Bank for Ongoing Compliance Failures
- EO FP : Faurecia Increases Undrawn Credit Line to EU1.5B From EU1.2B
- GLJ GY : Grenke 1Q Net Income EU14.0M Vs. EU19.7M Y/y
- HYVE LN : Hyve, Carlyle in Talks on Investment Deal of Up To GBP250m: Sky
- ICP LN : U.K.’s Park Holidays Hires Bankers to Explore Potential Sale:Sky
- IPN FP : Ipsen Confirms U.S. FDA Accepts NDA for Palovarotene
- IRE IM : Iren CEO Massimiliano Bianco to Leave Post
- KINVB SS : Kinnevik Exploring Potential Transaction Related to Babylon
- LIT IM : Marbles Makes EU468 Million Bid for Italy’s Retelit (1)
- LHA GY : Lufthansa Has Permits to Fly to Moscow and St. Petersburg
- KN FP : Natixis Taking ‘Necessary Steps’ to Recoup Ex-CEO’s Severance
- NVG PL : Navigator Co 1Q Net Income EU23.5M Vs. EU30.6M Y/y
- NOVN SW : Novartis to Terminate Beovu Study Early on Safety Concern
- SNN LN : Sanne Group: Board Unanimously Rejected Cinven’s 4th 850p Bid
- SNR LN : Senior Rejects Lone Star Proposal at 176p/Share; Shares Jump
- SFZN S: Siegfried Restarts Production; Flags 1H Hit From Cyberattack
- S30 FP : Short Seller Muddy Waters Notches Another Win With Solutions 30
- STLA IM : Stellantis to Restart Production at Michigan Jeep and Ram Plants
- STLA IM : Stellantis Mulls Italian Battery Investment Amid Draghi Push
- VOLVB SS : Volvo Cars Sees Return of 8,000 Staff to Office This Week: SvD
- WDI GY : Wirecard foiled staff attempts to flag concerns: Whistle-blower

Ars Technica : Covert channel in Apple’s M1 is mostly harmless, but it sure is i

Covert channel in Apple’s M1 is mostly harmless, but it sure is interesting
Technically, it's a vulnerability, but there's not much an attacker can do with it.

Apple's new M1 CPU has a flaw that creates a covert channel that two or more malicious apps—already installed—can use to transmit information to each other, a developer has found.

The surreptitious communication can occur without using computer memory, sockets, files, or any other operating system feature, developer Hector Martin said. The channel can bridge processes running as different users and under different privilege levels. These characteristics allow for the apps to exchange data in a way that can't be detected—or at least without specialized equipment.

Technically, it’s a vulnerability but...
Martin said that the flaw is mainly harmless because it can't be used to infect a Mac and it can't be used by exploits or malware to steal or tamper with data stored on a machine. Rather, the flaw can be abused only by two or more malicious apps that have already been installed on a Mac through means unrelated to the M1 flaw.

Still, the bug, which Martin calls M1racles, meets the technical definition of a vulnerability. As such, it has come with its own vulnerability designation: CVE-2021-30747.

"It violates the OS security model," Martin explained in a post published Wednesday. "You're not supposed to be able to send data from one process to another secretly. And even if harmless in this case, you're not supposed to be able to write to random CPU system registers from userspace either."

Other researchers with expertise in CPU and other silicon-based security agreed with that assessment.

"The discovered bug cannot be used to infer information about any application on the system," said Michael Schwartz, one of the researchers who helped discover the more serious Meltdown and Spectre vulnerabilities in Intel, AMD, and ARM CPUs. "It can only be used as a communication channel between two colluding (malicious) applications."
He went on to elaborate:

The vulnerability is similar to an anonymous "post office box", it allows the two applications to send messages to each other. This is more or less invisible to other applications, and there is no efficient way to prevent it. However, as no other application is using this "post office box", no data or metadata of other applications is leaking. So there is the limitation, that it can only be used as a communication channel between two applications running on macOS. However, there are already so many ways for applications to communicate (files, pipes, sockets, ...), that one more channel doesn't really impact the security negatively. Still, it is a bug that can be abused as an unintended communication channel, so I think it is fair to call it a vulnerability.

A covert channel might be of more consequence on iPhones, Martin said, because it could be used to bypass sandboxing that's built into iOS apps. Under normal conditions, a malicious keyboard app has no means to leak key presses because such apps have no access to the Internet. The covert channel could circumvent this protection by passing the key presses to another malicious app, which in turn would send it over the Internet.

Even then, the chances that two apps would pass Apple's review process and then get installed on a target's device are farfetched.

Why the heck is a register accessible by EL0?
The flaw stems from a per-cluster system register in ARM CPUs that's accessible by EL0, a mode that's reserved for user applications and hence has limited system privileges. The register contains two bits that can be read or written to. This creates the covert channel, since the register can be accessed simultaneously by all cores in the cluster.

Martin wrote:

A malicious pair of cooperating processes may build a robust channel out of this two-bit state, by using a clock-and-data protocol (e.g., one side writes 1x to send data, the other side writes 00 to request the next bit). This allows the processes to exchange an arbitrary amount of data, bound only by CPU overhead. CPU core affinity APIs can be used to ensure that both processes are scheduled on the same CPU core cluster. A PoC demonstrating this approach to achieve high-speed, robust data transfer is available here. This approach, without much optimization, can achieve transfer rates of over 1MB/s (less with data redundancy).


It's not clear why the register was created, but Martin suspects that its access to EL0 was an error rather than intentional. There is no way to patch or fix the bug in existing chips. Users who are concerned about the flaw have no other recourse than to run the entire OS as a properly configured virtual machine. Because the VM will disable guest access to this register, the covert channel is killed. Unfortunately, this option has a serious performance penalty.

Martin stumbled on the flaw as he was using a tool called m1n1 in his capacity as the lead manager for Asahi Linux, a project that aims to port Linux to M1-based Macs. He initially thought the behavior was a proprietary feature, and as such, he openly discussed it in developer forums. He later learned that it was a bug that even Apple developers hadn't known about.

Again, the vast majority of Mac users—probably higher than 99 percent—have no reason for concern. People with two or more malicious apps already installed on their machine have much bigger worries. The vulnerability is more notable for showing that chip flaws, technically known as errata, reside in virtually all CPUs, even new ones that have the benefit of learning from previous mistakes made in other architectures.

Apple didn't respond to a request for comment, so it's not yet clear if the company has plans to fix or mitigate the flaw in future generations of the CPU. For those interested in more technical details, Martin's site provides a deep dive.

(ZH) Morgan Stanley Asks What To Do When Everything Is Expensive

Morgan Stanley Asks What To Do When Everything Is Expensive

By Vishwanath Tirupattur, global head of Quantitative Research at Morgan Stanley
The title of our recently published mid-year outlook – Now the Hard Part – captures the conundrum market participants face: early-cycle timing, mid-cycle conditions and late-cycle valuations.
It is unusual to see this confluence, especially because it was only a little over a year ago that global risk markets were reeling and recording cyclical lows. Thus, despite our economists' call for strong global economic growth supported by the largest fiscal stimulus, the largest monetary easing and the highest consumer savings rates in post-war history, the investment recommendations from our strategists have a more subdued tone. Over the next 12 months, we see single-digit upside in global equities, a modest steepening of the yield curve and thus a neutral stance in government bonds. We have downgraded corporate credit to neutral and expect flat returns in emerging market fixed income.
Our strategists' restraint is really driven by the conviction that current valuations across risk markets already reflect a lot of positivity about economic growth. That said, our outlook also points to attractive return potential in asset classes not often in the limelight because of the perception of complexity associated with them. In today's Sunday Start, we will highlight a few such opportunities. We argue that these are not nearly as complex as perceived and are driven by the same economic narrative that underlies broader risk markets. Equally interestingly, the opportunity set includes both long and short ideas.
The first opportunity we want to highlight is in collateralized loan obligations (CLOs), which are first-order securitizations of corporate loans. With over US$800 billion of outstanding, CLOs are no longer a niche market. The structural leverage in CLOs makes the equity tranches well suited for current conditions as CLO liability tranche spreads have tightened at a faster rate than spreads of CLO assets, thus creating conditions for attractive returns. The strong fundamental backdrop, leading to lower loan default rates, along with upside from Libor floors and other embedded options convince our CLO strategists, Charlie Wu and Vasu Goel, to expect CLO equity tranche returns to be in the mid-to-high teens over the next 12 months.
As we have noted on these pages before, the US housing market has been on fire in the months since the onset of the pandemic. Even though we expect the rate of growth in home prices to slow from current levels, the US housing market sits on a healthy foundation. As our securitized credit strategists, Jim Egan and Som Basu, have highlighted, the growth in home prices, and the consequent increase in the equity that borrowers have in their homes, has been a boon for the fundamental performance of the mortgage credit market in two ways – lower delinquencies and higher prepayments, both of which benefit securitized mortgage credit markets. Over the next 12 months, we see single-digit upside in global equities, a modest steepening of the yield curve and thus a neutral stance in government bonds. We have downgraded corporate credit to neutral and expect flat returns in emerging market fixed income.
Contrary to the old adage, what's good for the goose is sometimes not good for the gander. Strong housing fundamentals are a positive for securitized credit but not necessarily so for Agency RMBS. The elevated purchase volumes that come with a healthy housing market just mean a continuation of an endless supply of Agency RMBS. Prepayment risk, which is a negative for Agency RMBS, continues to run high. At or close to their all-time tights, valuations in Agency RMBS are notably richer than other comparable asset classes. For example, the spread on the mortgage index is 15bp through its post-GFC tights, whereas the spread on the investment grade corporate credit index is merely at its post-GFC tights. Jay Bacow and Zuri Zhao, our Agency MBS strategists, note that Agency RMBS have already priced in all the optimism that accompanies demand from a supportive Fed and deposit-rich domestic banks. Thus, they recommend a longer-term structural underweight in MBS. Not only do negative option-adjusted valuations give minimal room for further spread tightening, but the steepness of the belly of the Treasury curve means that being long five-year Treasury notes against Agency RMBS is a positive carry, positive convexity steepener. It is not often that investors can be short a risk asset at the tights and get paid to do it.
The three ideas we discuss are not plain vanilla. There is indeed a degree of complexity associated with CLOs, CRT and Agency RMBS, and fully harvesting the risk premia embedded in these ideas does require an investment in digging into the nuances of these products. What we are arguing is that understanding the complexity is worth the effort, given the potential for returns in this opportunity set.