TheChek News Flow

Dow -0.61% S&P -0.68% NAsdaq -0.82% Russell -1.50%

US Market closed on a lower note following Europe. Italian Banks, The pound, Crude Oil downturn on genscape datas, WTI crude ended its session lower by 4.7% ($46.73/bbl; -$2.28). Eight sectors ended in the red with energy (-1.9%), materials (-1.9%), and financials (-1.5%) rounding out the board. The remaining cyclical sectors ended with losses between 0.7% (technology) and 0.9% (industrials). On the flipside, countercyclical sectors outperformed as utilities (+0.7%), consumer staples (+0.5%), telecom services (UNCH) and health care (-0.1%) each benefited from safe-haven inflows. Buyers step in in the the last hour. Volume were above average @ 955mil shares. US After Hours MDVN +1.3% after confirming entry into confidentiality agreements with Sanofi, others; confirmed revised takeover offer from Sanofi, which it rejected ($58.00/share in cash & up to $3.00/share in CVR); GBIM -47% after announcing it would move to delist and deregister its common stock. TSLA -0.93% on report of another accident of Tesla operating autopilot mode. Asian equity markets are tracking the losses in US hours, tumbling across the board as investors flee to the safety of bonds and gold. Brexit fears are fully blown yet again after the latest BOE financial stability report released overnight underscored risks from Brexit beginning to materialize, with worries over deterioration in demand for UK assets becoming more acute. GBP/USD extended its losses with an even steeper plunge in Asian hours as Cable pierced the 1.30 handle on its way to session low of 1.2790 - down about 250pips from session's highs. USD/JPY was down over 100pips below 100.70, dragging Nikkei225 down by over 3%. Gold is also bid up by nearly $15 in Aug contract above 1,370 - a 2-year high. Cautious sentiment is exacerbated by Fed-speak unwilling to pivot toward a more accommodative - Fed's Williams said his personal view of US economy has not changed based on Brexit, adding that a hike this year may still be appropriate if economic forecasts hold.

Macro :

- Brexit Erodes U.K. Economic Pillars, Property Investors Flee

- Gold Jumps to Two-Year High as Bullish Wagers Surge on Turmoil

- Brexit Offers Safety Valve to $800 Billion Emerging Company Debt

- Italy Considering Giasone Bank Fund to Help Paschi: Repubblica

- Morgan Stanley Expects Further Stress in U.K. Property Funds

- Car-Parts Industry M&A to Accelerate: Roland Berger, Lazard

Keep an eye on :

- ATLN VX : Actelion Starts Phase 3 Study on Macitentan

- AI FP : Air Liquide Confident in Growth Outlook, Gives 2016-2020 Goals

- BABA US : Alibaba Interested in Reaching Out to Greek SMEs: Greek Official

- BAYN GY : Bayer May Agree to Pay More After Seeing Monsanto Books: UFP

- BMPS IM : Italy Mkt Regulator Bans Short Selling on Monte Paschi July 6

- BMPS IM : Atlante Fund Could Spend EU1.7b on Paschi Bad Loans: Sole

- CVX US : Chevron approves $37bn Kazakhstan oilfield expansion

- CBK GY : Commerzbank May See More Cost Reductions, Job Cuts: Handelsblatt

- CNHI IM : Truckmakers Said to Face Record EU Fines in Price-Fixing Probe

- DAI GY : Truckmakers Said to Face Record EU Fines in Price-Fixing Probe

- DB1 GY : Deutsche Boerse to Sell Market News International, No Terms

- FINGB SS : Fingerprint Cards New CEO Buys His First Shares in the Company

- GSK LN : The Graying Face of HIV Spurs Race to Simplify Therapies

- ILD FP : Iliad in Pact to Be 4th Mobile Network Operator in Italy

- ILD FP : Swisscom’s Fastweb Hopes Iliad Plan Guarantees Competition

- ITV LN : British TV network could be bought after shares plunge - NY Post

- LSE LN : Deutsche Boerse Suggests Double Holding for LSE Merger: SZ

- NOVN VX : Novartis Says Alcon Resolves U.S. Case on Iran Sanctions

- SAN FP : improved MDVN Offer to $58/share in cash + $3/share CVR - MDVN Rejected offer

- SAN FP : Sanofi in Research Pact With U.S. Army for Zika Vaccine

- SIE GY : Dong, Siemens Exploring Sale of Jointly Held A2Sea Unit: Borsen

- SCMN VX : Swisscom’s Fastweb Hopes Iliad Plan Guarantees Competition

- TIT IM : -ve comments on Iliad news of entering the italian mobile market.

- FP FP : Total Says Yamal LNG Continues Talks W/ Intl Lenders: Kommersant

- VOD LN : Vodafone Said to Be Frontrunner to Buy Telenor India Ops: ET

- VOW3 GY : Truckmakers Said to Face Record EU Fines in Price-Fixing Probe

- YNAP IM :

*BOUYGUES RAISED TO HOLD VS SELL AT SOCGEN

*EU CONSIDERING ACCORD TO LIMIT MARKET SPECULATION: REPUBBLICA

*ATLANTE FUND COULD SPEND EU1.7B ON PASCHI BAD LOANS: SOLE

LONDON—Two big British asset managers blocked worried investors from pulling money out of real-estate funds, and the pound sank to a new 31-year low Tuesday, twin signs that the U.K.’s vote to leave the EU was injecting new turbulence into financial markets after days of relative calm.

At the same time, the Bank of England eased regulatory restraints on British banks, a bid to allow them to lend more and keep the economy flush with credit.

Britain is laboring through the second week after its Brexit vote with little clear direction. David Cameron has announced his resignation as prime minister, his Conservative Party is picking a successor in a sharply contested ballot and the opposition Labour Party is in disarray.

Much of the postvote economic response has been left to the central bank and its governor, Mark Carney. A news conference Tuesday was Mr. Carney’s third public appearance in the 12 days since the vote.

The fund freeze is among the most tangible economic consequence to sprout up. Investors, concerned that Britain’s huge and frothy real-estate market might come undone, scrambled to dump their holdings. Fund managers, unable or unwilling to sell the shopping malls and office buildings in their portfolios, closed the door.

M&G Investments and Aviva Investors both said Tuesday they had barred investors from pulling out of property funds, following a similar announcement by Standard Life on Monday afternoon.

The real-estate fears and the pound’s decline are intertwined: Foreign investors have been huge buyers of U.K. property, and they have started to cash out. The Bank of England said Tuesday in its financial-stability report that foreign flows into U.K. commercial real-estate sank nearly 50% in the first quarter. Late Tuesday in London, the pound traded near $1.30, down 2%.

The central bank also pointed to signs in the stock market—the midcap FTSE 250 index fell 2.4% Tuesday—that foreign investors were pulling out of the U.K. The economy faces a “material slowing” in growth in the months ahead, officials warned in the report.

Stocks fell broadly in Europe Tuesday. The only index that ended the day in positive territory was Britain’s FTSE 100, which is packed with companies with foreign earnings and is boosted by the weak pound.

Investors fled to government bonds: Yields on the 10-year U.S. Treasury bond and the 10-year U.K. gilt touched record lows. Yields fall as prices rise.

Souring views on the global economy, and views that low inflation will persist, have helped pull down long-term bond yields across the developed world. Short-term bond yields have also declined, reflecting a belief that central banks will keep rates at ultralow levels, or possibly even cut them further. But the slump in long-term yields is especially dramatic. In the U.K., the 10-year bond now yields around two-thirds of a percentage point more than the two-year bond, roughly half the spread that existed at the beginning of the year.

The BOE’s move Tuesday to reduce the so-called countercyclical capital buffer from 0.5% to zero is one of the first instances of a major central bank relaxing bank-capital requirements to mitigate a gathering economic slowdown.

The change means banks don’t need to hold as much capital against their assets. The BOE said they aren’t supposed to use the breathing room to increase dividends or other payouts.

It is an especially important test case because traditional central-bank tools are stretched. The BOE’s benchmark interest rate is 0.5%, meaning Mr. Carney doesn’t have much room to cut rates further. The bank may be led to cut nonetheless and to revive its bond-buying program.

Real estate is an especially vulnerable asset to mass flight because it is difficult to sell quickly, while “open-ended” funds typically allow their investors to cash out any day they like.

“Systemic risk would arise from the funds needing to sell illiquid assets in a hurry,” said Michael Snapes, a financial-services risk and regulation director with PricewaterhouseCoopers in London. That would depress prices further, spurring more redemption requests and a downward spiral.

M&G said it put up the gate on a £4.4 billion U.K. property fund—the biggest of its kind—after redemption requests rose on the back of “high levels of uncertainty.”

Aviva said in a note to investors that dealing in the £1.8 billion Aviva Investors Property Trust was “temporarily suspended” at midday on July 4 because of “higher than usual volumes of requests to sell units.” Standard Life locked investors into its £2.9 billion UK Real Estate Fund.

“It would not surprise me if similar firms take similar actions in the coming weeks,” said Laith Khalaf, senior analyst at Hargreaves Lansdown.

The U.K. commercial real-estate market holds in aggregate about £800 billion worth of assets, according to Mike Prew, an analyst at Jefferies Group LLC. Residential real-estate assets amount to a total of £5 trillion.

Memories of the global financial crisis of 2008, when problems in the housing sector quickly spread to banks, loom large for investors.

Analysts said the U.K. banking system is now more insulated against a commercial-property crash than it was then. Regulators forced banks to raise capital and go through a series of stress tests to check whether they can weather a severe downturn.

British banks have since cut their stock of commercial real-estate lending in half, according to the Bank of England. Much of that slack was taken up by the nonbanking sector: Pension funds and insurers, looking for steady returns in a low-interest-rate environment, piled in.

But while major banks like Lloyds Banking Group PLC and Royal Bank of Scotland Group PLC cut their lending, smaller British banks have jumped in. These newer lenders have taken on proportionately more high-risk loans in the commercial sector.

Investors are already taking flight from smaller banks that have been gaining share in the buy-to-let market, in which banks lend to landlords. Some analysts expect rental-property lending to be stung by Brexit if house prices fall, especially in London.

For instance, Aldermore Group PLC, a small lender which focuses on small businesses, saw its share price drop 9% on Tuesday. It is down 64% over the past 12 months.

A relatively small increase in write-offs of U.K. real-estate exposures would be painful for Aldermore and a handful of other small lenders with more-concentrated investment in the sector, Deutsche Bank U.K. banking analyst David Lock wrote in a research note last week.

Meanwhile, shares of Virgin Money Holdings PLC, another rapidly growing bank, tanked 11% on Tuesday’s news. In the first three months of the year Virgin Money increased buy-to-let lending by 17% compared with the year before.

There’s a huge sale going on at Barneys New York — a minority stake in the glamorous retailer is up for grabs, The Post has learned.

Billionaire hedge fund manager Richard Perry, who took a majority stake in the upscale fashion business in 2012, is shopping a minority slice in the 93-year-old chain, according to a source familiar with the situation.

Perry has hired Goldman Sachs to scout out a buyer, the source said.

“The existing owners don’t want to put more money into Barneys,” said the source, who added that first-quarter, double-digit declines in same-store sales and profits helped cement that outlook.

First-quarter, same-store sales dipped 10 percent from last year, according to numbers being shown to prospective buyers, the source said. Earnings before interest, taxes, depreciation and amortization, or Ebitda, fell 30 percent, the source noted.

In addition, Barneys Chief Executive Mark Lee, who came to the high-profile business six years ago from Gucci, is said to be looking to exit and hand over the reins of the 25-store chain to Chief Operating Officer Daniella Vitale, several sources said. Lee and Vitale worked together at Gucci.

A Barney’s spokesperson said the company does not comment on rumors.

Perry, who serves as chairman, owns the company along with billionaire Ron Burkle’s Yucaipa Cos.

He took control of Barneys after its previous owners couldn’t continue under a $590 million mountain of debt.

In a debt-for-equity swap, Barneys debt was reduced to a much more manageable $50 million.

From the start, Perry and his wife Lisa were committed to running the chain. Lisa, a fashion designer, sells her line in Barneys, including dresses for as much as $795 — plus tops, jackets and home decor.

One financial issue that could be weighing on Perry is Barneys’ lease at its flagship store on Madison Avenue.

The renewal options for the lease come due in early 2019, when real estate sources say the rent will likely go up significantly. “They should be in negotiations [with their landlord] already,” said Faith Hope Consolo, chair of Douglas Elliman Real Estate.

Lee brought many changes to the chain, which fell on hard times after the 2008 recession. He closed underperforming stores and increased revenue.

In November 2014, Lee told Vogue magazine the company was performing “extremely well” and was “debt free, thanks to the vision and support of Richard Perry.”

That was then. Of late, the retail landscape has turned upside down.

“The business of selling other people’s branded products is a challenged business,” said Richard Kestenbaum, a partner in Triangle Capital. “It requires investment, and it’s not surprising that Barneys needs capital for strategic alternatives.”

While some sources said Barneys has pulled back on its purchasing, Gary Wassner, chief executive of Hilldun Corp., a lender, said Barneys has increased its orders through his company.

“They are probably dropping collections that have had weak sell-through,” Wassner said.

Deutsche Börse has floated the idea of setting up a dual holding company after its merger with the London Stock Exchange Group as a way of assuaging German regulatory concerns about the deal.

Under the finely-balanced terms of the €20bn deal announced in March, the new group will have a single holding company, to be based in London, while Carsten Kengeter, chief executive of Deutsche Börse, will head the combined entity.

However, since the UK voted two weeks ago to leave the EU, there have been mounting signs of resistance from German politicians and regulators. They object to locating some of the country’s key financial infrastructure outside the EU. Instead, some politicians want the headquarters to be in Frankfurt. Amsterdam has also been mentioned as an alternative in recent days.

According to one investor, Mr Kengeter — who has been meeting shareholders in an effort to make sure that they back the deal — suggested to some investors that one way to assuage regulators’ concerns would be to set up two holding companies, rather than one.

These two holding companies, one of which would be situated in the EU, would be supplemented by a joint-operating company, which would reap the synergies envisaged by the deal. People close to the situation stressed that no concrete decisions about adapting the deal had been taken.

Deutsche Börse said: “We decline to confirm that Mr Kengeter made these comments.”

Any changes would have to be made after the deal has gone through, however, since its terms are binding and LSE shareholders backed them in a vote this week. Deutsche Börse’s shareholders must decide by July 12 whether or not to approve the deal.

One adviser familiar with the talks said the terms could not be changed even after the deal had closed, and the two exchanges said in a joint statement. “We refer back to our previous statements on this matter — those still stand. The terms of our deal — which are binding — remain unchanged.”

Two top-20 shareholders in D Börse said on Tuesday that they would back the deal, while others have yet to make up their minds.

In a separate statement on Tuesday, D Börse emphasised that “the agreed transaction includes all necessary mechanisms” to cope with the fallout from the UK’s referendum.

The company has set up a referendum committee, which is due to meet for the first time at the end of this month.

“In a fast-changing landscape where it is anticipated that the UK will remain a member of the EU for at least two years, the work of the referendum committee may take many months to complete,” D Börse said.

At first look, a potentially credible 4th player: There had already been recent press reports about Iliad being in pole position to be the sole remedy taker in Italy. But the main news in Iliad's press release was that the deal agreed with 3 and Wind potentially positions Iliad as a credible player in Italy, i.e. the odds of market repair happening are reduced if a deal is approved. For TI and Vod, this means Italy may not see market repair – and indeed pricing pressure could worsen. It is a comprehensive set of frequencies which suggests Iliad are serious about building a business.

--> -ve Telecom Italia & Vodafone

Micheline Calmy-Rey, a former Swiss president, thinks she knows what lies in store for Britain after its historic vote to leave the EU last month. She believes the UK has little option but to follow Switzerland itself.

“There isn’t what you can call a ‘Swiss model’; there is a ‘Swiss way,’ says Ms Calmy-Rey, who now teaches at Geneva university, referring to the more than 120 bilateral deals that provide Switzerland access to EU markets without some of the burdens of membership.

“I think it is inevitable that the UK will go the same way,” she adds. “I can’t see any other alternatives working.”

Such a path might prove highly attractive for a UK government pondering life after the EU and keen to establish controls over European immigration while minimising economic damage. The Swiss are the wealthiest people in the world, their country a stable, low-tax democracy.

Christoph Blocher, a veteran Swiss People’s party politician, argues that there are clear parallels between Brexit and his own successful campaign against Switzerland joining the European Economic Area — a waystation to membership — two-and-a-half decades ago.

“It was the same in our 1992 referendum,” he says. “All of the experts had predicted it would be our downfall. It would be an economic disaster, we would be isolated. None of that happened.”

And yet Switzerland’s arrangement with the EU may be difficult for Bern to maintain, let alone for the UK to replicate.

While Europe’s leaders scramble to deal with the UK, Swiss politicians are frantically seeking ways to preserve a web of trade and other agreements while implementing the outcome of a referendum that has caused problems of its own.

In February 2014 the Swiss voted narrowly for quotas on EU immigration — in direct contradiction with the EU’s cherished principle of the free movement of people across the continent.

“Like in the UK, nobody has a plan,” says Max Stern, co-founder of Foraus, a Swiss foreign policy forum. “There are ideas about what we might do but we don’t know how the EU will react. It’s a super high-risk situation.”

UK Brexiters might in any case object to the way Switzerland pays into EU programmes and has to adopt many of the bloc’s rules — without having any say over them.

But with Switzerland formally abandoning its goal to join the EU, Brussels has refused to deepen ties any further until the country has signed up to a broader deal to adopt EU rules as they evolve. Swiss voters would almost certainly reject any agreement to obey rulings of the European Court of Justice — also one of Brexiters’ chief causes of complaint.

If Bern also reneges on the principle of free movement of people, many of the most important existing bilateral deals with the EU could also become void.

Already, the stand-off has cast doubt over the future participation of Swiss universities in European research projects. To the dismay of Swiss banks, talks have been shelved on a financial services agreement.

Some Swiss see the UK vote as helpful in finding a way out. “Great Britain is a bigger power, it has leverage,” says Ms Calmy-Rey. “Switzerland could benefit from Brexit because it gets a de facto ally in its negotiations with the EU.”

When it comes to scientific research programmes, “the EU will not want to exclude the UK’s world-class universities,” argues Thomas Aeschi, one of a new generation of Swiss People’s party leaders. So there would be concessions too for top Swiss institutions, he says

The debate over the UK could open possibilities that would work for Switzerland, Mr Aeschi adds. “The EU has to recognise that it needs models which allow different countries to move at different speeds — including on the free movement of people.”

But the timing of the UK vote was bad for Switzerland. A three-year deadline for implementing the 2014 referendum result expires next February.

“Brexit will mean a bumpy ride because of the spillovers,” says Alexis Lautenberg, former Swiss ambassador to the UK. “Short term, it will penalise Switzerland because we don’t know the policy trade-offs that will be decided for the UK — and won’t for some time.”

Swiss officials are working on compromise solutions, such as introducing an “emergency brake” procedure to halt immigration if the country becomes overwhelmed. A solution might have to be temporary pending resolution of the UK’s own immigration concern. To break the stalemate, however, Switzerland will probably need another referendum on its relationship with the EU.

“Up until now we could always find compromises that were in the interests of both sides,” says Christa Markwalder, a senior politician in the liberal FDP party. “I don’t know whether the pragmatism on the EU side is still there.”

The TV network — which became world famous for airing “Downton Abbey” — looks ripe for the plucking by a big US conglomerate.

The firm has lost billions in market cap after its shares plunged nearly 22 percent since the June 23 Brexit vote in the UK.

ITV, which trades on the London Stock Exchange, closed Tuesday at 171.99 pence ($2.20), versus a pre-Brexit close of 220p ($2.86).

Liberty Global, a John Malone company, holds a 9.9 percent stake in the firm. Viacom, which owns rival UK broadcaster Channel 5, has been mentioned as a potential bidder, as has Comcast — although the latter firmly denied last year it was making a bid.