Tag: news

Yesterday we highlighted the European people’s growing ‘revulsion’ against Europe and overnight we got yet another confirmation that the status quo – despite record low bond yields and record high stock and real estate prices – are losing their grip on control. Having taken the lead in the polls last week, UKIP’s Nigel Farage has scored a major victory in local elections in England with early results pointing to considerable gains for the euro-skeptic party:

• UKIP GAINS 20 SEATS IN EARLY ENGLISH LOCAL-ELECTION RESULTS
• U.K. TORIES LOSE 20 SEATS IN EARLY LOCAL-ELECTION RESULTS

As Reuters reports, one MP noted “I think Nigel Farage for quite a lot of those people is just a big sort of two fingers stuck up at what they feel is a sort of hectoring, out-of-touch elite.”

As Reuters reports,

Britain’s anti-EU party UKIP made strong gains in local elections in England, siphoning support from Prime Minister David Cameron’s Conservatives as it capitalised on discontent about immigration and mainstream politics.

 

The gains by the UK Independence Party, which wants Britain to leave the EU, will pile pressure on Cameron to toughen his approach to Europe and alarm some in his party who worry UKIP could scupper the Conservatives hopes of winning next year’s national election.

 

The strong support for UKIP indicated by early local council results suggests the party could also do well in elections to the European Parliament, also held on Thursday.

 

…

 

Farage told reporters he was cheered by the early results and thought they were a good platform to challenge for seats in the 2015 national election.

 

“Looking at the average vote shares across the country, and without wishing to count any chickens before they’re hatched, it looks pretty good,” he told reporters.

 

…

 

“I think Nigel Farage for quite a lot of those people is just a big sort of two fingers stuck up at what they feel is a sort of hectoring, out-of-touch elite,” Jeremy Browne, a Liberal Democrat lawmaker

 

…

 

The European elections were held on the same day, but the results will not be announced until Sunday evening, in line with the rest of the EU. They will determine the political persuasion of Britain’s 73 lawmakers in the 751-seat European Parliament.

 

…

 

“There’s been a vote for UKIP and that sends us a very clear message that people have concerns about immigration, about welfare, about schools and skills of course,” said Michael Gove, the Conservative education minister.

 

“We will pay attention to those concerns.”

Change – it appears – is coming.

via Zero Hedge http://ift.tt/1ocDVfy Tyler Durden

Just like stocks go up on Tuesdays in the US (and Wednesdays in Japan).. and volatility always falls… so shortly after 8am ET this morning ‘someone’ decided it was the optimal time to unleash $450 million notional of gold futures. Just as we saw earlier in the week, this sizable dump only achieved a $5 depreciation in price as it seems the inexorable efforts of status quo stabilizers to ensure the only real indicator of empire collapse is not flashing red remain in full effect. Given that Barclays is now out ofthe business of rigging gold prices, the question remains: who is?

 

via Zero Hedge http://ift.tt/1onCKrk Tyler Durden

• The Fed can’t print trade? World Trade Flows Fall in First Quarter (WSJ)
• PBOC’s Zhou Says China May Have Housing Bubble in ‘Some Cities’ (BBG)
• ECB’s Weidmann – Reviving ABS market not task for central bank (Reuters)
• LOL: Fitch upgrades Greece by a notch to ‘B’; outlook stable (Reuters)
• LOL x2: Spain Sovereign Debt Rating Upgraded by S&P (BBG)
• China Will Vet Tech Firms After Threatening U.S. Retaliation (BBG)
• US to claim victory over China in WTO car dispute (BBG)
• Obama urges Democrats to vote in midterms, attacks Republicans (Reuters)
• U.S. Military Pushes for More Disclosure on Drone Strikes (WSJ)
• The power struggle behind China’s corruption crackdown (Reuters)
• Secrecy of Oil-by-Train Shipments Causes Concern Across the U.S. (WSJ)

Overnight Media Digest

WSJ

* Hewlett-Packard Co is cutting thousands more jobs, as efforts to revitalize the company have sputtered amid a rapidly changing technology landscape. The company said Thursday it would cut an additional 11,000 to 16,000 jobs on top of 34,000 positions it previously said would be eliminated as part of a multi-year restructuring plan. (http://ift.tt/1onwTSH)

* Investors defied a technology-market slump to send shares of Chinese online retailer JD.com Inc as much as 20 percent higher after its initial public offering Thursday in New York. The shares opened trading at $21.75, and rose as high as $22.80 in early trading. The shares closed their first day at $20.90, a gain of 10 percent.(http://ift.tt/1oZU9ZE)

* Cox Communications Inc became the biggest U.S. cable operator to commit to rolling out a gigabit-speed broadband offering to all its residential customers, starting this year, the latest sign that the push for ultra-fast broadband speeds sparked by Google is gaining traction throughout the industry. (http://ift.tt/1onwTSN)

* Google Inc is developing a new, cutting-edge tablet as it continues to experiment with advanced vision capabilities for mobile devices. The company plans to produce about 4,000 of the prototype tablets beginning next month, according to people briefed on the company’s plans. (http://ift.tt/1oZU9ZG)

* One of AstraZeneca Plc’s biggest shareholders, BlackRock Inc, has urged the British pharma giant’s board to eventually re-engage in talks with Pfizer Inc over a possible deal, but backed its rejection of Pfizer’s offer this week, according to people familiar with the situation. (http://ift.tt/1onwTSR)

 

FT

AstraZeneca’s biggest shareholders have told the drugmaker they want the company to take a fresh look at a possible deal with Pfizer by August.

Swiss drugmaker Roche Holding AG said it had been visited by a unit of China’s anti-trust regulator, in the latest move in the widening crackdown on corruption in the country’s pharmaceutical sector.

Germany’s largest bank Deutsche Bank’s top executives faced angry investors at the annual shareholders’ meeting, less than a week after announcing a surprise 8 billion euro capital raising plan.

Spanish government chose to move the country’s maiden inflation-linked bonds in line with Eurozone Harmonised Index of Consumer Prices across European countries.

Wizz Air, central eastern Europe’s largest airline, plans to list its shares on the London Stock Exchange next month and is seeking to raise 200 million euros ($273 million).

 

NYT

* The St. Petersburg International Economic Forum aims to woo foreign investment, but the event is under a cloud this year as Russia stands on the verge of recession. A panel at an annual economic forum here was deeply divided over the direction of the Russian economy. The isolationists in the group favored relying on state banks for its financing needs. Others called for Russia to deepen its ties with China, while a different contingent said global trade and commerce remain critical. (http://ift.tt/1oZUafW)

* Hundreds of miles from Credit Suisse’s Madison Avenue office tower and an ocean away from its headquarters in Zurich, the bank found an unlikely opponent in Alexandria, Virginia. Federal prosecutors there helped lead an investigation into Credit Suisse, which this week pleaded guilty to helping thousands of American clients hide their wealth overseas. (http://ift.tt/1onwW0V)

* The Mizkan Group’s $2.15 billion purchase of Unilever Plc’s Ragu and Bertolli pasta sauce brands is the latest overseas foray by a storied and gutsy vinegar maker, one that helped transform sushi from an obscure delicacy into a global culinary phenomenon. (http://ift.tt/1oZUb3D)

* The slide continued on Thursday for the deeply troubled Sears Holdings Corp, whose dismal earnings report not only lacked signs of improvement but also laid bare how few options the company had left. Sears Holdings, owner of Sears and Kmart stores, was once again the bleakest of the lackluster reports. It announced that it would close at least 80 stores this year, a downsizing move it has made in previous years without significant results. (http://ift.tt/1onwTSV)

* Online Chinese retailer JD.com Inc started life as a publicly traded company with a rousing start, closing up 10 percent on the Nasdaq on Thursday. At that price, shareholders valued the company at more than $28.6 billion, more than other American technology names like Twitter Inc and LinkedIn Corp. Investors in the United States seemed eager for the offering, even though some analysts have criticized JD.com’s corporate governance and lack of profitability in recent years. (http://ift.tt/1oZUag8)

 

Canada

THE GLOBE AND MAIL

* The United States has implemented limits on emissions from the oil and gas sector that are “significant” and “comparable” to those the Canadian government is considering, says a newly released Environment Canada memo, one that contradicts Prime Minister Stephen Harper’s assertion that Canada is waiting for the U.S. regulations before it acts. (http://ift.tt/1onwU9c)

* The Conservative Party of Canada has postponed a bitter nomination battle in a Toronto-area riding, saying it needs time to sort out complaints of fraud and robocalls in the riding. (http://ift.tt/1oZUb3H)

Reports in the business section:

* Russia is weighing whether it should end its $3.4 billion deal with Bombardier Inc to buy Q400 turboprop planes to be built in a new assembly plant in Russia, the country’s industry minister said. (http://ift.tt/1onwW0Y)

NATIONAL POST

* Europe’s seal ban is arbitrary, unfair and “inconsistent,” the World Trade Organization ruled Thursday, but the continent will still be allowed to keep out Canadian seal products in order to “protect public morals.” The ruling by the WTO Appellate Body was cheered by animal activists, but roundly condemned in Canada’s seal hunting regions. (http://ift.tt/1oZUb3J)

* A man accused of killing five young people in Calgary’s worst mass murder has been found fit to stand trial. Matthew de Grood is charged with first-degree murder after four men and a woman were stabbed to death at a house party that was being held last month to mark the end of the university school year. (http://ift.tt/1onwW13)

FINANCIAL POST

* The Keystone XL pipeline debacle with the United States has drawn plenty of second guessing of late that it’s all Canada’s fault – government’s pushing too hard on behalf of the oil industry for approval in the United States and doing too little to ingratiate themselves to President Barack Obama by getting tough on greenhouse emissions from the sector. The man on the front lines of campaign, Canadian ambassador to the United States Gary Doer, couldn’t disagree more. (http://ift.tt/1oZUaws)

* Toyota Motor Corp is recalling 430,500 vehicles for three separate safety problems, including 82,381 Sienna minivans in Canada that face potential problems caused by salt used by road crews to melt snow or ice in some areas. (http://ift.tt/1onwU9q)

 

Hong Kong

SOUTH CHINA MORNING POST

— An Italian journalist who mounted an undercover operation to expose a suspected eastern European gangster told the District Court how easy it was to set up a money-laundering operation in Hong Kong. (http://ift.tt/1oZUaww)

— A more complete picture of Hong Kong, including all the off-street nooks and crannies, will soon be available online in 3D, via mapping developed by the University of Science and Technology. The comprehensive map of the city is being touted as better than those from Google and Apple. (http://ift.tt/1onwU9s)

— Shanghai vice-mayor Tu Guangshao has heralded further financial liberalisation in the city’s free-trade zone, fuelling speculation about future full convertibility of the yuan in the test bed for mainland economic reform. (http://ift.tt/1oZUbk7)

THE STANDARD

— Cheung Kong Holdings has priced its first batch of 350 units at City Point in Tsuen Wan close to those of secondary homes nearby, prompting some owners to cut their asking prices. The joint project has a price tag of up to HK$12,071 ($1,600) per sellable sq ft after a discount of up to 15.75 percent. (http://ift.tt/1oZUbk9)

— The “Father of Lan Kwai Fong,” Allan Zeman, says he supports the idea of Hong Kong expanding into Hengqin in Zhuhai or Nansha as Hong Kong needs to compete with mainland cities. (http://ift.tt/1onwX4S)

— Staff training budgets grew to 3.1 percent of annual salaries last year, the highest since 2009, as companies want to develop and retain staff, a survey by personnel experts showed. This is the second-biggest proportion since 2004, the study by the Hong Kong Institute of Human Resource Management found. (http://ift.tt/1oZUbkd)

HONG KONG ECONOMIC JOURNAL

— Sunac China Holdings Ltd said it would buy 24.3 percent of Greentown China Holdings Ltd for about HK$6.3 billion ($812.52 million), a price equivalent to HK$12 per Greentown share or 56 percent premium to the previous close.

— Property-to-transportation group Shun Tak Holdings Ltd said it would sell its funeral service business in Macau for HK$624 million ($80.48 million).

HONG KONG ECONOMIC TIMES

— Li & Fung Ltd’s planned spinoff firm Global Brands Group is set to be a high growth company and is planning to acquire more brands which have potential to expand globally, according to Chief Executive Officer Bruce Rockowitz.

 

Britain

The Telegraph

INTEREST BILL ON UK’S 1.27 TRILLION STG DEBT TO HIT 1 BLN STG A WEEK

(http://ift.tt/1onwWhq)

Britain’s huge debt interest bill remains on course to hit £1bn a week this year, after official data showed the government borrowed 3 billion pounds more in April than forecast by analysts.

INTERNATIONAL DIRECTOR SET TO LEAVE MARKS & SPENCER

(http://ift.tt/1oZUbkh)

Jan Heere, who was hired from Inditex, the owner of Zara, in 2011, is understood to be returning to a role in Russia, although he is yet to resign from his role at Marks and Spencer .

The Guardian

CLYDESDALE BANK TO INTRODUCE FIRST PLASTIC BANKNOTES IN BRITAIN NEXT YEAR

(http://ift.tt/1onwWhs)

The first plastic banknotes in Great Britain will be introduced in Scotland next year to mark the 125th anniversary of the Forth Bridge, Clydesdale Bank has announced.

ROYAL MAIL SAYS POSTAL DELIVERIES TO REMOTE AREAS UNDER THREAT

(http://ift.tt/1oZUdsa)

Royal Mail has warned that postal deliveries to rural areas are under threat because rivals are being allowed to cherry pick easy and profitable deliveries in towns and cities without having to run services to isolated homes such as on Scottish islands.

The Times

COCA-COLA DIPS TOE IN TROUBLED WATERS AS IT TRIES TO PUT DASANI FIASCO IN PAST

(http://ift.tt/1onwX56)

Coca-Cola is to launch a fresh assault on Britain’s 1.4 billion pound bottled water market by bringing its glacéau smartwater across the Atlantic.

GATWICK WILL GET EXTRA RUNWAY IN “POLITICAL FIX”, WARNS BORIS

(http://ift.tt/1oZUbkj)

A “political fix” is emerging in favour of building a second runway at Gatwick airport as the government realises that it would be unable to expand Heathrow, mayor of London Boris Johnson claimed yesterday.

Sky News

BLACKROCK URGES ASTRAZENECA TO HOLD NEW TALKS

(http://ift.tt/1onwWhy)

AstraZeneca’s biggest shareholder wants the pharmaceuticals group to consider renewing talks with Pfizer about a 69 billion pound takeover offer once a curfew period imposed by City regulators has expired.

LONDON-MADE TECH HARDWARE ‘EATING THE WORLD’

(http://ift.tt/1oZUdsf)

The maker of a new type of music keyboard has raised 7.6 million pound in funding, in a series A round that could value the company at 40 million pound. Dalston-based tech start up Roli raised the money from Balderton, Firstmark, Index and Universal Music.

 

 

Fly On The Wall 7:00AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
New home sales for April at 10:00–consensus up 10.7% to 420K rate

ANALYST RESEARCH

Upgrades

FireEye (FEYE) upgraded to Overweight from Equalweight at Barclays
German American Bancorp (GABC) upgraded to Outperform at Keefe Bruyette
L Brands (LB) upgraded upgraded to Buy from Hold at Stifel
Portfolio Recovery (PRAA) upgraded to Buy from Neutral at Janney Capital
RTI International (RTI) upgraded to Overweight from Neutral at JPMorgan
Rubicon (RBCN) upgraded to Perform from Underperform at Oppenheimer
Saint Joe Co. (JOE) upgraded to Outperform from Market Perform at Raymond James

Downgrades

Aeropostale (ARO) downgraded to Sector Perform from Outperform at RBC Capital
Aflac (AFL) downgraded to Equalweight from Overweight at Barclays
Covisint (COVS) downgraded to Sector Perform from Outperform at Pacific Crest
Hain Celestial (HAIN) downgraded to Hold from Buy at Jefferies
Linde (LNEGY) downgraded to Neutral from Buy at Goldman
RetailMeNot (SALE) downgraded to Hold from Buy at Stifel

Initiations

BNY Mellon (BK) initiated with a Hold at Deutsche Bank
CMS Energy (CMS) initiated with an Outperform at RW Baird
Durata Therapeutics (DRTX) initiated with a Buy at MLV & Co.
Dynagas LNG (DLNG) initiated with a Buy at Stifel
GasLog (GLOG) initiated with a Hold at Stifel
Golar LNG Partners (GMLP) initiated with a Buy at Stifel
Golar LNG (GLNG) initiated with a Hold at Stifel
Northern Trust (NTRS) initiated with a Hold at Deutsche Bank
State Street (STT) initiated with a Hold at Deutsche Bank

COMPANY NEWS

HP (HPQ) increased its workforce reduction forecast by 11,000-16,000 jobs, saying it now expects to lay off 45,000-50,000 employees, up from its prior estimate of 34,000, with 41,000 total to leave by the end of FY14
Barclays (BCS) fined $43.9M by FCA over gold price fixing
Starboard raised its stake in Darden (DRI) to 6.2% from 5.5%
Boeing (BA) acquired ETS Aviation, terms not disclosed
Keryx (KERX) said that the FDA extended the PDUFA date for Zerenex to September 7
Ziopharm Ad-RTS-IL-12 (ZIOP) said study shows precise control of IL-12 gene expression level

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Cavco Industries (CVCO), Nordson (NDSN), Compuware (CPWR), Mentor Graphics (MENT), Marvell (MRVL), GameStop (GME), Ocean Rig UDW (ORIG), TiVo (TIVO), Aeropostale (ARO), Gap (GPS), Zumiez (ZUMZ)

Companies that missed consensus earnings expectations include:
Covisint (COVS), New York & Co. (NWY), Shoe Carnival (SCVL), 21Vianet (VNET)

Companies that matched consensus earnings expectations include:
Hibbett Sports (HIBB), Brocade (BRCD), Aruba Networks (ARUN), The Fresh Market (TFM), Ross Stores (ROST)

HP (HPQ) reports Q2 Personal Systems revenue up 7% YoY
GameStop (GME) backs FY14 EPS view $3.40-$3.70, consensus $3.68
GameStop (GME) sees Q2 EPS 12c-20c, consensus 17c
Aeropostale (ARO) sees Q2 EPS (61c)-(55c), consensus (50c)
Gap (GPS) backs FY14 EPS $2.90-$2.95, consensus $2.93

NEWSPAPERS/WEBSITES

Google (GOOG) developing ‘cutting-edge’ tablet, WSJ reports
Sony (SNE) CEO vows again that TV unit will be profitable, Bloomberg reports
WWE (WWE) needs 1.3M-1.4M subscribers to make up for revenue loss, NY Post says
Apple (AAPL) wants Beats because streaming could ‘kill’ download sales, TechCrunch says
NTSB asks FAA to look into battery tests after 787 (BA) events, Bloomberg reports
Credit Suisse (CS) sells $5B worth of bonds since tax evasion suit, Bloomberg says
HSBC (HSBC) to face criticism over bonus payouts payments, The Independent reports

SYNDICATE

Agile Therapeutics (AGRX) 9.17M share IPO priced at $6.00
China Sunergy (CSUN) files to sell $45M of ordinary shares, warrants
Gold Resource (GORO) files to sell 4.1M shares for selling shareholders
Heritage Insurance (HRTG) 6M share IPO priced at $11.00
Matador (MTDR) files to sell 7.5M shares of common stock
Orbitz (OWW) 7.5M share Secondary priced at $6.60
Parsely Energy (PE) 50M share IPO priced at $18.50
Santander Mexico (BSMX) files to sell ADS for holders

via Zero Hedge http://ift.tt/1k18j50 Tyler Durden

Following the only major overnight econ event, which was the May German IFO Business Climate Index which dropped from 111.2 to 110.4 missing expectations of 110.9, the USDJPY has been on a soaring rampage higher hoping to push equities along with it (because now that gold manipulation is a proven fact, it is only a matter of time before the link between manipulating the USDJPY on thin volume with massive leverage and rigging the equity market is uncovered too), and at last check was just shy of 102.000. For now equity futures have failed to be dragged along although with the S&P all time high just around the horizon, the psychological level of 1900 staring the rigged market in the face, and the weekend just around the corner, it is virtually assured that the S&P will close at an all time high today – after all the people need to be confident when they go shopping at malls with money they don’t have (but delighted by paper profits they haven’t booked) so they boost the US non-GAAP GDP (at least before like Italy, the BEA too changes the definition of GDP to include cocaine and hookers). Finally, assuring a (record?) low-volume levitation today is the early closure of the bond pit ahead of Memorial Day holiday which also means only a skeleton crew of algos will be frontrunning each other to push the S&P over 1,900.

The only data on the US calendar today is April new home sales. If good it will be a confirmation of the recovery, if bad, it will merely prove that the harsh January winter weather lasted through April, or some other just as idiotic spin.

Bulletin headline summary

• Today’s European session has been relatively quiet with the main focus being on the weak German IFO release which has led EUR/USD to print its lowest level since Feb.
• Peripheral paper outperforms the German benchmark following Greek and Spanish sovereign rating upgrades, with France and UK ratings expected after the European session.
• Looking ahead, today’s session is expected to remain quiet with new home sales being the only tier 1 release from the US.

Asian Headlines

The Nikkei 225 (+0.9%) extended on yesterday’s gains to post a 1-month high underpinned by further JPY weakening and a second consecutive positive close on Wall Street (+0.24%). Elsewhere, Chinese stocks closed with minor gains with the Hang Seng (+0.1%) and the Shanghai Comp (+0.6%) shrugging off a telecoms sector downgrade at HSBC.

EU & UK Headlines

The main focus in today’s muted European session has been upon the German IFO release (Business Climate 110.4 vs. Exp. 110.9) which saw all components come in marginally below expectations, which exacerbated the recent EUR weakness and helped Bunds recover off their lows. Elsewhere, in Europe S&P raised Spain to ‘BBB’ from ‘BBB-‘; outlook stable and Fitch upgraded Greece’s ratings to ‘B’ from ‘B-‘; outlook stable, which consequently lifted peripheral paper and saw a tightening of the periphery against the German benchmark. In terms of ECB commentary, ECB’s Hansson said no mechanical reaction to lower ECB staff forecast.

Prelim Barclays month end extensions show Pan-Euro Agg at +0.04y (Prev. +0.10y), Sterling-Agg at +0.06y (Prev. +0.02y)

US Headlines

Fed’s Williams (non-voter, dove) said Fed policy tightening “still a good way off”, normalizing will be gradual and Fed will be flexible. (BBG/RTRS)

Prelim Barclays month end extensions show US Treasury at +0.13y (Prev. +0.08y)

Equities

European indices have fluctuated between minor gains and losses (Euro Stoxx +0.2%), with no firm direction being provided by the subdued Asia-Pacific session despite the Nikkei 225 closing higher by 0.9%. The notable outperformer has been the FTSE MIB which has been lifted by Italian banks due to their holdings of Italian debt and cheap borrowing costs. The FTSE 100 (-0.2%) has underperformed throughout the session following individual equity news.

FX

The German IFO release saw EUR/USD break below its 200DMA for the first time since September 2013 with the pair trading at its lowest level since February 2014, which consequently lifted the USD-index to its highest level since April 7th after briefly breaching its 200DMA.

Commodities

Both WTI and Brent continue to remain range bound trading relatively flat heading into the North American open on muted news flow. Of note, In order to help shrink its growing glut of oil, the US may swap light crude to nearby counties without having to deal with new rules or findings. (BBG)

In metals markets, USD strength has seen gold ebb lower throughout European trade and away from the 50, 100 and 200DMAs. In terms of metals news, Citigroup and Nomura have said that they expect further easing of gold import rules into India. Citigroup have said that they expect an increase in gold imports to 800 tonnes in 2015 vs. 640 tonnes in 2014.

* * *
We conclude as usual with Andy Reid’s overnight recap

Voting for the European Parliament began yesterday in Britain and the Netherlands and will continue across the EU’s 28 member states until the last Italian voters cast their ballots on Sunday evening before 10pm. The European Parliament forms one of the major institutions of the EU government and one of its main roles is to debate, amend and pass legislation proposed by the European Commission (the parliament itself has no power to make laws). In spite of this the parliament has exerted growing influence over EU legislation since the Lisbon Treaty became effective five years ago via amendments to commission directives. Given that the EU is involved in almost half of all European legislation the fact that up to 90% of what the EU does now requires the parliament’s assent means it shouldn’t be discounted off-hand. Nevertheless whilst the parliament does have some ability to affect EU legislation the response to the Euro zone crisis has only gone to highlight the central role of national governments and the European Commission in EU governance and so the parliamentary election results have to be seen in this context. This context is important as the main “winners” from the election look set to be Europe’s anti-EU and protest parties. Whilst the latest opinion polls suggest the centre right (EPP) will extend its parliamentary lead in the election they also point to a significant increase in support for anti-EU/protest parties, with Open Europe in late April estimating such parties would win up to 31% of the vote (vs 25% in 2009) giving them 218 of 751 seats (up by 54). Some of the notable anti-EU/protest parties leading national polls are Syriza in Greece, the Front National in France, the Freedom Party in the Netherlands and UKIP in the UK.

What would such a result mean? Quite how much influence these parties would actually be able to exert within the (already-constrained) Parliament after the election, given their fractious nature and the lack of agreement between the different protest/anti-EU parties, is up for debate. Perhaps more important could be what these elections may mean for national elections over the next few years with some maybe interpreting a Syriza win in Greece for example as a sign that they might win the next Greek election (due in 2016). Such concerns are likely overdone in the near-term with the next key periphery election still likely over a year away (Spain’s next election must be held before December 20th 2015, although the ruling PP look set to win the largest portion Spain’s European election vote). Nevertheless politics are probably going to be Europe’s biggest Achilles heel over the next few years so these elections offer an important window into the prevailing mood of the electorate.

Looking at the Dutch exit polls (which were released late last night), the result of the anti-EU parties has been mixed at best. In the Netherlands, Geert Wilders’s anti-EU Freedom Party finished in fourth place according to an exit poll for NOS television with 12.2% of the vote. The pro-EU D66 party came first with 15.6% of the vote, ahead of the Christian Democratic Alliance on 15.2%. Pre-election polls had suggested that the Freedom Party would finish at least second. The outcome, if confirmed when official results are published in two days’ time, means the Freedom Party will have three seats in the new European Parliament, two fewer than it won in the last elections five years ago according to Bloomberg. Official results are due in two days time. Across the English Channel, British exit polls for the European elections aren’t available but the European vote did coincide with local council elections. Early local council results show a significant swing towards the UKIP at the expense of the major parties.

While we’re talking about politics it will be interesting to see if there is any profit-taking or cautiousness in Russian assets today ahead of Sunday’s Ukrainian presidential elections. We’ve had a strong rally in the MICEX and Russian bonds over the last few weeks, with both almost back at pre-Crimea crisis levels. Our Chief Russian strategist Yaroslav Lissovolik highlights that if no candidate obtains a simple majority in the first round, there will be a second round run-off between the two leading candidates which is likely to take place in June. According to the schedule of Ukraine’s Central Electoral Committee, the official results should be published not later than 4 June. According to the most recent polls in Ukraine conducted by KISS from 29th April to 11th May), Petro Poroshenko remains the most popular candidate in the race (33.7% of total) followed by Yulia Tymoshenki. According to Yaroslav, Mr. Poroshenko advocates the restoration of the president-parliament political system; decentralization with more authority given to regions and pursuing EU integration.

Shifting from EMEA politics to Asian politics, there has been relatively muted reaction from markets to the Thai military coup, although one could argue that markets were already underinvested in Thai assets given the six month political stalemate. The coup is also providing hope to investors that we will see a faster end to the political deadlock. According to the FT, leading politicians have been jailed, the Constitution and the government have been suspended, and all radio and TV broadcasting has been suspended. The Thai Baht is trading 0.2% stronger against the USD today, recouping most of its 0.3% losses when the headlines first broke yesterday. The SE Thai equity index is down 1.5% overnight while Thai 5yr CDS is about 3bp wider today at around 130bp. During the last Thai military coup of 19th September 2006, the Thai Baht lost 1.3% on the day while the stock market dropped 2.3%, so the reaction this time around certainly has been mild in comparison. Outside of Thailand, Asian markets are generally trading in the green led by the Nikkei (+1%) while in China a number of property stocks are seeing 2-3% gains on market chatter that the government will be easing home purchasing restrictions to support the cooling property market.

Elsewhere in the Asian political sphere, DB’s GEM equity strategist JP Smith warns that while the Indian election win gave the BJP a clear mandate for economic reforms, there are some formidable constraints to the government’s agenda. The new administration faces a series of economic issues which are likely to require immediate action and which may swiftly deflect investors’ attention away from the potential gains from structural reforms. The most pressing is likely to be to negotiate the balance between pro-growth measures and fiscal tightening given that the underlying fiscal situation appears to be much worse than the headline figures suggest. There is also a strong possibility that the RBI may have to raise interest rates given recent poor inflation data. If there is a swift deterioration in public support for Prime Minister Modi (like French President Francois Hollande after the 2012 election), the administration might be tempted to push a more conservative program in front of the series of upcoming state elections and most importantly the 2016 election for the upper house, which is currently dominated by the BJP’s political opponents. The Indian market has risen in anticipation of a decisive BJP victory while taper concerns have evaporated against a backdrop of falling UST yields. The recent election may well mark the start of a paradigm shift, but it is too early to tell and in the meantime, the market is expensive relative to its history relative to GEM, despite the fact that GDP growth rates are unlikely to return to 2005-07 and 2010 levels for some time, if at all.

As we go to print this morning, Spain has been upgraded to BBB from BBB- by S&P. S&P said that it has revised up its 2014-2016 real GDP growth projections for Spain to 1.6% from 1.2% reflecting the effects of labour and other structural reforms. This will come as some relief to markets who in 2012 were fearing that Spain could be downgraded to sub-investment grade. Greece has also been upgraded to B from B- by Fitch overnight.

Yesterday saw the theme of low volatility and a slow grind higher in equities continue, buoyed by better than expected PMIs in China and the US, which offset mixed PMI data in Europe and weaker than expected US home sales data. There was a brief dip in risk after the release of US existing home sales data which printed at +1.3% MoM (or 4.65m), a little lower than the +2.2% (or 4.69M) run rate expected. The dip lasted just a few minutes though, and soon the S&P500 (+0.24%) resumed its march higher, spending 80% of the day within a small 4 point trading range. US 10yr yields hit a low of around 2.535% shortly after the home sales data, but ticked upwards to 2.55% towards the US close (+2bp on the day). In terms of other data, US initial jobless claims for the week of May 17 rose +28k to 326k (310k expected) after the prior week was revised up +1k to 298k. Despite this rise the four-week moving average fell 1k to 323k. DB’s Joe Lavorgna expects a 200k gain on May payrolls when the data is reported on June 6. EM saw some solid gains bringing the YTD gains in the MSCI EM index to 3.84% and gains from the February lows of 14%.

Looking at the day ahead, there’s more US housing data on the way with April new home sales. Consensus is calling for a rebound (+10.7% MoM) following the falls in four of the last five months. In Europe, Germany publishes its final estimate of Q1 GDP, the latest German IFO survey is released and Italy prints retail sales for March. Sovereign rating updates for France (Moodys), Spain (S&P), and Turkey (S&P) are due this morning. As discussed earlier there are plenty of political themes to watch ahead over the weekend including Ukraine presidential elections and the rest of the European parliamentary elections. The US session might be quieter than usual ahead of the Memorial Day long weekend. Here in the UK we’re also off on Monday.

via Zero Hedge http://ift.tt/1iaQ51c Tyler Durden