>>> Europe pre market indications

ML
MEGGITT - FY16 beat and cash flow better. We put through 5% upgrades (436)..+5%
DERWENT LDN - Strong results plus flurry of activity shows +ve start (2800).+3%
GKN - 3% beat for op profit & mgmt PBT. Good enough for modest upgrades(353)+3%
SES - Spec of Intelsat (+25% a/h)/One Web consolidation is +ve (19.8).....+2-3%
BABCOCK - Trading since start of H2 has been inline. FY outlook unch (902)..+2%
TULLOW - Read from Kosmos call: Jubilee field producing 120kbd gross (275)..+2%
BOOHOO - Strong. Expect rev growth +50% v prev guided range of 46-48% (150).+2%
FERROVIAL - Modest beat on EBITDA & CF with Q4 traffic +6.5% v +4.5% (17.5).+2%
STEINHOFF - Decent. Rev ex acq grew 11%. Poundland performing ahead (5.3)...+2%
EUTELSAT - Spec of Intelsat (+25% a/h)/One Web consolidation is +ve (18.55).+2%
VALEO - Very bullish 2021 targets. To outperform auto prodn by 7% (59.1)..+1-2%
MERLIN PROPS - Announces 20c final div & lifts guide for '17 to 44c (11)....+1%
BLND - CC Land offered £1.02bn for the Cheesegrater; Co Star reports (616)..+1%
HISPANIA - Azora has proposed a value return plan. Nos look good (12.2).....+1%
V.MONEY - Beat cons with PBT 4% ahead. Capital & credit both strong (340)...+1%
ARKEMA - Solid. EBITDA 6.6%/revs 4.5% beat gives margin 13.1% v 12.9% (92.7)+1%
THALES - 2H operating beat & inline guidance. Positive acq comments (90.5)..+1%
TELEPIZZA - Group has beat on FY16 LFL sales but missed on margin (5.08)....+1%
ERSTE - Positive one offs but pre provision profit/guide is inline (27.72)..u/c
EDPR - Inline. Q4 load factors weak which explain weakness in op CF (6.2)...u/c
T.WIMPEY - Modest beat. PBT & EPS 2% beat with stronger commentary (178.4)..u/c
CRODA - Sales 2% ahead of cons with op profit broadly inline with est (3345)u/c
BODYCOTE - All looks bang inline. Nothing to move the dial this am (713)....u/c
MINERS - Copper -0.27%, Iron Ore fut -2.1% with BHP OZ +0.04%, RIO OZ -0.8%.-1%
ADIDAS - Struggling to sell Taylor Made (golf brand); New York post (156)...-1%
SALZGITTER - Inline with EBT 2% ahead but FY17 guide lower than exp (34.6)..-2%
ST JAMES - Mixed. Div ahead but miss on underlying cash generation (1050).-3-4%
SEADRILL - EBITDA 354m, slightly ahead of co guidance of US$340m (156.2)....-5%
MONY - Inline nos. Outlook weak saying group revs are behind last yr (327)..-7%
GO AHEAD - Half yr inline. FY exp lowered due to challenges in GTR (2056)..-10%

CS
Aalberts +1-2% Sales inline, operating profit ahead, net ahead
Ackermans M/P Net €224.2m vs cons 224m, divi €2.04 vs cons €2.09
Adidas -1-2% Losses at golf unit TaylorMade are much worse
Applus -1% FY results broadly in line
Arkema +1% Q4 EBITDA 243m Cons 228m, FY17 guidance 1.3bn Cons 1.29bn
Babcock +1-2% No's inline, outlook for FY remains unchanged
Bodycote M/P FY revs 7% beat, margin lower
Brit Land M/P In discussions to sell Leadenhall building
BT -1-2% OFCOM plans to cut bills
Croda +1% FY operating profit 298.2m vs cons 296.3m
Derwent +1-2% NAV lower but better vs cons, couple of small disposals
Erste M/P 4Q net income EU85.6m vs EU204m, 2017 Guidance confirmed
Eurofins +1-2% FY revs €2.54bn vs cons 2.532, guidance confirmed
Ferrovial +1% EBITDA ahead, Net light, buyback of up to Eu275m
Fresnillo +1-2% Revs $1.91b vs cons 1.90b, guidance inline
George Fisher M/P Sales CHF3.74bn vs cons 3.76bn, outlook reads fine
GKN +1-2% Operating profit 2% ahead, revenues 4% ahead
Go-Ahead -3-5% 1h Numbers fine but co have lowered guidance
Greggs M/P FY sales inline, PTP and outlook inline
Hochtief +2-3% FY16 sales 1% ahead, guidance reads well
Intesa M/P Wants to Buy a Large Bank in Russia: Local Unit Chairman
IWG +1-2% FY16 a touch ahead of cons, pick-up in sales
Meggitt +7-10% Revs £1.99b cons 1.91b, FCF is 29% ahead, guidance strong
Merlin Prop +1% FY16 net 20% ahead, Occupancy down to 91.3% vs 95.7%
Moneysuper -5-7% FY inline, slower start, CS DOWNGRADE to NEUTRAL
Miners -1% Copper -0.30%, Brent UNCH, Iron Ore -1.90%, China -0.10%
Novo Nord M/P Files NDA application with Japanese Ministry of Health
Orior +1% FY16 Turnover 1% ahead, EBITDA 2.5% ahead
Oerlikon +1% FY Turnover inline, Order intake 2% ahead, EBITDA 2% ahead
Safran UNCH To buy-back remaining €200m of €450m mandate
Salzgitter -0.5% Q4 beat, Guidance below consensus
Seadrill -5% Numbers inline but outlook extremely challenging
St James -1-2% CEO Bellamy stepping down, NAV at 900.6p is 5% above cons
Taylor Wimp +0.5% Op profit inline, No change to medium term targets
Thales +0.5% FY ebit 1.354 vs 1.325-1.374 range, strong FCF
Valeo +1-2% Announces new long-term targets ahead of its Investor Day
Valora +1% EBIT CHF72m vs cons 70m, Outlook for 2017 is positive

MF
*NOVARTIS-Has 13 potential blockbusters in pipeline says CEO........U/C 
*VALEO-Tgts 2021 Sales above 27b,FCF 3.7b 2017-21,Margin 9% '21.....+1% 
*EUROFINS-FY Rev 2.54b(2.53),Confirms 2017 targets,Trends +ve.......+1% 
*ACKERMANS-FY Net 224.2m(224),Div 2.04(2.09),outlook ok.............+1%
*HOCHTIEF-Q4 Sales 5.4b(5.42),Op Ebt 196.2m(170),NI 112.4m(88)......+1.5% 
*THALES-FY Ebit 1.354b(1.347),Sales 14.89b(14.85),Div 1.60..........+1% 
*A2A-FY Ebitda 1.22b(1.14),PT 350m,Net Debt 3.14b(3.19),FY 3/4......+2% 
*STRAUMANN-Ends partnership with MegaGen rec'd $30m repayment.......U/C
*OERLIKON-FY16 Sales 2.33b(2.34),Ebitda 334m(326),Net 388m(373).....+1% 
*AALBERTS-FY Ebita 298m,FCF 273m,Div 273m,Sees bolt-on acq's........+1% 
*ADIDAS-Struggling to sell TaylorMade Brand says New York Post......-1% 
*ELRINKLINGER-Prelims Q4 Rev 407.2m(403),Adj Ebit 39.5m(36.7).......-1.5%
*SALZGITTER-FY16 Rev 7.91b(8.18),EBT 53.2m(52.2),Net 56.8m(32)......-1.5% 
*HAPAG LLOYD-FY16 Ebitda 607m(569.7),Ebit 126m(82.82),Rev 7.3b(7.8).+1% 
*ARKEMA-FY NI 427m(384.5),Rev 7.54b(7.45),Div 2.05(2.05)............+1%

>>> Safran Holders Should Push Co for Vote on Zodiac, TCI Says

Safran Holders Should Push Co for Vote on Zodiac, TCI Says
Vote should come before the takeover occurs, U.K. fund manager says in letter dated Feb. 27 posted on website.
  • Transaction’s sequence can only be changed by shareholder pressure and intervention by market regulator AMF, TCI says
  • Shareholders should vote against the merger “for the sake of good governance,” TCI says
  • Safran holders should register their shares for double voting rights to help improve Safran corporate governance: TCI
  • Safran has poor governance and it will get worse after deal, because Zodiac founding families, French state, Peugeot family and FSP fund will sign a shareholder agreement giving them effective control of board, voting rights: TCI
  • In separate letter to AMF, TCI asks regulator to declare Zodiac families, state, others as “concert party” regarding Safran shares, with an obligation to launch a takeover offer for Safran because the group will control more than 30% of voting rights

>>> What to look at today - 28th of February 20117

Dow +0.08% S&P +0.10% Nasdaq +0.28% Russell +0.96%
US MArket closed higher. Mkt opened lower disappointed by durable good orders but some comments from Trumpe ahead of congress meeting today pushed mkt higher. Bulls turned their attention to aerospace & defense names after Mr. Trump proposed a $54 billion boost to defense spending, making good on his promise from last Friday to implement one of the "greatest military buildups in American history." Additionally, the president's comments helped send shares of Caterpillar (CAT 97.44, +1.96) higher after the promise to touch on his infrastructure plan during his first address to Congress, which will take place tomorrow evening. Energy finished top of the leader board with Cruce higher by 0.1% at $54.04/bbl. Financials (+0.5%), health care (+0.4%), and real estate (+0.5%) also outperformed with health care receiving a boost from the biotechnology industry, IBB +2.9%. On the flip side, telecom services finished Monday at the bottom of the leaderboard after AT&T (T 41.82, -0.54) announced that it will be lowering the price of its unlimited data plan, pointing to increased competition within the wireless space. US After Hours NTRI +18.5%, ALB +3%, EOG +2% following earnings/guidance, SBY +17% on M&A news... THC -14% following earnings/guidance, FRGI -13.3% on earnings/sale evaluation suspension. Asian indices traded mixed after consecutive down days, with funds flowing out of Treasuries and seeking riskier assets. Nikkei is outperforming as USD/JPY broke a string of 3 straight down days with a rally. Reversals in Treasuries and the greenback are construed as technically driven, with all eyes on President Trump's first speech to a joint session of Congress on Tuesday night and hopes of more concrete outline of promised tax cuts and infrastructure spending initiatives. Japan industrial output surprised with its first sequential decline in 6 months. China's Vice Premier Yang took a more conciliatory tone ahead of Trump's address tomorrow, calling for Beijing to maintain non-confrontational principle with the US despite the recent press reports of both sides boosting their military spending.

Nikkei +0.06% Hang Seng -0.62% CSI +0.14% Shanghai +0.33%

Eur$ 1.0595 CNH 6.8568 CNY 6.8681 JPY 112.38 GBP 1.2424 CHF 1.0071 RUB 57.94 WTI$ 54.06

S&P -0.08% EuroStoxx +0.15% Dax +0.05% FTSE +0.09% SMI +0.14%

Macro :
- Euro Stoxx 50 ETF Call Volume Surges to Record on Block Trades
- David Tepper Says ‘Still Long Stocks, ’Still Short Bonds’: CNBC
- S&P 500 Upside Calls Show Bullish View Into March Expiration
- HSBC Recommends Emerging Markets vs Europe on Policy Uncertainty
- Greece Said to Expect Revised Bailout Proposal for Tuesday Talks

Keep an eye on :
- A2A IM : A2A Exceeds Ebitda Guidance, Focus Now on Plan: Kepler Cheuvreux
- AALB NA : Aalberts Forecasts Further Sustainable Profitable Growth
- ABG SM : Abengoa Begins Sale Process for Atlantica Yield: Expansion
- AKE FP : Arkema Confirms 2017 Ebitda Target as 2016 Net Beats Estimates
- CS FP : Axa Denies Lettre De L’Expansion’s Report on Online Bank Review
- BWO NO : BW Offshore 4Q Ebitda Stable; Net Loss Narrows
- DAI GY : Daimler Appoints Martin Daum to Head Trucks, Buses Units
- DLG GY : Dialog Semiconductor watching for bolt-ons
- EDPR PL : EDP Renovaveis 2016 Net Income Falls 66% Y/y to EU56m
- EDP PL : EDP Renovaveis Sells Stake in Wind Assets to China Three Gorges
- ZIL2 GY : ElringKlinger 4Q Revenue Rises, Swiss Business Improves
- ERF FP : Eurofins Adj. Net Misses Forecast, Dividend Below Estimates
- EURCAR FP : Europcar to Pay Dividend for 2016 of 50% of Net Income
- FER SM : Ferrovial 2016 Net EU376.2m, Misses EU406.5m Analyst Consensus
- FER SM : Ferrovial Proposes EU0.74/Shr Scrip Dividend
- HOT GY : Hochtief 4Q Profit Rises, Sees 2017 Sales Growth
- ISP IM : Intesa Not Seeking to Syndicate EU5.2b Glencore-Qatar Debt, Intesa Wants to Buy a Large Bank in Russia: Local Unit Chairman
- NOVN VX : Novartis Has 13 Potential Blockbusters in Pipeline: CEO in BaZ
- PRS SM : Prisa 2016 Net Loss EU67.9m; Operating Revenues Slip 1.2%
- SAF FP : Safran to Buy Back Up To EU200m of Its Shares by June 14
- SAZ GY : Salzgitter Sees 2017 Pretax Profit Rising to EU100m-EU150m
- SDRL NO : Seadrill Ebitda Beats; Challenging Reaching Deal Before Deadline
- SO IM : Sogefi 4Q Rev. +5.4%; Sees Mid-Single Digit Rev. Growth in 2017
- HO FP : Thales May Seek Acquisitions in Four Core Areas, CEO Caine Says, Thales FY Ebit Jumps 11%; Co. Sees Profit Rising Again in 2017
- FR FP : Valeo Targets 2021 Sales Above EU27b, Op. Margin About 9%
- VCT FP : Vicat FY Net Climbs 18%; Co. Sees Results Improving in 2017

>>> Europe : Brokers Upgrades & Downgrades - 29th of February 20

>>> Up
*Allianz Raised to Equal-Weight at Morgan Stanley, PT EU184
*Beni Stabili SpA SIIQ Raised to Overweight at JPMorgan
*GALP ENERGIA RAISED TO OUTPERFORM AT BMO CAPITAL MARKETS
*Hershey Raised to Hold at SocGen, PT $110
*Marks & Spencer Raised to Buy at Jefferies, PT 370p
*PostNL Raised to Neutral at Main First Bank AG, PT EU4.30
*Saint-Gobain Raised to Neutral at UBS
*Skyworks Raised to Buy at Erste Group
*Tullow Raised to Outperform at BMO, PT GBP3.80

>>> Down
*BW LPG Cut to Hold at ABG Sundal, PT NOK37
*Exxon Cut to Hold at Erste Group
*LEG Immobilien Cut to Hold at SocGen, PT EU87
*Nordex Cut to Neutral at Citi, PT EU14.60
*Rhoen Klinikum Cut to Underperform at Jefferies, PT EU17.60
*Swiss Re Cut to Sell at SocGen, PT CHF85

>>> Initiation
*Auto Trader Rated New Sell at UBS, PT 375p
*BANCO BPM Rated New Buy at SocGen, PT EU3.10
*Buwog Rated New Buy at SocGen, PT EU29
*Cellectis Rated New Outperform at Wells Fargo
*Geberit Rated New Buy at Erste Group
*IP Group Rated New Hold at Jefferies, PT 169p
*Rheinmetall Rated New Outperform at Main First Bank AG, PT EU80
*Scout24 Rated New Neutral at UBS, PT EU34.75
*Vinci Rated New Buy at Erste Group

>>> Europe : Brokers Upgrades & Downgrades - 29th of February 20

>>> Up
*Hershey Raised to Hold at SocGen, PT $110
*PostNL Raised to Neutral at Main First Bank AG, PT EU4.30
*Saint-Gobain Raised to Neutral at UBS
*Skyworks Raised to Buy at Erste Group

>>> Down
*Exxon Cut to Hold at Erste Group
*LEG Immobilien Cut to Hold at SocGen, PT EU87
* Swiss Re Cut to Sell at SocGen, PT CHF85

>>> Initiation
*BANCO BPM Rated New Buy at SocGen, PT EU3.10
*Buwog Rated New Buy at SocGen, PT EU29
*Geberit Rated New Buy at Erste Group
*Rheinmetall Rated New Outperform at Main First Bank AG, PT EU80
*Vinci Rated New Buy at Erste Group

>>> After Hours Summary: NTRI +18.5%, ALB +3%, EOG +2% followin

After Hours Summary: NTRI +18.5%, ALB +3%, EOG +2% following earnings/guidance, SBY +17% on M&A news... THC -14% following earnings/guidance, FRGI -13.3% on earnings/sale evaluation suspension

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: NTRI +18.5%, BWXT +5.3% (light volume), KND +5.1%, TCMD +4.3%, WUBA +4.3%, PCLN +4%, ALB +3.4%, EOG +2.2%, HTZ +1.5%

Companies trading higher in after hours in reaction to news: SBY +17% (Silver Bay Realty Trust agrees to be acquired for $21.50 per share in cash), NSPR +15.4% (continued strength), INUV +13.5% (Inuvo's Vertro and Google entered into a Google Services Agreement), DRYS +7% (to initiate a new dividend policy; will pay a regular fixed quarterly dividend of $2.5 million to the holders of common stock), X +3.6% (upgraded to Outperform from Market Perform at Cowen)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: THC -14.4%, ESND -14.4% (ticking lower), FRGI -13.3% (also provides strategic update), PRGO -10.8% (also announces the resignation of CFO Judy Brown effective April 1, 2017; Ron Winowiecki appointed CFO effective immediately; to divest Tysabri royalty stream for up to $2.85 billion), KONA -9.9%, NVAX -9.2%, FTR -7.9%, ZTO -4.9%, IPWR -4.2% (enters into a definitive securities purchase agreement with various investors to raise gross proceeds of approx. $15 mln in a private placement of common stock and warrants to purchase common stock), ANTH -4%, CPE -3.7%, KTOS -3.2%, WDAY -2.2%, WDAY -2.2%, EXEL -2.1%, APLE -1.2%, DLNG -0.7%,

Companies trading lower in after hours in reaction to news: NVAX -9.2% (pulling back after closing near highs with notable afternoon move to highs), TTNP -7.9% (receives FDA communication on ropinirole implant Investigational New Drug Application; FDA indicated that it will require final release test data), HTGM -5.7% (modestly pulling back), TCAP -3.7% (announces the commencement of a public offering of 7,000,000 shares of common stock), HPP -2% (commences 8.5 mln common stock offering), O -1.8% (commences an underwritten public offering of 8,000,000 shares of common stock), SQ -1.7% (commences $350 mln offering of convertible senior notes due in 2022), TZOO -1.6% (following PCLN results)

>>> Asian Update

Asia Mid-Session Market Update: Japan industrial output contracts; Australia Current Account hints at stronger Q4 GDP

***US Session Highlights***
- (US) Jan Building Permits revised higher from 1.285M to 1.293M
- (US) JAN PRELIMINARY DURABLE GOODS ORDERS: 1.8% V 1.7%E; DURABLES EX-TRANSPORTATION: -0.2% V +0.5%E
- (US) President Trump: defense budget increases will be offset by savings elsewhere; tomorrow's address will have big statement on infrastructure spending
- (US) JAN PENDING HOME SALES M/M: -2.8% V +1.0%E; Y/Y: +2.7% V -2.0% PRIOR (falls to one-year low)
- (US) White House spokesperson: budget plan to request $54B increase in defense spending; will look for corresponding cuts across other agencies - press
- (US) FEB DALLAS FED MANUFACTURING ACTIVITY: 24.5 V 19.4E

***US markets on close: Dow +0.1%, S&P500 +0.1%, Nasdaq +0.3%***
- Best Sector in S&P500: Energy
- Worst Sector in S&P500: Telecom
- Biggest gainers: ILMN +4.3%, SWN +3.5%, TGNA +3.5%, REGN +3.3%, JWN +3.3%
- Biggest losers: AES -6.6%, NEM -5.9%, NRG -4.0%, MDLZ -3.6%, HBI -3.4%
- At the close: VIX 12.1 (+0.6pts); Treasuries: 2-yr 1.20% (+4bps), 10-yr 2.37% (+5bp), 30-yr 2.99% (+3bps)

***US movers afterhours***
- NTRI: Reports Q4 $0.29 v $0.22e, R$108.9M v $100Me; Guides Q1 GAAP $0.14-0.19 v $0.10e, R$202-207M v $180Me; EBITDA $11.6-13.6M; +17.9% afterhours
- SBY: To be Acquired by Tricon Capital Group Inc. in $1.4B in All-Cash Transaction, or $21.50/shr; +16.9% afterhours
- KND: Reports Q4 $0.08 v $0.06e, R$1.75B v $1.73Be; Guides initial FY17 $0.55 v $0.43e, R$7.1-7.3B v $6.8Be, EBITDAR $910-950M; +5.1% afterhours
- PCLN: Reports Q4 $13.47 v $13.06e, R$2.35B v $2.33Be; +3.3% afterhours
- HTZ: Reports Q4 -$0.71 v -$0.54e, R$2.01B v $2.03Be; +2.0% afterhours
- WDAY: Reports Q4 $0.07 v -$0.01e, R$436.7M v $430Me; Guides initial FY18 R$2.01-2.03B v $1.99Be; -2.1% afterhours
- FTR: Reports Q4 -$0.12 v -$0.03e, R$2.41B v $2.50Be; approves stock split; Guides initial FY17 Capex $1-1.25B, ~ unch y/y; -8.5% afterhours
- PRGO: Reports FY16 $5.6B v $5.44Be; To divest Tysabri royalty stream to Royalty Pharma in $2.9B deal; Guides FY17 adj $7.10-7.25 v $7.21e, R$5-5.2B v $5.51Be; -10.7% afterhours
- FRGI: Reports Q4 $0.27 v $0.27e, R$171.3M v $176Me; Halts strategic alternatives search; -13.3% afterhours
- THC: Reports Q4 $0.06 v $0.20e, R$4.86B v $4.97Be; Guides Q1 -$0.60 to -$0.45 v $0.45e, R$4.75-4.95B v $4.95Be, adj EBITDA $475-525M; -14.3% afterhours

***Politics***
- (US) Wilbur Ross confirmed as US Commerce Sec by US Senate in 72-27 vote - press
- (US) Former US Ambassador to China Jon Huntsman said to be in talks to become No 2 official at the State Dept - press

***Asia Key economic data:***
- (JP) JAPAN JAN RETAIL SALES M/M: 0.5% V 0.3%E; RETAIL TRADE Y/Y: 1.0% (3rd straight increase) V 1.0%E
- (JP) JAPAN JAN PRELIMINARY INDUSTRIAL PRODUCTION M/M: -0.8% (biggest decline since May 2016, first decline in 6 months) V +0.4%E; Y/Y: 3.2% V 4.3%E
- (JP) JAPAN JAN VEHICLE PRODUCTION Y/Y: 3.8% V 4.2% PRIOR
- (AU) AUSTRALIA Q4 CURRENT ACCOUNT BALANCE (A$): -3.9B V -4.0BE; NET EXPORTS OF GDP: 0.2% V 0.2%E
- (AU) AUSTRALIA JAN HIA NEW HOME SALES M/M: -2.2% (First decline in 3 months) V +0.2% PRIOR
- (AU) AUSTRALIA JAN PRIVATE SECTOR CREDIT M/M:0.2% V 0.5%E; Y/Y: 5.4% V 5.6%E
- (NZ) NEW ZEALAND JAN TRADE BALANCE (NZ$): -285M V -25ME (7th straight deficit)
- (NZ) NEW ZEALAND FEB ANZ ACTIVITY OUTLOOK: 37.2 (5-month low) V 39.6 PRIOR; BUSINESS CONFIDENCE: 16.6 (5-month low) V 21.7 PRIOR

***Asia Session Notable Observations, Speakers and Press***
- Asian indices traded mixed after consecutive down days, with funds flowing out of Treasuries and seeking riskier assets. Nikkei is outperforming as USD/JPY broke a string of 3 straight down days with a rally. Reversals in Treasuries and the greenback are construed as technically driven, with all eyes on President Trump's first speech to a joint session of Congress on Tuesday night and hopes of more concrete outline of promised tax cuts and infrastructure spending initiatives.
- Also due out tomorrow is Australia's Q4 GDP, and analysts are increasingly more upbeat following today's narrower than expected current account deficit as well as anticipated rise in Exports % of GDP component. This follows strong corporate profits data overnight and mixed CapEx figures last week, leading some analysts to revises their growth targets slightly higher.
- Japan industrial output surprised with its first sequential decline in 6 months. While METI raises its Feb forecast to 3.5% m/m v 0.8%, March is seen contracting again at -0.5% as JPY remains stubbornly stronger in the first two months of the year.
- China's Vice Premier Yang took a more conciliatory tone ahead of Trump's address tomorrow, calling for Beijing to maintain non-confrontational principle with the US despite the recent press reports of both sides boosting their military spending. Overnight, a PBoC official also called for monetary policy to be more neutral, as China govt looks ahead to Trump's address and any further mention of Beijing being the "grand champion" Of currency manipulation.

***Asian Equity Indices/Futures (00:30ET)***
- Nikkei +0.6%, Hang Seng -0.1%, Shanghai Composite +0.2%, ASX200 -0.2%, Kospi +0.3%
- Equity Futures: S&P500 flat; Nasdaq flat; Dax +0.1%; FTSE100 +0.1%

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.0570-1.0595; JPY 112.45-112.80; AUD 0.7665-0.7690; NZD 0.7175-0.7195
- Apr Gold -0.4% at $1,254/oz; Apr Crude Oil +0.3% at $54.20/brl; May Copper flat at $2.69/lb
- (CN) PBOC SETS YUAN MID POINT AT 6.8750 V 6.8814 PRIOR
- (CN) PBOC to inject combined CNY30B v CNY30B prior in 7-day, 14-day and 28-day reverse repos
- (JP) Japan MoF sells ¥2.09T v ¥2.3T indicated in 2-yr 0.1% JGBs; Avg yield: -0.252% v -0.173% prior; bid to cover: 3.93x (lowest since Sept 29) v 5.19x prior

***Asia equities / Notables / movers by sector***
- Consumer discretionary: HVN.AU Harvey Norman +0.3% (H1 result); MBE.AU Mobile Embrace -9.0% (H1 result); VTG.AU Vita Group +7.1% (H1 result)
- Financials: 1233.HK Times Property Holdings +6.6%, 388.HK Hong Kong Exchanges & Clearing -0.9% (FY16 result); SPO.AU Spotless -13.7% (guidance); EGH.AU Eureka Group Holdings -14.0% (H1 result)
- Industrials: WOR.AU Worley Parsons +30.2% (receives proposal); 7013.JP IHI Corp +3.6% (booked gain); CDD.AU Cardno +11.9% (Morgans Financial raises rating)
- Technology: 018260.KR Samsung SDS Co Ltd -1.9% (momentum)
- Materials: RSG.AU Resolute Mining -12.8% (H1 result); FMG.AU Fortescue -0.3% (no interest in Wesfarmers coal assets); ORE.AU Orocobre -14.6% (H1 result)
- Energy: AWE.AU AWE +3.2% (H1 result)
- Healthcare: CAJ.AU Capitol Health -6.1% (H1 result)
- Telecom: SDA.AU SpeedCast International -6.0% (FY16 result)

>>> Dialog Semiconductor watching for bolt-ons

Dialog Semiconductor watching for bolt-ons
STRATEGIC SNAPSHOT27 FEB 2017
Dialog Semiconductor [FRA:DLG], the UK-based provider of standard and custom mixed signal integrated circuits, will focus on bolt-on transactions, according to CEO Jalal Bagherli.
On the 4Q16 earnings call held 23 February, Deutsche Bank analyst Robert Sanders noted that billion dollar-plus deals had been off the table in 2016 and asked if Dialog would continue to focus on bolt-ons. Bagherli said he had spent a lot of time looking at potential acquisition targets in 2016 but had not found the right candidate to buy.
“We are looking at smaller acquisitions relative to what we tried prior to that,” the CEO said. “And that strategy will continue in 2017, so there will be bolt-on acquisitions that we look at.”
He noted that the company could not be certain of making any deals until it went through the due diligence and valuation process, adding that Dialog was wary of misspending its cash on assets that did not create value.
“As we scale up, you need to also consider that (M&A) scales up with us,” Bagherli continued.
He said what was previously considered a tuck-in deal was now just “noise” to Dialog, adding that with its increase in size, the company’s cash level and revenue growth were higher.
“So we will be looking at things which are bigger than say what we did three or four years ago potentially. But we're not looking, in terms of our scale, at major large scale acquisitions,” the CEO said.
In a March 2016 published report, Bagherli said the company remained interested in acquisitions, adding that any takeover would involve a company that was smaller than Atmel, a California-based rival that Dialog tried to acquire. The CEO said Dialog had learned its lesson after successfully finalising two smaller buys, but failing to nail down two larger transactions, the report said.
Dialog announced in September 2015 its agreement to buy Atmel for approximately USD 4.6bn. The deal lapsed in mid-January 2016, and the latter was subsequently bought by Microchip Technologies [NASDAQ:MCHP]
Dialog’s main reporting segments are: Mobile Systems, including power management, audio and display; Connectivity, such as Bluetooth Smart, short-range wireless VoIP and voice over DECT; Power Conversion, including AC/DC converters, solid-state lighting LED drivers and AC/DC chargers and adapters; and Automotive & Industrial, providing motor control ICs and control ASICs. Mobile Systems is the largest contributor to earnings, providing 82% of revenues, with the latter three segments providing 9%, 6% and 3%, respectively.
The company’s most recent transaction was a USD 10m investment in Energous Corporation [NASDAQ: WATT], a California-based developer of wireless charging technology.
Morgan Stanley advised Dialog on the attempted Atmel takeover, while RBC Capital Markets was used for the 2013 purchase of iWatt for around USD 310m. Jefferies advised on an earlier transaction.
Dialog used Davis Polk & Wardwell for the Energous deal, as well as for iWatt and the failed Atmel acquisition. UK-based RPC was also used for iWatt and Amtel, according to the Mergermarket M&A database.
Colin Sturt, Dialog’s General Counsel, previously worked at Davis Polk. Dialog’s 2015 annual report named RPC as the company’s legal advisor.
Dialog reported a cash balance of USD 697m at year-end. It has a market capitalization of EUR 3.8bn.

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Closing Market Summary: Dow Posts 12th Straight Record Close on Monday

Investors cautiously nudged the major averages higher on Monday in another afternoon rally that has become almost expected as of late. The Dow (+0.1%) closed at a fresh record high for the 12th consecutive time, while the S&P 500 (+0.1%) posted a fresh record high of its own. The Nasdaq finished with a gain of 0.3%.

Equity indices opened the morning session mildly lower following a relatively disappointing durable goods, excluding transportation, reading. However, President Trump got things rolling with some comments shortly after the opening bell.

Bulls turned their attention to aerospace & defense names like Boeing (BA 179.43, +1.99) and Lockheed Martin (LMT 269.36, +5.18) after Mr. Trump proposed a $54 billion boost to defense spending, making good on his promise from last Friday to implement one of the "greatest military buildups in American history." Additionally, the president's comments helped send shares of Caterpillar (CAT 97.44, +1.96) higher after the promise to touch on his infrastructure plan during his first address to Congress, which will take place tomorrow evening.

The industrial space (+0.3%) led the stock market back to its flat line, where it hovered until its afternoon advance.

Energy (+0.9%) finished Monday at the top of the leaderboard. The space did receive some help from crude oil, although not as much as early indications may have predicted. WTI crude finished just above its flat line, higher by 0.1% at $54.04/bbl, despite trading as high as $54.60/bbl in the overnight session.

Financials (+0.5%), health care (+0.4%), and real estate (+0.5%) also outperformed with health care receiving a boost from the biotechnology industry. The iShares Nasdaq Biotechnology ETF (IBB 298.27, +8.37) jumped 2.9% higher, closing near its five-month high.

On the flip side, telecom services finished Monday at the bottom of the leaderboard after AT&T (T 41.82, -0.54) announced that it will be lowering the price of its unlimited data plan, pointing to increased competition within the wireless space.

Consumer staples (-0.6%) fared only slightly better, suffering in light of the dissolved Kraft-Heinz (KHC 90.51, -2.54)-Unilever (UL 47.69, +0.58) merger after Warren Buffett said that KHC is not planning a hostile takeover of UL and that there is no backup deal in the works. Given that Mr. Buffett is the chairman of Berkshire Hathaway (BRK.b 170.63, +0.41), which invested in the Kraft-Heinz merger back in 2015, his comments on the situation hold some weight.

Mr. Buffett also revealed that he more than doubled his holdings in Apple (AAPL 136.93, +0.27) between January 1 and the company's earnings report on January 31. AAPL added 0.2% on the news, but it wasn't enough to keep technology (-0.1%) out of the red.

U.S. Treasuries finished the day with large losses as investors revised up their probabilities for a rate hike at the March 14-15 FOMC meeting; the fed funds futures market now shows an implied probability of 35.4% from 26.6% on Friday. The benchmark 10-yr yield closed Monday five basis points higher at 2.37%. In addition, bond traders have started looking at the possibility of another debt ceiling showdown and a possible government shutdown if there is no agreement on how to deal with the debt limit by March 15.

Today's economic data included January Durable Orders and January Pending Home Sales:

  • January durable goods orders rose 1.8%, which is in line with the consensus. The prior month's reading was revised to -0.8% (from -0.4%). Excluding transportation, durable orders declined 0.2% (consensus +0.5%) to follow the prior month's revised gain of 0.9% (from 0.5%).
    • The key takeaway from the report is that the "hard" data indicates business spending declined at the start of the year, which is contradictory of the spending optimism reported in the "soft" survey data.
  • Pending Home Sales for January declined 2.8% while the consensus expected an increase of 0.9%. Today's reading follows a revised 0.8% uptick in December (from 1.6%).

Tuesday's economic data will include the second estimate of fourth quarter GDP (Consensus 2.1%) and January International Trade in Goods at 8:30 ET, February Chicago PMI (consensus 53.0%) at 9:45 ET, and February Consumer Confidence (consensus 111.5) at 10:00 ET.