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WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

6-May-09

BERNANKE ON THE HILL

Yesterday, Ben Bernanke’s testimony before the Joint Economic Committee drew a brighter picture of the economic outlook: “We continue to expect economic activity to bottom out, then to turn up later this year. Key elements of this forecast are our assessments that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next few quarters. Final demand should also be supported by fiscal and monetary stimulus. An important caveat is that our forecast assumes continuing gradual repair of the financial system; a relapse in financial conditions would be a significant drag on economic activity and could cause the incipient recovery to stall”. The recent data suggest that the pace of contraction may be slowing, and they include some tentative signs that final demand, especially demand by households, may be stabilizing. Consumer spending, which dropped sharply in the second half of last year, grew in the first quarter. In coming months, households' spending power will be boosted by the fiscal stimulus program, and there was some improvement in consumer sentiment. The housing market, which has been in decline for three years, has also shown some signs of bottoming. Sales of existing homes have been fairly stable since late last year, and sales of new homes have firmed a bit recently. The rebound in the ISM non-manufacturing index in April was very similar to the improvement already reported in the corresponding manufacturing index for last month. The headline non-manufacturing index recovered to a six-month high of 43.7, from 42.2. That recovery was led by a sharp rise in the new orders index to a six-month high of 47.0, from 38.8. There was also a rebound in the employment index to 37.0 in April, from 32.3, although all that rebound did was reverse most of the slump the month before. The combination of a broad rally in equity prices and a sizable reduction in risk spreads in corporate debt markets reflects a somewhat more optimistic view of the corporate sector on the part of investors, and perhaps some decrease in risk aversion. Bond issuance by nonfinancial firms has been relatively strong recently. Equity markets worldwide are benefiting from further signs that the worst is over for the global economy and from hopes that there will be no nasty surprises in the results of stress tests for US banks (to be formally announced tomorrow). As bond yields are rising from historically low levels (10-year U.S. Treasury rate at 3.16 %) and commodity prices are rebounding (WTI well above $50 /bbl) some are seeing this as a sign of reflation while others are concerned that this is the start of an inflationary nightmare… Anyway, global interest rates are historically low, quantitative easing is very aggressive and fiscal stimulus is excessive. In these conditions, the value of the stress tests conducted on the 19 largest US banks may be trustworthy. Under the baseline scenario, it is assumed that GDP growth averages -2.0% this year but rebounds to +2.1% in 2010. The unemployment rate averages 8.4% this year and 8.8% in 2010. Under the so-called adverse scenario, GDP falls by 3.3% this year before expanding by a muted 0.5% in 2010. With growth remaining lacklustre, the unemployment rate averages 8.9% this year and 10.3% in 2010. House prices fall by 22% this year and a further 7% in 2010. But additional injections of new capital will therefore be required. Some of that capital could be raised from the private sector, either through the issuance of new equity or by selling parts of the business. The Treasury will also need to invest more of the TARP funds. The Treasury still has more than $100bn available.
WTI Last Perf 1d % 53,9 -0,39 €/$ 1,3271 -0,44 $/¥ 98,22 0,60 10 yr US 3,16 0,2 bp 10 yr Euro 3,21 -3,2 bp Basic -1,08 -1,03 Energy Financ Health -1,37 0,69 -1,40 0,08 0,75 0,63 Tech -0,52 -0,90 Tel -0,15 0,24 Indus Utilities -0,05 -0,39 -0,25 -0,02 SOX -1,33 -1,43 S&P NAS DOW Close US Europe -0,38 -0,54 -0,19 0,03 -0,71 0,03

ECONOMIC DATA with impact
U.S ADP survey (12.15 GMT) which is likely to show another big decline in private sector employment in April (-645 000 expected). Euro-zone, retail sales probably increased modestly in March (+0.1 % MoM, -2.6 % YoY expected) relative to February (09.00 GMT). Spanish retail sales fell by 0.8% MoM, but the downturn there has been sharper than elsewhere. In contrast, French consumer spending on manufactured goods rose by a healthy 1.1%.

POSITIVE IMPACTS
AHOLD : Q1 sales €8.7 bn (8.58bn exp) / Stop&shop/giant-landover Q1 sales $5.3 bn ($5.27 bn exp) / Giant-Carlisle Q1 sales $1.5 bn ($1.49 bn exp) / Albert Heijn Q1 sales €3 bn (€2.94 bn) / Europe and the US performance remained solid ADDECO : Q1 revenue €3.7bn (3.8bn exp) / Operating €30m (25m exp) / "Near term, sees no reversal of current conditions + sees no clear signs of stabilization yet" / Said it is unable to stem the revenue decline as demand for temporary work services fell in key markets CLARIANT : Q1 sales SFR1.62bn, in line / Ebit loss 68m (+10m e) but ex one-offs is in line / FCF better / Expects demand to stabilize LAFARGE : Q1 revenue €3.63 bn, in line / Current operating €335 m (311m exp) / Sees positive impact from stimulus plan in 2010 LEGRAND : Q1 sales €901m (950m exp) but operating €125.5m (121m exp) / Confirmed 2009 margin goal DEUTSCHE POST : Q1 revenue €11.51bn (€11.9bn exp) / Underlying EBIT €312m (€290m exp) / Says P&L was positively impacted by close to €1.18bn from the accounting for Postbank sale / Still target €1bn in cost savings by end-2010 MUNICH RE : Q1 Gross Premium €10.37bn (€10.20bn exp) / NII €1.37bn (€1.28bn exp) / Operating €746m (€792m exp) / CR 97.3% (97.6% exp) / Repeats no SBB program at this stage / 2009 Outlook unchanged BNP : Q1 rev. €9.48bn (€7.5bn e) / Op. €4.13bn (€2.84bn e) but costs €5.35bn (€4.5bn e) / Risk charge €1.83bn (€1.72bn e) / Tier1 8.8% end-March (7.8% end-Dec) / Said unlikely that ROE to get back to 2006/2007 levels / Sees more writedowns / Webcast 1300 UKT SOC GEN : The new chairman is expected to be chosen Today from a short-list of 3 to 4 candidates BBVA expects the LatAm economy to be amongst the first to recover from the crisis PORSCHE-VOW : The Piech & Porsche families are set to meet Today to resolve the debt issue at Porsche & how to combine with VW CARPHONE WAREHOUSE hopes to finalize the purchase of Tiscali's U.K. assets this week (The Times ) / Both companies are working towards a deadline of Thursday to sign the deal, although negotiations could continue over the weekend DELHAIZE : Q1 sales €5.09bn, in line / Ebit €247m (239m exp) / U.S. comparable store sales growth 2% (1.6% exp) / Belgian comparable store sales growth 1.7% (1.4% exp) / Repeats 2009 forecasts CARLSBERG : Q1 sales DK11.8bn (11.7bn exp) / Operating DK 788m (785m exp) / Repeated guidance TOTAL : Q1 Operating €3.62bn (3.47bn exp) / Oil & gas output 2.322m boepd (2.33m exp) / Can maintain dividend policy BAE SYSTEMS : Trading for the period has been consistent with management expectations SAGE : H1 revenue £748.4m (725m exp) / Adjusted pre-tax profit £159.3 m (152m exp) / Interim dividend raised to 2.50 p (+3%) NEXT : H1 retail like for like sales -2.3 (-7% exp) / Expect the Q2 will be weaker than Q1 BATS sees strong revenue growth in Q1 / Good start to 2009 and is continuing to build on the success achievd in 2008. BMW : Q1 sales €11.5bn (10.8bn exp) / Ebit loss 55m (-73m exp) / FCF +€220m / Impossible to give forecast

NEGATIVE IMPACTS
FERROVIAL : Q1 Ebitda €522m (525m exp) / Net loss €105m (-80m exp) hit by a loss in value of hedging instruments / Order backlog -11.1% to €8.1 bn at end March from a year earlier, while its service contract backlog gained 1.8% to €10.2 bn / Net debt €21.9bn HOLCIM : Q1 sales SFR4.52bn (4.65bn exp) / Operating SFR343m (455m exp) / Repeated 2009 will be tough / Won’t give guidance SWISSCOM : Q1 revenue SFR2.92bn (2.94bn exp) / Ebitda SFR1.13bn (1.14bn exp) / 2009 outlook unch. despite tough situation HENKEL : Q1 sales €3.26bn (3.32bn exp) / Adj. Operating €235m (327m exp) / Sees tough situation to persist through 2009

WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

6-May-09

BERNANKE ON THE HILL

DNBNOR : Q1 NII NK5.63bn (6.05bn exp) / Loan Losses NK1.6bn (-2.34bn exp) / says Q1 was hit by relatively large Writedowns in Baltic region & cost cutting program on track / aims to increase capital adequacy in future STOREBRAND : Q1 Loss NK733m (-164m exp) / Life Insu loss NK655m (-169m exp) / Says in Satisfactory financial position at end Q1 BHP said it will fall slightly short of previous guidance for iron ore production in 2009 after a number of accidents disrupted operations MAN said its offices were searched by public prosecutors on suspicion of briber / Authorities suspect that between 2002 and 2005 hidden commission of several million euros were paid… GDF Suez : Brazilian prosecutors filed a complaint arguing GSZ's hydroelectric project isn't complying with environmental regulations
RESULTS DIVIDENDS EVENTS Total / Gas Natural / L'Oreal sales / Adecco / BMW / BNP Paribas / Ahold /Carlsberg / Holcim / Italcementi / Lafarge / Antofagasta ($ 0.48 +0.056) / Baloise (CHF E.On AGM / Renault AGM / Lafarge AGM / Amgen Rhodia / Tenaris / Clariant / Delhaize / Deutsche Post / 4.50) / GDF Suez (€0.80+0.60) / Kingfisher (GBp AGM / ABB AGM Prudential / Mun Re / JC Decaux sales / BAE Systems / 3,777778) Henkel / Swisscom / Cisco Soc Gen / Swiss Re / Altana / Ciment Français / Italcementi / Adidas AGM / Google AGM / Hochtief AGM / Old Deutsche Telekom / Unilever / Diageo / General Motors / Axa (€0.40) / E.On (€1.50) / Technip (€1.20) Mutual AGM / Fugro AGM VeriSign / Toyota Adidas (€0.50) / HeidelbergCement (€0.12) / OMV / Puma / Repsol / Havas sales / Mc Do sales Hochtief (€1.40) / Lanxess (€0.50) / Scania (SEK Alcoa sales 2.50) / Yara (NOK 0.40) Lonmin / NEC / TUI / Maroc Tel / Microsoft Centrica AGM / Tele2 AGM Baloise / Abertis / Enel / EDF / Intercontiental Hotels / Mediaset / Mediobanca / Deutsche Boerse

Today

Thursday Friday Monday Tuesday

TRADING IDEAS
BUY OIL names as TOTAL / ENI / BP / ROYAL DUTCH on eco recovery
BUY FRANCE TEL / DTE / TEF / TOTAL / ENI / BP / ROYAL DUTCH on eco recovery BUY NESTLE / L OREAL / VIVENDI on reversal Head & Shoulder possibility BUY GLAXO / DANONE / UNILEVER looking good & BUY AHOLD / GSZ on double bottom possibility / BUY ROCHE on island reversal BUY DAIMLER / SELL RENAULT // BUY BAYER / SELL BASF // BUY AIR FRANCE / SELL LUFTHANSA // BUY NOVARTIS / SELL SANOFI

BROKER METEOROLOGY
BASF ......................................... RAISED TO NEUTRAL FROM REDUCE ........................................................................ BY NOMURA UBS ............................................ RAISED TO HOLD FROM SELL ..............................................................................................BY ING ROYAL BANK OF SCOTLAND . RAISED TO HOLD FROM SELL ...............................................................................................BY ING BARCLAYS ............................... RAISED TO HOLD FROM SELL ..............................................................................................BY ING METRO ...................................... RAISED TO OVERWEIGHT FROM NEUTRAL ......................................................... BY JPMORGAN HSBC ......................................... RAISED TO NEUTRAL FROM UNDERWEIGHT ....................................................... BY JPMORGAN HOME RETAIL .......................... RAISED TO TO BUY FROM HOLD ........................................................................................ BY UBS INFINEON .................................. RAISED TO BUY ............................................................................................................. BY MERRILL ALSTOM .................................... CUT TO HOLD FROM BUY ............................................................................. BY DEUTSCHE BANK EON ........................................... CUT TO HOLD ........................................................................................................................ BY RBS ARCELORMITTAL ..................... CUT TO SELL FROM HOLD ....................................................................................... BY CITIGROUP SWISS LIFE ............................... CUT TO NEUTRAL FROM OVERWEIGHT ............................................................... BY JPMORGAN KLEPIERRE .............................. CUT TO NEUTRAL FROM OVERWEIGHT .......................................................................... BY HSBC

PLEASE FIND BELOW ON THE NEXT PAGE OUR MORNING ECO

WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

6-May-09

BERNANKE ON THE HILL
CHART OF THE DAY

Eurostat Producer Price Index Eurozone Industry Ex construction (% ,YoY) Since 2000
10 8 6 4 2 0 -2 -4 200 0 20 01 200 2 20 03 2 004 20 05 2 006 20 07 2 008

Source : Eurostat After reaching a peak in July 2008 at 8.9% when the barrel was at $147, European’s producer price are in a continuous drop trend since then to reach -3.1% YoY in March their lowest level since February 1987. As a matter of fact the euro area is now getting closer and closer to a deflation situation increasing the pressure on the European Central Bank to significantly cut its leading rate next Thursday.

ECONOMIC DATA
Time Country Indicator Period GE forecasts Consensus Previous

8.50 GMT 8.55 GMT 9.00 GMT 9.00 GMT 9.30 GMT 9.30 GMT 10.00 GMT 12.00 GMT 12.30 GMT 13.15 GMT

France PMI Services ( final) Germany PMI Services ( final) Euro area PMI Services ( final) Euro area PMI composite (final) United Kingdom PMI Services United Kingdom Official Reserves (Changes) Euro area Retail sales United States MBA Mortgage applications United States Challenger job cuts United States ADP employment change

April April April April April April March May 1 April April

46,2 43,5 43,1 40,5 46,3 0,1%,-2,6%YoY

-645 000

46,2 43,5 43,1 40,5 45,5 $ 422 million -0,6%,-4,0%YoY -18,1% 180,7%YoY -742 000

Inde x e s
DJIA S&P 500 Nas daq CA C 40 DA X Eur os tox x 50 DJ 600 FTSE 100 Nikkei Shanghai Comp Sens ex ( India) MICEX ( Rus s ia)

P rice
8410,7 903,8 1754,1 3225,0 4853,0 2407,6 205,1 4336,9 CLOSED 2588,4 12072,1 957,1

% 5 D a ys
4,93% 5,72% 4,85% 4,44% 3,39% 4,72% 4,88% 4,24% CLOSED 6,74% 7,08% 6,15% 10,59%

Ytd
- 4,17% 0,06% 11,23% 0,22% 0,89% - 1,64% 3,38% - 2,19% CLOSED 42,16% 25,14% 54,48% 34,94%

Forex
EUR/USD EUR/JPY USD/JPY

Price
1,3270 130,34 98,22

% 5 Days
0,03% -0,62% -0,59%

Ytd
-4,99% 2,84% 7,73%

Oil
Brent $/b

Price
53,9

% 5 Days
12,52%

Ytd
29,09%

Gold
Gold $/oz

Price
903,1

% 5 Days
0,55%

Ytd
2,37%

Rates
Central Banks* Overnight 3 Months

USA
0,25 0,15

Euro
1,25 0,55

Japan
0,10 0,10

Bov es pa ( Bras il) 50669,8

0,19 0,71 0,20 10 Y ears** 3,16 3,21 1,41 *US: Fed Funds; Jap: Overnight; Euro: Ref i ** Euro: German Bund rate
So urc e : B lo o m berg

WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

6-May-09

BERNANKE ON THE HILL
ECONOMIC DATA PREVIEW

Watch in the United-States the ADP employment change for April due at 13.15 GMT expected to decrease but to remained at a high level around -645 000. Watch in the Euro area the retail sales for March due at 10.00 GMT expected to remained in negative territory at -0.1% but to drop at a slower pace than the previous month (-0.6%in February). Watch as well the PMI services due at 09.00 GMT expected to remained stable around 43.0 /JB

by sector

ECONOMY

UNITED-STATES : ISM SERVICES IMPROVED IN APRIL After dropping regularly since January , the U.S. ISM non manufacturing a gauge of the activity in the service rose from 40.8 in march to 43.7 in April (forecast 42.2). if we look to the breakdown we can say that the recovery was led by a sharp rise in the new orders index to a six -month high of 47.0 from 38.8, there is as well a rebound in the employment index to 37.0 in April from 38.8. It is important to remind that services are representing 70% of the U.S. economy in order to put in perspective this improvement. Nevertheless this data remained under the level of 50 revealing that there is still a contraction of the activity in the service sector. After the rise of the ISM manufacturing reaching its highest level since September 2008 this encouraging data is showing us that the bottom should have been reached in the United-States and the economic contraction should ease. EURO ZONE : PRODUCER PRICE INDEX DROPPED THE MOST IN 22 YEARS After reaching a peak in July 2008 at 8.9% when the barrel was at $147, European’s producer price are in a continuous drop trend since then to reach -3.1% YoY in March their lowest level since February 1987. This decline is mainly due to the drop of energy prices from a year ago. Indeed producer price excluding energy dropped of 1.7% only. If we look to the breakdown of the headline figure by sector prices fell as follow: energy -7.3%, intermediate goods -4.1%, consumer goods -1.2%. On the other hand capital goods rose 1.5% from a year ago. European companies are lowering prices and eliminating jobs to face the global economic downturn hitting the global demand. As a matter of fact the euro area is now getting closer and closer to a deflation situation in which the offer is way above the demand generating a rise of unemployment and of bankruptcies. This situation is increasing the pressure on the European Central Bank to significantly cut its leading rate next Thursday./JB

WWW.GLOBAL-EQUITIES.COM / DEL SARTE / + 33 (0) 1 44 43 33 24

6-May-09

BERNANKE ON THE HILL
$ Libor - 3-M onth (Interbank Rate)

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 07/05/2007

6 5,5 5 4,5 4 3,5 3 2,5 2 1,5 1 0,5

07/11/2007

07/05/2008

07/11/2008

07/05/2009

07/05/2007

07/11/2007

07/05/2008

07/11/2008

07/05/2009

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
07/05/2007

United States : 10-year Treasury yield

10-year Treasury spread USA-Euro zone

07/11/2007

07/05/2008

07/11/2008

07/05/2009

-1 07/05/2007

07/11/2007

07/05/2008

07/11/2008

07/05/2009

Source : Bloomberg
150 140 130 120 110 100 90 80 70 60 50 40 30 07/05/2007 07/11/2007 07/05/2008 07/11/2008 07/05/2009

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
07/05/2007

Forex : Euro vs Dollar (EUR/USD)

07/11/2007

07/05/2008

07/11/2008

07/05/2009

Source : Bloomberg

Source : Bloomberg

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