>>> Mediaset proxy advisor stands against proposed changes to restrict minority


Mediaset proxy advisor stands against proposed changes to restrict minority shareholders to two seats on board - report (translated)
29 NOV 2017

ISS, the proxy advisor to Mediaset [BIT: MS] shareholders, has come out against proposed changes to the election of board members to the Italian media group, Italian-language daily Il Sole 24 Ore reported. The unsourced report said that ISS opposes the changes, which would restrict minority shareholders to only two seats on the board.

The report said that the changes are being proposed by Fininvest, the holding of the Berlusconi family that controls Mediaset.

ISS represents institutional investors in Mediaset, the report added.

As previously reported, Fininvest is believed to be introducing the changes to forestall any takeover attempts or other moves to loosen its control over Mediaset.

Mediaset has a market cap of EUR 3.8bn.

>>> US After Hours Summary: NUAN +6%, MRVL +2%, WAIR / ADSK -10%,

After Hours Summary: NUAN +6%, MRVL +2%, WAIR / ADSK -10%, GSUM -8%, PSTG -2% following earnings/guidance; RGC up another +6% after confirming Cineworld talks

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: NUAN +6.2%, MRVL +2.3%, HTHT +1.9%

Companies trading higher in after hours in reaction to news: OVID +6.4% (ticking higher; announces OV101 shows comparable PK profile in Ph 1 study of adolescent patients; now anticipates data from the STARS trial to be available in the second half of 2018), XNET +5.4% (after ending the day ~12% lower), RGC +6.2% (after late move higher/halted; Regal Entertainment confirms Cineworld Group plc discussions about possible all-cash acquisition of Regal at $23.00 per share), MARA +1.6% (after closing down ~40% on the day)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: WAIR -10.4%, ADSK -10%, GSUM -8%, PSTG -2.2%

Companies trading lower in after hours in reaction to news: TDOC -7.1% (files for $175 mln mixed securities shelf offering; proposes 3.25 mln share common stock offering by Teladoc and 830K by certain stockholders), STNG -6.4% (announces public offering of 30 mln common shares), MCF -4.3% (Frontier Communications will replace Contango Oil & Gas in the S&P SmallCap 600), KOOL -2.9% (continued weakness; proposes after the close plans for registered public offering of its common stock), ATO -2.5% (announces public offering of $400 million of common stock), DPW -2.2% (after closing down nearly 40%), TEUM -1.7% (continued volatility), APTO -1.6% (files for 6,041,567 common share offering by the selling shareholder Aspire Capital)


>>> Asian Update

Asia Market Update: Markets little moved on latest N. Korea missile launch even though it puts US in range; Bitcoin surges past $10,000, making fresh highs


***Headlines/Economic Data***
Asian equities markets trade mixed despite sharp gains seen in the US.
-Gains in Japan and Korea capped amid North Korean missile and upcoming Bank of Korea policy meeting
-Shanghai and Hong Kong markets trade generally lower
- Asian steelmakers outperform
- Semiconductor names continue to be pinned under Morgan Stanley note on the industry issued Monday
- BTC/USD Continues its surge above $10,000 (fresh record high) and continues to extend gains

Japan
-Nikkei 225 opened +0.6%; closed +0.5%
-TOPIX Securities Index +1.7%; Nomura +1.7% (announced a new ¥100B principal investment fund, buyback)
-Nomura: New principle business will provide funding for areas including corporate restructurings and MBOs; To inject up to ¥100B in the investment fund
-Megabanks track earlier rise in US financials: Mitsubishi UFJ +2.5%, Mizuho +1.8%, Sumitomo Mitsui +1.5%
-TOPIX Iron & Steel Index +2.7%; Steelmakers trade generally higher, JFE +4.5%, Nippon Steel +3.5% (broker commentary)
- Some chip-related shares remain under pressure: Tokyo Electron -5.5%, SUMCO -0.7%
-Yamaha Motor -3% (Yamaha Corp to lower stake)
-Nikkei looks at BOJ's vulnerability to a stock market downturn given the ¥20.3T worth of equity ETFs sitting on its balance sheet
- OECD thinks BOJ should maintain easing
- JAPAN OCT RETAIL SALES M/M: 0.0% V 0.2%E; RETAIL TRADE Y/Y: -0.2% V 0.2%E
-According to Japan Business Federation (Keidanren): to ask for 3% wage increase - Japan press
- (JP) Nikkei looks at BOJ's vulnerability to a stockmarket downturn given the ¥20.3T worth of equity ETFs sitting on its balance sheet

Korea
-KOSPI opened +0.1%, has since pared gains
-Samsung Electronics -0.9%
-North Korea: Confirmed fired new type of ICBM at HWASONG-15 that puts entire US in range; launch was successful
- South Korea Pres Moon: South Korea will strengthen its capabilities against North Korean provocations
-South Korea military conducts drills following earlier North Korea missile launch – South Korean Press
-Bank of Korea (BOK) Deputy Gov Yoon: says North Korea impact on markets to be limited – South Korean Press (Note: The BoK is said to have held an unscheduled meeting earlier today amid the North Korean launch)
-Looking ahead: The Bank of Korea is due to hold its regularly scheduled policy meeting tomorrow. The central bank is expected to raise rates by 25bps to 1.50%, according to one poll; Bank of Korea last raised rates in 2011

China/Hong Kong
-Shanghai Composite opened +0.1%, Hang Seng -0.3%
-Markets are currently in negative territory, as of the time of writing
-Hang Seng Information Technology Index -1.1%; Semiconductor Manufacturing -2.4% (capital raise), Tencent -1%
-Even still, Chinese steelmakers trading generally higher on supply constraints; Baosteel +2.6%
- China property names, higher on Moody's report, Rated China property developers' sales rise strongly, amid slower national sales growth
-(CN) China Banking Regulatory Commission (CBRC) official Yu Xuejun: China's economy is still facing relatively large downward pressure; economic stimulus measures have been overly strong
-(CN) Turkey imposes anti-dumping duty on some China flat sleet products
-(CN) China CIRC (Insurance Regulator): Q3 solvency was generally adequate; 167 insurers avg solvency ratio 253%
-(CN) NDRC: China to promote long-term coal contract implementation for 2018 – Chinese Press
-(CN) PBoC OMO: Injects CNY240B in 7, 14-day, 63-day reverse repos v CNY250B injected in 7,14 and 63-day reverse repos prior; Net: Nil v nil prior (3rd consecutive net nil)
-(HK) Hong Kong Dollar (HKD) 1-month HIBOR 1.18927%, up over 5bps (highest since 2008)
-Alibaba planning to sell 5.5, 10, 20, 30 and 40 year US dollar denominated bonds
Yuan denominated bond issuance: Originwater Technology [300070.CN] said to cancel CNY1B bond offering on market volatility
-Philippines now targeting planned issuance of yuan-denominated ‘Panda Bonds’ in Q1 (had targeted 2017)
-(CN) PBoC sets yuan reference rate at 6.6011 v 6.5944 prior
-Looking Ahead: China Nov Official Manufacturing and Non-Manufacturing due for release on Thursday

Australia/New Zealand
-ASX200 opened -0.1%, pared losses as session progressed; closed +0.4%
-ASX 200 Utilities Index +1.6%, Consumer Discretionary +1.2%, Financials +0.7%, Resources +0.7%, Energy +0.7%
-(AU) Australia sells A$900M v A$900M indicated in 2.75% Nov 21 2028 Bonds, avg yield, bid to cover 3.4x
- (NZ) RBNZ semi-annual Financial Stability Report: financial system remains sound and risks to the system have reduced over the past six months
- (NZ) RBNZ Spencer comments following release of Financial Stability Report: Does not have target for house price inflation; Expects extra 5K houses/year from Kiwibuild
- OECD expects RBA to tighten in 2018 due to robust economic growth
- (NZ) Fitch: New Zealand banks housing risk unlikely to up on easing of curbs
- IDX.AU Capitol Health preparing unsolicited takeover offer at A$2.46/shr; +23%
- Looking Ahead: Australia Q3 Private New Capital Expenditure data due for release on Thursday

Other Asia
- (PH) Philippines Finance Sec Dominguez: Will reset panda bond offering to Q1 (had targeted 2017)

North America
- US markets closed higher as Senate Budget Committee advanced tax bill: Russell 2000 +1.5%, Dow +1.1%, S&P500 +1%, Nasdaq +0.5%
-S&P 500 Financial Sector +2.6%, Industrials Sector +1.5%
Tax Reform: (US) Senate Budget Committee advanced the tax bill; All 12 Republicans vote 'yes' including Senators Johnson and Corker; the 11 Democrats vote 'no'; The Budget Committee approval moved the bill to the full Senate, which could consider the bill later this week
Politics: (US) Congress unlikely to pass legislation this year to fund government agencies through Sept 30, 2018 – financial press; Therefore, Congress is likely to need a stop-gap, temporary funding legislation at least until late Jan to keep the federal government operating.
- (US) Democratic leaders pull out of meeting with Trump on govt funding; will instead seek meeting with GOP leaders in Congress - press
Energy: Reportedly joint OPEC and non OPEC committee to support 9-month production cut extension (through 2018), with an option to review in June (as previously speculated)
(US) Weekly API Oil Inventories: Crude: +1.8M v -6.4M prior
Mexico Central Bank Chief: Board needs to take most recent information into account with decisions; board agrees on need to remain 'vigilant' and to be cautious on inflation outlook
After Market Movers: Marvell Technology [MRVL] +3% (Q3 results above ests, mid-point of Q4 guidance above ests); Autodesk [ADSK] -13% (reported financial results and guidance, announced restructuring measures)
Looking Ahead: Second reading of US Q3 GDP, Fed’s Yellen to testify before Congress, DOE weekly Crude Inventories

Europe
- (UK) Reportedly UK and EU agree Brexit divorce bill with tab between €45-55B (vs. EU demands of €60B) - UK Telegraph
- (UK) Govt official: do not recognize UK Telegraph newspaper account of Brexit negotiations
- (UK) Brexit ministry spokesperson: we are exploring how to build on recent momentum in talks so that we can move negotiations to the next phase
M&A: Cineworld [CINE.UK]: Regal Entertainment confirms merger talks
-Looking ahead: Spain and German Nov prelim CPI

***Levels as of 01:00ET***
- Nikkei225 +0.4%, Hang Seng -0.2%; Shanghai Composite -0.5%; ASX200 +0.5%, Kospi -0.1%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.0%, Dax -0.0%; FTSE100 -0.0%
- EUR 1.1856-1.1839; JPY 111.67-111.38; AUD 0.7608-0.7583;NZD 0.6904-0.6884
- Dec Gold +0.0% at $1,295/oz; Jan Crude Oil -0.5% at $57.70/brl; Mar Copper +0.5% at $3.11/lb

>>> US Close Dow +1.09% S&P +0.98% Nasdaq +0.88% Russell +1.53%

Closing Market Summary: Financials Power Another Rally to Record Highs

Equities ran to new record highs on Tuesday, with the S&P 500's financial sector (+2.6%) leading the advance.

The Dow Jones Industrial Average and the S&P 500 Index climbed 1.1% and 1.0%, respectively, while the tech-heavy Nasdaq Composite advanced a relatively modest 0.5%. All three major U.S. stock indices closed at new all-time highs, as did the small-cap Russell 2000, which jumped 1.5%.

Tuesday's rally was fueled by developments in Washington, including the Senate Budget Committee's approval of the GOP's tax reform bill--which effectively sends the bill to the full upper chamber for a vote. There were concerns that the bill wouldn't make it to the Senate floor due to Republicans' slim one-vote majority in the Budget Committee.

In addition, Jerome Powell's Fed Chair confirmation hearing provided support to the broader market--and to financials in particular.

Mr. Powell's comments were largely in line with the Fed's current policy rhetoric, although he did sound a little more lax than current Fed Chair Janet Yellen in the area of regulation. Specifically, Mr. Powell said rules implemented since the financial crisis are 'tough enough' and emphasized a desire to reduce regulatory constraints on smaller banks.

Financial heavyweights like JPMorgan Chase (JPM 101.36, +3.43), Bank of America (BAC 27.64, +1.05), Wells Fargo (WFC 55.57, +1.62), and Citigroup (C 73.70, +2.31) finished with gains between 3.0% and 4.0%.

On a related note, the yield curve steepened slightly as U.S. Treasuries sold off, pushing the 2yr-10yr spread to 59 basis points. The yield on the benchmark 10-yr Treasury note climbed two basis points to 2.34%, while the 2-yr yield jumped one basis point to 1.75%. A steeper yield curve bodes well for lenders' earnings prospects.

The industrial sector also finished ahead of the broader market, adding 1.5%, as did the lightly-weighted telecom services group, which jumped 2.2%.

However, the top-weighted technology sector struggled throughout the session, ending with a gain of just 0.2%. Mega caps like Apple (AAPL 173.07, -1.02), Alphabet (GOOG 1047.41, -6.80), and Facebook (FB 182.42, -0.61) weighed on the group, finishing with losses between 0.3% and 0.7%.

Sill, the tech space is this year's top-performing sector by far, sporting a year-to-date gain of 39.2%. For comparison, the S&P 500 has climbed 17.3% year to date.

It's also worth pointing out that Tuesday's rally was briefly interrupted in the afternoon following reports that North Korea launched a ballistic missile into Japan's exclusive economic zone. President Trump later responded to the launch, saying "it's a situation we will handle."

Elsewhere, equity markets in Europe finished Tuesday broadly higher, with the UK's FTSE (+1.0%) pacing the advance. After European markets were closed, reports surfaced that the EU and UK have reached a deal on the terms of Brexit liabilities. The pound overcame an early loss to add 0.3% on the U.S. dollar (1.1843).

Stock indices in the Asia-Pacific region ended Tuesday mostly flat; China's Shanghai Composite (+0.3%) showed relative strength.

Reviewing Tuesday's heavy dose of economic data, which included November Consumer Confidence, October Advance International Trade In Goods, October Advance Wholesale Inventories, the September FHFA Housing Price Index, and the September S&P Case-Shiller Home Price Index:

  • The consumer confidence reading for November increased to 129.5 (consensus 124.0) from the prior month's revised reading of 126.2 (from 125.9).
    • The key takeaway from the report is that consumers are optimistic about the labor market, but are surprisingly reserved about their short-term income prospects. That is noteworthy because high levels of consumer confidence help consumer spending activity, yet it is income growth that drives consumer spending activity.
  • The Advance report for International Trade in Goods for October showed a deficit of $68.3 billion (consensus -$65.4 billion), up from a deficit of $64.1 billion in September.
  • The Advance report for Wholesale Inventories for October showed a decrease of 0.4%. The prior month's increase was revised to 0.1% from 0.3%.
  • The FHFA Housing Price Index rose 0.3% in September (consensus +0.6%), while the August increase was revised to 0.8% from 0.7%.
  • The Case-Shiller 20-city Index increased 6.2% in September (Briefing.com consensus +6.0%), while the August increase was revised to 5.8% from 5.9%.

On Wednesday, investors will receive the weekly MBA Mortgage Applications Index at 7:00 ET, the second estimate of third quarter GDP (consensus +3.2%) at 8:30 ET, October Pending Home Sales (consensus +0.6%) at 10:00 ET, and the Fed's Beige Book for November at 14:00 ET.

  • Nasdaq Composite +28.4% YTD
  • Dow Jones Industrial Average +20.6% YTD
  • S&P 500 +17.3% YTD
  • Russell 2000 +13.2% YTD

UK bows to EU demands with breakthrough offer on Brexit bil

UK bows to EU demands with breakthrough offer on Brexit bill

Britain agrees to liabilities worth €100bn but will aim to pay less than half

Britain has bowed to EU demands and agreed to fully honour its financial commitments as identified by Brussels, removing one of the biggest obstacles to a Brexit divorce settlement. According to several diplomats familiar with the talks, the UK would assume EU liabilities worth up to €100bn although net payments, discharged over many decades, could fall to less than half that amount. Prime minister Theresa May is expected to formally present the breakthrough offer next week as part of package deal if agreement can be reached on the other issues of citizen rights and the contentious question of the border between Northern Ireland and the Republic. The overture on the bill was made by Olly Robbins, the British prime minister’s lead official on Brexit, in discussions with the commission last week. Negotiators are working on how to present the settlement as a net estimate, with the UK side pressing for an implied figure of between €40-45bn once UK receipts and other deductions are taken into account. “They have promised to cover it all, we don’t care what they say their estimate is,” said one senior EU diplomat. “We’re happy to help them present it.” Intensive negotiations are continuing, with the aim of reaching a declaring “sufficient progress” next week on the financial settlement, citizen rights and Northern Ireland. Discussions are delicately poised and negotiators have warned that all hold-up on any one element of talks could scupper a December deal to open trade talks.

Both sides say no final figure will be agreed on Britain’s exit settlement next week. Significantly the UK plans to avoid a lump-sum settlement and instead will develop a system for regularly calculating payments in years to come, when specific liabilities come due. 

Under this model, pensions of EU officials, for instance, could be paid on the basis of annual costs, meaning there will be no final figure for the so-called “Brexit bill” until the final eligible EU pensioner is dead, many decades from today. 

The political compromise engineered between London and Brussels aims to guarantee to the other 27 EU member states that there will be no Brexit gap in the discharge of the current EU budget, while allowing the UK to point to much lower estimates of net payments and contingent liabilities. 

Mrs May won the backing of her cabinet to break the deadlock in Brexit talks with an increased financial offer, but on the condition it was tied to a good trade agreement. British ministers have made clear that “nothing is agreed until everything is agreed”. 

The prime minister’s original offer in her Florence speech in September covered around two years of transition payments, worth approximately €20bn in net terms. She added that Britain would meet other commitments, but until now had not clarified what that covered in discussions with the EU. 

Since the start of talks, the main objective of the EU side has been for the UK to commit to meeting its share of gross EU liabilities accrued while Britain was a member state. A payment schedule for this “global settlement” would then be fixed in the second phase of talks. According to commission estimates circulated to member states, these include €582bn of unpaid spending commitments in the 2014-2020 long-term budget, around €83bn of obligations such as pensions, and around €88bn of contingent liabilities, such as outstanding loans. 

If a 13 per cent share is applied, as the commission initially estimated, Britain’s gross share comes to around €100bn. 

Several EU diplomats told the Financial Times the UK had said to commission negotiators it was willing to honour this full range of commitments under an agreed payment mechanism. France, Germany and other member states appear satisfied by the broad outlines of the deal. 

Net estimates that the UK share would take account of receipts worth around €28bn, including agricultural payments to UK farmers and structural funds for investment projects in Britain. Actual payments for structural funds could be made years from now.
 
British officials are working on other potential methods to bring down the net estimate, which the EU originally put at around €60bn. This includes using a higher rate for cancelled investment projects, the receipt of €3.5bn of UK capital at the European Investment Bank — potentially decades from now — and the payment of Britain’s 2018 budget rebate. 

The mechanism for determining payments, once applied in future years, may take account of the fall in sterling and decline in the relative size of Britain’s economy, thereby reducing the UK’s share from 13 per cent.