>>> What to look at today - 7th of March 2017

Dow -0.24% S&P -0.33% Nasdaq -0.37% Russell -0.71%
A morning sell-off was met with a slight uptick in buying interest on Monday afternoon, leaving the major averages with modest losses to start the new week on lower-than-average trading volume. Ten of eleven sectors finished Monday's session in the red. The energy sector (+0.3%) was the lone winner. The top spot on the leaderboard has been an elusive one for the energy sector, which remains in last place in the 2017 sector standings with a year-to-date loss of 5.2%.
Crude oil didn't aid the energy sector's uptick, finishing Monday's session with a loss of 0.2% at $53.22/bbl. US After Hours MEET +19% following earnings/guidance/acquisition news, DISH +5% to join S&P 500... CASY -4% following earnings/guidance, several names lower following offerings. Asia indices are mixed as investors shrugged political drama in Washington. Energy led other sectors in US session despite lower oil prices, while Financials and Materials slumped. Nikkei225 put in a modest drop as USD/JPY sank back below ¥114. AUD/USD was also volatile, with RBA delivering a modest upgrade of economic conditions, but not enough to materially shift expectations for a rate hike this year.

Nikkei -0.18% Hang Seng +0.31% CSI +0.22% Shanghai +0.26%

Eur$ 1.0601 CNH 6.89004 CNY 5.8983 JPY 113.76 GBP 1.2224 CHF 1.001 RUB 58.2290 WTI$ 53.10 -0.19%

s&p -0.14% EuroStoxx -0.14% FTSE -0.33% Dax -0.10% SMI -0.06%

Macro :
- French Equities Raised to Bullish at Jefferies Ahead of Vote


Keep an eye on :
- BCP PL : BCP Plans to Cut Non-Performing Exposure by EU1b/Yr Through 2018
- BMW GY : BMW CEO Sees Europe Market Slowing to Single-Digit Gain in 2017
- CO FP : Casino Aims for Sales, Earnings Growth in 2017
- CNA LN : Centrica Pension Deficit a Constraint, Rating Cut: Credit Suisse
- COMB BB : Bois Sauvage Raises Dividend by 1%; NAV Advances to EU369/Share
- EIT IM : RAI Way Said to Consider Takeover of Berlusconi’s EI Towers
- ENI IM : Eni, Enel CEOs to Stay at Posts; Moretti to Be Replaced: Stampa
- ILD FP : Iliad Deputy CEO Says Banking Business Not Short-Term Priority
- LISP SW : Lindt Outlook Cautious ‘for the First Time in Years’: Baader
- OHL SM : OHL Said to Mull Selling Part of Mexican Stake: El Confidencial
- PST IM : Poste Italiane to Distribute 80% of Net Income as 2016 Div: CEO
- PSPN SW : PSP Swiss Property 2016 Net Rises 6.9% as New CEO Appointed
- SAN SM : Santander Agrees to Sell Stake in Allfunds for EU470M
- SRG IM : Snam FY Rev. Beats Est., Co. to Introduce Interim Dividend
- SOW GY : Software AG to Cancel Treasury Shares, Sets EU100m Buyback
- TEG GY : TAG Immobilien Will Sell as Many as 4.1 Mln Treasury Shares
- TIT IM : Telecom Italia Is Said to Weigh Bid for Soccer Online-TV Rights
- TIT IM : Telecom Italia Said to Close Its Brussels Office to Cut Costs
- TGYM IM : Technogym FY16 Net Rev. EU555m; Proposes Div. of EU0.065/Shr
- FR FP : Valeo to Buy Back Shares Within EU75m Limit by May 19
- VOW3 GY : VW Sticks to Strategy Amid PSA-Opel Deal, CEO Says in Interview
- VOW3 GY : Wolfgang Porsche Says He’s Not in Touch With Piech on Allegation
- VOW3 GY : VW to Continue Investing Into Diesel Engines, Handelsblatt Says

>>> Europe : Brokers Upgrades & Downgrades - 7th of March 2017

>>> Up
*Addeco Reiterate OverWeight at JPMorgan, PT CHF75
*Cargotec Raised to Buy at HSBC, PT EU52
*Ferrexpo Raised to Neutral at Credit Suisse
*Glencore Raised to Neutral at JPMorgan, PT 330p
*Norsk Hydro Raised to Buy at Norne Securities, PT NOK60

>>> Down
*Centrica Cut to Neutral at Credit Suisse
*Dialog Cut to Neutral at Main First Bank AG, PT EU51
*EON Cut to Underweight at Santander, PT EU7.20
*JCDecaux Cut to Hold at Berenberg
*Mitie Cut to Underperform at Jefferies, PT 175p
*Pop Emilia Cut to Neutral at Goldman, PT EU5
*SSE Cut to Sell at Citi

>>> Initiations
*Borr Drilling Rated New Buy at ABG Sundal, PT NOK35
*Geberit Rated New Hold at Baader-Helvea, PT CHF453
*Stabilus Rated New Hold at M.M. Warburg, PT EU60

>>> Call
*FRENCH EQUITIES RAISED TO BULLISH AT JEFFERIES

>>> Iliad mobile revenues pass €2bn

Iliad, the low-cost French telecoms company owned by billionaire entrepreneur Xavier Niel, grew profits by a fifth last year as its mobile revenues passed €2bn for the first time.

The group’s net profits grew 20 per cent in 2016 to over €400m,
according to its annual results published on Tuesday. Overall turnover was up 7 per cent to €4.7bn during the year.

Five years after Iliad disrupted the French mobile market by bursting on the scene as the fourth operator with a low-cost service, the group has grown to represent almost a quarter (24 per cent) of fixed line market share, and 18 per cent of the mobile market, it said on Tuesday.

Iliad’s mobile revenues grew 12 per cent in 2016 as subscribers
migrated to its more expensive €19.99/month offer, which helped to increase average revenue per user – a key measure for telecoms providers. The number of 4G subscribers grew 60 per cent to almost 6m.

During 2016, Iliad invested nearly €1.3bn in fixed and mobile
infrastructures in France.

The group has now set its sights on Italy. In July last year Iliad signed an agreement with the Hutchison and VimpelCom groups, as part of the merger of H3G and Wind, to acquire assets that enable it to become the fourth mobile operator in Italy.

On Tuesday Iliad gave no further details on its launch in Italy, and said it’s a “unique opportunity.”

The launch is targeted for later this year and Iliad will have a market share of less than 10 per cent in the country’s mobile market.

>>> Asian Update

Asia Mid-Session Market Update: RBA on hold with slightly rosier view of domestic economy; THAAD system components start to arrive in Korea

***US Session Highlights***
- (US) Trump trade adviser Navarro: Questions Chinese, Japanese, German and Indian trade fairness; Can reduce trade deficit through negotiations
- (MX) Mexico central bank begins auction of $1B in non-deliverable forwards (start of $20B program to bolster the peso)
- (MX) MEXICO FEB CONSUMER CONFIDENCE: 75.7 V 68.6E
- (US) JAN FACTORY ORDERS: 1.2% V 1.0%E
- IEA Chief Economist Birol: beginning to see a second wave of US shale growth, the size of which will determine the oil price direction

***US markets on close: Dow -0.2%, S&P500 -0.3%, Nasdaq -0.4%***
- Best Sector in S&P500: Energy
- Worst Sector in S&P500: Materials
- Biggest gainers: RRC +4.1%, COG +3.5%, SWN +3.0%, NFLX +2.0%, MRO +1.8%
- Biggest losers: ENDP -6.9%, CSRA -4.3%, FTR -3.8%, FSLR -3.7%, RIG -3.6%
- At the close: VIX 11.2 (+0.3pts); Treasuries: 2-yr 1.31% (flat), 10-yr 2.49% (flat), 30-yr 3.10% (+1bps)

***US movers afterhours***
- MEET: Reports Q4 $0.19 v $0.19e, R$29.2M v $28.7Me; +18.5% afterhours
- WFT: Names Mark A. McCollum new CEO effective in late April; +14.6% afterhours
- ASNA: Reports Q2 -$0.07 v -$0.10e, R$1.75B v $1.75Be; +7.8% afterhours
- DISH: To be added to S&P500 Index, effective at the open on March 13th; +5.3% afterhours
- PIR: Guides Q4 $0.32-0.34 v $0.30e; Rev -2.6%; SSS +0.2% - We are raising our estimates for earnings per share and adjusted earnings per share for the fourth quarter and full year as a result of a number of key factors; +5.0% afterhours
- CRM: IBM and Salesforce announce global strategic partnership centered on artificial intelligence; +2.1% afterhours
- THO: Reports Q2 $1.23 v $1.26e, R$1.59B v $1.51Be- Q2 Consolidated RV backlog $1.38B v $1.21B q.qq; -2.5% afterhours
- CASY: Reports Q3 $0.58 v $0.88e, R$1.77B v $1.82Be; To repurchase up to $300M in common stock (6.7% of market cap); -4.6% afterhours
- PCRX: Files to sell $300M aggregate principal amount of convertible senior notes due 2022; -4.9% afterhours
- KTWO: Reports Q4 -$0.30 v -$0.26e, R$61.8M v $61.5Me- Guides initial FY17 R$263-270M v $270Me - Guides initial FY17 adj EBITDA $6-10M; -8.0% afterhours

***Politics***
- (US) House releases text of Obamacare replacement bill: To include refundable tax credits tied to age and income

***Asia Key economic data:***
- (AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50% (AS EXPECTED)
- (AU) AUSTRALIA FEB AIG PERFORMANCE OF CONSTRUCTION INDEX: 53.1 V 47.7 PRIOR (1st expansion in 5-months)
- (TW) TAIWAN FEB CPI Y/Y: 0.0% V 0.7%E; WPI Y/Y: 2.2% V 3.0%E

***Asia Session Notable Observations, Speakers and Press***
- Asia indices are mixed as investors shrugged political drama in Washington. Energy led other sectors in US session despite lower oil prices, while Financials and Materials slumped. Nikkei225 put in a modest drop as USD/JPY sank back below ¥114. AUD/USD was also volatile, with RBA delivering a modest upgrade of economic conditions, but not enough to materially shift expectations for a rate hike this year.
- AUD rose going into the decision to session highs of 0.7630 on expectations of hawkish language and then fell back below 0.76 on release of another neutral statement. Most notably, RBA added that "exports have risen strongly and non-mining business investment has risen over the past year" and also acknowledged better Q4 GDP by noting that "consumption growth was stronger towards the end of the year". However, RBA also reiterated that inflation remains quite low and cheered depreciating exchange rate in assisting economy transition from its mining boom. Fixed income markets were pricing in about a 30% chance of a rate hike this year going into the statement, and after the decision those odds rose only about 3pts.
- Tensions on the Korean peninsula continued to simmer as White House released a statement that President Trump spoke with leaders of Japan and South Korea. Trump said the North Korea launch is a violation of UN resolutions and poses a "serious threat". On a related note, US commander in the region said the launch justifies THAAD deployment which started today and may begin operating as soon as next month. Recall that China has been a vocal opponent of THAAD deployment in the region, cancelling joint exercises with South Korea and urging termination of the system.

China
- (CN) China NDRC: Sees coal prices falling steadily, coal supply is sufficient
- (CN) UBS Economist Hu: Sees PBOC cutting RRR 4x in 2017; benchmark rate hike unlikely this year
- (CN) PBOC Dep Gov Yi Gang: Will seek to prevent systemic risk and moral hazard in markets - Chinese press

Japan
- (JP) Japan Fin Min Aso: China needs to address overcapacity and debt issues
- (JP) Japan Center for Economic Research (JCER): Japan Jan GDP estimated at -0.5% m/m v -0.5% prior - Nikkei

Australia
- (AU) AMP's Oliver: RBA to remain on hold until H2 of 2018 - SMH
- (NZ) IMF: New Zealand household debt continues to be a risk to financial stability

Korea
- (KR) Commander of US Pacific Command: North Korea's latest missile launch confirms the need for THAAD deployment; some equipment, including 2 launch pads for Thaad US missile defense system, has arrived in South Korea; Thaad may start operating as soon as April
- (KR) White House: Pres Trump spoke to Japan PM Abe and South Korea acting Pres Hwang; North Korea poses a "serious threat" and latest missile launch is a clear violation of UN resolutions - press
- (KR) South Korea govt think tank (KDI): Modest economic recovery losing momentum due to faltering consumption - Korean press

***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.2%, Hang Seng +0.4%, Shanghai Composite -0.1%, ASX200 +0.2%, Kospi +0.7%
- Equity Futures: S&P500 flat; Nasdaq flat; Dax +0.3%; FTSE100 +0.2%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.0570-1.0595; JPY 113.85-114.10; AUD 0.7575-0.7630; NZD 0.6980-0.7020
- Apr Gold flat at $1,225/oz; Apr Crude Oil flat at $53.20/brl; May Copper +0.1% at $2.66/lb
- (IQ) Iraq energy min: Iraq would participate if OPEC decides to extend the cut agreement past June 30th, but too soon to say if it should be extended - Ceraweek conf comments
- (AU) Australia Port Hedland Feb Iron Ore Exports 35.7Mt v 40.3Mt m/m
- GLD SPDR Gold Trust ETF daily holdings fall 3.8 tonnes to 836.8 tonnes; lowest since Feb 10th; 2nd straight decline
- (CN) PBOC SETS YUAN MID POINT AT 6.8957 V 6.8790 PRIOR; weakest CNY setting since Jan 17th
- (CN) PBOC to inject combined CNY30B v CNY40B prior in 7-day, 14-day and 28-day reverse repos
- (JP) Japan MoF sells ¥723B in 0.8% (0.6% prior) 30-yr bonds; Avg yield: 0.821% v 0.907% prior; Bid to cover: 3.14x v 3.23x prior
- (KR) South Korea sells 30-yr Govt bonds at 2.369%

***Asia equities / Notables / movers by sector***
- Consumer discretionary: 848.HK Maoye International Holdings -1.3% (profit warning); 7956.JP Pigeon Corp +1.5% (FY16/17 result)
- Financials: 6030.HK CITIC Securities +1.6% (Feb result); 1918.HK Sunac China Holdings +3.4%, 688.HK China Overseas Land +1.3% (Feb result); WFD.AU Westfield Corp -1.5% (Credit Suisse cuts rating)
- Industrials: 2333.HK Great Wall Motor +0.8% (Feb result); 4005.JP Sumitomo Chemical Co +2.3% (to triple OLED screen capacity); 6103.JP Okuma Corp +2.4% (Goldman Sachs raises rating); 7211.JP Mitsubishi Motors -1.5% (Nomura cuts rating)
- Technology: 066570.KR LG Electronics Inc +5.0% (strong preorders of G6 smartphone); 7751.JP Canon +2.1% (efforts to form profit structure); 7974.JP Nintendo Co +1.9% (Switch device sales)
- Materials: RRL.AU Regis Resources -3.5%, RSG.AU Resolute Mining -3.6%, SBM.AU St Barbara -1.5% (gold declines)
- Utilities: 5803.JP Fujikura -2.5% (Nomura cuts rating)

>>> US After Hours Summary: MEET +19% following earnings/guidance/acqui

After Hours Summary: MEET +19% following earnings/guidance/acquisition news, DISH +5% to join S&P 500... CASY -4% following earnings/guidance, several names lower following offerings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: MEET +19.3% (also announces acquisition), ASNA +5.3%, PIR +5%, ATSG +3.6%, WMC +3.6% (ticking higher)

Companies trading higher in after hours in reaction to news: GMAN +15% (after closing near lower on reports that the company may be preparing a potential bankruptcy filing), VRML +11% (attains out-of-state provider status with Medi-Cal, California's Medicaid program, for OVA1 access to over 12 mln beneficiaries), DISH +5.3% (to replace Linear Technology in S&P 500), WFT +4.4% (appointed Mark McCollum as President and Chief Executive Officer with an effective start date in late April 2017), LJPC +3.4% (insider buy disclosures, also Tang Capital Partners increases active stake), CRM +2.1% (IBM and Salesforce announce Landmark Global Strategic Partnership)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: KTWO -8%, AKBA -6.3%, LPCN -4.6% (light volume; also entered into a Controlled Equity Offering with Cantor - may offer and sell shares of common stock having an aggregate offering price of up to $20 mln), CASY -4.2% (also announces $300 mln share repurchase), ALOG -4.2% (ticking lower - also approves plan of restructuring), KFY -2.7% (light volume), THO -2.5%

Companies trading lower in after hours in reaction to news: PCRX -4.7% (announces proposed offering of $300 million aggregate principal amount of convertible senior notes), HASI -3.4% (commences a public offering of 3,000,000 shares of common stock; provides Q1 update in connection with the commencement of a 3 mln share common stock offering), STAY -2.6% (announces secondary offering and repurchase of paired shares by selling stockholders), FRC -1.9% (agrees to sell 2,000,000 shares of its common stock in an underwritten public offering)

>>> US Close Dow -0.24% S&P -0.33% Nasdaq -0.37% Russell -0.71%

Closing Market Summary: Averages Start the Week with Modest Losses

A morning sell-off was met with a slight uptick in buying interest on Monday afternoon, leaving the major averages with modest losses to start the new week on lower-than-average trading volume. The Dow finished lower by 0.2% while the S&P 500 (-0.3%) and Nasdaq (-0.4%) performed slightly worse. Small-caps were hit the heaviest with the Russell 2000 closing lower by 0.7%.

Given the pace and scope of gains this year, and really since President Trump's election on November 8 -- a period in which the S&P 500 has gained over 11.0% -- it should come as little surprise to see the stock market succumb to some profit-taking interest.

There were some news headlines over the weekend that may have contributed to the profit taking from what many pundits are describing as a market that is overextended on a short-term basis.

The most notable of these headlines was North Korea's most recent act of defiance in which Pyongyang launched four ballistic missiles into the Sea of Japan, marking the third time since August that North Korean missiles have fallen in Japan's exclusive economic zone.

Other notable news included allegations from President Trump that former President Obama ordered a wiretap of his Trump Tower offices prior to the presidential election and an announcement from Deutsche Bank (DB) that the company will raise $8.5 billion of capital through the issuance of stock.

These headlines, though, appeared to serve more as convenient excuses to do some selling than anything else considering the stock market did make a rebound effort intraday and the CBOE Volatility Index increased less than 1.0%, hinting at some limited hedging activity among today's participants.

Ten of eleven sectors finished Monday's session in the red. The energy sector (+0.3%) was the lone winner. The top spot on the leaderboard has been an elusive one for the energy sector, which remains in last place in the 2017 sector standings with a year-to-date loss of 5.2%.

Crude oil didn't aid the energy sector's uptick, finishing Monday's session with a loss of 0.2% at $53.22/bbl. The commodity was pressured somewhat by a strengthening U.S. dollar, which was reflected in the 0.3% uptick for the U.S. Dollar Index (101.69, +0.34).

The top-weighted technology sector (-0.2%) saw some slight outperformance versus the broader market, but still ended the day lower.  The semiconductor stocks helped keep the sector's losses in check, as they rebounded from early losses to help the PHLX Semiconductor Index eke out a small gain for the session.

The financial sector (-0.6%) led the stock market's retreat in the morning session, but received a jumpstart in the afternoon to climb past the materials sector (-0.7%) at the bottom of the leaderboard.

News on the corporate front was limited, but it is worth noting that airlines suffered after Delta Air Lines (DAL 48.85, -1.28) cut its first quarter guidance in light of more moderate than expected unit revenues in February. Despite the airlines' losses, the industrial sector (-0.3%) finished in line with the benchmark index.

Losses in the remaining sectors -- consumer discretionary, health care, consumer staples, utilities, telecom services, and real estate-- were modest, between 0.2% and 0.4%.

U.S. Treasuries finished slightly lower as fixed-income markets were still digesting last week's aggressive campaign by Fed officials to prepare markets for the possibility of a March 15 rate hike. The benchmark 10-yr yield closed Monday one basis point higher at 2.49%.

Monday's lone economic report was January Factory Orders:

  • The Factory Orders Report for January showed an increase of 1.2% while the consensus expected a increase of 1.0%. The December reading was left unrevised at 1.3%.
    • The key takeaway from the report is that it should contribute to some slight upward revisions to economists' first quarter GDP estimates since shipments of nondefense capital goods excluding aircraft were not down as much as the advanced report for durable goods indicated.

Tomorrow's data will include January Trade Balance (consensus -$48.5 billion) at 8:30 ET and January Consumer Credit (consensus $17.0 billion) at 15:00 ET.

  • Nasdaq Composite +8.7% YTD
  • S&P 500 +6.1% YTD
  • Dow Jones Industrial Average +6.0% YTD
  • Russell 2000 +2.0% YTD

Reuters - Trump adviser Navarro: U.S, Germany should discuss trade outside EU

Trump adviser Navarro: U.S, Germany should discuss trade outside EU

Trump administration trade adviser Peter Navarro said on Monday the $65 billion U.S. trade deficit with Germany was "one of the most difficult" trade issues, and bilateral discussions were needed to reduce it outside of European Union restrictions.

Navarro, the director of the new White House National Trade Council, also in an address to economists in Washington depicted chronic trade deficits as a threat to national security and said the Trump administration would seek to "reclaim" parts supply chains that had moved overseas.

Navarro said that Germany has too long used the argument that the EU dictates its trade policy and that it does not control the value of the euro.

"I think that it would be useful to have candid discussions with Germany about ways that we could possibly get that deficit reduced outside the boundaries and restrictions that they claim that they are under," Navarro told a National Association for Business Economics conference.

"But it's a serious issue. Germany is one of the most difficult trade deficits that we're going to have to deal with but we're thinking long and hard about that."

He said an visit by German Chancellor Angela Merkel to Washington next week could include discussions on how to improve the U.S.-German economic relationship as part of the administration's agenda to make trade "free, fair and reciprocal."

Navarro's comments follow his complaints last month that Germany was exploiting a weak euro to gain a trade advantage.

But the Trump adviser, who shares the trade policy spotlight with new U.S. Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin, said he would wait until a Treasury currency report due in mid-April to learn whether China is manipulating its currency and the yuan is undervalued.

Trump had said during his election campaign that he would declare China a currency manipulator on his first day in office, a move that would require demands from the administration for negotiations with Beijing. He has not made such a declaration, despite telling Reuters in an interview last month that China was the "grand champion" of currency manipulation.

Navarro said that according to classic trade theory, in his view, the yuan's value should rise and the dollar should fall so that trade equalizes. He said the current capital outflow pressure in China was largely due to China's drive to acquire companies abroad.

"If you look at it through that lens, it's clear that the Chinese currency is undervalued. Navarro said, adding that he would wait for the Treasury report for a final verdict.

Navarro also called out India for its high tariffs and Japan for its non-tariff trade barriers, and said negotiations to use U.S. leverage as the world's largest market were needed to bring these down and boost U.S. exports.

"If we are able to reduce our trade deficits through tough, smart negotiations, we should be able to increase our growth," Navarro said.

If current trade trends continue, foreign interests will eventually acquire wide swaths of the U.S. economy, he said, ultimately driving down wages and living standards for Americans in a grim "conquest by purchase" scenario.

Reuters - Saudi Aramco to list locally and abroad in second half of 2018: CEO

Saudi Aramco to list locally and abroad in second half of 2018: CEO

Oil giant Saudi Aramco will be listed locally and abroad in the second half of 2018, and the process is going according to plans, Chief Executive Amin Nasser said on Monday.

The IPO is the centerpiece of the Saudi government's ambitious plan, known as Vision 2030, to diversify the economy away from oil. Up to 5 percent of the world's largest oil producer is likely to be listed on both the Saudi stock exchange in Riyadh and on one or more international markets.

"We have always said the listing will happen in the second half of 2018, everything is going very smoothly, we are evaluating different stock exchanges," Nasser, speaking at an industry conference in Bahrain, said.

"There is a lot of work which is ongoing but everything is going as planned," he added.

He said the listing would be "locally on Tadawul and internationally on one or perhaps two" bourses. The Tadawul is Saudi Arabia's stock exchange.

"We are evaluating different stock exchanges globally and we will present this to our board and shareholder on where Aramco will be listed," he added.

Nasser also said an overhang in world oil supplies was expected to ease in the first half of 2017 and that the industry needed to maintain investments for the long term despite lower prices.