>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: KFY -8%, JBL -2.3%, ( announces $400 mln buyback), RAD-1.4%, QUNR -0.6%

M&A news: CAVM -15.8% (QLogic to be acquired by Cavium for approximately $15.50 per share ), EVHC -7.3% (reports AmSurg, Envision Healthcare to merge), PXD -3.4% (to acquire ~28,000 Midland Basin Acres for $435 mln and to Add 5 Horizontal Rigs During the Second Half of 2016; expects to increase its horizontal rig count by five rigs from 12 rigs to 17 rigs in the northern Spraberry/Wolfcamp; commences public offering of 5.25 million shares of its common stock)

Select financial related names showing weakness: DB -2.8%, CS -2.3%, RBS -2.3%, BCS -1.8%, SAN -1.5%, LYG-1.4%


Select metal producer names showing early weakness: FCX -3.1% (Copper futures -2%+ overnight), BHP -2.1%,BBL -2.1%, AA -2.1%, RIO -1.6%, VALE -1.2%

Other news: TNXP -20.3% (prices public offering of 5 mln shares of its common stock at $2.00 per share), SMFG-8.6% (Fitch revises Outlook for Japanese financial institutions to negative), BTX -6.9% (to sell shares of its common stock in an underwritten public offering ), CLF -5.5% (files $300 mln common stock offering), HASI -4.4% (prices upsized offering of 4 mln shares of common stock for gross proceeds of ~$82.0 mln), NKE -1.6% (cont weakness)

Analyst comments: FCAU -3.2% (downgraded to Sell at Citigroup ), VMW -1.8% (downgraded to Underperform at Credit Agricole)

>>> Coca Cola (KO US) - Expects Q2 Rev to see 5-6% headwind, PBT to see 4-5% hea

Expects Q2 Rev to see 5-6% headwind, PBT to see 4-5% headwind as a result of expected net impact of acquisitions, Divestitures and Other Structural Items 

In connection with the presentation, the Company is updating its expectations regarding the net impact of acquisitions, divestitures and other structural items on its second quarter results. These changes are driven by the completion of the Coca-Cola European Partners plc combination on May 28, 2016, approximately one month prior to previous expectations. The Company now expects these items to be a 5 to 6 point headwind on net revenues and a 4 to 5 point headwind on income before taxes in the second quarter.

>>> Anthony Hilton: Why we may remain even if we vote Leave

Anthony Hilton: Why we may remain even if we vote Leave


Back in 1975, the last time we had a referendum on whether we should continue to be a member of the European Union, the Government spelled out in advance that it would not necessarily do what the people decided.

The Labour government of Harold Wilson made it clear the referendum was advisory — the ultimate opinion poll if you like — but that “the British parliament in Westminster retains the final right to repeal the Act which took us into the Market on January 1, 1973”.

People seem not to understand that this is still the case. The referendum next week is not binding and the result does not constitute a final irrevocable decision either way. People talk about notifying the EU of our intention to leave and then having two years to organise it, but that is not the core issue either. If we are to leave the EU, it will take a fully fledged Act of Parliament to do so. It is hard to see how a notice to quit under Article 50 could be served, given it sets that process in train without the agreement of Parliament.

But that should have to go through the Commons and the Lords, plus all the committee stages, just like any other Act of Parliament. That is a big ask for a Tory Government with a majority of only 14. It is one of the ironies of the campaign that the Brexiteers bang on constantly about Parliament’s loss of sovereignty and claim all our laws are made in Brussels. It is a lie because, as they may yet find out, the British Parliament has retained more than enough sovereignty to thwart their plans and ignore the referendum result.

The British Parliament is sovereign and it is accountable to the people — but through elections at which we choose those whom we want to represent us, not through referendums. To rub in the point, Members of Parliament are representatives, not delegates, the difference being they are there to decide what in their judgment is good for us and the country, not simply to do what we say. That is why we do not have capital punishment, which was abolished in the Sixties although a clear majority of the population remained in favour of it. A civil war was fought and a king beheaded to establish that sovereignty; it is not something that can be set aside at the whim of a Boris.

The interesting thing is that the 650 members of the House of Commons are overwhelmingly in favour of staying in. How overwhelming? Well Brian Reading, for many years one of the team at Lombard Street Research, has done the sums and published them on the website of Omfif, the financial think-tank. He thinks the Conservatives are 50% for remain, 40% for out and 10% unknown.

On the Labour side, remain is supported by 215 members, leave by seven and there are 10 unknown. In percentage terms, that makes 93% in favour of staying, against 3% for leaving.

The 56 Scottish Nationalists and the eight Liberals are overwhelmingly for remain but the views of the Welsh and Northern Irish members are more mixed. Nevertheless, the overall picture is clear. Reading concludes that the MPs are 70% in favour of remaining with 20% wanting to leave and 10% whose preferences are unknown. That does not sound far off the mark.

So what will Parliament do in the event of a referendum vote for Brexit? Reading suggests it will depend very much on the size of the majority and the turnout. If the vote was 60 to 40 to leave on a turnout of 80%, MPs might feel obliged to support a Bill for exiting because there was so much popular support.

But if the vote was 51 to 49 on a turnout of 50%, they could legitimately argue that only just over 25% of the population had actively supported Brexit, and supporting a Bill to leave would be too big a step to take on the basis of such thin support. So, even if he wanted to, David Cameron could not get such a bill through the Commons, let alone the Lords. Prime Minister Boris Johnson, if he were to topple Cameron, would have even less chance.

So how might this be resolved? One obvious tactic would be for Cameron to accept the Brexit vote and undertake to begin negotiations for withdrawal without actually triggering the formal mechanism that sets the two-year clock ticking. As these negotiations proceed, people will gradually get a better idea of what Brexit might mean in practice and it is a fair bet if the negotiations are tough that they might begin to have some doubts as to what they had signed up to.

Even if they like the romantic idea of swimming in the wide open sea, they might not want to jump off Beachy Head to get into the water.

Once there was a clear idea of what leaving would look like, it might be legitimate to go back to the country and ask, via another referendum, whether people still wanted to do this. And who knows what that result would be.

Perhaps the only real conclusion is that, far from settling the issue, this referendum is most likely to make things worse. A Remain vote is not going to convince the Tories that they should work more constructively and enthusiastically with the EU; a Leave vote may not achieve that result either. These past few weeks have entrenched prejudices far more than they have opened minds

>>> Street Pre-Market Indications

Ml
DIRECT ENERGIE - Ecofin selling 1.7m shrs; SocGen/Dupont joint bookrunners...
SAFESTORE - 18.8% NAV growth yoy, u/lying EPS +18.4% yoy & divi +20%....+2-3%
MULBERRY - Retail LfL +8%, margin expansion driven by sourcing efficiency.+2%
ATKINS - Solid. FY op profit 4% beat & div ahead. Shares weak into #'s....+2%
GLENCORE - We UPGRADE to Buy, PO 190p. BS fixed, commods going right way..+1%
THYSSENKRUPP - We UPGRADE to Buy, PO EUR23. See upside to steel division..+1%
KUKA - Midea offers EU 115/shr and aims to raise stake to more than 30%...+1%
SALZGITTER - We UPGRADE to Neutral, PO EUR26. Highly levered to steel P.+0.5%
NOKIA - Expects to cross 95% ownership thresholds in Alcatel tomorrow.....u/c
ORANGE - Extends roaming agreement with Iliad from end of 2017 to 2020....u/c
N BROWN - Product rev -1.6%, financial services rev +3.4%. Trading inline.u/c
ILIAD - Extends roaming agreement with Orange from end of 2017 to 2020..-0.5%
ASML - To buy Hermes Microvision for EUR 2.75bn cash. Use weakness to add.-1%
AIRBUS - A350 deliveries still at risk according to various press reports.-1%
ASHTEAD - In May fleet growth of 1.1% outpaced rent growth of 0.1%........-1%
CS/UBS - SX7E futs breaking YTD low. Comments from SNB on leverage ratios.-2%
MQ - Q3 gross margin ahead but same store sales declined. Close NOR ops.-2-3%

CS Indications:
Airbus -1-2% CEO says won't be able to keep all commitments
AMS ag M/P Aquires 100% of the shares in Cambridge CMOS Sensors
Autos -1% Japanese and Chinese peers weak, cyclicals will be for sale
Azimut unch CS initiate with O/P
Electrolux +0.5% Solid US AHAM data shipments of home appliances rose 3.5%
Oils -1.5% Oil down 1.4% overnight on growth concerns
Miners -2-3% All metals drifting lower, Aussie names ignored gains here
Mulberry M/P Retail sales for the 11 weeks +9%, stock has had good run
N Brown unch guidance unchanged, current trade looks fine
Neste -2% CS D/G to U/P on valuation
Prem Farnell M/P Spec of a higher bid in the FT after Elliot bought 1%
Safestore +1% initial trading in 2H continues to be robust
Swatch -1% CS cut profit forecast by ave 19% - remain O/P
Total M/P Total has decided not to sell 50% stake in its Port Arthur
Utils -0.5% Sector likely to outperform as beta is sold
Vopak M/P On Track to Meet 2014-2016 Goals by End of the Year
VW -2% Car sales data show VW mkt share drops most since Dec
WS Atkins M/P Revs beat, expectations for next year unch

MainFirst Pre Mkt Indications

*AIRBUS-CEO says A350 delivery goal presents a challenge............-2%
*VW-Settlement proposal deadline delayed 1 week,mkt share -24.2%....-1.5%
*ASML-To buy Hermes Microvision in deal valued at about €2.75b......-1%
*SFS-CEO confirms FY16 tgts in interview(Grth 2-4%,mrg 13-14%)......+0.5%
*VOPAK-On track to meet 2014-16 goals by end of year................-1%
*ACS-In talks to sell Urbaser to Cnty for €2bln - Expansion.........U/C
*LUFTHANSA-Seeks outsider to replace CEO Menne - Handelsblatt.......-0.5%
*ROCKET-PLDT who own 6.1% stake,will keep stake(CEO gets msg).......-1%
*DIALOG/AMS-Read across from Jabil Circuit a/hrs pft warns -2%......-1%
*CS/UBS-Need added going-concern capital of CHF10b each - SNB.......-3%
*TOTAL-Said not to seek sale of Texas Refinery stake - Reuters......U/C
*ELECTROLUX-Good AHAM shipment Data,in May +3.5%....................U/C
*KUKA-Midea launches €115 offer to raise stake......................+1.5%

Commerzbank:

ACX -4.7% Major shareholder will place up to 10% of shares (up to €50m) AIR -1.0% To review goal of 50 A350 deliveries in late summer DTE -2.0% Jeffries cuts to Underperform (Hold) - PT €12.1 (14.7) DRI -1.7% KeplerChev starts with Buy- PT €41 FNTN -2.3% KeplerChev starts with Reduce - PT €20 FRA -0.8% GS raises to neutral (Sell) - PT €53 (57) LHA -0.8% Seeks outsider to replace CFO Menne MTX -0.6% Barclays start with Overweight - PT €97
PNE3 -1.8% Seeks to broaden revenue base, CEO says RKET -1.6% PLDT (owns 6.1%) intends to keep investment SNH +0.1% Acquired 22.8% of UK retailer Poundland UTDI -1.0% KeplerChev starts with Buy - PT €47
VOW3 -1.6% Gets more time to hammer out U.S. diesel-cheating fix accords

Shore
N.BROWN - group sales better than we expected, no change to our f'casts.....+2%
POUNDLAND - no's inline with prev g'dance,final divi cut,we D'G 2017 by 6%.UNCH
DARTY - LfL +3.9%,retail profits +24%,FNAC offer to go uncond' by 5/8......UNCH
SAFESTORE - grp LfL +10.4%,free cash flow +25.5%,sees FY above top end......+3%
MULBERRY - revs +5% £156m,LfL sales +8%,swings back into profit.............+2%
PURPLEBRICKS - FY revs +448% £18.6m,profit +427% £10.6m,new yr starts well.UNCH
WS ATKINS - Fy revs 1.86b.Ptp 131.1m.Divi 39.5p.Confident for rest of year..-1%
CONSORT MEDICAL - Fy revs 276.9m.New financial year started well...........UNCH
CHARLES STANLEY - Fy revs 141.6m.Loss after tax 0.3m.Divi 5p................-2%

>>> BOJ Gov Kuroda: Reiterates view that domestic economy continues a moderate r

BOJ Gov Kuroda: Reiterates view that domestic economy continues a moderate recovery - post rate decision press conference 
- Reiterates inflation expectations rising as a whole in the long-term
- Reiterates that CPI likely to be slightly negatve or around zero (0%) for the time being
- Reiterates view that to achieve 2% inflation target in FY17; will not hesitate to take more easing steps via three options to achieve the target

>>> US After Hours Summary: QLGC +13% following news of acquisitio

After Hours Summary: QLGC +13% following news of acquisition by CAVM -8%; EVHC -7% on news of merger with AMSG +1%

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: NUS +3.5%

Companies trading higher in after hours in reaction to news: QLGC +12.9% (to be acquired by Cavium (CAVM -7.8%) for ~$15.50/share ($11.00/share in cash & 0.098 in stock)), RLYP +4.7% (announces that in May 1,385 new patients started taking Veltassa with a free starter supply, 1,230 outpatient prescriptions were covered by payers and dispensed, and 277 units were sold to hospitals and other institutions), DVN+1.5% (PXD to acquire ~28K Midland Basin Acres for $435 mln from DVN), AMSG +1.3% (AmSurg and Envision Healthcare Holdings (EVHC -7.3%) confirm plans to merge in a $10 bln deal)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: KFY -2.2%, JBL -2.2%

Companies trading lower in after hours in reaction to news: TNXP -8.5% (to offer shares of its common stock in an underwritten public offering), HASI -4% (commences 3.85 mln common stock offering), BTX -3.8% (to sell shares of its common stock in an underwritten public offering), PXD -2.2% (to acquire ~28K Midland Basin Acres for $435 mln from DVN; commences public offering of 5.25 million shares of its common stock)