>>> Lyon and Nice airports receive four and three indicative offers respectively

Lyon and Nice airports receive four and three indicative offers respectively 

Three indicative offers have been submitted in the privatisation of the Nice Cote D’Azur airport against four offers in the privatisation of the Lyon Saint-Exupery airport, French daily Les Echos reported.

The unsourced report claimed that three parties submitted offers for both airports, namely the consortium including financial services group CDC, insurer Predica and French construction and concessions group Vinci, as well as the consortium including banking group BPCE and funds Siparex and Ardian, and the bidding duo comprising Spanish group Ferrovial and investment fund Meridiam.

The Geneva airport in Switzerland, jointly with infrastructure fund Cube, made a bid for the Lyon airport only, the report added.

Les Echos

>>> Asian Update

Asian Market Update: China bad loans continue to rise; BOJ's Kuroda more upbeat on export and consumption, but leaves room for more easing; BOK on hold

***Economic Data***
- (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.50%; AS EXPECTED
- (CN) China Apr Fiscal Revenue CNY1.55T, +14.4% y/y v +7.1% prior; Spending CNY1.31T, +4.5% y/y v +20.1% y/y prior
- (JP) Japan Apr M2 Money Stock Y/Y: 3.3% v 3.2%e; M3 Money Stock Y/Y: 2.7% v 2.6%e
- (NZ) NEW ZEALAND Q1 RETAIL SALES (EX-INFLATION) Q/Q: 0.8% V 1.0%E
- (PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS EXPECTED
- NPD: Apr video game sales -15% y/y at $509.5M

***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 -1.1%, S&P/ASX -0.6%, Kospi -0.6%, Shanghai Composite flat, Hang Seng -0.9%, Jun S&P500 -0.3% at 2,053

***Commodities/Fixed Income***
- June gold -0.1% at $1,269/oz, June crude oil -0.9% at $46.27/brl, Jul copper +0.3% at $2.08/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 3.3 tonnes to 845.2 tonnes; 7th straight increase; highest since Nov 2013
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5246 V 6.4959 PRIOR; weakest Yuan setting since Mar 4th
- (CN) PBOC to inject CNY30B in 7-day reverse repos; Drains CNY110B for the week v drained CNY220B prior (3rd week of drain)
- (JP) BOJ offers to buy ¥450B in 5-10yr JGBs, ¥240B in 10-25yr JGBs and ¥160B in JGBs with maturity over 25-yr and ¥3T in T-bills

***Market Focal Points/FX***
- Asian equity markets are tracking the losses on Wall St, where less dovish Fed-speak from Rosengren and Mester underscored the notion that markets are underpricing expectations of further FOMC tightening this year. USD rallied and commodities fell on those remarks. Rosengren endorsed more hikes, stating that early Q2 data is consistent with inflation closer to 2% target. Mester also noted that inflation is rising toward desired levels. Bullish USD momentum was most evident against high-beta FX that benefit from lower rates - AUD/USD was down over 30pips below 0.73, a 2-month low, and NZD/USD fell over 30pips below 0.68.

- China is bracing for more April economic data, namely industrial output, retail sales, and fixed asset investment. Lending and money supply may also be released in the coming hours. Ahead of those figures, latest findings from CBRC saw NPL ratio to overall lending rise 0.36pts to 1.75% in April. Y/Y, bad load volume spiked up over 40% to CNY1.4T. China Finance Ministry also unveiled its fiscal revenue for Apr up 14% and spending up 20% y/y, adding that downward economic pressure still exists and structural adjustments are difficult.

- BOJ Gov Kuroda delivered a speech for Research Institute of Japan, defending negative rate policy, calling for more time to allow easing to work itself through the economy, but also reiterating the door remains open to more measures. Kuroda did note that risks to the outlook are tilted to the downside and export recovery has paused, but also pointed to 3rd straight year of higher wages, momentum of non-manufacturing, and expectations of improving domestic demand.

- Bank of Korea left rates on hold as expected at 1.50%. This time, the decision was unanimous and the accompanying statement was less dovish. Going into the decision, analysts were evenly split that another easing is possible at the next meeting. BOK's assessment of improvement in economy and consumption, along with more gradual slowdown in China, could tilt those expectations to a neutral BOK stance.

***Equities***
US equities / ADRs:
- NVDA: Reports Q1 $0.46 v $0.32e, R$1.30B v $1.27Be; +7.4% afterhours
- SHAK: Reports Q1 $0.08 v $0.06e, R$54.2M v $52.5Me; +5.6% afterhours
- ADRO: First patient dosed in Phase 1 study of ADU-S100 for treatment of Cutaneously Accessible Tumors; To receive $35M milestone payment; +0.4% afterhours
- PTC: Cuts Q3 $0.28-0.33 v $0.34e (prior $0.31-0.36); -0.8% afterhours
- SYMC: Reports Q4 $0.22 v $0.24e, R$873M v $879Me (in line with prelim Q4 on 4/28); Enters into $2B credit facility; -3.4% afterhours
- DAR: Reports Q1 $0.01 v $0.13e, R$779.6M v $807Me; -5.5% afterhours
- JWN: Reports Q1 $0.26* v $0.45e, R$3.19B v $3.29Be; -17.1% afterhours

- AAPL: To invest $1B in China's Didi Chuxing (direct competitor of Uber)

Notable movers by sector:
- Consumer discretionary: APN News APN.AU +7.9% (entitlement offer); Chow Tai Fook Jewellery Group 1929.HK -2.8% (profit warning); Toray Industries 3402.JP -0.5% (FY15/16 result); Unicharm 8113.JP -0.5% (Q1 result, share buyback)
- Industrials: Yue Yuen Industrial 551.HK -2.1% (Q1 result); RUSAL PLC 486.HK +0.4% (Q1 result); Nissan Motor Co 7201.JP +4.8%, Mitsubishi Motors 7211.JP -4.7% (FY15/16 result, acquisition of Mitsubishi Motor)
- Technology: Hon Hai Precision Industries 2317.TW +0.6% (Q1 result); Toshiba Corporation 6502.JP +2.2% (FY15/16 result)
- Materials: Nippon Steel & Sumitomo Metal Corp 5401.JP -1.2 % (price rise); Mitsubishi Materials 5711.JP -10.3% (FY15/16 result)
- Healthcare: Sigma Pharmaceuticals SIP.AU +1.3% (settlement)
- Telecom: KDDI Corp (JP) 9433.JP -4.1% (FY15/16 result)

(Exane) Luxury : Bottom-Fishing Expedition

The luxury goods sector lacks direction
Many moving parts need to be factored in when investing in luxury goods stocks today, as the
sector faces both a structural transition and cyclical headwinds. Investors are pursuing various
strategies in this context: 
1) The prudent are seeking places to hide and focus on low volatility names (Trading Meets Fundamentals (1): Hiding Away); 
2) the optimists/speculators are looking for bashed down low valuation stocks; 
3) the ST negatives/LT positives are after currently disappointing high quality names at low valuations; 
4) those who want to stand out from the average are focusing primarily on self-help stories.

Burberry may be better prepared to face its challenges
Burberry is about to announce a productivity plan, but its main issue - we think - is that the brand is getting boring to its core Chinese constituency. A new senior organisation and fresh blood in the creative department could help to address this. Promote Christopher Bailey to full time CEO? Hugo Boss by contrast is a question mark: who will be CEO and what will be the new strategy? In flux for the moment. Swatch seems prepared to sit out the demand decline, and would only be bailed out by a rebound in watch demand and wholesale restocking: this is the highest risk proposition.

>>> US After Hours Summary: SHAK +6%, PBR +1%, DDS-6% following earnin


After Hours Summary: SHAK +6%, PBR +1%, DDS-6% following earnings/guidance; TTPH -24% following guidance from FDA

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: HTGM +34.9% (enters into research collaboration with Bristol-Myers Squibb (BMY) to evaluate the potential for immuno-oncology molecular profiling in multiple tumor types), RUN +15.4%, KMPH +8.9%, NVDA +7.4%, SHAK +6.2%, PBR +1.2%

Companies trading higher in after hours in reaction to news: CLBS +11.4% (confirms it was granted orphan designation by the FDA for its compound for the treatment of type 1 diabetes mellitus with residual beta cell function)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: CFMS -37.9%, JWN -17.4%, VJET -11.6%, DDS -5.8%, DAR -5.4%, ANY -5%, GEVO -6.3%, ARGS -4.4%

Companies trading lower in after hours in reaction to news: TTPH -23.9% (receives guidance from the FDA regarding the regulatory path for eravacycline; FDA advises that data from one additional positive phase 3 clinical trial will be required to support an NDA submission), ECC -7.6% (to commence 1.25 mln share public offering of common stock), NFLX -1% (California Public Employees' Retirement System (CalPERS) and the New York City Pension Funds request shareowners vote for non-binding proposal to give shareowners effective access to the director nomination process)

>>> US Close Dow+0.05% S&P-0.02% Nasdaq-0.49% Russell-0.58%

Closing Market Summary: Averages End Flat as Heavyweights Weigh

The stock market ended the Thursday affair on a flat note as the major averages trimmed their intraday losses. The Dow Jones Industrial Average (+0.1%) finished ahead of the S&P 500 (UNCH) while the Nasdaq Composite (-0.5%) underperformed. Contributing factors for today's trade included a rebound in oil, vacillating price action in the dollar, a healthy dose of Fed speak, and relative weakness from the heavyweight health care (-0.6%), technology (-0.4%), and consumer discretionary (-0.3%) spaces.

The major averages began on a choppy note as investors weighed sliding oil prices and a below-consensus reading of weekly initial claims (264,000; consensus 274,000). Adding to early pressure was the inability of equity indices to hold their opening gains while the heavyweight health care (-0.6%) and technology (-0.4%) spaces underperformed.

Equities hit their lowest point in the early afternoon as participants ruminated over hawkish commentary from FOMC voter and Cleveland Fed President Loretta Mester. President Mester contended that risks to economic forecasts should not paralyze policymakers. Furthermore, she voiced her confidence in recent inflation data, which was encouraging given tailwinds from a rebound in oil and weakness in the dollar. Boston Fed President and fellow FOMC voter Eric Rosengren would later echo this sentiment, saying that the market is underestimating the pace of rate hikes.

The major averages rallied through the afternoon as oil helped lead equities off their lows. WTI crude ended its day higher by 1.0% at $46.65/bbl. Meanwhile, health care (-0.6%), technology (-0.4%) and consumer discretionary (-0.3%) each trimmed more substantial losses. Seven sectors finished in the green with telecom services (+0.7%), materials (+0.5%), and consumer staples (+0.5%) leading the pack. Conversely, health care (-0.6%), technology (-0.4%) and consumer discretionary (-0.3%) finished with the only losses.

In the health care space (-0.6%), biotechnology, health care plans, and generic drug manufactures all demonstrated relative weakness. Among generic names Mylan Labs (MYL 38.62, -1.02) and Allergan (AGN 216.02, -6.69) declined 2.6% and 3.0%, respectively. Elsewhere, Aetna (AET 108.60, -3.66) weighed on health care plans providers after the company confirmed that it will continue to offer plans through health care exchanges. The iShares Nasdaq Biotechnology ETF (IBB 251.73, -4.37) erased a modest weekly gain and is now down 1.4% over that period.

The high-beta chipmakers underperformed in the technology space (-0.4%), evidenced by the 1.8% decline in the PHLX Semiconductor Index. The group moved lower as iPhone suppliers were impacted by continued concerns regarding smartphone demand. Meanwhile, Apple (AAPL 90.32, -2.19) established a new two-year intraday low (89.47). On the flipside, Microsoft (MSFT 51.51, +0.46) finished higher by 0.9%.

The Dow Jones Transportation Average (-1.4%) underperformed as a negative revenue metric from JetBlue Airways (JBLU 18.17, -0.89) weighed on airlines. The company reported that revenue per available seat mile declined 12.5% on a year-over-year basis in April.

In the consumer discretionary space (+0.1%), retail names trimmed larger losses as the SPDR S&P Retail ETF (XRT 41.61, -0.11) ended off its low. Elsewhere, Kohl's (KSS 35.15, -3.54) plunged 9.2% after disappointing investors with its quarterly results. Meanwhile, Nordstrom (JWN 45.23, -0.20) finished the day lower by 0.4% ahead of this evening's quarterly report.

The U.S. Dollar Index (94.15, +0.35) ended at its high as the greenback gained ground against the yen and the euro. The euro slipped 0.5% against the dollar (1.1372) while the dollar/yen pair ended higher by 0.6% at 109.08.

The Treasury complex ended lower as the yield on the 10-yr note rose two basis points to 1.75%.

Today's participation was above the recent average as more than 923 million shares changed hands on the NYSE floor.

Today's economic data was limited to weekly initial claims and Import and Export Prices for April:

  • The latest initial claims report produced a surprise -- and not a good one. Initial claims for the week ending May 7 increased by 20,000 to 294,000 (consensus 270,000).
    • While the latest week marked the 62nd straight week initial claims have been below 300,000, it was the highest level of claims since February 28, 2015, and there were no special factors influencing the increase.
    • With this report, the four-week moving average jumped to 268,250 from 258,000.
  • Continuing claims for the week ending increased by 37,000 to 2.161 million. That is the highest level for continuing claims since April 2, 2016.
    • The four-week moving average, though, dipped to 2.137 million from 2.140 million and is the lowest level for this average since November 11, 2000.
    • The initial claims surprise is something that will probably contribute to the market's belief that the Fed won't raise rates in June.
  • According to the BLS, fuel prices drove a 0.3% increase in import prices in April. That was the second consecutive month that import prices have increased 0.3%.
    • They're still down 5.7% over the past year, yet that is the smallest year-over-year drop since December 2014. Export prices increased 0.5% after being unchanged in March, but are still down 5.0% year-over-year.
  • Excluding fuel, import prices increased 0.1%, which is the first monthly advance since July 2014. Nonfuel import prices are down 2.0% year-over-year.
  • Excluding agriculture, export prices also increased 0.5% on the heels of a 0.3% increase in March. That gain left them down 4.6% year-over-year.

Tomorrow's data will include Core PPI for April (consensus +0.1%) and Retail Sales for April (consensus+0.8%) each being released at 8:30 ET. The day's data will be capped off with March Business Inventories (consensus +0.2%) and the preliminary reading of the University of Michigan Consumer Sentiment Survey for May (consensus 90.0) both crossing the wires at 10:00 ET. 

  • Nasdaq Composite -5.4% YTD
  • Russell 2000 -2.4% YTD 
  • S&P 500 +1.0% YTD
  • Dow Jones +1.7% YTD

Exclusive: Dow Chemical CEO Says Mixed Companies Are Out


Andrew Liveris, the chief executive of Dow Chemical, warned his rival BASF that mixed companies are no longer a good idea in the chemicals business.

Dow Chemical and Dupont, the number one and two chemicals companies, are merging to create a giant with annual revenues of $90 billion. Soon after the merger though the company will be divided into three parts: Dow, Dupont and a smaller company for specialty chemicals.

This is the future, Mr. Liveris told Handelsblatt: “If we had a mega-merger, you’d have a very diversified portfolio. But I think that time frame is ending.”

This is a hidden warning to his German rival BASF. Kurt Bock, the company’s CEO, recently told Handelsblatt it will continue to have a broader base. Mr. Liveris countered with agrochemicals as an example, as the cost of development keeps on growing. “You have to choose,” he said.

Mr. Liveris said investors had pressured Dow into the merger. Low interest rates were only adding to that investor pressure for acquisitions: “To use that cash, to have a project for 30 years return, there’s no investor who wants that, none,” he said.

While BASF may not face the same investor pressure because of a different shareholder structure, Mr. Liveris warned the competition could force a move instead. “BASF has to compete against a big competitor in Dow DuPont and new Syngenta with ChemChina owning it,” he said