phpKs19AM
Content
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24
19-Feb-09
THE WRESTLER
One day after Obama officially signed “The American Recovery and Reinvestment Plan” into law ($787bn, see our Tuesday’s mail for more details), the Treasury and Obama’s Administration introduced a new plan for homeowner in dire straits called “Homeowner Affordability and Stability Plan”. This new plan is not funded by the “Tarp” or the “Financial Stability Plan” but is an extension of the 2008 Housing and Economic Recovery Act which was roughly the launch of the nationalization of Fannie Mae and Freddie Mac. Considering that millions of responsible families who make their monthly payments and fulfil their obligations have seen their property values fall, and are now unable to refinance at lower mortgage rates, that millions of workers have lost their jobs or had their hours cut back and are now struggling to stay current on their mortgage payments-with nearly 6 million households facing possible foreclosure (10 000 per day currently), and that neighbourhoods are struggling as each foreclosed home reduces nearby property values by as much as 9 %, the “Homeowner Affordability and Stability Plan” will help up to 7 to 9 million families restructure or refinance their mortgage to avoid foreclosure. The key components of the plan are: 1) refinancing for up to 4 to 5 million responsible home owners to make their mortgages more affordable 2) a $75bn homeowner stability initiative to reach up to 3 to 4 million at-risk homeowners 3) supporting low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac and in monolines. Treasury is increasing its preferred Stock Purchase Agreements to $200bn each from their original level of $100bn each. To ensure that Fannie Mae and Freddie Mac can continue to provide assistance in addressing problems in the housing market, Treasury will also be increasing the size of the GSE’s retained mortgage portfolios allowed under the agreements-by $50bn to $900bn- along with corresponding increases in the allowable debt outstanding. In a speech at the National Press Club yesterday, Ben Bernanke “the wrestler” talked about the Fed’s policies and its balance sheet: the three sets of policy tools--lending to financial institutions, providing liquidity directly to key credit markets, and buying longer-term securities--each represents a use of the asset side of the Fed's balance sheet. Specifically, loans that the Fed extends-either to financial institutions, through the discount window and related facilities, or to other borrowers in programs like commercial paper facility--are recorded as assets on the Fed’s balance sheet, as are securities acquired in the open market, such as the GSE securities purchased by the Fed. The Fed's assets also include about $500 billion of Treasury securities. About 5 percent of the Fed’s balance sheet, or $100 billion, consists of assets acquired in the government interventions to prevent the failures of Bear Stearns and AIG. The liability side of the Fed’s balance sheet is relatively simple, consisting primarily of currency issuance (Federal Reserve notes) and reserves held by the banking system on deposit with the Federal Reserve. The various credit-related policies all act to increase the size of both the asset and liability sides of the Fed’s balance sheet. For example, the purchase of $1 billion of GSE securities, paid for by crediting the deposit account of the seller's bank at the Fed, increases the Fed's balance sheet by $1 billion, with the acquired securities appearing as an asset, and the seller's bank's deposit at the Fed being the offsetting liability. The quantitative impact of the Fed’s credit actions on the balance sheet has been large; its size has nearly doubled over the past year, to just under $2 trillion. The minutes of January’s US FOMC meeting confirm hints made that the Committee thinks that establishing a more effective inflation target is a better way to fight the war against deflation than the purchase of Treasuries. The new long-term projections (for 5-6 years ahead) released alongside the minutes effectively establish an inflation target of between 1.7% to 2.0% on the PCE deflator. That might be equivalent to around 2.2% to 2.5% on the CPI measure. The minutes provided the surest sign yet that the FOMC is concerned about deflation. They said “there is a risk of a protracted period of excessively low inflation” and a few members “even saw some risk of deflation”. The Committee discussed, but dismissed, the idea of establishing a target for the growth of the monetary base or M2. The CPI YoY in January released tomorrow (13.30 GMT) may have turned negative (-0.1 %) for the first time since 1955… Neither the U.S. housing starts (-16.8 % in January) nor the industrial production (-1.8 % MoM in January, -10.0 % YoY) could trigger a rally of equities yesterday. In addition to that the FOMC’s central tendency for GDP growth in 2009 has been revised down to -0.5 %/-1.3 % vs. -0.2 %/+1.1 % in October with unemployment rate between 8.5 % and 8.8 % (vs. 7.1 %/7.6 % in October). But the FOMC upgraded its projection for GDP growth in 2010 to 2.5 % to 3.3 % vs. 2.3 %/3.2 % in October. The widely spread conviction that growth will sharply rebound in 2010 in a “V” shape scenario may explain equities’ resilience yesterday.
WTI Last Perf 1d % 34,7 0,17 €/$ 1,2581 0,41 $/¥ 93,47 0,34 10 yr US 2,75 -0,72 bp 10 yr Euro 2,99 1,9 bp Basic -0,67 0,19 Energy Financ Health -0,37 0,35 -0,07 -0,42 -0,12 0,07 Tech 0,26 1,31 Tel -1,15 -0,03 Indus Utilities -0,47 0,36 -1,37 -0,47 SOX 0,48 2,08 S&P NAS DOW 0,04 0,38 Close US Europe -0,10 -0,18 0,35 0,68
ECONOMIC DATA with impact
PPI – 13;30 GMT - Exp 0.3% / Ex Food & Energy exp 0.1% Jobless Claims - 13.30 GMT – exp 620K Leading Indicators - 15.00 GMT – exp 0.0% Philadelphia Fed - 15.00 GMT – exp –25.00
POSITIVE IMPACTS
PPR : FY sales €20.20bn (20.07bn exp) / Operating €1.72bn (1.68bn exp) / Dividend €3.30 (-4% vs 2007) / No guidance for 2009 but said said it would intensify measures to boost its competitiveness TECHNIP : Q4 revenue €1.91bn (1.79bn exp) / Operating €183m (163m exp) / Dividend €1.20, unch./ Sees FY09 revenue between €6.1-6.4bn (6.2bn exp) / Sees subsea 2009 operating margin between 16-18% AXA : FY rev. €91.2bn (€94.2bn e) / Operating €4.04bn (€3.75bn e) / Underlying L&S €1.51bn / Underlying P&C €2.39bn / Dividend €0.4 (€0.7 exp) / Will ask AGM on April 30, the authorization to issue preferred shares to increase its financial flexibility if necessary POSTBANK : Q4 NII €738m (€571m exp) / Risk Provisions €104m (€108m exp) / Trading Loss €406m (€ -161m exp) / Tier1 ratio 7.4% / FY net loss €821m (-845m exp) / Still sees after-tax ROE at 13-15% mid term NESTLE : FY sales SFR110 Bn (110.5bn exp) / Ebit SFR15.7Bn (15.5bn exp) / Org. growth 8.3% (8.2 exp)/ Dividend SFR 1.40 (1.32 exp) / Does not need to take action, decision regarding stake in l’Oreal in April … / 2009 org. growth at least approaching 5% SCHNEIDER : FY sales €18.31bn (18.26bn exp) / Ebita €2.75bn (2.65bn exp) / Dividend €3.45 (3.30 last year) / Repeated little visibility for sales trend in 2009 but reiterated its 12% 2009 BITA margin, based on a worst-case scenario of a 5-15% drop in org. growth XSTRATA : Big UK investors are considering whether to vote against plans by Xstrata to conduct a rights issue and buy the Prodeco coal mining business in Colombia from Glencore, its biggest shareholder (The Guardian) ACCIONA has reached an agreement to sell its 25% stake in Endesa to Enel following months of negotiations and differences over the price and the conditions of the deal (Cinco Dias) INFINEON : The Qimonda works council urged Angela Merkel to help save the insolvent memory chipmaker
NEGATIVE IMPACTS
BNP : Q4 rev. €4.85bn (€4.95bn e) / Net Loss €1.37bn, in line / Cost of Risk - €2.55bn (-1.8bn e) / CIB loss €2.07bn / Div. €1, with possibility to pay it in share (3.35 last year) / Tier1 7.8% to go up to 8.4% with latest French govt aid / “Well positioned for 2009”… SAP : Business by Design is running into difficulty and its market launch may be delayed (Handelblatt) ROCHE may increase the size of a planned bond sale to $15 bn or more in a 6-part bond sale to finance its $42 bn offer for Genentech
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24
19-Feb-09
THE WRESTLER
MAN AG : FY sales €14.9bn ( €14.8bn exp) / Operating €1.73bn, in line / Dividend €2 (as exp) / Order Intake €1.96bn (€2.3bn exp) / Sees more or less stable revenue in 2009 SWISS RE : S&P cut the reinsurer's LT counterparty rating to A+ from AA- because of its larger-than-anticipated capital depletion in 2008 / Final results = FY Net loss SFR 864m (-1bn est.) / Div SFR 0.1 / FY ROE -3.4% / To issue up to 180m shr but no right issue / Tgt 2009 95% combined ratio / Sees improving outlook for life/non life ops / Wants to free up cap from non core ops HYPO REAL ESTATE needs up to €20 bn in further state guarantees in the coming weeks (FAZ) FRESENIUS : FY sales €12.34bn (12.26bn exp) / Adj. Ebit €1.73bn (1.69bn exp) / Dividend €0.70 (0.74 exp) / 2009 outlook positive RDSA will discuss further cooperation with Gazprom on energy projects in Russia's Far East (CEO) TF1 : FY Operating €177m (190m exp) / Plans €60m of cost cuts / Dividend €0.47 (0.55 exp) / Sees 9% decline in 2009 conso. sales SOLVAY : Q4 rev €2.27bn (2.18bn e) / EBIT ex-items €125m (178m e) / Final div. of €1.733 / Mkt condition still tough at start of 2009 HPQ : Q4 Revenue $28.8bn ($31.9bn exp) / EPS $0.93 (In line) / Sees adjusted Q1 EPS from $0.84 to $0.85 ($0.89 exp) & revenue to a range of $27.4bn to $27.7bn ($30.95bn exp)
Today Friday Monday Tuesday Wednesday RESULTS Saint Gobain / Schneider / BAE Systems / PPR / BNP / Cadbury / AXA / Eramet / Fresenius / Deutsche Postbank / Continental / Man AG / Shire / Reed Elsevier / Swiss Re DIVIDENDS EVENTS BNP Dividend declaration
Arcelor Mittal ($0.1875) / Goldman Lafarge / Anglo American / Allied Irish Bank / Belgacom / Endesa / Gecina / Campbell Sachs ($0.466667) / Johnson & Soup / GM : Johnson ($0.46) ACS / Maroc Telecom ST Micro ($0.09) Akzo Nobel / Corio / Deutsche Boerse / Theolia / OZ Minerals / Heinz / Home Depot / Novartis AGM Accor / CNP / Vallourec / Heinkel / ASM International / OMV / Telekom Austria / BHP Biliton ($0.455556) / Reckitt Apple AGM Cadbury Benckiser (GBp 53,3333)
TRADING IDEAS
BUY BANKS as BNP / SOCGEN / DT BOERSE / CREDIT AGRICOLE on support level & bank sector recovery BUY AIR FRANCE to play oil prices drop and business starting back on H2 thanks to stimuli plans BUY DANONE / ROCHE / AIR LIQUIDE on double bottom possibility BUY CARREFOUR / on reversal Head & Shoulder possibility
BROKER METEOROLOGY
SANOFI .........................................................RAISED TO NEUTRAL ........................................................................... BY JP MORGAN BOUYGUES .................................................CUT TO UNDERWEIGHT ........................................................... BY MORGAN STANLEY SAP ...............................................................RATED NEW NEUTRAL ..................................................................................... BY HSBC CENTRICA ....................................................CUT TO UNDERWEIGHT FROM NEUTRAL .......................................... BY JP MORGAN
PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24
19-Feb-09
THE WRESTLER
CHART OF THE DAY
US Housing starts since 1959
2400
1900
1400
900
400 59 64 69 74 79 84 89 94 99 04 09
Source : US Department of Commerce
The sharp rise of the unemployment add to the credit crunch are humping the real estate market which is still on a lasting down trend in the United-States. Indeed housing starts plunged 17% to 466 000 in January ( forecast 529 000) , which represent the deepest slump since the great depression and building permits plunged as well to record low at 521 000 in January ( forecast 525 000).As foreclosure are reaching as well high record builders are fighting a very sharp lake of demand and are trying to sell with much difficulties the units they have constructed. The rebound of mortgage applications in the U.S. OF 45.7% last week is mainly due to surge in refinancing and will not overshadow the gloomy and lasting real estate situation which will more likely generate an intervention from the Obama administration.
ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
09.00 GMT 09.30 GMT 09.30 GMT 13.30 GMT 13.30 GMT 13.30 GMT 13.30 GMT 15.00 GMT 15.00 GMT
Italy United Kingdom United Kingdom United States United States United States United States United States United States
Trade balance ( total) Public sector net borrowing M4 money supply ( préliminairy) Producer price index Producer price index ( ex food and energy) Initial jobless claims Continuing claims Conférence Board leading indicators Philadelphia Fed index
December January January January 0,3%, - 2,5% YoY January 0,1%,+3,8% YoY 14 th February 7 th February January February
€ - 10,1 billion £ -7,0 billion 1,2%,+15,7% YoY 0,3%, - 2,4% YoY 0,1%,+3,8% YoY 620 000 4 831 000 0,1% -25
€ - 10,7 billion £ 14,9 billion 1,4%,+16,1% YoY -1,9%, -0,9% YoY 0,2%,+4,3% YoY 623 000 4 810 000 0,3% -24,3
Inde x e s
DJIA S&P 500 Nas daq CA C 40 DA X Euros tox x 50 DJ 600 FTSE 100 Nikkei Shanghai Comp Sens ex (India) MICEX (Rus s ia)
P rice
7555,6 788,4 1468,0 2874,1 4205,0 2118,5 183,4 4006,8 7557,7 2225,6 9022,1 628,0
% 5 D a ys
-4,02% -4,57% -3,65% -5,08% -7,18% -6,59% -4,98% -5,09% -5,17% -2,25% -6,25% -13,59% -2,87%
Ytd
-13,91% -12,71% -6,92% -10,69% -12,58% -13,45% -7,57% -9,64% -14,70% 22,23% -6,48% 1,36% 5,66%
For e x
EUR/USD EUR/JPY USD/JPY
P rice
1,2591 117,78 93,55
% 5 D a ys
- 2,11% - 0,73% - 2,83%
Ytd
- 9,89% - 7,02% 3,14%
O il
Br ent $/b
P rice
39,2
% 5 D a ys
- 11,72%
Ytd
- 6,18%
Gold
Gold $/oz
P rice
977,5
% 5 D a ys
3,24%
Ytd
10,82%
Ra te s
Centr al Banks * Ov er night 3 Months
U SA
0,25 0,25
E u ro
2,00 1,00
Ja p a n
0,10 0,10
Bov es pa (Bras il) 39674,4
0,30 0,98 0,24 10 Y ear s ** 2,74 2,99 1,27 *US: Fed Funds ; Jap: Ov er night; Eur o: Ref i ** Eur o: Ger man Bund r ate
S o u rc e : B lo o m b e rg
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24
19-Feb-09
THE WRESTLER
Economic data preview
Watch in the United-States the release of the producer price index for January due at 13.30 GMT, expected to slightly increase since last month as oil prices stop felling but it will still decline from a year ago, on the other hand the producer price index core ( excluding food and energy) will still increase from last month and from a year ago , watch as well the release of the initial jobless claims and the continuing claims this week both expected to increase as recession is deepening in the United-States and in all major industrialized countries generating wild fears from companies which are sharply cutting jobs ./JB
ate
ECONOMY
UNITED-STATES : HOUSING STARTS AND BUILDING PERMITS DROPPED TO RECORD LOW IN JANUARY The sharp rise of the unemployment add to the credit crunch are humping the real estate market which is still on a lasting down trend in the United-States. Indeed housing starts plunged 17% to 466 000 in January ( forecast 529 000) , which represent the deepest slump since the great depression and building permits plunged as well to record low at 521 000 in January ( forecast 525 000).As foreclosure are reaching as well high record builders are fighting a very sharp lake of demand and are trying to sell with much difficulties the units they have constructed. The rebound of mortgage applications in the U.S. OF 45.7% last week is mainly due to surge in refinancing and will not overshadow the gloomy and lasting real estate situation which will more likely generate an intervention from the Obama administration. UNITED -STATES : INDUSTRIAL PRODUCTION FELL IN JANUARY Industrial production fell of 1.8% in January from -2.4% in December which is slightly more than expected ( forecast -1.5%). If we look into the breakdown this drop is mainly led by a 23.4% decline in motor and vehicle part , on the other hand computer and electronic sector which drop 3.8% in December only fell 1.7% in January showing a decrease not as bad as expected. This drop of industrial production is not a surprise as the manufacturing ISM was very low in January ( 35.6),as the domestic demand is weak due to the credit crunch and as the car sector is still sharply hit by deep crisis. Nevertheless it is important to bear in mind to put in perspective these bleak figures that the car sector represent only 3.5%of the U.S. GDP and the industry sector represent only 13% of the U.S. GDP. /JB
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24
19-Feb-09
THE WRESTLER
6 5,5 5 4,5 4 3,5 3 2,5 2 1,5 1
VIX index : im plied volatility on the S&P 500
85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 20/02/07
$ Libor - 3-Month (Interbank Rate)
20/08/07
20/02/08
20/08/08
20/02/09
19/02/07
19/08/07
19/02/08
19/08/08
19/02/09
Source : Bloomberg
Source : Bloomberg
1,2 1 0,8 0,6 0,4 0,2 0 -0,2 -0,4 -0,6 -0,8
5,5 5,25 5 4,75 4,5 4,25 4 3,75 3,5 3,25 3 2,75 2,5 2,25 2
19/02/07
United States : 10-year Treasury yield
10-year Treasury spread USA-Euro zone
19/08/07
19/02/08
19/08/08
19/02/09
-1 19/02/07
19/08/07
19/02/08
19/08/08
19/02/09
Source : Bloomberg
150 140 130 120 110 100 90 80 70 60 50 40 30 19/02/07 19/08/07 19/02/08 19/08/08 19/02/09
Source : Bloomberg
Oil : Brent ($/b)
1,65 1,6 1,55 1,5 1,45 1,4 1,35 1,3 1,25 1,2
19/02/07
Forex : Euro vs Dollar (EUR/USD)
19/08/07
19/02/08
19/08/08
19/02/09
Source : Bloomberg
Source : Bloomberg
19-Feb-09
THE WRESTLER
One day after Obama officially signed “The American Recovery and Reinvestment Plan” into law ($787bn, see our Tuesday’s mail for more details), the Treasury and Obama’s Administration introduced a new plan for homeowner in dire straits called “Homeowner Affordability and Stability Plan”. This new plan is not funded by the “Tarp” or the “Financial Stability Plan” but is an extension of the 2008 Housing and Economic Recovery Act which was roughly the launch of the nationalization of Fannie Mae and Freddie Mac. Considering that millions of responsible families who make their monthly payments and fulfil their obligations have seen their property values fall, and are now unable to refinance at lower mortgage rates, that millions of workers have lost their jobs or had their hours cut back and are now struggling to stay current on their mortgage payments-with nearly 6 million households facing possible foreclosure (10 000 per day currently), and that neighbourhoods are struggling as each foreclosed home reduces nearby property values by as much as 9 %, the “Homeowner Affordability and Stability Plan” will help up to 7 to 9 million families restructure or refinance their mortgage to avoid foreclosure. The key components of the plan are: 1) refinancing for up to 4 to 5 million responsible home owners to make their mortgages more affordable 2) a $75bn homeowner stability initiative to reach up to 3 to 4 million at-risk homeowners 3) supporting low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac and in monolines. Treasury is increasing its preferred Stock Purchase Agreements to $200bn each from their original level of $100bn each. To ensure that Fannie Mae and Freddie Mac can continue to provide assistance in addressing problems in the housing market, Treasury will also be increasing the size of the GSE’s retained mortgage portfolios allowed under the agreements-by $50bn to $900bn- along with corresponding increases in the allowable debt outstanding. In a speech at the National Press Club yesterday, Ben Bernanke “the wrestler” talked about the Fed’s policies and its balance sheet: the three sets of policy tools--lending to financial institutions, providing liquidity directly to key credit markets, and buying longer-term securities--each represents a use of the asset side of the Fed's balance sheet. Specifically, loans that the Fed extends-either to financial institutions, through the discount window and related facilities, or to other borrowers in programs like commercial paper facility--are recorded as assets on the Fed’s balance sheet, as are securities acquired in the open market, such as the GSE securities purchased by the Fed. The Fed's assets also include about $500 billion of Treasury securities. About 5 percent of the Fed’s balance sheet, or $100 billion, consists of assets acquired in the government interventions to prevent the failures of Bear Stearns and AIG. The liability side of the Fed’s balance sheet is relatively simple, consisting primarily of currency issuance (Federal Reserve notes) and reserves held by the banking system on deposit with the Federal Reserve. The various credit-related policies all act to increase the size of both the asset and liability sides of the Fed’s balance sheet. For example, the purchase of $1 billion of GSE securities, paid for by crediting the deposit account of the seller's bank at the Fed, increases the Fed's balance sheet by $1 billion, with the acquired securities appearing as an asset, and the seller's bank's deposit at the Fed being the offsetting liability. The quantitative impact of the Fed’s credit actions on the balance sheet has been large; its size has nearly doubled over the past year, to just under $2 trillion. The minutes of January’s US FOMC meeting confirm hints made that the Committee thinks that establishing a more effective inflation target is a better way to fight the war against deflation than the purchase of Treasuries. The new long-term projections (for 5-6 years ahead) released alongside the minutes effectively establish an inflation target of between 1.7% to 2.0% on the PCE deflator. That might be equivalent to around 2.2% to 2.5% on the CPI measure. The minutes provided the surest sign yet that the FOMC is concerned about deflation. They said “there is a risk of a protracted period of excessively low inflation” and a few members “even saw some risk of deflation”. The Committee discussed, but dismissed, the idea of establishing a target for the growth of the monetary base or M2. The CPI YoY in January released tomorrow (13.30 GMT) may have turned negative (-0.1 %) for the first time since 1955… Neither the U.S. housing starts (-16.8 % in January) nor the industrial production (-1.8 % MoM in January, -10.0 % YoY) could trigger a rally of equities yesterday. In addition to that the FOMC’s central tendency for GDP growth in 2009 has been revised down to -0.5 %/-1.3 % vs. -0.2 %/+1.1 % in October with unemployment rate between 8.5 % and 8.8 % (vs. 7.1 %/7.6 % in October). But the FOMC upgraded its projection for GDP growth in 2010 to 2.5 % to 3.3 % vs. 2.3 %/3.2 % in October. The widely spread conviction that growth will sharply rebound in 2010 in a “V” shape scenario may explain equities’ resilience yesterday.
WTI Last Perf 1d % 34,7 0,17 €/$ 1,2581 0,41 $/¥ 93,47 0,34 10 yr US 2,75 -0,72 bp 10 yr Euro 2,99 1,9 bp Basic -0,67 0,19 Energy Financ Health -0,37 0,35 -0,07 -0,42 -0,12 0,07 Tech 0,26 1,31 Tel -1,15 -0,03 Indus Utilities -0,47 0,36 -1,37 -0,47 SOX 0,48 2,08 S&P NAS DOW 0,04 0,38 Close US Europe -0,10 -0,18 0,35 0,68
ECONOMIC DATA with impact
PPI – 13;30 GMT - Exp 0.3% / Ex Food & Energy exp 0.1% Jobless Claims - 13.30 GMT – exp 620K Leading Indicators - 15.00 GMT – exp 0.0% Philadelphia Fed - 15.00 GMT – exp –25.00
POSITIVE IMPACTS
PPR : FY sales €20.20bn (20.07bn exp) / Operating €1.72bn (1.68bn exp) / Dividend €3.30 (-4% vs 2007) / No guidance for 2009 but said said it would intensify measures to boost its competitiveness TECHNIP : Q4 revenue €1.91bn (1.79bn exp) / Operating €183m (163m exp) / Dividend €1.20, unch./ Sees FY09 revenue between €6.1-6.4bn (6.2bn exp) / Sees subsea 2009 operating margin between 16-18% AXA : FY rev. €91.2bn (€94.2bn e) / Operating €4.04bn (€3.75bn e) / Underlying L&S €1.51bn / Underlying P&C €2.39bn / Dividend €0.4 (€0.7 exp) / Will ask AGM on April 30, the authorization to issue preferred shares to increase its financial flexibility if necessary POSTBANK : Q4 NII €738m (€571m exp) / Risk Provisions €104m (€108m exp) / Trading Loss €406m (€ -161m exp) / Tier1 ratio 7.4% / FY net loss €821m (-845m exp) / Still sees after-tax ROE at 13-15% mid term NESTLE : FY sales SFR110 Bn (110.5bn exp) / Ebit SFR15.7Bn (15.5bn exp) / Org. growth 8.3% (8.2 exp)/ Dividend SFR 1.40 (1.32 exp) / Does not need to take action, decision regarding stake in l’Oreal in April … / 2009 org. growth at least approaching 5% SCHNEIDER : FY sales €18.31bn (18.26bn exp) / Ebita €2.75bn (2.65bn exp) / Dividend €3.45 (3.30 last year) / Repeated little visibility for sales trend in 2009 but reiterated its 12% 2009 BITA margin, based on a worst-case scenario of a 5-15% drop in org. growth XSTRATA : Big UK investors are considering whether to vote against plans by Xstrata to conduct a rights issue and buy the Prodeco coal mining business in Colombia from Glencore, its biggest shareholder (The Guardian) ACCIONA has reached an agreement to sell its 25% stake in Endesa to Enel following months of negotiations and differences over the price and the conditions of the deal (Cinco Dias) INFINEON : The Qimonda works council urged Angela Merkel to help save the insolvent memory chipmaker
NEGATIVE IMPACTS
BNP : Q4 rev. €4.85bn (€4.95bn e) / Net Loss €1.37bn, in line / Cost of Risk - €2.55bn (-1.8bn e) / CIB loss €2.07bn / Div. €1, with possibility to pay it in share (3.35 last year) / Tier1 7.8% to go up to 8.4% with latest French govt aid / “Well positioned for 2009”… SAP : Business by Design is running into difficulty and its market launch may be delayed (Handelblatt) ROCHE may increase the size of a planned bond sale to $15 bn or more in a 6-part bond sale to finance its $42 bn offer for Genentech
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24
19-Feb-09
THE WRESTLER
MAN AG : FY sales €14.9bn ( €14.8bn exp) / Operating €1.73bn, in line / Dividend €2 (as exp) / Order Intake €1.96bn (€2.3bn exp) / Sees more or less stable revenue in 2009 SWISS RE : S&P cut the reinsurer's LT counterparty rating to A+ from AA- because of its larger-than-anticipated capital depletion in 2008 / Final results = FY Net loss SFR 864m (-1bn est.) / Div SFR 0.1 / FY ROE -3.4% / To issue up to 180m shr but no right issue / Tgt 2009 95% combined ratio / Sees improving outlook for life/non life ops / Wants to free up cap from non core ops HYPO REAL ESTATE needs up to €20 bn in further state guarantees in the coming weeks (FAZ) FRESENIUS : FY sales €12.34bn (12.26bn exp) / Adj. Ebit €1.73bn (1.69bn exp) / Dividend €0.70 (0.74 exp) / 2009 outlook positive RDSA will discuss further cooperation with Gazprom on energy projects in Russia's Far East (CEO) TF1 : FY Operating €177m (190m exp) / Plans €60m of cost cuts / Dividend €0.47 (0.55 exp) / Sees 9% decline in 2009 conso. sales SOLVAY : Q4 rev €2.27bn (2.18bn e) / EBIT ex-items €125m (178m e) / Final div. of €1.733 / Mkt condition still tough at start of 2009 HPQ : Q4 Revenue $28.8bn ($31.9bn exp) / EPS $0.93 (In line) / Sees adjusted Q1 EPS from $0.84 to $0.85 ($0.89 exp) & revenue to a range of $27.4bn to $27.7bn ($30.95bn exp)
Today Friday Monday Tuesday Wednesday RESULTS Saint Gobain / Schneider / BAE Systems / PPR / BNP / Cadbury / AXA / Eramet / Fresenius / Deutsche Postbank / Continental / Man AG / Shire / Reed Elsevier / Swiss Re DIVIDENDS EVENTS BNP Dividend declaration
Arcelor Mittal ($0.1875) / Goldman Lafarge / Anglo American / Allied Irish Bank / Belgacom / Endesa / Gecina / Campbell Sachs ($0.466667) / Johnson & Soup / GM : Johnson ($0.46) ACS / Maroc Telecom ST Micro ($0.09) Akzo Nobel / Corio / Deutsche Boerse / Theolia / OZ Minerals / Heinz / Home Depot / Novartis AGM Accor / CNP / Vallourec / Heinkel / ASM International / OMV / Telekom Austria / BHP Biliton ($0.455556) / Reckitt Apple AGM Cadbury Benckiser (GBp 53,3333)
TRADING IDEAS
BUY BANKS as BNP / SOCGEN / DT BOERSE / CREDIT AGRICOLE on support level & bank sector recovery BUY AIR FRANCE to play oil prices drop and business starting back on H2 thanks to stimuli plans BUY DANONE / ROCHE / AIR LIQUIDE on double bottom possibility BUY CARREFOUR / on reversal Head & Shoulder possibility
BROKER METEOROLOGY
SANOFI .........................................................RAISED TO NEUTRAL ........................................................................... BY JP MORGAN BOUYGUES .................................................CUT TO UNDERWEIGHT ........................................................... BY MORGAN STANLEY SAP ...............................................................RATED NEW NEUTRAL ..................................................................................... BY HSBC CENTRICA ....................................................CUT TO UNDERWEIGHT FROM NEUTRAL .......................................... BY JP MORGAN
PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO
WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24
19-Feb-09
THE WRESTLER
CHART OF THE DAY
US Housing starts since 1959
2400
1900
1400
900
400 59 64 69 74 79 84 89 94 99 04 09
Source : US Department of Commerce
The sharp rise of the unemployment add to the credit crunch are humping the real estate market which is still on a lasting down trend in the United-States. Indeed housing starts plunged 17% to 466 000 in January ( forecast 529 000) , which represent the deepest slump since the great depression and building permits plunged as well to record low at 521 000 in January ( forecast 525 000).As foreclosure are reaching as well high record builders are fighting a very sharp lake of demand and are trying to sell with much difficulties the units they have constructed. The rebound of mortgage applications in the U.S. OF 45.7% last week is mainly due to surge in refinancing and will not overshadow the gloomy and lasting real estate situation which will more likely generate an intervention from the Obama administration.
ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous
09.00 GMT 09.30 GMT 09.30 GMT 13.30 GMT 13.30 GMT 13.30 GMT 13.30 GMT 15.00 GMT 15.00 GMT
Italy United Kingdom United Kingdom United States United States United States United States United States United States
Trade balance ( total) Public sector net borrowing M4 money supply ( préliminairy) Producer price index Producer price index ( ex food and energy) Initial jobless claims Continuing claims Conférence Board leading indicators Philadelphia Fed index
December January January January 0,3%, - 2,5% YoY January 0,1%,+3,8% YoY 14 th February 7 th February January February
€ - 10,1 billion £ -7,0 billion 1,2%,+15,7% YoY 0,3%, - 2,4% YoY 0,1%,+3,8% YoY 620 000 4 831 000 0,1% -25
€ - 10,7 billion £ 14,9 billion 1,4%,+16,1% YoY -1,9%, -0,9% YoY 0,2%,+4,3% YoY 623 000 4 810 000 0,3% -24,3
Inde x e s
DJIA S&P 500 Nas daq CA C 40 DA X Euros tox x 50 DJ 600 FTSE 100 Nikkei Shanghai Comp Sens ex (India) MICEX (Rus s ia)
P rice
7555,6 788,4 1468,0 2874,1 4205,0 2118,5 183,4 4006,8 7557,7 2225,6 9022,1 628,0
% 5 D a ys
-4,02% -4,57% -3,65% -5,08% -7,18% -6,59% -4,98% -5,09% -5,17% -2,25% -6,25% -13,59% -2,87%
Ytd
-13,91% -12,71% -6,92% -10,69% -12,58% -13,45% -7,57% -9,64% -14,70% 22,23% -6,48% 1,36% 5,66%
For e x
EUR/USD EUR/JPY USD/JPY
P rice
1,2591 117,78 93,55
% 5 D a ys
- 2,11% - 0,73% - 2,83%
Ytd
- 9,89% - 7,02% 3,14%
O il
Br ent $/b
P rice
39,2
% 5 D a ys
- 11,72%
Ytd
- 6,18%
Gold
Gold $/oz
P rice
977,5
% 5 D a ys
3,24%
Ytd
10,82%
Ra te s
Centr al Banks * Ov er night 3 Months
U SA
0,25 0,25
E u ro
2,00 1,00
Ja p a n
0,10 0,10
Bov es pa (Bras il) 39674,4
0,30 0,98 0,24 10 Y ear s ** 2,74 2,99 1,27 *US: Fed Funds ; Jap: Ov er night; Eur o: Ref i ** Eur o: Ger man Bund r ate
S o u rc e : B lo o m b e rg
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THE WRESTLER
Economic data preview
Watch in the United-States the release of the producer price index for January due at 13.30 GMT, expected to slightly increase since last month as oil prices stop felling but it will still decline from a year ago, on the other hand the producer price index core ( excluding food and energy) will still increase from last month and from a year ago , watch as well the release of the initial jobless claims and the continuing claims this week both expected to increase as recession is deepening in the United-States and in all major industrialized countries generating wild fears from companies which are sharply cutting jobs ./JB
ate
ECONOMY
UNITED-STATES : HOUSING STARTS AND BUILDING PERMITS DROPPED TO RECORD LOW IN JANUARY The sharp rise of the unemployment add to the credit crunch are humping the real estate market which is still on a lasting down trend in the United-States. Indeed housing starts plunged 17% to 466 000 in January ( forecast 529 000) , which represent the deepest slump since the great depression and building permits plunged as well to record low at 521 000 in January ( forecast 525 000).As foreclosure are reaching as well high record builders are fighting a very sharp lake of demand and are trying to sell with much difficulties the units they have constructed. The rebound of mortgage applications in the U.S. OF 45.7% last week is mainly due to surge in refinancing and will not overshadow the gloomy and lasting real estate situation which will more likely generate an intervention from the Obama administration. UNITED -STATES : INDUSTRIAL PRODUCTION FELL IN JANUARY Industrial production fell of 1.8% in January from -2.4% in December which is slightly more than expected ( forecast -1.5%). If we look into the breakdown this drop is mainly led by a 23.4% decline in motor and vehicle part , on the other hand computer and electronic sector which drop 3.8% in December only fell 1.7% in January showing a decrease not as bad as expected. This drop of industrial production is not a surprise as the manufacturing ISM was very low in January ( 35.6),as the domestic demand is weak due to the credit crunch and as the car sector is still sharply hit by deep crisis. Nevertheless it is important to bear in mind to put in perspective these bleak figures that the car sector represent only 3.5%of the U.S. GDP and the industry sector represent only 13% of the U.S. GDP. /JB
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19-Feb-09
THE WRESTLER
6 5,5 5 4,5 4 3,5 3 2,5 2 1,5 1
VIX index : im plied volatility on the S&P 500
85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 20/02/07
$ Libor - 3-Month (Interbank Rate)
20/08/07
20/02/08
20/08/08
20/02/09
19/02/07
19/08/07
19/02/08
19/08/08
19/02/09
Source : Bloomberg
Source : Bloomberg
1,2 1 0,8 0,6 0,4 0,2 0 -0,2 -0,4 -0,6 -0,8
5,5 5,25 5 4,75 4,5 4,25 4 3,75 3,5 3,25 3 2,75 2,5 2,25 2
19/02/07
United States : 10-year Treasury yield
10-year Treasury spread USA-Euro zone
19/08/07
19/02/08
19/08/08
19/02/09
-1 19/02/07
19/08/07
19/02/08
19/08/08
19/02/09
Source : Bloomberg
150 140 130 120 110 100 90 80 70 60 50 40 30 19/02/07 19/08/07 19/02/08 19/08/08 19/02/09
Source : Bloomberg
Oil : Brent ($/b)
1,65 1,6 1,55 1,5 1,45 1,4 1,35 1,3 1,25 1,2
19/02/07
Forex : Euro vs Dollar (EUR/USD)
19/08/07
19/02/08
19/08/08
19/02/09
Source : Bloomberg
Source : Bloomberg
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