>>> US Early premarket gappers

Early premarket gappers
Gapping up: CLNE +19.2%, OPGN +15.4%, ADVM +12.7%, YELP +12.6%, VSAR +11.5%, SUNW +10.7%, VRNS +9.6%, OCN+9%, DXPE +8.9%, BBSI +8.6%, COTV +7.7%, DHT +7.7%, NH +7.3%, YRD +7.3%, HCHC +7%, WATT +6.7%, INFI +5.6%,CDXS +5.3%, LITE +4.9%, HALO +4.8%, RYI +4.4%, JD +4.1%, XONE +3.7%, CEL +3.7%, GFI +3.6%, HL +3.3%, HLIT+3.3%, CRME +3.2%, SWC +3.1%, CDE +3.1%, AG +3.1%, KGC +3%, CPRX +2.8%, GOLD +2.5%, AUY +2.5%, GG +2.4%,ABX +2.4%, EDIT +2.4%, TCS +2.4%, SLV +2.3%, MUX +2.3%, GDX +2.2%, NEM +2.1%, AU +2%, TAHO +1.9%, MT +1.7%,WAGE +1.7%, RBCN +1.7%, IAG +1.6%, ICL +1.5%, BTG +1.4%, PTLA +1.1%, AEZS +1.1%, BHP +0.9%, GLD +0.8%, CYRN+0.8%

Gapping down: GEVO -32.6%, MYGN -30%, SPWR -29%, WGBS -24.8%, TDW -17%, PRGO -12.7%, YUME -10.2%, SIF -9.4%,RPRX -8.6%, GALE -7%, CYBR -5.5%, DPLO -5.1%, LSCC -4.8%, GPRE -4.6%, ARWR -4.5%, OHRP -4.4%, CALL -4.3%, ALDX-4.2%, KORS -4.2%, SEDG -3.8%, OA -3.8%, CALA -3.4%, CSIQ -3.3%, VSAT -3.3%, CLF -2.9%, OMER -2.8%, CONE -2.2%,SPPI -2.1%, VWR -2%, NVAX -2%, LOAN -1.8%, HTM -1.8%, CTSO -1.8%, FSLR -1.5%, PANW -1.5%, JKS -1.5%, DIS -1.4%,MATR -1.4%, SPHS -1.4%, ZBH -1.3%, TSL -1.1%, VRX -1.1%, JAZZ -1%, RIG -0.8%, XON -0.7%, MYL -0.7%, MDVN -0.7%,BIOA -0.7%, EPIQ -0.7%, LUV -0.7%, FTNT -0.5%

(Makor) Who is right, USD/JPY or Nikkei Index ?

Bottom line:  the divergence between USD/JPY and Nikkei needs to be solved in one out of two ways 1) a move lower in Nikkei or 2) USD/JPY needs to play catchup and move significantly higher. Given the long term technical setup I prefer option 2. I will stick to this view as long as USD/JPY trades above 99.02. Feedback welcomed !

 

Chart 1 Divergence between USD/JPY (White) & Nikkei Index (Orange): while the Nikkei Index managed to sustain its gains USD/JPY is falling back to the lower end of its 99/106 range.

 

 

Chart 2 Nikkei 225: The Index broke out from its declining channel making the bottom of wave ‘4’ (14,864) the new pivot level. Overall the Elliot wave setup favors a move higher over time.

 

 

Chart 3 USD/JPY: The CCY pair is trying to base above the 99.02 / 100.6 area. Looking at the wave structure it seems like we are either in some kind of basing process between 99.02 and 107.49 or did not hit a low yet.  

 

 

 

 

Regards,

 

Barry Lyss - Makor Capital

Sales Equities/Derivatives

 

(BofA-ML) Equity Client Flow Trends : Mid Cap sales at a post crisis High

Clients sell for 5th week; big mid cap sales; weak 3Q for buybacks
Last week, during which the S&P 500 climbed 0.4% to another new high, BofAML clients were net sellers of US stocks for the fifth consecutive week. Net sales of $0.8bn were smaller than the prior week’s ~$2bn, but all three client groups (hedge funds, institutional clients, and private clients) were net sellers again. Institutional clients led the selling, as has been true a majority of weeks this year. And similar to the prior week, clients sold stocks in all three size segments, with the biggest sales of mid caps (fourth-largest in our data history after near-record mid-cap outflows the week before). As we noted last week, mid caps are the most expensive size segment and have generally seen accelerating sales by our clients since earlier this year—four-week average net sales are their largest since mid ‘08 (Chart 25), and cumulative net sales of mid caps YTD are the largest in our data history (Chart of the Week, below). Buybacks by our corporate clients picked up last week, though QTD are tracking at their lowest levels of any comparable period since 2012.

Biggest sales of cyclicals, Health Care; Telecom buying continues
Clients sold stocks in six of the ten sectors last week, along with ETFs (a reversal from net buying of ETFs most weeks this year). Net sales were largest in Health Care and Consumer Discretionary, despite differing trends for these two sectors in 2Q results (most Health Care stocks have positively surprised, while Discretionary has seen a high proportion of sales misses). Tech, along with the defensive sectors of Telecom, Staples and Utilities, saw net buying by our clients last week, with flows into Tech stocks their largest in one year. Cyclical sectors continue to see larger net sales than defensive sectors, which has been true since late June. Telecom continues to have the longest net buying streak (for four consecutive weeks, or since mid-June when looking at four-week average flows).

Other notable flows: institutional clients’ sales nearing records
• Cumulative net sales by institutional clients YTD ($28 bn) have eclipsed sales by this group in 2015 ($26bn), though so far remain below 2013’s record ($33bn).
Redemptions from mutual funds amid poor performance is one likely contributor.
• Hedge funds, institutional clients and private clients all sold stocks in the Financials, Discretionary and Materials sectors last week. No sector saw net buying by all three.
• Pension fund clients were net buyers of US stocks for the third consecutive week. Similar to other institutional clients, Tech stocks saw the biggest buying from this group last week. Their biggest net sales were of Staples stocks. All three size segments saw inflows by this group last week. See Pension fund flows for details.

(DBK) Weekly Flows (wed-Wed) : review of funds’ in/outflows as % of funds’ AuM.

Fund investors still chose EM debt exposure as their preferred risk play, but became more discerned on credit funds over the past week. In a shift to quality, investment-grade bond funds hit 17-week high inflows while high-yield funds suffered their first redemption since June, the latter burdened by low oil prices and slightly receding risk appetite. In the IG space, European funds gained 2.5-year high inflows in the past week and UK funds in particular have experienced a very notable investor interest over the past few weeks – a position which now seems reassured with the BoE’s announcement of a corporate bond purchasing scheme.

Last week, EM surprises turned positive for the first time since June which – paired with the weak Q2 GDP number out of the US (but before the strong nonfarm payrolls last Friday) – led the market to put aside their worries of a hawkish Fed re-pricing. As such, EM equity funds sustained inflows for a fifth week but investors again showed selective tastes for risk exposure, preferring diversified GEM mandates over regional EM mandates (see top right chart). Overall, a combination of weak economic data releases (as of last Wednesday’s close) and an underwhelming stimulus package in Japan, put a more defensive flavour to flows compared to the week prior, with investors withdrawing from DM equities while topping up money market exposure.

(ZH) Bank Of England Suffers Stunning Failure On Second Day Of QE: "Goodness Kno

Bank Of England Suffers Stunning Failure On Second Day Of QE: "Goodness Knows What Happens Next Week"

It started off well enough.
On the first day of the Bank of England's resumption of Gilt QE after the central bank had put its monetization of bonds on hiatus in 2012, bondholders were perfectly happy to offload to Mark Carney bonds that matured in 3 to 7 years. In fact, in the first "POMO" in four years, there were 3.63 offers for every bid of the £1.17 billion in bonds the BOE wanted to buy.
However, earlier today, when the BOE tried to purchase another £1.17 billion in bonds, this time with a maturity monger than 15 years, something stunning happened: it suffered an unexpected failure which has rarely if ever happened in central bank history: only £1.118 billion worth of sellers showed up,meaning that the BOE's second open market operation was uncovered by a ratio of 0.96. Simplystated, the Bank of England encountered an offerless market.

What makes this particular failure especially notable - and troubling - is that while technically uncovered sales of government securities happen frequently, and Germany is quite prominent in that regard as numerous Bund auctions have failed to find enough demand in the open market in recent years forcing the "retention" of the offered surplus, when it comes to a central bank's buying of securities, there should be, at least in practice, full coverage of the operation as the central bank is willing and able to pay any price to sellers to satisfy its quota.
For example, in today's operation, the scarcity led to the BOE accepting all submissions, even as some investors offered prices above the prevailing market. The highest accepted price for the 4 percent bond due in 2060, for example, was 194.00, compared with a weighted average of 192.152, which means that the happy seller obtained a yield well in excess of that implied by the market.
And yet, despite having a completely price indiscriminate buyer, some £52 million worth of bond sellers simply refused to sell to the BOE at any price!
The QE failure quickly raised alarm signals among the bond buying community. In a Bloomberg TV interview, Luke Hickmore, an Edinburgh-based senior investment manager at Aberdeen Asset Management said that “lots of people are bidding us for bonds -- Mark Carney is now bidding me for bonds and he still can’t have them. The problem is he was trying to buy 15-year plus bonds today in the gilt market. That’s a really difficult area.”
Needless to say, immediately after the news that not even the BOE can buy all the bonds it needs to buy at any price, yields on 10 and 30-year gilts quickly dropped to new record lows. "Yesterday we saw a 3.63 cover in the short APF so this is a sharp difference that has really caught the market off guard,” said Daniela Russell of Legal & General Group in London, cited by Bloomberg.
We were surprised they didn't slide even lower. After all, if even the central bank is met with an offerless market, there is simply no price that is high enough, as ludicrous as that may sound, for longer-maturity gilts because the last marginal seller can demand any price from the BOE and they will get it.
As Bloomberg notes, the BOE’s failure to reach its target on Tuesday is an early warning of the challenges it may face in expanding its QE plan. A big part of the problem for the central bank is that it already scooped up about a third of the U.K. government bond market as part of a program that started in March 2009. And, with yields already at all time lows, it has just run into the same problem that wewarned back in 2014 will haunt the BOJ: a lack of willing sellers. Ironically, even as the BOJ has stumbled from one monetary policy embarrassment to another, it never had a failed POMO. It was up to the Bank of England to demonstrate what a bond shortage really means.
But why the lack of sellers? Well, since the BOE paused purchases in 2012, global bond yields have tumbled, meaning investors may be less willing to part with longer-term bonds that tend to offer higher yields than their shorter-dated equivalents. Long-dated U.K. bonds are in particular demand from pension companies that hold the securities to match their liabilities.
“You’d understand why investors might not be keen to offload longer bonds - if you are looking for yields that’s the only place on the curve to be,” said Jason Simpson, a London-based fixed-income strategist at Societe Generale SA.
Longer-dated bonds are “an area where people are hunting down what yield is left - you have to extend out into that area to get anything really,” Aberdeen’s Hickmore said. Carney “is going to say ‘it’s very early days, this is day one of the long-end purchasing.’”
Whatever the reason, and however the BOE will try to justify this striking failure, Mark Carney has a major problem on his hands: according to last week's announcement, the BOE hopes to increase its holdings of government securities by 60 billion pounds ($78 billion) to 435 billion pounds over the next six months. However, if today is any indication, it will fail.
Tomorrow the market's attention will be fixated on the BOE's Asset Purchase Facility website (link) then another open market operation, this time in the seven- to fifteen-year sector, is scheduled to take place. Another uncovered failure like today, and alarm bells will be going off everywhere, not to mention that Gilt yields will implode.
Just as importantly, the BOE has said that "the Bank will announce its response to the shortfall in today's uncovered operation at 9am tomorrow."
We can't wait, and neither can SocGen's Jason Simpson: “It is a bit of a surprise that this went uncovered in the first week of the operation, goodness knows what happens next week.”

WSJ : Alibaba’s Ant Financial Strikes Deal With Ingenico for European Payments P

Alibaba’s Ant Financial Strikes Deal With Ingenico for European Payments Push
Ingenico will allow users of Ant’s Alipay to access its network of offline merchants in Europe

BEIJING—Ant Financial Services Group, the $60 billion financial-services affiliate of online shopping giant Alibaba Group Holding Ltd., is partnering with France’s Ingenico Group SA to push its mobile-payment system into Europe.
Paris-based payments provider Ingenico will allow users of Ant’s Alipay, China’s biggest online-payments platform by transaction volume, to access Ingenico’s network of offline merchants in Europe, according to a person familiar with the situation. The collaboration comes after Ingenico disclosed in its latest earnings release an agreement to handle some of Alipay’s cross-border online payments.
While no investment will occur, a person familiar with the offline collaboration said Ingenico will receive service charges from Alipay users and expects to see their transaction volume grow. In 2015, Ingenico processed transactions in 170 countries; Alipay currently is accepted in 70 countries.
Ant’s push into Europe with the Ingenico partnership is the latest in its ambitious expansion plans. In June, it bought a 20% stake in Ascend Money, a Thai online-payment provider. A month earlier, Ant Financial orchestrated a collaboration with Uber Technologies Inc. that gives Alipay users the ability to pay for rides in the 68 countries where the ride-hailing service operates. This spring, Ant Financial hired Goldman Sachs Group Inc. veteran Douglas Feagin to spearhead its global push.
The Chinese company has forged other partnerships in Europe and elsewhere. It has collaborated with Wirecard and Concardis to offer mobile-payment services to Chinese tourists in Germany, France, the U.K. and Italy. Last year, it invested in India’s Paytm, one of the country’s largest mobile-payment platforms.

Ant Financial is flush with cash after closing a $4.5 billion fundraising round in April, hanging the $60 billion valuation on the company. It has said in the past that it plans to list shares in an initial public offering, but hasn’t set a timetable yet.

WSJ : Why Italy Is Losing to Spain in the Battle of the Bonds

Why Italy Is Losing to Spain in the Battle of the Bonds
Italy’s homegrown problems are back on the agenda

The yield squeeze goes on. Ten-year Spanish bond yields dropped below 1% for the first time this week, down 0.8 percentage point so far in 2016. What is more telling for investors is that Spain has crossed this mark ahead of Italy.
Last year, Italian bonds were the winning trade, posting gains of 4.8% according toBarclays indexes, versus 1.6% for Spain. But now, while both countries are benefiting from European Central Bank bond purchases and the global search for yield, Spain has the upper hand: Spanish bonds are up 6.6% year-to-date, Italian bonds just 4.6%. Most notably, Spanish 10-year yields have fallen below their Italian peers for the first time since mid-2015.
Political risk looks to be the culprit. Spanish bonds lagged behind last year as a general election approached. Spain still hasn’t formed a government—with both December’s vote and a subsequent re-run in June proving inconclusive—but political stalemate hasn’t proved unsettling.

By contrast, Italy faces more active political risk. Its banks have been under the microscope, weighed down by bad loans. The country’s reform-minded prime minister, Matteo Renzi, has tied his future to a constitutional referendum to be held later this year. The U.K. vote to leave the European Union marks the point at which Spanish bonds gained a march on Italy.

Rating firm DBRS Friday said it might downgrade Italy’s rating as a result of both the looming referendum and the country’s banking problems. A cut would lead the ECB to charge higher haircuts on Italian bonds used as collateral in refinancing operations, since DBRS is the only rating firm to rate Italy in the single-A category.

Some investors have used moves in Italian bond prices as a handy rule-of-thumb to judge risk appetite in general. But now Italy’s homegrown problems are back on the agenda. Thanks to Italy’s linchpin role in the European project, they may yet pose a challenge for the eurozone.

FT : Savills profit edges down


The estate agency group Savills has reported a 3 per cent drop in pre-tax profit for the first half as commercial property transactions declined in the EU referendum period.
However, the FTSE 250 group said it was maintaining its expectations for the full year and would increase its interim dividend by 10 per cent to 4.4p.

Pre-tax profit was £25.5m in the six months to the end of June, while underlying profit — which strips out costs related to past acquisitions — was up 11.5 per cent to £42.8m from a year earlier.
Savills has fared better during the Brexit vote period than peers that are more focused on the UK residential market: Countrywide reported a 25 per cent drop in profits, while Foxtons’ net profits were down 42 per cent in the first half.
Jeremy Helsby, chief executive, said: “Looking to the second half, at this stage, in the traditionally quieter summer period and so soon after the EU referendum result, it is not possible to obtain a clear read on the direction of activity in a number of the group’s principal markets.”
He added that “the fundamental attributes of real estate as an investment class remain strong”.
Revenues increased 14 per cent to £622.7m as Savills’ international businesses delivered strong results, but a drought in the UK commercial property transactions meant fee income from this sector was down 23 per cent to £32.1m.
The group said buyers who had formerly been significant players in the central London commercial market, such as sovereign wealth funds and international private equity groups, “elected to remain largely on the sidelines” during the referendum period.
“[This] opened the way for private wealth from areas such as the Middle East to transact,” the group added.
Mr Helsby said there had been a “flurry of activity” post-referendum as commercial property funds sold buildings to meet investor redemption requests, while “signs are looking positive for the residential business, although we’ll have a better picture in September or October”.
Savills said its residential transaction fee income increased by 10 per cent to £57.2m from a year earlier, partly thanks to a rush to buy homes ahead of changes to the stamp duty regime in April.
It has been seeking to diversify its residential business from the high end into relatively less expensive London homes, bringing the average value of the London properties it sold down to £2.5m from £3m a year earlier.
The group also benefited from growth in its Asian business, which brought in revenues of £209m, a 13 per cent rise on a year earlier.