>>> Asian Update

Asia Mid-Session Market Update: China, Japan, Korea manufacturing PMIs retreat; Australia Retail Sales slump

***Friday US Session Highlights***
- (US) FEB PERSONAL INCOME: 0.4% V 0.4%E; PERSONAL SPENDING: 0.1% V 0.2%E; Real Personal Spending (PCE): -0.1% v +0.1%e
- (US) FEB PCE DEFLATOR M/M: 0.1% V 0.1%E; Y/Y: 2.1% V 2.1%E
- (US) FEB PCE CORE M/M: 0.2% V 0.2%E; Y/Y: 1.8% V 1.7%E
- (US) Fed's Dudley (dove, FOMC voter): Rate hikes to be data dependent; couple of more hikes in 2017 is reasonable
- (US) MAR CHICAGO PURCHASING MANAGER: 57.7 V 56.9E
- (US) Atlanta Fed cuts Q1 GDP to 0.9% from 1.0% on 3/24

***Friday US markets on close: Dow -0.3%, S&P500 -0.2%, Nasdaq flat***
- Best Sector in S&P500: Real Estate
- Worst Sector in S&P500: Financials
- Biggest gainers: FMC +13.2%; MLM +3.2%; cBT +2.9%
- Biggest losers: INCY -3.0%; URBN -2.9%; AN -2.8%
- At the close: VIX 12.4 (+0.8pts); Treasuries: 2-yr 1.27% (-2bps), 10-yr 2.40% (-2bps), 30-yr 3.02% (-1bps)

***Politics***
- (AU) Approval rating for Australia's ruling Coalition slips to 47% v 53% for opposition Labor party in two-party terms - Australian
- (US) President Trump: Will handle North Korea without China's help if need to - FT
- (US) Pres Trump tweets, calls on media to investigate "Obama SURVEILLANCE SCANDAL and stop with the Fake Trump/Russia story"

***Weekend US/EU Corporate Headlines***
- 4503.JP: Acquires privately owned drug discovery company, Ogeda SA for €800M
- TSLA: Reports Q1 deliveries just over 25.0K (~13.5K Model S; ~11.6K Model X), +69% y/y; Production 25.4K (deliveries and production fresh record highs)

***Key economic data:***
- (CN) CHINA MAR CAIXIN PMI MANUFACTURING: 51.2 V 51.7E (9th consecutive expansion)
- (JP) JAPAN Q1 TANKAN LARGE MANUFACTURING INDEX: 12 V 14E; MANUFACTURERS OUTLOOK: 11 V 13E; ALL-INDUSTRY CAPEX: 0.6% V -0.3%E
- (JP) JAPAN MAR FINAL PMI MANUFACTURING: 52.4 V 52.6 PRELIM
- (AU) AUSTRALIA FEB RETAIL SALES M/M: -0.1% V +0.3%E
- (AU) AUSTRALIA FEB BUILDING APPROVALS M/M: +8.3% (7-month high) V -1.5%E; Y/Y: -4.9% (smallest decline in 3 months) V -14.5%E
- (AU) AUSTRALIA MAR MELBOURNE INSTITUTE INFLATION M/M: 0.1% V -0.3% PRIOR; Y/Y: 2.2% (14-month high) V 2.1% PRIOR
- (AU) AUSTRALIA MAR CORELOGIC RPDATA HOUSE PRICES M/M: 1.4% V 1.4% PRIOR; Y/Y: 12.9% (7-year high)
- (AU) AUSTRALIA MAR AIG MANUFACTURING INDEX: 57.5 V 59.3 PRIOR; 6th month of expansion
- (KR) SOUTH KOREA MAR PMI MANUFACTURING: 48.4 V 49.2 PRIOR; 8th consecutive month of contraction

***Asia Session Notable Observations, Speakers and Press***
- Asian equity markets are trading mixed, tracking underwhelming US Friday session where PCE inflation data were in line with consensus, Chicago PMI numbers saw decent growth, but personal spending data missed expectations. Oil prices have remained supported above the $50/brl level, while US Treasuries were bid somewhat higher within their recent range. FX market volatility was also somewhat dulled by the start of a holiday break in China - USD majors saw little change with the exception of AUD/USD, which slid some 40pips from the highs toward $0.76 on the release of weaker than expected Retail Sales.
- Aussie retail figures came in unexpectedly negative, with a -0.1% slide against expected 0.3% rise, sending AUD down to its lows. This may allow RBA some flexibility as it prepares to crafts its monetary policy statement on tap for tomorrow. Slowing Australia spending as well as recent slump in exports is mitigated by continued price pressures in the property sector - just today, CoreLogic for March saw prices nationwide rise by 12.9% on the year - a 7-year high. Building Approvals data were also higher, with m/m increase registering its 7-month high rate of growth.
- Over the weekend, China March Caixin manufacturing PMI missed expectations at 51.2 V 51.7E. Caixin economists noted continued downward trend in employment, weakest new export sales this year, and further slowdown in the rate of input price inflation, even though the overall figure was in expansion territory for the 9th straight month. Also of note in China, BoC released its FY16 results that saw a miss on the bottom line, a 200bp drop in ROE and 30bp slide in NIMs. The bank warned domestic and international picture will remain "complicated this year" amid China's economic transition as its shares fell over 2% in Hong Kong.
- Other PMI figures from the far east were mixed. South Korea's was most troubling, remaining in contraction for 8th straight month amid "sharpest decline in employee numbers" since the end of 2008. New export orders also slumped due to weaker demand from China amid THAAD system deployment dispute. Japan final PMI also retreated somewhat from the prelim figure, even though Q1 Tankan showed more signs of economic recovery.

China
- (CN) China announces property curbs in city of Tianjin - China Daily (update)
- (CN) PBOC raises interest rates on Standing Lending Facility (SLF) Loans by 0.2pts to 3.3% effective Mar 16th - press
- (HK) Macau Mar Gaming Rev MOP21.23B v MOP22.99B prior; y/y: 18.1% v +11%e

Japan
- (JP) Japan megabanks said to be planning to raise mortgage rates - Nikkkei

Australia / New Zealand
- (NZ) New Zealand Treasury March Monthly Economics Indicators report: Inflation was near 2% in Q1; sees inflation below 2% later in 2017

Korea
- (KR) South Korea, Japan, and US naval forces to hold 3-day anti-submarine training - press

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

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0650-1.0680 (3-month high); JPY 111.10-111.50; AUD 0.7610-0.7640; NZD 0.7000-0.7015; GBP 1.2530-1.2555
- Apr Gold flat at 1,250/oz; May Crude Oil -0.1% at $50.53/brl; May Copper -0.3% at $2.65/lb
- (US) Weekly Baker Hughes US Rig Count: 824 v 809 w/w (+1.9%) (11th straight weekly rise)
- iShares Silver Trust ETF daily holdings fall to 10,274 tonnes from 10,292 tonnes prior; 3rd straight decline
- (KR) South Korea MoF sells 3-yr bonds; avg yield 1.67%

***Asia equities / Notables / movers***
Australia
- DOW.AU Downer -1.9% (Cut at Morgan Stanley)
- MLD.AU Maca +3.9% (contract)

Japan
- 4613.JP Kansai Pain +2.2% (raised at Nomura)
- 8750.JP Daichi Life -3.7% (medium term growth target speculation)
- 6502.JP Toshiba -6.6% y/y (may miss Q3 earnings results again)

Hong Kong
- 1919.HK Cosco Shipping +0.6% (FY16 results)
- 1186.HK China Railway Constructino (CRCC) +2.7% (FY16 results)
- 1893.HK China National Materials Company +4.7% (FY16 results)
- 0661.HK China Daye Non Ferrous Metals Mining +3.3% (FY16 results)
- 3988.HK Bank of China -2.1% (FY16 results)
- 3688.HK Top Spring International Holdings Ltd +5.7% (FY16 results)

>>> What to look at this Week End - 1st & 2nd of April 2017

Weekly Update
Dow +0.32% S&P +0.80% Nasdaq +1.42% Russell +2.31% Mexico -1.10% Brazil +1.77% EuroStoxx +1.65% FTSE -0.19%% CAC +2.02% Dax +2.06%% Ibex +1.49%% MIB +1.51%% SMI +0.53% Nikkei -1.83% Hang Seng -1.01% CSI -0.96% Shanghai -1.44%
Eur$ -1.26%
After falling 1.4% last week, the S&P 500 rebounded, rising 0.8% for the week. The benchmark index wrapped up a solid first quarter (+5.5%), which was overshadowed by an even better performance from the Nasdaq, which gained 1.4% for the week, extending its first quarter gain to 9.8%. Healthcare decision in the US was digest by the market and focus was on Oil this week and capacity to Trump administration to move on the tax measures. A week of mostly hawkish talk from Federal Reserve officials brought rate hike expectations back to levels from two weeks ago. The implied probability of a rate hike in June climbed to 62.5% from last week's 49.6%, according to the fed funds futures market.

Macro :
- U.K.’s Johnson Sees Difficult Talks Ahead for Brexit: Figaro
- Bond Traders Are No Fools, Dismissing Bluster of Four Rate Hikes

Keep an eye on :
- A2A IM : A2A Signs Partnership MOU With Local Italian Utilities
- BAB LN : Babcock International Said to Win GBP340m U.K. Navy Order: Sky
- BAYN GY : Bayer’s Copanlisib Meets Main Goal in Mid-Stage Lymphoma Study
- BIIB US : Biogen Rises 2% on Patent Win; Mizuho Sees $5 Upside to Stock
- BRE IM : Brembo Aims Doubling Revenue in China in Two Years, Sole Says
- BT/A LN : BT Group Said to Be Preparing Italian Unit for Sale: Telegraph
- BWO NO : Signed an extension agreement for the lease and operation of the FPSO Abo with Nigerian Agip Exploration Ltd, a subsidiary of ENI S.p.A., until 31 March 2018 with options until 2023.
- CSGN VX : Minder Tells Credit Suisse Shareholders to Vote Against Pay: T-A
- ENRO SS : Eniro Hasn’t Reached Pact With Bank Syndicate
- FCA IM : German Transport Ministry to Complain to EU Over Fiat: Reuters
- FCA IM : Fiat Chrysler Says 500X Conforms to Applicable Emissions Rules
- FCT IM : Fincantieri Seeking to Conclude STX France Deal This Week : JDD
- DEC FP : JCDecaux Says It Has Lost Paris Velib Bicycle Contract
- LDO IM : Leonardo Sees Growing Defense Markets in Brazil, Peru, Argentina
- POM FP : Plastic Omnium Sells Seven Sites in Europe to Flex-N-Gate
- QIA GY : Qiagen Licenses Prostate Cancer Test From Johns Hopkins
- RB/ LN : Reckitt Benckiser Said to Plan Sale of Food Division: S. Times
- RSA LN : RSA Said to Drop Dublin From EU Base Shortlist: Sunday Times
- SAN SM : BofA Says to Short Santander Consumer USA on Subprime Car Loans
- SU FP : Schneider Electric Said Close to $1b Sale of DTN: WSJ
- SNAP US : Snap Debuts a New Search Tool, in First Major Product Since IPO
- SCMN VX : Price War Threatens Network Investment, Swisscom CEO Tells SZ
- TSCO LN : Tesco Deal With Booker May Force It to Sell Stores: Telegraph
- VOW3 GY : VW’s Poetsch Says Internal Investig. to Last Beyond 2017: FAZ

WSJ : Active Managers Stage a Comeback

Active Managers Stage a Comeback
With more active funds outperforming, some asset managers are optimistic the resurgence will slow the flow of money into index-tracking funds

Bill Miller is on a winning streak again.
His $1.4 billion Miller Opportunity Trust is up 7.5% so far this year and has climbed 21% in the past 12 months, according to Morningstar. Its performance this past year has been helped in part by its holdings of bank stocks including Bank of America Corp. and J.P. Morgan Chase & Co.
Mr. Miller isn’t alone: Some 45% of all U.S.-based actively managed stock, bond and other mutual funds were beating their benchmark indexes as of Feb. 28, Morningstar said.

Helping these managers is a market rally that has rewarded bets on companies expected to benefit the most from a strengthening economy. The Trump administration’s promises of lower taxes and fewer regulations have helped lift business confidence and pushed stocks higher.

Some investors are optimistic that conditions are right for active managers’ resurgence to continue, eventually slowing the flow of money out of actively managed funds into lower-cost index-tracking funds, a trend that has hounded many of them in recent years.
“Active managers are getting a little more confidence, and maybe reaching out a bit more,” said Mr. Miller, a former star manager atLegg Mason who posted an unparalleled 15-year winning streak against the market that ended in 2006.
To be sure, the rally does little to make up a lengthy stretch of underperformance for these money managers. The last year even half of all active funds beat their benchmarks was 2009, according to Morningstar. In 2016, 31% of actively managed funds beat their benchmarks.


But the recent rebound has helped. Actively managed mutual funds in February posted their first month of positive net inflows since April 2015, according to Morningstar. Those were helped by money flowing into bond funds as well as international stock funds.
While investors continued to pull money from actively managed U.S. stock funds, the type of funds hardest hit by the growing popularity of passive investing, they withdrew less in February than in any month since September 2015. So far in 2017, 45% of actively managed U.S. stock funds have beaten their index.
In the recent pocket of outperformance for active funds, funds that pick stocks in a specific industry have led the pack, with more than half ahead of their benchmarks. Bond funds also have done well, with 54% beating their benchmarks.
“It’s to be determined if this is the dawn of a new era or not, but the odds that it might be are the highest they’ve been since the financial crisis,” said Rob Sharps, co-head of global equity at T. Rowe Price Group Inc.
Mr. Sharps attributes the rebound to a combination of the Federal Reserve’s moves to raise interest rates after a long period of monetary easing, a new presidential administration and diminishing correlations between asset classes.
The change of fortunes is a welcome respite for active managers whose struggles to beat the market in recent years have resulted in fee pressure, fund closings, business overhauls and even mergers.

“The last five to seven years have been very difficult markets for active managers, and especially growth managers,” said Dan Chung, chief executive and chief investment officer at Fred Alger Management, which oversees $20 billion.
“Confidence was due to come back,” Mr. Chung said.
Other managers aren’t counting on a sustained recovery, with some continuing to overhaul their product lineups, fees and business units in a bid to adapt to the continuing competitive pressure.BlackRock Inc., the world’s largest money manager, unveiled an overhaul of its active equity unit that includes a greater focus on quantitative, computer-driven investing, layoffs of active managers, fee cuts, and research improvements.
AllianceBernstein LP recently secured regulatory approval to launch a set of funds that only charge fees when they fare better than their benchmarks. The new funds charge index-fund-like fees—often less than 0.10%—unless they outperform.
Mr. Miller also has his doubts that several months of better performance will reverse the trend toward passive funds.
Index-fund giant “Vanguard is getting billions of dollars a month,” he said.
Vanguard Group pulled in a net $48 billion in January and $33 billion in February, a spokeswoman said.

WSJ : Europe Deal Value Pushes Sharply Higher Despite China’s Pullback

Europe Deal Value Pushes Sharply Higher Despite China’s Pullback
The activity highlights renewed confidence in M&A among some large European and U.S. companies

It turns out Europe doesn’t need China to drive deal-making.

After more than tripling last year, Chinese acquisitions in Europe fell 87% in the first quarter, hindered by the Asian giant’s plans to restrict capital outflows. Still, a drive by North American and European companies to boost profits by cutting costs and unlocking new revenue sources spurred multibillion-dollar transactions, pushing deal value in Europe sharply higher in the first three months of 2017.

Some of those deals included the $16.6 billion Reckitt Benckiser Group PLC- Mead Johnson Nutrition Co. tie-up, Johnson & Johnson ’s $30 billion pact for Swiss biotech Actelion Ltd. ALIOY +1.07% and the made-in-U. K. Standard Life PLC- Aberdeen Asset Management £3.8 billion ($4.74 billion) merger.


The activity highlights renewed confidence in M&A among some large European and U.S. companies, some bankers say, following challenges last year that included Britain’s decision to leave the European Union, Donald Trump’s surprise election as U.S. president and anemic European growth.

Potential worries remain, as Britain begins talks to actually exit the EU and investors brace for key French and German elections. But improving stock market and economic conditions are so far offsetting that uncertainty. In Europe, for instance, the broad-based Stoxx Europe 600 index is up about 5% in 2017, after ending lower last year. Debt financing remains cheap, and economic growth, though still relatively muted, is expected to accelerate from this year to next, the European Commission forecast in February.

“Companies are now operating in a more stable environment and that is giving confidence to pull the trigger on big strategic deals which sometimes take longer to complete,” said Alasdair Warren, co-head of Deutsche Bank ’s corporate and investment bank for Europe, the Middle East and Africa.

Still, the favorable environment could make major European companies more susceptible to takeovers by U.S. rivals, some bankers say. That is because gains in the U.S. dollar against the British pound and euro combined with the availability of cheap debt lowers acquirers’ costs. European stock markets also trade at a discount to their U.S. counterparts, bolstering the firepower of U.S. companies.

The broad-based Stoxx Europe 600 index trades at 15.8 times 2017 estimated earnings, a discount to the Standard & Poor 500 benchmark’s price-earnings multiple of 18.1 times, according to FactSet.

“A number of companies are looking at the wish list and thinking ‘maybe I should make an approach because the circumstances won’t remain here forever,’” said Luca Ferrari, head of EMEA M&A at Bank of America Merrill Lynch.


In February, Unilever PLC lent credibility to that view, in part blaming the U.S.-European stock market valuation gap for Kraft Heinz Co.’s $143 billion unsolicited bid for the Anglo-Dutch consumer-goods giant. In the end the Pittsburgh and Chicago-based company dropped its bid amid stiff opposition from its Dutch rival. Five days after that decision Unilever Chief Financial Officer Graeme Pitkethly cited the recent rise in the average price-to-earnings ratio for U.S. companies as a contributing factor behind the bid.

But that failed deal, and the continuing takeover battle between Dutch paint and chemicals maker Akzo Nobel NV and Pittsburgh-based rival PPG Industries Inc., underscores the difficulty U.S. companies can face completing cross-border deals that aren’t done on friendly terms. Despite calls on Akzo from some of its biggest shareholders to negotiate with PPG, the Amsterdam-based company so far refuses. Akzo argues the PPG bid is too low and doesn’t take into account all of the company’s stakeholders.

The overall predominance of larger deals in the first quarter is evidenced by a 39% year-over-year rise in the value of transactions in which the acquirer or target is a European company to $322.6 billion despite a 3.6% decline in the number of deals over the same period, according to Dealogic. The total value level is the highest since 2008.

Still, any concerns of a raid by foreigners on big companies in Britain, Europe’s most active M&A market, didn’t seem to play out in the first quarter, Dealogic data suggests. While inbound activity measured by the number of deals rose about 10%, on a value basis that deal making fell about 50%.

In the case of outbound deals, the number of transactions rose slightly, but the total value more than doubled, in large part driven by the pact by U.K. consumer group Reckitt t to acquire Mead, a U.S. baby-food specialist.

Despite the sharp slowdown in M&A by China into Europe so far this year, the Asian giant’s appetite for higher end manufacturing and other expertise to help spur domestic consumption ensures that buyers will return, bankers predict, noting the capital controls are meant to be temporary. Some suggest activity could start to rally early next, once China’s power structure becomes clearer following the Communist Party’s 19th Party Congress in October.

“Chinese demand [for deals] is as strong as it has ever been,” said David Lomer, J.P. Morgan co-head of M&A for EMEA, and the pace of acquisitions that support the country’s strategic economic goals should pickup as China’s current concerns over the strength of its domestic currency ease, he said.

WSJ : Schneider Electric Nears $1 Billion Sale of Data-Software Unit DTN

Schneider Electric Nears $1 Billion Sale of Data-Software Unit DTN
Sale of DTN, which distributes real-time weather information to farmers and other customers, could be announced within days

French power-equipment supplier Schneider Electric SE SU +0.37% is close to selling U.S.-based data-software business DTN to a Europe-based financial investor in a deal valued at around $1 billion, according to a person familiar with the matter.

The planned transaction, depending on final negotiations, could be announced in the next couple of days, the person said. The identity of the buyer couldn’t immediately be learned.

Schneider acquired DTN, which distributes real-time weather information to farmers and other customers, as part of its €1.4 billion ($1.5 billion) acquisition in 2011 of Spain’s Telvent. But in October, Schneider announced a strategic review of the business, and decided against trying to build a subscription-based business as a new source of revenue.

DTN’s expected sale price of close to $1 billion would allow Schneider to recover the bulk of what it paid to acquire Telvent, while retaining a large part of its operations.

The expected sale also comes as the French multinational’s overall strategy is showing signs of paying off. In February, it reported 24% growth in annual net profit, attributing the strength to a combination of organic growth, cost controls and improving margins.

Based in Minneapolis, Minn., DTN is most widely known for its ownership of the Progressive Farmer magazine, a storied U.S. agricultural periodical founded in 1886.

That operation, though, is only a small part of its business. DTN also collects and electronically transmits weather information to farmers, primarily in the U.S. on a subscription basis, to help them determine the best time to plant certain crops. Other customers that depend on up-to-date weather information range from airlines to professional golf associations.

DTN offers a similar service for refined fuel aimed at the energy sector. Traders also subscribe to the company’s commodity-market data service.

>>> Reckitt Benckiser Said to Plan Sale of Food Division: S. Times

Reckitt Benckiser earmarks GBP 2bn food arm for sale - report

Reckitt Benckiser [LON:RB], the UK-based health, hygiene and home products company, is preparing to sell its food division, The Sunday Times reported. Senior sources cited in the report said the sale proposal has been outlined to the company’s banks, although insiders cautioned the disposal plan is not yet a definite course of action.
Reckitt has been interviewing potential advisers for the deal, the item reported.
The sale of the non-core subsidiary could be worth in excess of GBP 2.3bn (USD 3bn), City sources estimated. The proceeds will help Reckitt finance its recent GBP 14.3bn acquisition of Mead Johnson Nutrition [NYSE:MJN], which incurred significant debt, the report pointed out.
Chicago-based food giant Kraft Heinz [Nasdaq:KHC] is expected to be interested in the food-unit sale but may run into competition hurdles, the report said. Interest from US-based private-equity companies is also expected, the item reported.
Reckitt’s food business includes the Frank’s Red Hot range of sauces and French’s mustard, the report noted.
The company declined to make any comment on the matter, the item reported.
The original report appeared in The Sunday Times, Business section, page 1

WWD : L Catterton Makes ‘Significant’ Investment in Rhone Activewear

L Catterton Makes ‘Significant’ Investment in Rhone Activewear
The men's brand is expected to use the funds to drive its digital offering, wholesale reach and add retail stores.

L Catterton, which was formed in 2016 as a partnership between Catterton, LVMH Moët Hennessy Louis Vuitton and Groupe Arnault, is extending its reach in the active arena with a “significant growth investment” in Rhone, a men’s activewear brand.
The size of the investment from L Catterton’s Growth Fund was not disclosed.
L Catterton is the largest consumer-focused private-equity firm in the world, with 17 offices across five continents. It has investments in Peloton, CorePower Yoga, Sweaty Betty, 2XU, Gant, Pepe Jeans, Sandro and Maje, Hackett and Emperor Watch and Jewellery, among others.
“Rhone represents a compelling opportunity to invest in a differentiated and on-trend concept within men’s activewear, a large and growing category,” said Jon Owsley, co-managing partner of L Catterton Growth Fund. “We seek companies in great trend areas with consumer appeal. Rhone is very well positioned to ride the wave of what’s happening in men’s apparel. It has all the technical aspects of fitness wear but designed with an eye for regular wear.”
He pointed to the company’s commuter pant as an example, saying that while a man may wear it to ride a bike to work, it looks good enough to keep on all day.

The brand’s GoldFusion technology, which it introduced last year, is also seen as a “potentially revolutionary fabric in the men’s wear space,” he said. The technology infuses gold particles into the brand’s highest-performing fabrics, resulting in a softer, safer, faster-drying, longer-lasting, odor-neutralizing garment, according to the company.
Owsley said he expects Rhone to use the additional capital as well as L Catterton’s resources to expand its digital offering, wholesale presence and build brand awareness.
Rhone was founded in 2014 to appeal to men seeking active apparel that was not an afterthought to women’s wear or so full of “bravado and chest-pounding” that the marketing overshadowed the merchandise.
It is carried in more than 400 doors, including Bloomingdale’s, REI and Equinox and offers shorts, pants, long- and short-sleeved tops, socks, hats, gloves and other accessories. Its assortment is centered around comfortable, innovative fabrics such as GoldFusion. The company has one store at Chelsea Piers in Connecticut.
“Given their strong retail expertise, significant history working with leading health and wellness brands and deep knowledge of the active consumer, L Catterton is the ideal partner to help us take the Rhone brand to the next level,” said Nate Checketts, cofounder and chief executive officer. He said the company will use the investment to improve its supply chain, continue to seek out innovative fabrics and increase the name recognition of the brand.
Opening stores is also in the cards, he said, adding that the brand would like to add two locations this year, with New York at the top of the list.
Checketts said before negotiating the L Catterton investment, Rhone had received an acquisition offer, but turned it down. “We built Rhone to be better, not to be squeezed by a larger company for profits. That’s why we’re so excited about L Catterton. They know brands and they know health and wellness.”
Rhone has attracted several investors since it launched. In 2015, the brand closed on a $5 million Series A round of financing, bringing the total amount raised to $6.2 million. Prior investors include Steve Bornstein, former president and chief executive officer of the NFL Network and former chairman, president and ceo of ESPN; David Stern, NBA Commissioner Emeritus; Ryen Russillo, host of ESPN Radio’s Russillo & Kanell; Shane Battier, former NBA player, and M3 Ventures, an investment fund managed by former CAA executive Martin Dolfi.

WWD: Sources: InterLuxe Invests in Mackage

Sources: InterLuxe Invests in Mackage
The investment house reportedly took a stake in the Montreal-based outerwear brand.

Gary Wassner’s InterLuxe has ventured north of the border and taken a stake in Montreal-based brand Mackage, according to sources.
Wassner, who is chairman of the Lee Equity-backed investment house, declined to comment and representatives for Mackage did not respond to a WWD query.
The brand was founded in 1999 by designers Eran Elfassy and Elisa Dahan, who built a successful contemporary outerwear business that expanded into ready-to-wear in 2010, handbags in 2013 and now has two doors in Toronto as well as one in Montreal and one in New York. According to its web site, the brand is also distributed in more than 20 countries.
Mackage’s styles range from short lightweight down jackets for $290 to a range of higher-priced suede looks to moto leather jackets for $850.
The company touts the line as “creatively designed with sexy detailing and tailored cuts in leather, puffy and wool, made to compliment any silhouette.”
Mackage mixes a dose of fashion with functionality, making coats with layers of breathable, waterproof fabrics that ward off the cold and lined gloves to protect hands in freezing Canadian winters.
The company is also seeking to project its brand through the force-multiplier of affiliate marketing with bloggers. Its web site details an affiliate program that gives influencers a cut of sales when they feature Mackage online.
One financial source described Mackage as a “mini Canada Goose” that plays in what is a “magic category” for the moment.
Outerwear has been getting some buzz lately, even as other types of fashion goods struggle to find their footing.
Canada Goose — a brand that’s become omnipresent in the cold New York months — is a favorable comparison. Bain Capital bought control the maker of $900 goose down parkas in 2013 and successfully took it public this month.
Mackage would seem to still have a way to go still if it were to follow in Canada Goose’s footsteps, but Wassner, who also runs Seventh Avenue factor Hilldun, is in a good position to help the brand grow. InterLuxe got its start in 2014, when it bought a controlling state in Jason Wu. That deal was followed a year later by an investment in Andrea Liberman’s contemporary line ALC.

Barron's : Outlook Brightening for Euro Zone Banks

The prospects for Europe’s battle-worn financial sector could be improving, as the region’s more positive economic outlook fuels hopes that negative interest rates might soon be a thing of the past.

There’s good reason to believe that the euro zone is on a surer footing now than it was even a few months ago, when it faced a number of economic and political challenges.

Inflation is up, unemployment is down, and concerns that anti–European Union populists would make significant gains at key elections this year have subsided for now. The Dutch election in March was won by the incumbent center-right party, fending off a populist challenger and allaying concerns that France’s antieuro, anti-immigration National Front could win the presidential election there in a month’s time.

Persistently weak inflation in recent years drove the European Central Bank into the previously uncharted territory of negative interest rates, meaning that banks are effectively paying to keep cash on deposit. Most are reluctant to pass that cost on to their own savers, so profit margins have been squeezed.

THE GOOD NEWS is that euro zone inflation exceeded the ECB’s target of just below 2% for the first time in four years in February. Unemployment, the currency’s bloc’s other bête noire, has finally slipped into single digits. It stood at 9.6% in both December and January, its lowest since 2009.

Those figures, along with growing business confidence and rising retail sales, have increased speculation that the ECB could start tapering its quantitative-easing program and raise interest rates. One such move is already in the pipeline, although the ECB insists that it doesn’t indicate the start of a tapering plan. From April, it will reduce the value of its monthly bond purchases to 60 billion euros ($64.34 billion) from the current €80 billion. The program is slated to run until the end of the year.

ECB officials are typically cautious, saying they need to see more evidence of a recovery before making any further moves. Rising inflation, for example, owes much to a recent recovery in oil prices and slipped back to 1.5% in March, missing forecasts. Still, some economists have enough confidence in the euro zone outlook to suggest that the ECB could start winding down quantitative easing and lift interest rates within the next year.

That would be great news for the euro zone banks that have been laid low by a series of setbacks. Pressure on earnings from negative interest rates came when they were still shaking off fallout from the financial crisis and coping with rising regulatory costs.

Rob Lutts, chief investment officer at Salem, Mass.–based Cabot Wealth Management, likes a range of European finance stocks that includes the United Kingdom’s HSBC Holdings (ticker: HSBC.UK), Spain’s Banco Santander (SAN.Spain), France’s BNP Paribas (BNP.France), and German insurer Allianz (ALV.Germany), while admitting that the sector is still a controversial call.

To mitigate risk, he has opted to get broad and safer exposure to those stocks through an exchange-traded fund, but he particularly likes HSBC.

“HSBC has a very vast reach across the globe in many different areas, and the potential of its earnings power isn’t appreciated today,” he says. He sees HSBC as a type of warrant on emerging markets because of its strong exposure to Asia.

HSBC has increased its focus on Asia and away from Latin America as part of its recent restructuring drive.

Along with other banks, its stock was lifted by rising bond yields starting about the middle of last year. It’s up by roughly 50% from a year ago. That progress came to a grinding halt when the bank reported disappointing fourth-quarter results last month.

Falling revenue and charges brought full-year pretax profit down more than 62%, to $7.1 billion, less than half the amount analysts had forecast. After hitting a 52-week high of 7.15 pounds ($8.94) the day before the earnings release, it plunged 6.5% just after.

It closed on Friday at £6.56.

The upshot is that the stock is relatively cheap, trading at a forward price/earnings ratio of 13.68, according to FactSet Research, compared with an average of 15.51 for the Stoxx Europe 600 index.

Morgan Stanley analyst Chris Manners has HSBC at Equal Weight with a price target of £7.45, giving it upside of about 13% from the current price. He says that the bank’s longer-term revenue outlook is improving, helped by loan growth in the Asia-Pacific region.

“We also see HSBC as a beneficiary of steeper yield curves with a loan-to-deposit ratio of just 68% at December 2016, which should support net interest margins, particularly in Hong Kong,” he says.