From: Laurent Chekroun <sgva@bloomberg.net> To: undisclosed recipients Subject: (Exane) FRENCH ELECTIONS: STATE HOLDINGS (from 22/03/2017) Date: Thu, 6 Jul 2017 06:54:16 +0000old but Le Marie said 10bil to sell...From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: 05/08/17 07:54:32Subject: (Exane) FRENCH ELECTIONS: STATE HOLDINGS (from 22/03/2017)
Stake frites* Sale of public stakes: on the agenda of the main reformist candidates Emmanuel Macron proposes to partly finance a EUR10bn fund dedicated to innovation and industry by selling public stakes in French companies. François Fillon plans to accelerate the sale of the State’s holdings in different companies, keeping only those he deems “strategic”. Marine Le Pen has announced she would like a mix of nationalisation and divestments. Benoît Hamon and Jean-Luc Mélenchon would rather increase the size of public stakes in French companies, although, based on current polls, they are less likely to be elected.* State’s portfolio likely to focus more on strategic assets It is very unlikely that any candidate will trigger a sale of stakes in companies in which the French State has strategic interests. This is particularly the case in defence and aerospace. That said, the lacklustre performance of the State’s shareholding portfolio in the past and the desire to protect strategic interests also highlight the need for a more efficient management of the State’s portfolio.* Infra, telecom, transport, electronics and energy holdings most likely divestment candidates We expect a movement on ADP’s capital in the next 12-18 months and BPI to fully exit its Eiffage stake. We think a stake sale of Air France-KLM would be unlikely to be seen as giving up the crown jewels; a divestment of PSA would make sense for the next government given the significant profit (>100%) the investment has generated. We also believe the State is likely to consider disposing part of its stake in Orange while maintaining its level of influence via the double voting rights mechanism and the regulatory authorities. We also think STMicroelectronics and TechnipFMC may not be as strategic as they once were for the French government. Finally, the government’s lack of influence over ENGIE may eventually prompt it to reassess its holding.* A detailed analysis on all listed companies partly held by the French government We assess for each company the likelihood of public stakes being sold over the coming five-year Presidential mandate. Our analysts lay out the current political and financial context for each stock and consider what the State could do with its holdings.
Bruno Le Maire annonce une vague de privatisations afin de financer l'innovation
Par Challenges le 02.09.2017 à 13h26, mis à jour le 02.09.2017 à 16h46
Le ministre français de l'Economie, Bruno Le Maire, a indiqué samedi qu'il annoncerait dans "quelques semaines" la privatisation de certaines entreprises afin de financer l'innovation. La Française des Jeux fait partie des pistes étudiées, selon certains experts.
"Nous pensons vraiment que c'est une meilleure façon de dépenser de l'argent en finançant l'innovation plutôt que d'être emprisonné dans certaines compagnies qui ne sont pas stratégiques pour l'Etat français", a-t-il ajouté. "L'innovation est la clé du futur pour l'économie, la clé pour rendre la France plus forte", a-t-il martelé.
M. Le Maire n'a donné aucun détail sur les entreprises qui allaient être privatisées. La Française des Jeux fait partie des pistes étudiées, selon certains experts. M. Le Maire avait déjà fait état le 6 juillet de la cession de "participations dans un certain nombre d'entreprises publiques à partir du mois de septembre". La veille, il avait annoncé ces "importantes cessions d'actifs" pour financer l'innovation, à laquelle l'Etat destinera 10 milliards d'euros.
Fonds de 10 milliards
Ces cessions permettront "au contribuable de savoir que son argent est placé pour le futur et non pas pour le passé", avait-il souligné. Pendant la campagne électorale, le président, Emmanuel Macron, avait promis d'alimenter ce fonds de 10 milliards par les dividendes tirés du portefeuille de l'Etat, mais aussi peut-être par quelques privatisations.
M. Le Maire, qui s'exprimait devant la presse, a souligné "être ici (à Cernobbio) pour dire aux partenaires de la France que la France est de retour". "Avec notre nouveau président, Emmanuel Macron, nous sommes déterminés à rendre la France plus forte", a-t-il affirmé en détaillant les diverses mesures annoncées par le gouvernement pour "améliorer" le fonctionnement du marché du travail et le système fiscal et réduire la dépense publique
Closing Market Summary: Wall Street Takes August Jobs Report in StrideEquities ended another positive week on a positive note as investors took a relatively disappointing August jobs report in stride, pushing the Nasdaq (+0.1%) to a new record high (6,435.33). The S&P 500 and the Dow climbed 0.2% apiece, ending the day in the middle of their trading ranges. Trading volume was especially light as many investors got a jump start on the extended Labor Day weekend.
The Employment Situation Report for August disappointed on nonfarm payrolls (156K actual vs 183K consensus), nonfarm private payrolls (165K actual vs 173K consensus), the unemployment rate (4.4% actual vs 4.3% consensus), and the average workweek (34.4 actual vs 34.5 consensus). However, another tepid average hourly earnings reading (+0.1% actual vs +0.2% consensus) overshadowed the less-than-stellar metrics.
Average hourly earnings have been reluctant to pick up despite a tightening of the labor market, effectively tempering inflation and, therefore, the market's rate-hike expectations. The fed funds futures market currently places the chances of an additional rate hike this year--which the Fed needs to meet its forecast of three rate hikes in 2017--at 41.4%.
Treasury yields moved solidly higher on Friday to end the week relatively flat. The 10-yr yield climbed four basis points to 2.16%, registering a weekly loss of one basis point, while the 2-yr yield jumped three basis points to 1.35%, settling the week higher by one basis point. Meanwhile, the U.S. Dollar Index (92.77, +0.18) added 0.2% to end the week higher by 0.1%.
Seven of the eleven sectors settled Friday's session in positive territory, but the underperformance of the influential health care (-0.1%) and technology (-0.2%) spaces kept the broader market's gain in check. Still, the two groups ended the week at the top of the leaderboard--in first and second place, respectively. Health care climbed 3.0% for the week while technology added 2.1%.
The energy sector (+0.8%) was the top performer on Friday, followed closely by the financials (+0.4%), consumer discretionary (+0.5%), and materials (+0.7%) groups. Within the consumer discretionary space, automakers outperformed after reporting their U.S. sales for the month of August.
Fiat Chrysler (FCAU 15.86, +0.73), Ford Motor (F 11.35, +0.32), and General Motors (GM 37.36, +0.82) showed notable strength, climbing 4.8%, 2.9%, and 2.2%, respectively. However, GM was the only one to report an increase in sales (+7.5%). FCAU and F reported respective year-over-year declines of 11.0% and 2.1%.
On the earnings front, lululemon athletica (LULU 61.68, +4.13) jumped 7.2% after beating both top and bottom line estimates and issuing above-consensus guidance. The SPDR S&P Retail ETF (XRT 39.70, +0.53) finished higher by 1.4%.
In Washington, reports indicate that the White House will not shut down the government in October in an attempt to gain funding for President Trump's promised barrier along the U.S.-Mexico border. The decision will potentially make it easier for Congress to reach a deal on a short-term budget.
Reviewing Friday's economic data, which included the Employment Situation Report for August, the August ISM Manufacturing Index, July Construction Spending, and the final reading of the University of Michigan Consumer Sentiment Index for the month of August:
- The August Employment Situation Report:
- August nonfarm payrolls hit 156,000 while the consensus expected a reading of 183,000. The prior month's reading was revised to 189,000 from 209,000. Nonfarm private payrolls added 165,000 while the consensus expected an increase of 173,000. The previous month's reading was revised to 202,000 from 205,000.
- The unemployment rate rose to 4.4% (consensus 4.3%). Average hourly earnings increased 0.1% (consensus +0.2%), while the previous month's reading was left unrevised at 0.3%. The average workweek was reported at 34.4 (consensus 34.5). The previous month's reading was left unrevised at 34.5.
- The key takeaway from the report is that wage inflation is still not picking up despite the low unemployment rate. That will keep the Goldilocks narrative in place, which has served as a perfectly-cooked bowl of porridge for a stock market that has feasted on a backdrop of modest growth and low inflation.
- The ISM Index for August rose to 58.8 from an unrevised reading of 56.3 in July while the consensus expected an uptick to 56.8.
- The key takeaway from the survey is that it connotes a manufacturing sector running with a full head of steam, although that interpretation conflicts somewhat with the drop in the manufacturing workweek reported in the Employment Situation report for August.
- The Construction Spending report for July declined 0.6% while the consensus expected an increase of 0.5%. The prior month's reading was revised to -1.4% from -1.3%.
- The key takeaway from the report is that the decline in construction spending will act as a drag on Q3 GDP forecasts.
- The final reading of the University of Michigan Consumer Sentiment Index for August declined to 96.8 (consensus 97.1) from 97.6 in the preliminary reading.
- The key takeaway from the report is that consumer sentiment remains at high levels despite the (geo)political drama as consumers reportedly have maintained a favorable assessment of their own financial situations.
The U.S. equity market will be closed on Monday in observance of Labor Day.
- Nasdaq Composite +19.6% YTD
- S&P 500 +10.6% YTD
- Dow Jones Industrial Average +11.3% YTD
- Russell 2000 +4.2% YTD
Weekly Market Update: Stocks shrug off biblical floods and North Korean hostility, helped by weaker US dollar
Stock markets moved higher this week in continued thin, late summer trading conditions. Investors once again quickly looked past the concerning escalation of hostility by the North Korean regime, and catastrophic floods in the Houston area brought about by the historic rains of Hurricane Harvey. A narrative emerged that politicians in Washington would be more likely to come together and pass legislation in order to support Texas in its hour of need, rather than bicker over raising the debt ceiling when they return to work next week. Wednesday, the President kicked off what is expected to be an all-out press to get major tax reform signed into law by the end of the year at a address in Missouri. By Friday reports circulated that Trump was going to request $5.9B in Harvey aid while also pulling back on a threat of a forced government shutdown over border wall funding. Major US indices rose back to within striking distance of all time highs, lead by the NASDAQ, while the VIX fell 10% to sit just above 10 once again. For the week the S&P rose 1.4%, the Dow added 0.8% and the NASDAQ gained 2.7%.
The US Dollar fell to fresh two-year lows, leading to a print above 1.20 in the Euro which rekindled speculation the ECB could hold back when they lay out expected plans to start moving away from QE. The economic data remained solid, headlined by a Q2 GDP print of 3% and a host of robust manufacturing PMIs, while inflation readings remained soft but within recent ranges. Friday's jobs report caused a little bit of indigestion when most components came in below expectations. The markets response though quickly indicated few were expecting the Aug data to have a material impact on the Fed’s economic outlook. Metals markets moved to fresh multi-year highs, in many cases helped by the softer Greenback and healthy growth prospects. Energy markets were pushed around by refinery/pipeline outages resulting from flooding in Texas and Louisiana. Gasoline futures rose on expected shortages in refined product coming to markets east of the Rockies, while crude prices remained heavy on the notion that a crude glut would grow as Permian and Eagle Ford shale oil would have to find storage until flows into key Gulf refineries could be reopened.
In corporate news, the week started off with the announcement that Gilead would acquire Kite Pharma for $180/shr in an $11B deal to bolster its cancer treatment portfolio. Best Buy posted a solid earnings report and raised its revenue outlook, but shares fell after it warned that the bounce in margins seen this period would moderate in coming quarters. Building material names were buoyed for the week on predicted upcoming reconstruction funds for the Texas region post-Hurricane Harvey.
MONDAY 8/28
*(EU) EURO ZONE JULY M3 MONEY SUPPLY Y/Y: 4.5% V 4.9%E
(JP) JAPAN GOVT ISSUES WARNING TO PEOPLE IN NORTHERN PART OF COUNTRY OVER POSSIBLE INCOMING MISSILE LAUNCHED FROM NORTH KOREA - Japan press
TUESDAY 8/29
(DE) GERMANY SEPT GFK CONSUMER CONFIDENCE: 10.9 V 10.8E (highest since Oct 2001)
(FR) FRANCE Q2 PRELIMINARY GDP Q/Q: 0.5% V 0.5%E; Y/Y: 1.7% V 1.8%E
BBY Reports Q2 $0.69 v $0.63e, Rev $8.94B v $8.66Be
(US) AUG CONSUMER CONFIDENCE: 122.9 V 120.7E
(KR) UN Security Council: Condemned North Korea's firing of a ballistic missile over Japan as an "outrageous" act and demanded that Pyongyang not launch any more missiles and abandon all nuclear weapons and programs
WEDNESDAY 8/30
1398.HK Reports H1 (CNY) Net 153B v 153Be, Net Interest Income 250.9B
3988.HK Reports H1 (CNY) Net 103.7B v 94.7Be, Total Op Income 248.4B v 262.6B y/y
(EU) EURO ZONE AUG BUSINESS CLIMATE INDICATOR: 1.09 V 1.05E; FINAL CONSUMER CONFIDENCE: -1.5 V -1.5E
939.HK Reports H1 (CNY) Net 138.3B v 133.4B y/y; Op Income 303.1B v 295.7B y/y
(DE) GERMANY AUG PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 1.8% V 1.8%E
(US) AUG ADP EMPLOYMENT CHANGE: +237K V +185KE
(US) Q2 PRELIMINARY GDP PRICE INDEX: 1.0% V 1.0%E; CORE PCE Q/Q: 0.9% V 0.9%E
(US) Q2 PRELIMINARY GDP ANNUALIZED (2nd reading) Q/Q: 3.0% V 2.7%E; PERSONAL CONSUMPTION: 3.3% V 3.0%E
(US) President Trump tweets: "The US has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!"
CA.FR Reports H1 adj net €154.0M v €235.0M y/y, EBIT €621M v €675Me, Net Rev €38.5B v €36.3B y/y
(US) Association of American Railroads weekly rail traffic report for week ending Aug 26th: 551.8K carloads and intermodal units, +2.3% y/y (33rd straight week of gains)
(US) Colonial Pipeline update: Main gasoline line from Gulf Coast to US northeast to shut Thursday
(CN) CHINA AUG OFFICIAL GOVT MANUFACTURING PMI: 51.7 V 51.3E (13th month of expansion)
(KR) BANK OF KOREA (BOK) LEAVES REPO RATE UNCHANGED AT 1.25%; AS EXPECTED (14th straight pause in the current easing cycle)
COST Reports Aug Total SSS (ex gas) 5.9%; US SSS (ex gas) +6.1% v +3.9%e
THURSDAY 8/31
(FR) FRANCE AUG PRELIMINARY CPI M/M: 0.5% V 0.5%E; Y/Y: 0.9% V 0.9%E
(DE) GERMANY AUG NET UNEMPLOYMENT CHANGE: -5K V -6KE ; UNEMPLOYMENT RATE: 5.7% V 5.7%E
(EU) EURO ZONE AUG ADVANCE CPI ESTIMATE Y/Y: 1.5% V 1.4%E; CPI CORE Y/Y: 1.2% V 1.2%E
(EU) EURO ZONE JULY UNEMPLOYMENT RATE: 9.1% V 9.1%E (matches lowest level from Feb 2009)
EUR/USD (EU) Euro currency strength concerns said to be a growing concern among ECB members thus raising the chance its asset purchases will be phased out only slowly - financial press citing several sources familiar with discussions
(US) JULY PERSONAL INCOME: 0.4% V 0.3%E; PERSONAL SPENDING: 0.3% V 0.4%E
(US) JULY PCE DEFLATOR M/M: 0.1% V 0.1%E; Y/Y: 1.4% V 1.4%E
(US) JULY PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.4% V 1.4%E
(US) AUG CHICAGO PURCHASING MANAGER: 58.9 V 58.5E
(US) JULY PENDING HOME SALES M/M: -0.8% V +0.3%E; Y/Y: -0.5% V +0.5%E
(US) Atlanta Fed cuts Q3 GDP to 3.3% from 3.4% on 8/25
(CN) CHINA AUG CAIXIN PMI MANUFACTURING 51.6 V 51.0E (Highest since Feb)
FRIDAY 9/1
(IN) INDIA AUG MANUFACTURING PMI: 51.2 V 47.9 PRIOR
(HK) Macau Aug Gaming Rev MOP22.7B, +20.4% y/y
(UK) AUG PMI MANUFACTURING: 56.9 V 55.0E (13th month of expansion)
(US) AUG UNEMPLOYMENT RATE: 4.4% V 4.3%E
(US) AUG AVERAGE HOURLY EARNINGS M/M: 0.1% V 0.2%E; Y/Y: 2.5% V 2.6%E; AVERAGE WEEKLY HOURS: 34.4 V 34.5E
(US) AUG CHANGE IN NONFARM PAYROLLS: +156K V +180KE
(EU) ECB said to see chance of QE plan not fully ready until Dec - financial press
GM Reports Aug US vehicle sales +7.5% y/y, at 275.6K units v 261.2Ke
Hearing unconfirmed chatter Carl Icahn has acquired a large stake in TEVA
Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- TECD -18.9%, AMBA -13.1%, COO -1.9%
Other news:
- MGNX -8.5% (MacroGenics announces termination of duvortuxizumab collaboration and license agreement with Janssen)
- PGNX -1.9% (Progenics Pharm announces study results that show treatment with AZEDRA produced clinically meaningful and durable responses across multiple study endpoints, including radiographic tumor response, tumor biomarker response, and overall survival), .
Analyst comments:
- N/A.
Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- PANW +7.7%, NTNX +6.8%, LULU +5%, AVIR +4.3%,
M&A news:
- CAAS +1.5% (receives revised going-private proposal for $5.45/share)
- ACOR +1% (adopts poison pill 'in response to the recent accumulations of significant portions of Acorda's outstanding Common Stock'), .
Other news:
- APVO +82.7% (Aptevo Therapeutics and MorphoSys end joint development and commercialization agreement for MOR209/ES414; Aptevo regains worldwide rights - preliminary phase I data show markedly lower anti-drug antibody titers; Aptevo Therapeutics also signs agreement for up to $74.5 million to sell hyperimmune commercial products; provides significant non-dilutive funding to execute R&D Strategy)
- IOVA +11.3% ( FDA has granted Fast Track designation for LN-144, the Company's adoptive cell therapy using its TIL technology, for the treatment of advanced melanoma)
- DRYS +2.9% (commencement of its previously announced rights offering )
- THC +2.8% (commences Board refreshment process, implements shareholder rights plan to protect NOLs)
- BGNE +1.6% (BeiGene to close strategic oncology collaboration with Celgene Corporation)
- NKE +1.3% (following LULU results)
- ETP +1.1% (announces FERC approval to put Phase 1A of the Rover Pipeline in service; natural gas service to begin from Cadiz to Defiance August 31)
Analyst comments:
- N/A