TheChek News Flow

Markets opened the week in a bit of a holding pattern ahead of several key catalysts. on Tuesday the UK Parliament voted on various non-binding Brexit amendments which set the stage for what UK officials hope will be another round of negotiations with EU officials in February.

The improving sentiment was further aided by what appear to have been constructive high level US/China trade talks in Washington D.C. Reports even speculated that enough progress had been achieved to allow for the potential of another Trump/Xi summit in early March.

For the week, the S&P gained 1.6%, the DJIA added 1.3%, and the Nasdaq rose 1.4%. In corporate news this week, earnings releases continued apace.

Caterpillar opened the week with a miss on both its top and bottom line, while its outlook fell short of expectations.

Nvidia cut its guidance, blaming deteriorating macroeconomic conditions, especially in China.

Apple shares lifted despite guiding lower than anticipated after reassuring commentary from management.

Boeing rocketed higher after a huge earnings beat, and the company forecast it would shatter delivery records in FY19.

Facebook surged on an EPS and revenue beat, with CEO Zuckerberg noting the Instagram Stories feature now has 500M daily active users, 25% higher than six months ago.

Amazon rolled over during its earnings conference call when the CFO said he would expect investment spending to increase this year.

Macro :

- Asia Stocks Having a ‘Bear-Market Bounce,’ JPMorgan Asset Says

- JPMorgan Says 2020 ‘Might Not Be Year to Think About Recession’

- Dollar Vortex Puts Chill on Earnings That May Worsen in Spring

Keep an eye on :

- ABI BB : Anheuser-Busch InBev Is Said to Pick Banks for Asia Business IPO

- AED BB : Aedifica Completes Acquisition of 92 Units in U.K. for GBP450M

- ATC NA : Altice to Start Auction For Portugal Cable Network Sale: Rtrs

- BAMI IM : Banco BPM to Present New Business Plan By Year End, CEO Says

- COFB BB : Cofinimmo Buys Dutch Care Home for EU4M at~5.5% Yield

- DAI GY : Mercedes-Benz Jan. U.S. Luxury Car Sales Down 11.1%

- DAI GY : Mercedes Wins Partial Dismissal of Emissions Cheating Case in NJ

- DEB LN : Debenhams Eyes Company Voluntary Arrangement Rescue Plan: FT

- DBK GY : Deutsche Bank Tried to Shed VTB Loan in 2016, WSJ Says

- DIE BB : Belgian Jan. Car Registrations Drop 10%; D’Ieteren Share 20.1%

- EOAN GY : German Utilities File Complaints Against EON/RWE Deal: Spiegel

- RF FP : Eurazeo: Proceeds From Neovia Stake Sale Amount to EU170M

- RMS FP : Hermes to Pay One-Time EU1,000 Bonus to More Than 7,000 Workers

- ILD FP : Inwit to Host Iliad Antennas on Towers for 4G, 5G

- FLYB LN : Flybe Confirms It Received Preliminary Contingency Proposal

- KN FP : Natixis Said to Seek Sale of Korean Derivatives That Blew Up (1)

- NOVOB DC : Novo Nordisk Doubles U.K. Inventory to Prepare for Brexit: WSJ

- MKS LN : M&S in talks to acquire Ocado distribution centre and fleet for GBP 850m; short window to agree deal by month-end

- MTRO LN : Hedge Funds Circling Troubled Metro Bank

- OCDO LN : M&S in talks to acquire Ocado distribution centre and fleet for GBP 850m; short window to agree deal by month-end

- REC IM : Rossini Says Only 0.03% of Recordati Capital Subscribed in Offer

- ROG SW : FDA Classifies Roche CoaguChek Recall as Class 1

- RWE GY : German Utilities File Complaints Against EON/RWE Deal: Spiegel

- SIE GY : Siemens, DEWA Start Building Hydrogen Energy Plant in Dubai (2)

- SCAB SS : Swedish Dockworkers Threaten More Strikes Next Week, DI Reports

- SPOT US : Spotify is in talks to buy Gimlet for more than $200 million. That’s a big deal for the podcasting world. http://bit.ly/2WuQgAe - Recode

- SCRG SW : Sunrise in Talks to Buy Liberty Global’s Swiss Cable Unit: FT

- TKA GY : Thyssenkrupp AG Elects Martina Merz as Chairwoman

- FP FP : Total Is Said to Weigh Bidding for Eneco in Challenge to Shell

- FP FP : Total Close to 1B Pound Sale of North Sea Stake: Telegraph

- VOW3 GY : Volkswagen of America January U.S. Auto Sales Down 6.7% Y/y

Weekend Papers Summary

NYT TIMES (Saturday): The Trump administration announced the suspension of one of the last major nuclear arms control treaties with Russia, following U.S. accusations that Moscow is violating the Reagan-era agreement, a decision that has the potential to incite a new arms race not only with Russia, but with China; Virginia governor Ralph Northam, a Democrat, acknowledged that a yearbook photo in which he appeared was racist, but is resisting a flood of calls from national and state Democrats that he resign; The bitter cold lifted in the Midwest on Friday, ending days of dangerous weather, but the fast-rising temperatures are causing a new set of risks to contend with, including the potential for flooding, abundant potholes and clogged storm water drainage systems; Donald Trump plans to use his State of the Union address on Tuesday night to outline a bipartisan and optimistic vision of the country, a senior administration official said on Friday, though after recent battles with House Democrats it could be a difficult sell; Litigation over pelvic mesh, also called transvaginal mesh, ranks as one of the biggest mass tort cases in U.S. history in terms of claims filed, number of corporate defendants, and settlement dollars, but the amounts paid out have been lower than expected—and the legal fees much higher; Fed chairman Jerome Powell said the central bank was pausing rate hikes “not because it embraced Trump’s argument that the economy was in ruddy health, but because the expansion faced growing threats, including from the impact of Trump’s own policies”; + AAPL: Tech giant fixed a security flaw in iPhones that allowed people to call another iPhone via FaceTime and listen in on conversations even if the recipient didn’t answer, a vulnerability that undermined the company’s public commitment to security; (Sunday): Medicare for all is emerging as an early policy platform for Democrats running for president in 2020, but while many influential liberals are calling for a single-payer system, some voters are concerned about losing private insurance; +/- BA: Company’s launch of the 737 Max, an upgrade to its basic 737 model that came in response to growing competition from Airbus, set off a “cascading series of engineering, business and regulatory decisions that years later would leave the company facing difficult questions” about the crash of a Lion Air plane off Indonesia; + DB: During his 2016 presidential campaign, Donald Trump turned to the bank, one of the few major lenders willing to do business with him, to borrow millions of dollars for his Scottish golf course, but the bank refused, saying his divisive candidacy made the loan too risky; Sunday Business: Locast, a streaming service that makes television network programming available to subscribers without using a home antenna, works on almost every device and is free—and has so far avoided legal problems because it’s structured as a noncommercial entity.

In an interview with Italian daily paper Il Sole 24 Ore on Sunday, the Roman designer talked about her next moves.

By Martino Carrera on February 3, 2019

NEXT MOVES: Frida Giannini, Gucci’s creative director until 2015, hinted at the possibility of a comeback to fashion as early as 2019 in a Sunday interview with Italy’s daily paper Il Sole 24 Ore.

“Throughout these years I’ve been submitted several offers: some I discarded, some I considered. Yes, it’s possible that there will be interesting news this year,” the designer is quoted as saying. “Should I make a comeback to fashion, I’d want it to be for a less all-absorbing role than [the one] I had at Gucci,” Giannini noted. Further details were not revealed.

After exiting Gucci, Giannini kept a low profile and eased out of the fashion world. In the interview she confessed: “When you are absorbed by an apical role in the [fashion] sector, with all the media exposure at the digital era’s fast pace, there’s little time left to reflect and find objectivity. These years [looking] ‘from the window’ have been positive for this reason, as well.”

Since her abrupt departure from Gucci, Giannini has focused on her role as the mother of her daughter Greta, whom she shares with former Gucci chairman and chief executive officer Patrizio di Marco. The couple tied the knot in June 2015 and Giannini chose Valentino’s then co-creative directors Pierpaolo Piccioli and Maria Grazia Chiuri to design her wedding gown.

Last year, the designer made a brief comeback to fashion for a humanitarian project in partnership with retailer OVS for which she created a Christmas capsule collection of sweaters benefiting the nonprofit association Save the Children, which she joined as a member of the board in 2017.

While at Gucci’s creative helm, the Roman designer made social issues a focus both for the brand and for herself. In particular, in 2013 together with Beyoncé Knowles and Salma Hayek Pinault, she and Gucci launched Chime for Change, created with the goal to support women’s and girls’ education, health services and justice. In 2011, Giannini also received the UNICEF Women of Compassion award.

After leaving the Kering-owned brand at the end of 2014, Di Marco took on the role of chairman of the board at Italian footwear and apparel company Golden Goose Deluxe Brand last year.

Philips/Healthineers: organ players

Both groups are bets on fast-changing medical tech, but which has better vital signs?

“The machine that goes ping” starred in a Monty Python sketch about gadget-obsessed doctors. Better than expected fourth-quarter results from Philips last week triggered an upwards “ping” on share traders’ screens. Even so, those look weedy compared with rival Siemens Healthineers.

Both companies are bets on fast-changing medical technology. Both are the products of corporate streamlining. Comparisons are invidious but necessary.

Once a sprawling conglomerate, Philips spun off television and lightbulb businesses to focus on hospital technology and personal care. Chief executive Frans van Houten argues its restructuring created flexibility in a healthcare sector prone to disruption from big data and artificial intelligence. He sees a “vacant space” for the Dutch group and is shifting its focus from selling gadgetry to providing services.

Pharma companies and US tech start-ups are in the mix, too. But Healthineers is the obvious read-across. Venerable conglomerate Siemens listed the business last year, keeping an 85 per cent stake.

Which has better vital signs? Both spend about 10 per cent of sales on research. Healthineers’ pipeline includes ideas for artificial intelligence-powered virtual human organs for testing treatments. With net debt not much higher than operating profits, firepower for acquisitions is similar.

However, Healthineers, which is strong in imaging devices, benefits more from economies of scale. Operating profit margins of about 18 per cent compare with about 15 per cent at Philips, where they remain a case for treatment. Healthineers’ shares, up a fifth since its March flotation, trade at 20 times forward earnings. Philips, on a multiple of 18, is still a recovery story. Healthineers hopes for improvements in its weaker diagnostics division.

Emergent digital medicine is as much of a black box as the machine that went ping. Old fashioned diagnostics make Healthineers the livelier prospect.