>>> Europe : Brokers Upgrades & Downgrades - 23rd of May 2017

>>> Up
*Banco BPM Raised to Overweight at Barclays
*BMW Raised to Hold at HSBC, PT EU85
*Credit Agricole Raised to Add at AlphaValue
*EasyJet Raised to Sector Perform at RBC, PT 1,325p
*LafargeHolcim Raised to Outperform at Bernstein, PT EU59
*Saipem Raised to Add at AlphaValue
*SocGen Raised to Add at AlphaValue

>>> Down
*ACS Cut to Equal-weight at Morgan Stanley, PT EU36
*Aryzta Cut to Hold at SocGen, PT CHF36
*Julius Baer Cut to Neutral at MedioBanca, PT CHF52
*Lonmin Cut to Sell at Citi, PT 95p
*UCB Cut to Neutral at Citi, PT EU65

>>> Initiation


>>> Call

>>> Asian Update

Asia Mid-Session Market Update: Japan manufacturing PMI slows to 6-month low; 19 killed in UK explosion investigated as terror attack

***US Session Highlights***
- OPEC Sec Gen Barkindo: within OPEC and other oil-producing countries reached a growing consensus to extend production cuts
- (US) Apr Chicago Fed National Activity Index: 0.49 v 0.10e
- (IR) Iran President Rouhani: Iran will test missiles when needed and will continue ballistic missiles program; will not seek US approval to conduct tests
- Stock continued to rise for a third consecutive day to start the week on a positive note. Investors were bullish, and the VIX fell back into the ~10.00 range. However, there was a sign of caution, as 10-year Treasury yields were only up 1.5bps as investor show no hurry to get rid of haven assets just yet, and the reflation trade takes a subdued tone. Best performing sectors in the S&P were Technology and Utilities, up 0.8% and 0.9% respectively.

***US markets on close: Dow +0.4%, S&P500 +0.5%, Nasdaq +0.8%***
- Best Sector in S&P500: Technology
- Worst Sector in S&P500: Energy
- Biggest gainers: BRO +7.5%; QRVO +3.4%; ADSK +3.1%
- Biggest losers: AAP -2.7%; TRIP -2.5%; MNK -2.5%
- At the close: VIX 10.9 (-1.1pts); Treasuries: 2-yr 1.28% (flat), 10-yr 2.25% (+1bps), 30-yr 2.92% (+1bps)

***US movers afterhours***
- A: Reports Q2 $0.58 adj v $0.48e, R$1.10B v $1.05Be; Guides Q3 $0.49-0.51 v $0.53e, R$1.06-1.08B v $1.08Be; +5.0% afterhours
- TTWO: Weakness attributed to tech blog report 'Red Dead Redemption 2' release delayed to next year; Launch had been expected this fall; -8.2% afterhours

***Key economic data***
- (JP) JAPAN MAY PRELIMINARY PMI MANUFACTURING: 52.0 V 52.7 PRIOR (6-month low; 9th consecutive expansion)
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 110.5 v 109.4 prior
- (KR) South Korea Q1 Household Debt (KRW) q/q: 1.36T v 1.34T prior (fresh record high)

***Asia Session Notable Observations, Speakers and Press***
- Asia indices trading mixed and US/Europe futures are slightly lower amid geopolitical concerns in UK and US. An explosion at a concert stadium in Manchester arena left 19 people killed and over 50 injured. Local police continues to investigate the cause of the explosion with a possible link to terror activity and a range of speculation in the media - from exploded transformer to a suicide nail bomb. Stateside, Washington Post reported that Pres Trump may have made requests back in March that Director of National Intelligence Coats and NSA director Rogers formally deny links between the Trump campaign and Russia. Report goes on to say that Rogers documented this contact in an internal memo which may be available to the special counsel and congressional investigators.
- Also of note in US, White House summary documents disclosed the outline of Trump's budget proposal seeking $3.6T in cuts over the next 10 years. Military spending benefits at the expense of social program cuts targeting food stamps and Medicaid. The budget also outlines fairly rosy forward growth projections, with 2018 GDP seen at 2.4%, 2019 at 2.7% and 2021-and-beyond growth at 3% or more.
- In FX, modest risk-off flows boosted JPY along with overall renewed selling in USD. USD/JPY fell as much as 50pips below 110.90, while AUD/USD and NZD/USD saw 3-week and 4-week highs respectively around 0.75 and 0.70.
- In economic data, Japan flash May manufacturing PMI expanded for 9th straight month but also registered a 6-month low. Output, New orders, and employment components were all at Nov-lows, while input and output prices grew at a slower rate. Markit economist noted “wait-and-see” attitudes amongst clients, excess warehouse inventories undermining expansion.

China
- (CN) PBOC Advisor Sheng Songcheng: Monetary policy adjustments is a trial and error process; The central bank will not excessively adjust monetary policy - China press
- (CN) China insurance regulator CIRC: Insurers' risks are controllable; to increase risk analysis and checks - press
- (CN) Various Chinese companies cancel planned bond sales on market volatility – US financial press

Japan
- (JP) Japan said to target large increase in use of generic drugs - press
- (JP) Japan Fin Min Aso: Will send a strong message about free trade at G7
- BOJ likely to maintain JGB buying targets with yields moving closer to central bank's target - Nikkei

Australia
- (AU) S&P: Number of delinquent loans underlying prime RMBS declined in Mar to 1.16% from 1.23% in Feb - press

Korea
- (KR) S&P to visit South Korea as part of an annual review of the sovereign rating this week
- (KR) South Korea denies JoongAng Ilbo report that President Moon Jae-in has written Pope Francis a letter asking him to mediate a summit between South Korea and North Korea

***Asian Equity Indices/Futures (00:30ET)***
- Nikkei -0.1%, Hang Seng +0.3%, Shanghai Composite -0.1%, ASX200 -0.2%, Kospi +0.8%
- Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax -0.1%, FTSE100 -0.1%

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1230-1.1255; JPY 110.85-111.35; AUD 0.7465-0.7505; NZD 0.6990-0.7020
- June Gold flat at 1,262/oz; July Crude Oil -0.4% at $50.95/brl; July Copper -0.7% at $2.59/lb
- SPDR Gold Trust ETF daily holdings rise 1.8 tonns to at 852.5 tonne; 1st increase since Apr 24th
- (CN) PBOC SETS YUAN MID POINT AT 6.8661 V 6.8673 PRIOR; 2nd straight firmer Yuan fix
- (CN) PBOC to inject combined CNY140B v CNY40B prior

***Asia equities notable movers***
Australia
- OFX Group (OFX) +15.2%; Reports FY17
- Woodside Petroleum (WPL) +0.3%; investor day comments

Japan
- Sony (6758) +0.7%; Investor relations day comments
- Fujifilm (4901) -1.2%; To further delay release of FY16/17 results

Hong Kong
- Tai Ping Carpets (146) +4.3%; Strategic review update
- Vanke (2202) +1.3; To spend CNY5B to form 2 investment funds with China Merchants Bank
- Tingyi Holding (322) -3.4%; Reports Q1
- Tongda Group (698) -17.1%; Weakness attributed to shorts targeting the company

>>> KOS : -6,9% in after market

Kosmos Energy announced that funds affiliated with The Blackstone Group L.P. and funds affiliated with Warburg Pincus LLC have agreed to sell an aggregate of 40 mln of Kosmos' common shares in a registered underwritten public offering

>>> US After Hours Summary: A +5% and TEDU -3% following earnings, KOS


After Hours Summary: A +5% and TEDU -3% following earnings, KOS / MB / CWH / H among names trading low following offerings, TTWO -8% on Red Dead Redemption 2 delay

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: RAVN +6.9% (light volume), A +4.4%

Companies trading higher in after hours in reaction to news: OPHT +3.6% (D. E. SHAW increases passive stake to 5.0%), SBPH +2.9% (very thinly traded; to host a conference call on Wednesday, May 24, 2017, at 8:00 a.m. ET, to discuss top-line results from the initial 25mg monotherapy dosing cohort of the Phase 2a segment of its ACHIEVE trial), GKOS +2.6% (Glaukos reported that study revealed potential cost efficiency of using two Glaukos iStent trabecular micro-bypass stents to treat elevated IOP in glaucoma patients), SNY +1.7% (Regeneron Pharma and Sanofi announced FDA approval of Kevzara (sarilumab) for treatment of adult patients with moderately to severely active rheumatoid arthritis), TPX +0.9% (Director disclosed purchase of 150K shares worth about $6.90 mln)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: PRGO -3.3% (also files 2016 Form 10-K with restated financial statements), TEDU -3%

Companies trading lower in after hours in reaction to news: TTWO -8.2% (confirms Red Dead Redemption 2 delay on blog), KOS -6.9% (announced 40 mln share secondary offering by holders -- 30 mln by Blackstone affiliated funds and 10 mln by Warburg Pincus affiliated funds), MB -4.6% (files for 4.4 mln share Class A common stock offering), MIME -2.7% (indicated lower on block trade pricing), CWH -2.5% (proposed Class A common stock offering - includes 3.5 mln by the company and 6.5 mln by certain affiliates of Crestview Advisors), H -2.4% (announces secondary offering of 4 mln shares of Class A common stock by certain stockholders that are investment funds associated with The Goldman Sachs), NOW -1.7% (to offer $750 mln of convertible senior notes due 2022)

>>> US Close Dow +0.43% S&P +0.52% Nasdaq +0.82% Russell +0.72%

Closing Market Summary: Stocks Register Third Consecutive Win

On Monday, investors continued chipping away at last Wednesday's big loss, pushing the stock market to its third consecutive win. The S&P 500 and the Dow added 0.5% and 0.4%, respectively, while the Nasdaq (+0.8%) settled a step ahead of its peers.

The benchmark index dropped 44 points, or 1.8%, last Wednesday in response to a New York Times article that accused President Trump of asking former FBI Director James Comey to shut down the Bureau's investigation of former National Security adviser Michael Flynn. However, since the tumble, the S&P 500 has reclaimed all but seven points of the loss, as the buy-the-dip trade has prevailed once again.

Ten of eleven sectors settled in positive territory on Monday with the technology (+1.0%) and utilities (+0.9%) spaces leading the charge. The technology group was underpinned by large-cap names like Microsoft (MSFT 68.45, +0.76), Alphabet (GOOGL 964.07, +9.42), and Qualcomm (QCOM 59.28, +1.61) with QCOM showing relative strength (+2.8%) after the company's stock was upgraded to 'Overweight' from 'Neutral' at JP Morgan. QCOM's positive performance rubbed off on its semiconductor peers, evidenced by the 1.1% increase in the PHLX Semiconductor Index.

The industrial sector also finished ahead of the broader market, thanks in part to defense names like Boeing (BA 183.67, +2.91) and Lockheed Martin (LMT 277.03, +4.24). The two names added 1.6% apiece following a weekend meeting between President Trump and King Salman of Saudi Arabia, which included the signing of a $110 billion arms deal. The consumer staples (+0.6%) and consumer discretionary (+0.6%) sectors also outperformed.

Most of the remaining sectors finished with modest gains between 0.1% and 0.3%. However, the energy sector (-0.2%) settled in negative territory despite crude oil's positive performance. The energy component jumped 0.9% to $51.14/bbl as investors displayed confidence that top oil producers will extend the original OPEC/non-OPEC production cut agreement by six to nine months when they meet in Vienna on Thursday. In addition to pushing back the end date, reports indicate that producers may increase the magnitude of the supply cuts.

In U.S. corporate news, Ford Motor (F 11.10, +0.23) officially announced that Jim Hackett will replace Mark Fields as the company's Chief Executive Officer on Monday morning. According to a Wall Street Journal report that was released earlier this month, Ford's Board of Directors has been looking to refine the company's strategy in response to a declining market share and a disappointing stock performance. Ford shares lost around 36.0% of their value during Mr. Fields time as CEO.

U.S. Treasuries settled slightly lower across the board with the benchmark 10-yr yield climbing two basis points to 2.25%. Meanwhile, the U.S. dollar lost 0.3% against the euro (1.1240) after German Chancellor Angela Merkel said the single currency is too weak.

Investors did not receive any economic data on Monday, but, on Tuesday, market participants will receive April New Home Sales (consensus 605,000) at 10:00 ET.

  • Nasdaq Composite +13.9% YTD
  • S&P 500 +6.9% YTD
  • Dow Jones Industrial Average +5.7% YTD
  • Russell 2000 1.5% YTD

NYP : New York landlords slashing rents to attract retailers

New York landlords slashing rents to attract retailers

Plunging retail rents in 14 of Manhattan’s 17 high profile shopping corridors are catching the attention of retailers, a new report has found.

Despite a gloomy outlook for malls across America, New York’s dense population and expendable incomes are keeping it in the forefront for new stores and locations, according to the new report from the Real Estate Board of New York.

Of course, it’s also because building owners are responding to vacancies with lower rents, flexible deal terms, build outs and concessions that were unheard of just a few years ago.

The vacancies and flexibility are expected to boost the interest local brokers will get from global retailers while in Las Vegas early this week for the International Council of Shopping Centers REcon that attracts 37,000 attendees from 58 countries.

“The broad based decline we observed in ground floor retail average asking rents is indicative of the challenges the national retail market is facing,” said John Banks, president of the Real Estate Board of New York which issued the report.

“Nevertheless, our advisory group remains optimistic as owners entertain more flexible lease terms, with notable trends and activity among food tenants and retailers opening fewer and/or smaller stores.”

On the positive side, the REBNY Spring 2017 Manhattan Retail Report found strong rent growth in both the Flatiron’s Fifth Avenue stretch between 14th and 23rd Streets, and along Broadway’s stretch downtown from Chambers Street to Battery Park.

Since spring 2016, interest by retailers has prompted average ground-floor asking rents to rise 18 percent to $456 per foot in the Flatiron District, while the Lower Broadway corridor increased 11 percent to $362 per foot. Still, the neighborhood’s Fifth Avenue corridor could see some lowering of asking rents as the number of storefronts available has risen from seven to 17 since last fall.

An 8-percent rent drop last fall to $755 per foot along Broadway in Soho between Houston and Broome Streets drew retailer interest, so rents rose again this spring to $812 per foot and are now just 1 percent less than the $824 per foot asked in the spring of 2016.

Things aren’t as bright on Broadway in the Flatiron, where rents fell 22 percent to $348 per foot, leaving just a handful of stores available.

The fanciest parts of Bleecker Street between Seventh Avenue and Hudson Street have fared the worst of all the Manhattan markets, as rents dropped 27 percent from $513 per foot to $373 per foot since last spring with nine vacancies.

Rents also dropped 18 percent in both Herald Square and now less-pricey Times Square to $734 and $1,930 per foot, respectively.

The asking rents along Fifth Avenue’s most expensive corridor between 49th and 57th Streets are just 2 percent lower at $3,324 per foot. But the range of rents there had been as high as $4,500 per foot last fall, and now runs to just $3,500 per foot; the lowest is now $3,000 per foot, up from $2,700 per foot last fall.

Tony Madison Avenue between 57th and 72nd Streets has 33 vacancies, causing asking rents to decline 12 percent to $1,446 per foot from $1,644 last spring when ,there were 34 stores on the market.

Third Avenue has also seen a leap in available stores to 34 from just 15 a year ago. But asking rents are down just 4 percent to $356 per foot. Keep in mind in that area rents now range from $85 per foot to $1,084 per foot versus a range of $185 to $550 last spring, as both lower and higher quality space has come to market and some owners have dropped rents to drum up interest in their spaces.

Similarly on the West Side, the Broadway corridor from 72nd to 86th streets has seen rents drop 12 percent since last spring to $315 per foot as the number of available stores rose from 16 to 21. On Columbus Avenue rents dropped 15 percent to $344 per foot as the number of stores increased from 8 to 14.

REBNY also notes that in smaller corridors with fewer stores available, retailers will expand to adjacent and less pricey blocks, just as they have in Soho. Prominent corners, the size of the space and those with several selling levels can also affect asking rents.

“This report is a recognition that rents are stabilizing,” said Robin Abrams of Lansco who is joining Eastern Consolidated in June.

Tenants are testing the market with pop-up stores, while others that were looking for several years are now ready to make a deal because it has less risk, she added. More on-line retailers are also seeking brick and mortar stores.

“The belief is now that both can coexist,” Abrams said.

NYP : Ashley Madison is back — and claims surprising user numbers

Ashley Madison is back — and claims surprising user numbers

Ashley Madison is back — and this time it’s dumping a new kind of data.

Not only is the disgraced hookup site for cheating spouses mounting a comeback, it’s claiming some hard-to-believe numbers when it comes to new users — upwards of 400,000 a month worldwide, a company spokesman told The Post.

That’s despite a July 2015 data breach that exposed the names, addresses and sexual preferences of countless adulterers — sending subscribers fleeing and bringing Ashley Madison’s parent company, Avid Life Media, to its knees.

“We’re back, we’re excited and our opportunities are significant,” says Paul Keable, VP of communications for the site’s new corporate parent, Ruby Life.

Ashley Madison claims it has now signed up a total of 52.7 million users since its founding 15 years ago. That’s up a whopping 50 percent from the 36 million it claimed a little less than two years ago at the time of the cyberattack from “The Impact Team” hacking group.

It also would imply that the average monthly signup rate since the hack has been north of 750,000 — a huge number by the standards of most any dating app these days.

“Your math is accurate,” Keable says. “In the summer of 2015 we experienced unprecedented media coverage of our business” — and unprecedented signups despite the hacking scare, according to Keable.

“Our monthly new member account additions have not been verified by a third party, but we stand behind them,” Keable insists.

Nevertheless, Ashley Madison is less than forthcoming when asked how many of those who signed up are still using the site — much less paying to use it.

“We don’t divulge active member numbers for competitive reasons,” Keable says.

Modal Trigger

The spokesman also wouldn’t reveal financials, citing the private status of the company, which in 2015 had been eyeing a potential public stock offering that it said could value the company at more than $1 billion.

Still, Keable said he “would have no reason to disavow” comments from the former parent company’s ex-president, who told Reuters last July the company was on track to produce sales of $80 million in 2016, with an Ebitda margin between 35 percent and 40 percent. That’s after revenue of $109 million in 2015.

Ashley Madison makes money by charging credits to members to start conversations on the site, typically for under $2.

Most of those payments presumably come from men. Still, Ashley Madison is making loud claims about one stat in particular: a 1-to-1 ratio of signups by women and men in New York City. That ratio falls off a bit, to 1.4 men for every woman signing up across the rest of the country, Keable said.

Either of these ratios might be hard to swallow for some in light of Ashley Madison’s past, when the site got a reputation for suckering horny husbands into online chats with prostitutes and robots — because it couldn’t get real women to sign up.

Keable admits to Ashley Madison’s having once used bots, while insisting that the practice is “a relic left over” from the site’s previous owner, Avid Life Media.

“We shut down bots in the USA and Canada in 2014 and in Australia in early 2015,” he says. “We then had Ernst & Young come in and certify there’s no remnants of the program whatsoever.”

WSJ : Streaming Services Are Music to Vivendi’s Ears

Streaming Services Are Music to Vivendi’s Ears
Recent rebound of the music industry has media conglomerate considering an IPO for its music business, CEO says

PARIS—A resurgent music industry, fueled by the rise of streaming services, is tempting the parent company of Universal Music Group to cash in on the music company with an initial public offering.
In an interview, Vivendi SA VIVHY 1.09% Chief Executive Arnaud de Puyfontaine said the French media conglomerate could float a minority stake in the music company, departing from the company’s longstanding opposition to selling any part of the California-based music company.
“This is not a sacred cow,” Mr. de Puyfontaine said, adding the firm has no imminent plans to carry out the IPO.

Vivendi’s flirtation with a Universal IPO shows how the music industry has begun to turn the corner on nearly two decades of decline. Record labels that once suffered steep losses on CD and unit sales are now growing again as Spotify and other services pay license fees for the rights to stream songs from their libraries.
“I remember the people a few years ago who explained to us that music was a dying business and would never recover,” Mr. de Puyfontaine said. “I have a good memory, and facts are proving them wrong.”
Universal Music has been a bright spot for Vivendi as subscription-based streaming has emerged as a possible business model for the music industry, with growth outpacing declines in physical music sales and digital downloads. Universal Music and its rivals—Warner Music Group Corp and Sony Corp.’s Sony Music Entertainment—rake in royalty payments whenever listeners access their songs through the streaming services.
In 2016, the industry’s global revenue from recorded music grew 6% to $15.7 billion, the single largest year-over-year gain since the International Federation of the Phonographic Industry started tracking the market in 1997. The rise owed largely to a 60% increase in streaming revenue, which now amounts to $3.9 billion.
While label executives are relieved to see industry revenues rise they also recognize that a single year of robust growth is hardly a guarantee that their fortunes have reversed.
Among other issues, neither Spotify nor its rivals has ever reported a profit. To change that, those services may need to lower the royalty rates they pay music companies like Universal.
The nascent recovery “does not erase 15 years of declines, or continuing uncertainty about the future,” Cary Sherman, CEO of the music industry’s U.S. trade group, wrote in a blog post earlier this year.
Mr. de Puyfontaine, however, said that Vivendi’s stock may be undervalued in part because it doesn’t reflect the true value of the music unit. Some investment banks pitching the idea of a float value the unit at up to €20 billion, Vivendi General Counsel Frederic Crepin told shareholders last month. Analysts value the unit at closer to €13 billion.

Vivendi has undergone a deep transformation in the past three years but Mr. de Puyfontaine and Vincent Bolloré, Vivendi’s chairman and main shareholder, have yet to convince investors that the company has promising growth prospects. Two years ago, Vivendi ignored calls from an activist shareholder to unlock value by selling some or all Universal..
Investors also say that floating a stake in Universal Music Group could complicate Vivendi’s attempts to find synergies between its music, film and television and videogame assets. It could become a distraction, adding a regulatory burden and increasing the time that Lucian Grainge, Universal Music Group’s CEO, would have to spend on Wall Street investors. Mr. Bolloré met with Mr. Grainge in California last week but didn’t discuss a possible IPO, according to people familiar with the matter.
A Universal spokesman declined to comment.
“It can make some sense to increase the value of its shares, but it makes no sense in terms of its global strategy,” said an analyst for one of Vivendi’s top investors. “It would be something just to tell the analysts : ‘Look, my share price is undervalued.’”
Vivendi’s shares have risen about 3.7% since Mr. Bolloré became chairman three years ago, and investors and bankers say they are still skeptical about how Vivendi’s strategy to build a media giant focused on Southern Europe will pan out. By comparison, France’s blue chip index is up 18% over the period and the index tracking European media stocks has gained 15%. That’s despite Vivendi giving back €8 billion in cash to shareholders through special dividends and share buybacks.
But Mr. de Puyfontaine is unfazed. He stressed that Vivendi has an edge on competition because of its combination of owning content, building partnerships with telecom companies to distribute that content, and having data on how its customers consume that content.
“We are proving day after day that our businesses are working together, and that they are creating much greater value for Vivendi than the sum of our parts,” Mr. de Puyfontaine said.