WSJ : Japan’s Longest Stretch of Economic Growth in 28 Years Ends

Japan’s Longest Stretch of Economic Growth in 28 Years Ends
The economy shrank at an annualized pace of 0.6% in the January-March quarter

TOKYO—Japan’s economy contracted in the first three months of 2018 due to weak private consumption and business investment, putting the brakes on the nation’s longest growth streak in 28 years, government data showed.

The world’s third-largest economy shrank at an annualized pace of 0.6% in the January-March period, compared with revised 0.6% growth in the final quarter of 2017. The contraction was the first since the final quarter of 2015.

It comes as the Japanese economy seemed to have finally escaped decades of stagnation, helped by economic policies including the Bank of Japan’s aggressive monetary easing.

The new data are a setback for Prime Minister Shinzo Abe, who has used the run of growth as evidence of the success of his economic platform, known as Abenomics. Mr. Abe, who faces a party leadership election in September, has also been under pressure from opposition lawmakers’ allegations that he did favors for friends, charges he denies.

Still, government officials and analysts expect the decline to be temporary. Some analysts expect the economy to rebound as soon as this current April-June quarter.

“There is no change in our view that the economy is recovering moderately,”​Economy Minister Toshimitsu Motegi said.

An anticipated pickup in private-sector demand will help the economy return to growth, he said.

Private consumption is expected to recover in part due to higher wages, said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance. Overall cash wages rose 2.1% from a year earlier in March—their fastest pace since June 2003, according to recent data released by the labor ministry.

Private consumption, which accounts for about 60% of GDP, stayed flat in the latest quarter after heavy snow in January and February caused people to stay home, while higher fresh-food and energy prices made consumers reluctant to spend.

Still, some economists say any return to economic expansion would likely be milder than previous quarters. Capital Economics senior Japan economist Marcel Thieliant expects annual growth to slow to 1.2% this year from 1.7% in 2017.

Trade disputes between the U.S. and China could also weigh on Japan if supply chains are affected.

Exports, one of the key engines of the Japanese economy, added just 0.1 percentage point to overall non-annualized growth in the January-March period as demand for electronic parts, such as those for smartphones, slowed.

>>> 5-Star, League want ECB to forgive 250 bln euros of Italy debt –draft - Reut

5-Star, League want ECB to forgive 250 bln euros of Italy debt –draft - Reuters News
16-May-2018 00:21:22
To view this story on Eikon, click here
By Gavin Jones
ROME, May 15 (Reuters) - The anti-establishment 5-Star Movement and far-right League plan to ask the European Central Bank to forgive 250 billion euros ($296 billion) of Italian debt, according to a draft of a coalition programme the parties are working on.
The 39-page document, obtained by Huffington Post Italia, also calls for a renegotiation of Italy's European Union budget contributions, an end to sanctions against Russia and plans to dismantle a 2011 pension reform that raised the retirement age.
The proposal likely to cause most alarm to financial markets is the creation in the EU of "economic and judicial procedures that allow member states to leave monetary union".
5-Star and the League said in a statement that the draft, which was dated May 14, was "an old version that has been considerably modified". In particular, it had been decided "not to call into question the single currency," they said.
The two parties have held six days of talks aimed at putting together a coalition government and ending 10 weeks of political stalemate following an inconclusive election on March 4.
5-Star leader Luigi Di Maio said on Tuesday he hoped a deal could be reached on Wednesday that would subsequently be put to supporters of both parties to see if they backed the pact.
The draft accord is likely to cause concern in Brussels and at ECB headquarters in Frankfurt. It might also dismay Italian President Sergio Mattarella, who has repeatedly stressed the importance of maintaining a strong, pro-European stance.
To help reduce Italy's public debt, which at more than 130 percent of national output is the highest in the euro zone after Greece's, the joint document calls for the ECB to forgive 250 billion euros of Italian benchmark BTP bonds bought under the bank's so-called "quantitative easing" programme.
This would cut 10 percentage points off Italy's debt/GDP ratio. While the two parties specified they had removed the section on possibly opting out of the euro, they made no mention about the suggestion the ECB should write off this debt.
Both parties have a history of Euroscepticism. 5-Star has moderated its position considerably in the last year, rowing back on a previous plan to hold a referendum on Italy's membership of the currency bloc. However the League still wants to leave the euro zone as soon as is politically feasible.
Hours after the document leak, 5-Star and the League issued a further joint statement saying they wanted to "reconsider" the euro zone's fiscal rules with Italy's partners "in the spirit of returning to the pre-Maastricht set-up" -- a reference to the treaty which laid the groundwork for monetary union.
Turning to other issues that have snarled Rome's relations with Europe, the draft calls for asylum seekers who arrive in Italy to be relocated automatically across the European Union.
They also demand an immediate end to sanctions on Russia in order for Moscow to become a "strategic partner" in regional hotspots, such as Syria and Libya.

>>> Europe Pre-Mkt

ML

MICRO FOCUS - Expects to report revs better than management guidance (1332).+5%

ALSTOM - Beat with orders +12%, sales +4% and EBIT +10% v cons estimates(40)+3%

BURBERRY - EBIT 3% beat, SSSG inline and FY guidance for flat EBIT (1840)...+2%

ENDESA - BAML DOUBLE UPGRADES to Buy. Margin upside is underappreciated (20)+2%

SSP - EBITA £55.2m cons c.£53m with org growth +2.8% v +2.5% cons (638.5).+1-2%

MARSTONS - Think reassuring with results being inline with estimates (113)..+1%

MAB - Another inline set of results, even with the weather issues (278).....+1%

CINEWORLD - Says on track. Quarter has benefited from 2 Marvel movies (272).u/c

NAT EXPRESS - Reads well with co on track to deliver rev/ profit/ FCF (406).u/c

MONDI - Solid with op profit 26% of FY18E cons. Expects H2 stronger (1998)..u/c

WIRECARD - 1Q EBITDA of E112.3m is all in line with the preannouncement(125)u/c

MEDIASET - Q1 in line with potential upside to cons from TI partnership (3).u/c

AGEAS - Strong headline beat but driven by one offs from high cap gains (45)u/c

PLAYTECH - Gaming division in Asia is lower than same period last year (812)-1%

DUERR - Group orders inline but total rev -1% v cons and EBIT -3.5% miss(84)-1%

AHOLD - -ve. Amazon prime nos to get add'l 10% discount at whole foods(19.6)-1%

GVC - UK said to announce crack down on gambling machines this week (902.1).-2%

WILLIAM HILL - UK said to announce crack down on gambling machines (307.7)..-2%

PADDY POWER - UK is said to announce crack down on gambling machines (7605).-2%

CREST NICHS - Mixed with 1251 units completed but margins guided lower (480)-3%

 

CS

Ageas         +1%    Q1 net income of E248m cons E142m, Belgium/Asia better

Alstom        +3%    FY adj EBIT 9% beat, sales 3.5% beat, FY19 targets

ahead

BMW           M/P    Seeks to maintain EBT >10%

Burberry     +0.5%   FY revs inline, adj op profit 2.5% beat

CocaCola HBC +1-2%   CS REITERATE OUTPERFORM (well positioned to expand

margins)

Crest         -5%    Guiding EBIT margin towards the bottom end

Deut Euroshop +1%    EBIT 1.5% ahead, FFO 3% ahead, FY18 guidance confirmed

Elior        -10%    Revises guidance lower, poor weather conditions

Leoni         M/P    Numbers inline with pre-release

Mediaset It  -1-2%   Q1 Rev EU 860.6mln est EU 857.6mln, EBITDA light

Micro Focus  +3-5%   Guiding towards top end of range

Miners       +0.25%  Copper -0.60%, Brent +0.30%, Iron Ore -1.75%, China

-0.25%

Mondi         +2%    Op profit 5% beat, outlook slightly positive

Nat Express   +2%    Group revenue +6.2, remains on target

Oils          UNCH   US API build of 100k barrels vs a draw of 1.9m last

week

Speedy Hire   M/P    Fy revs 377.4m cons 380m, EBITDA 73m cons 72.3m

Will Hill    +2-3%   Article in the Daily Mail regarding potential M&A

Wirecard      UNCH   1Q revs 420.4m vs bberg cons 402.6m, guidance confirmed

 

RBC PRE-MARKET INDICATIONS:

 

 

*AENA:                 -2% placing of 2.6% of AENA @ €174.12 per share.

*ALSTOM:              +3% FY revenues ahead, dividend increased, strong.

*AUSTRIAN POST:     +2% Q1 numbers ahead, EBIT +4.3%.

*BREWIN DOLPHIN:    0% interim results in line, dividend touch light.

*BURBERRY:            +1% FY retail LFL performance bang in line, share buyback announced.

*CINEWORLD:            0% trading in line with expectations.

*CREST NICHOLSON:  -3% H1 numbers disappointing, negative impact on margins.

*ELIOR:                -10% warning, FY'18 guidance for organic growth cut.

*MICROFOCUS:         +3% H1 revenue ahead, on "unusually large license deal".

*MITCHELLS & B:      +1% trading update solid, positive commentary.

*NATIONAL EXPRESS: +1% 4-month revenues +6.2%, FY'18 revenue & profit targets on track.

*PREMIER OIL:         +1% Q1 production in line, Catcher output solid.

*SPEEDY HIRE:         +3% FY revenues in line, encouraging start to year.

*STATOIL:                     --> name and code change to EQUINOR, EQNR.

*WIRECARD:              +1% Q1 numbers in line, FY'18 guidance confirmed.

 

Shore

NATIONAL EXPRESS - grp revs +6.2%,on track to deliver targets for the year...+1%
MONDI - inline,positive on outlook but seeing cost pressures & ccy headwind.UNCH
MITCHELLS BUTLER - LfL +1.6%,Easter LdfL +5.8%,weather hit op.profit.........-1%
MOSS BROS - trading improves,sales -2.4% from -4.4% in March.................+2%
BREWIN DOLPHIN - net inflows of £1.3bn,fees +10.4%,positive outlook..........+2%
SPEEDY HIRE - revs +2.2%,PBT +59.9%,ROCE +49.4%,divi +65%,sees FY in line....+3%
SSP - H1 op pft 55.2m.H1 rev 1.18b.Divi 4.8p.H2 started in line..............+1%
MARSTONS - H1 op pft 28.8m.H1 adj rev 528.1m.Divi 2.7p.25m capital reduction.+1%
MICRO FOCUS - Sees H1 revs above guidance on large license deal..............+2%
CINEWORD - Says trading was in line with expectations.FY remains on track....+1%
CREST NICHOLSON - completions +17.5%,fwd sales +5.3%,price growth restrained.-1%
BURBERRY - Sales in line,on track to deliver £100m savings,new £150m buyback.+2%
PLAYTECH - B2C in line,Sun Bingo seeing rev improvement,managment confident..+1%
PADDY POWER BETFAIR - in talks to buy FanDuel in US..........................MKT

 

MainFirst Pre Mkt Indications

 

*WIRECARD-Q1 Rev 420.4m(402.6),PT 70.8m(76),FY Ebitda ok ish.......+0.5%

*CNP-Q1 NI 313m(327),Confirms Organic FY Ebit Growth 5% plus.......+1%

*AGEAS-Q1 Ins Net 299m(201),Net Inc 247.7m(147),S/Ratio 194.7%.....+2%

*MEDIASET-Q1 Rev 860.6m(657.6),Ebitda 317.9m(322),Ebit 53.9m(54)...+1%

*DUERR-Q1 Sales 840.1m(847.6),Ebit 51.1m(56.2),FY cashflow +ve.....-1%
*ALSTOM-FY Ebit 514m(473).Rev 7.95b(7.68),Divi 35c,NI 475m(421)....+3%
*NOVARTIS-Meet the management Alcon ok,Sandoz improving,more later.+0.5%

*ELIOR-H1 Ebitda 231m(242.5),Margin 6.9%(lite),FY outlook lite.....-7%
*CROPENERGIES-FY Rev 882m(882),NI 51m(48),Ebitda 111m(111).........-2%

*GEOX-Q1 Rev 264.5m(285.33),Comfirms improvement in Inds margin....-2%
*BMW-Seeks to maintain PT above 10%(already flagged by company)....U/C
*BURBERRY-FY OP 467m(452),Sales +3%(+3%),Rev 2.73b(2.74),B/B 150k..+2%

*LEONI-Q1 NI 43.6m(35),Ebitda 100.5m,Co confirms outlook...........+0.5%
*AHOLD-Amazon cuts Whole Fds prices for Prime customers............-1%

 

>>> What to look at today - 16th of May 2018

Most stocks in Asia followed their American counterparts lower as geopolitical developments and rising benchmark U.S. yields spurred a return of risk aversion.bEquities in Japan, Hong Kong and China declined after U.S. stocks slid overnight. Australian shares bucked the trend while Korean ones fluctuated. Yields on 10-year Treasuries held near the highest since 2011 after traders boosted bets that the Federal Reserve will raise interest rates three more times this year. Bloomberg’s dollar index steadied close to a 2018 high. In emerging-markets, equities maintained losses after dropping the most since March and currencies held onto declines after the biggest slide in a year.

Nikkei -0.40% Hang Seng +0.16% CSI -0.11% Shanghai -0.08% Shenzen +0.21%

Eur$ 1.1838 CNH 6.3590 CNY 6.3681 JPY 110.26 GBP 1.3514 CHF 0.9999 RUB 62.2788 WTI$ 71.14

S&P +0.02% EuroStoxx +0.00% Dax +0.06% FTSE -0.07% SMI -0.18%

Macro :
- Trump May Not Consult California on Vehicle Emissions Rules: WSJ
- Oil Services Now Attractive, Set for ‘Dreamland’: Morgan Stanley

Keep an eye on :
- ADL GY : Adler Real Estate First Quarter Rental Income EU44.9 Mln
- ADJ GY : ADO Properties First Quarter Rental Income EU25.3 Mln
- AENA SM : Citigroup, UBS to Carry Out Private Placement of 2.6% of Aena
- AF FP : Janaillac Says France Should Sell Stake in Air France: L’Obs
- AF FP : Delta, Air France-KLM & Virgin Strengthen Trans-Atlantic Pact
- AGS NA : Ageas First Quarter Net Income Beats Estimates
- ALO FP : Alstom Names Airbus Executive Martinez as CFO, Effective July 1, Alstom Increases Div.; Sees 2018-2019 Adj. Ebit Margin Up to 7%
- ALPH SW : Alpiq Is Years Away From Paying Dividend, Chairman Tells FuW
- AMUN FP : Amundi Pioneer Sees Less Value in Paying for Sell-Side Research
- AAPL US : Buffett Among Few to Buy More Apple as Appaloosa Exits: 13F Wrap
- POST AV : Austrian Post First Quarter Ebit EU56.7 Mln
- AV/ LN : Aviva to Compensate Pension Customers After IT Glitch: FT
- BMW GY : BMW Seeks to Maintain Ebt at Above 10%: Handelsblatt
- BDRILL NO : Borr to Sell $350m of Convertible Bonds to Buy Five Jack-Up Rigs
- EN FP : Bouygues : Alstom Contribution to Bouygues 1Q Net EU73M
- CNP FP : CNP Assurances First Quarter Ebit EU625 Mln
- CE2 GY : CropEnergies Full Year Ebitda EU111 Mln
- DEQ GY : Deutsche Euroshop First Quarter Revenue Beats Highest Estimate
- DUE GY : Duerr First Quarter Sales Meet Estimates
- PBB GY : Hypo Real Estate sells 16.5 percent in Deutsche Pfandbriefbank
- ELI BB : Elia to Deliver Return on Equity Between 10%-12% in Germany
- ELIOR FP : Elior Cuts FY Guidance for Organic Growth, Adj. EPS
- FACC AV : FACC Full Year Adjusted Ebit EU48.6 Mln
- GEOX IM : Geox First Quarter Revenue EU264.5 Mln
- HEIJM NA : Heijmans Extends Credit Line to Mid 2022, Improves Terms
- IDIA SW : Idorsia Starts Modify Phase 3 Registration Study For Lucerastat
- IPS FP : Ipsos Holder Sofina to Offer 1.2m Shares via Societe Generale
- MS IM : Mediaset First Quarter Ebitda Misses Lowest Estimate
- NLFSK DC : Nilfisk Still Sees Full Year Organic Revenue +3% To +4%
- NOVN SW : Novartis Says Won’t Take Action on Alcon Before First Half 2019
- OHL SM : OHL First Quarter Loss EU144.9 Mln
- PPB LN : Paddy Power Betfair Is Said in Talks to Buy FanDuel: FT
- ROTH FP : Rothschild & Cie First Quarter Revenue EU420 Mln
- ROU BB : Roularta Says De Nolf to Use Payout to Buy Claeys-Held Shares
- SAFE NO : FSN Capital V Offers to Buy Saferoad for NOK30.10 a Share Cash
- SALM NO : Salmar Holder Glomar to Offer NOK388m Shares via DNB, Nordea
- SAN FP : Sanofi Eczema Drug Dupixent Meets Goals in Trial for Adolescents
- SIE GY : Siemens, Alstom Propose Future Board Members of Combined Entity
- STM FP : STMicro CEO Says Weakening of Euro Will Be An Advantage
- TEF SM : *TELEFONICA SEALS GLOBAL DEAL WITH AMAZON: CINCO DIAS
- UCB BB : UCB’s Cimzia Shows Positive Results in Phase 3 C-Axspand Study
- VAS IM : Vittoria Takeover Bid on Vittoria Assicurazioni for Delisting
- VOW3 GY : Volkswagen Truck Unit’s Finance Chief Leaves Before Possible IPO
- WDI GY : Wirecard First Quarter Ebitda EU112.3 Mln
- WPP LN : Top WPP Shareholder Backs Chairman Over Sorrell Probe Handling