■ We prefer Tod's Group over Ferragamo. Ferragamo has outperformed Tod's Group by >60% in the last three years largely due to 40% lower consensus earnings cuts. With both stocks now trading at similar multiples despite being at different stages in the margin and earnings cycle, we raise our rating on Tod's Group to Outperform (from Underperform) and reiterate our Neutral rating on Ferragamo. We lift both targe
Continental Europe: stick to this being our joint top overweight.
We raise our year-end Euro Stoxx 50 target to 3,450 from 3,300 (and midyear target to 3,500 from 3,350). What is supportive?
* There has been significant capitulation.
* GDP growth of 2% should be consistent with c.15% outperformance.
* The stage of the cycle: Europe outperforms 70% of the time the bund yield rises and also outperforms when the global cycle turns up.
* Valuation: Europe’s 12-month forward P/E is on a 19% discount to the US, and a 17% discount on normalised earnings. The equity risk premium is still high, at 7.4%.
* Profits: earnings momentum in absolute and relative terms is at a 5-year high. We upgrade EPS growth to 8.5% for 2017 (from c.6%). Nearly half of consensus EPS growth is from financials and energy (where we have net upgrades in both). Rising inflation helps margins. Above all, the profit share of GDP remains close to trough levels.
* The ECB is likely to remain dovish until at least the aftermath of the French elections
US MArket Closed lower after Trump executive order on refugee program. The Federal Reserve will release its latest policy statement on Wednesday, which, combined with Friday's release of the January Employment Situation report (consensus 170K), could build a case for a rate hike at the subsequent FOMC meeting. In addition, a full slate of quarterly reports awaits with Apple (AAPL 121.63, -0.32) scheduled to release its results after Tuesday's closing bell. Nine of eleven spaces finished the day in negative territory. Countercyclical sectors populated the upper half of Monday's leaderboard, with consumer staples (+0.1%) eking out a slim gain. The consumer discretionary sector (-0.1%) was the best performer on the cyclical side, finishing just a tick from its flat line. Walt Disney (DIS 110.94, +1.64) underpinned the sector's performance, adding 1.5%, after the company's stock was upgraded to 'Overweight' from 'Equal-Weight' at Morgan Stanley. energy sector occupied the bottom spot on the leaderboard, finishing 1.8% lower after pressure on multiple fronts. US After Hours SANM +10%, WERN +8%, DHT +3% higher following earnings, Shippers extending higher... IDTI and RMBS both 4% lower following earnings/guidance, TEVA -11% after unfavorable patent ruling. JPY and Gold remain bid while Asian equities and US futures are under pressure. Obama-appointed Acting Attorney General Sally Yates has instructed DoJ attorneys not to defend the EO - one which has already been criticized by lawmakers of both parties, foreign leaders, tech and financials (Goldman) CEOs, and State Sec nominee Tillerson. In response, Pres Trump has fired Yates, proclaiming her to be "weak on borders and very weak on illegal immigration". Knee-jerk market response to the firing was to the downside, as the contentious stance could further polarize the anti-Trump protests and complicate the confirmation process for AG-nominee Sessions.
Today's Bank of Japan policy decision was accompanied by continued resilience of economic data, as jobless rate remained at a low 3.1%, household spending decline was lower than expected, and industrial output m/m beat consensus. As speculated BOJ raised its GDP target for FY16, FY17, and FY18 to 1.4%, 1.5%, and 1.1% respectively, while maintaining inflation expectations.
Nikkei -1.69% Hang Seng CSI Shanghai Closed
Eur$ 1.0690 CNH 6.8547 CNY 6.8840 JPY 113.66 GBP 1.2491 CHF 0.9960 RUB 60.04 WTI$ 52.47 -0.30%
S&P -0.24% EuroStoxx +0.18% FTSE +0.10% Dax +0.05% SMI -0.10%
Macro :
- ETF Buyers Return to Precious Metals as Trump Turmoil Sows Angst
Keep an eye on :
- AF FP : Air France’s KLM Transported 30m Passengers in 2016: Echos
- ALFA SS : Alfa Laval 4Q Net Sales Beats Highest Est.
- ATK LN :
- BT/A LN : Orange Said Planning to Hold On to BT Stake Until Shares Rebound
- COMH SS : Com Hem 4Q Underlying Ebitda Beats Ests.; Dividend SEK4.00
- DBK GY : Deutsche Bank Said Near Settlement on Russia Probes: Reuters
- DBK GY : FCA Fines Deutsche Bank GB163m Over Money Laundering Failures
- DGE LN : Diageo Said to Unveil Its Own Irish Whiskey in War With Jameson
- DNA FH : DNA 4Q Rev. Beats Ests.; Sees FY Sales at 2016 Level
- DRX LN : Drax Catalysts Lack Clarity, Cut to Equalweight: Barclays
- EDF FP : EDF Signs Turbine Supply Deals for >3GW of U.S. Wind Projects
- EDF FP : EDF Halts French Belleville-1 Reactor Until Wednesday: RTE
- GFK GY : GfK 2016 Profit. Sales Retreat, Impacted by Growth Projects
- GIVN VX : Givaudan 2016 Ebitda 1.13B, Sales 4.7B; Confirms 2020 Goals
- ITP FP : Interparfums Says 2017 Sales May Reach EU385m-EU390m
- KPN NA : Royal KPN Files 12 Lawsuits After Patent Licensing Talks Fail
- LHA GY : Lufthansa CEO Spohr Wants to Lower Ticket Prices Slightly: WAZ
- MDLZ US : Mondelez Holder Pershing Square Boosts Stake to 6.4%
- NOVN VX : Novartis: Votubia Approved in EU for Seizures in Patients W/ TSC
- REC BB : Recticel Says Clean-Up Ongoing at Czech Plant Damaged by Fire
- CFR VX : Four Richemont Brand CEOs Said to Depart as Overhaul Widens
- RYA LN : Ryanair CEO Says Free Airfare Is an Objective: Handelsblatt
- SBRY LN :
- SDRL NO : Seadrill Restructure Talks Continuing; Targets Deal by April 30
- SFR FP : Drahi Wants to Buy Remaining 51% in NextRadioTV, Echos Says
- SYNN VX : Syngenta CEO ‘Very Optimistic’ on ChemChina Deal Closing: T-A
- TEVA IT : Teva Patents on Copaxone Drug Invalidated by U.S. Judge --> -10% in after hours
- TKA AV : Telekom Austria FY Edbitda EU1.35b, Est. EU1.34b
- TESSB BB : Tessenderlo Names Azzarello CEO of U.S. Fertilizer Business TKI
- TLG GY : TLG Immobilien Placing at EU17.20/Shr, is 3.5% Discount to Close
- UCG IM : UniCredit 2016 Profit Update Disappointing, Goldman Says
- VOD LN : Vodafone-Idea May Face India Regulatory Hurdles, Goldman Says
- VOLVB SS : Volvo’s Europe Heavy-Trucks Market Share Increased in 2016: DI
- VOW3 GY : VW To Pay Departing Compliance Chief EU13 Million: Handelsblatt
>>> Up
*Leroy Raised to Buy at ABG Sundal, PT NOK495
*RTL Raised to Buy at BofAML, PT EU87
*Tod's Raised to Outperform at Credit Suisse
*Valeo Raised to Buy at HSBC, PT EU65
>>> Down
*Air France Cut to Neutral at Citi
*Barclays Cut to Hold at Bankhaus Lampe
*Drax Cut to Equal-Weight at Barclays
*IG Group Cut to Underperform at RBC, PT 510p
*Nokian Renkaat Cut to Reduce at HSBC, PT EU32
*Randgold Cut to Neutral at Credit Suisse
*Telia Cut to Add at AlphaValue
>>> PT Change
>>> Initiation
*Enagas Rated New Underweight at Barclays, PT EU21.90
*ICADE Rated New Buy at Deutsche Bank, PT EU75
*Red Electrica Rated New Underweight at Barclays, PT EU16.60
*Terna Rated New Overweight at Barclays, PT EU4.90
>>> Call
>> Stock|
*OHB ADDED TO ALPHA LIST AT BANKHAUS LAMPE
*ZALANDO ADDED TO ALPHA LIST AT BANKHAUS LAMPE
>> Index
*EURO STOXX 50 MID-YEAR TARGET UPPED TO 3,500 FROM 3,350 AT CREDIT SUISSE
*EURO STOXX 50 YEAR-END TARGET UPPED TO 3,450 FROM 3,300 AT CREDIT SUISSE
After Hours Summary: SANM +10%, WERN +8%, DHT +3% higher following earnings, Shippers extending higher... IDTI and RMBS both 4% lower following earnings/guidance, TEVA -11% after unfavorable patent rulingAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: SANM +9.7%, WERN +7.6%, AEIS +6.5%, DHT +3%, PKG +2.4%, GGG +0.8%
Companies trading higher in after hours in reaction to news: , GTE +6.6% (to make a normal course issuer bid to purchase for cancellation up to ~5% of its issued and outstanding shares of common stock), MNTA +6% (Capaxone patent ruling)
Shipping names are seeing continued momentum: DRYS +36.2% (continued strength after disclosing additional info regarding Kalani stock purchase agreement), TOPS +13.3%, DCIX +9.2%, ESEA +6%, DHT +3%After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: IDTI -4.3%, RMBS -4.2%, FBR -2.4%, CNXC -2.1%, TMHC -1.5% (also commences 10 mln common stock offering)
Companies trading lower in after hours in reaction to news: RRTS -12.7% (to restate prior financial statements; call is scheduled for Jan 31 at 8:30am ET to discuss the matters), TEVA -10.8% (unfavorable Capaxone patent ruling), PULM -5.7% (continued weakness), SMLP -4.8% (Summit Midstream Partners LP announces secondary public offering of 4 mln common units by selling shareholder Summit Midstream Partners Holdings), GBX -4.6% (commences $175 mln debt offering of Senior Convertible Notes due 2024), RIGL -3.8% (intends to offer & sell shares of its common stock in an underwritten public offering), FHB -1.3% (First Hawaiian majority stockholder intends to offer 25 mln shares of the common stock in an underwritten public offering)
Asia Mid-Session Market Update: Political showdown over Trump's immigration curbs keeping markets on edge; BOJ on hold, raises GDP forecasts and inflation outlook
***US Session Highlights***
- (US) DEC PCE DEFLATOR M/M: 0.2% V 0.2%E; Y/Y: 1.6% V 1.7%E
- (US) DEC PERSONAL INCOME: 0.3% V 0.4%E; PERSONAL SPENDING: 0.5% V 0.5%E
- (US) DEC PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.7% V 1.7%E
- (US) JAN DALLAS FED MANUFACTURING ACTIVITY: 22.1 V 15.0E; new orders, capex and employment rise m/m
- (US) Atlanta Fed forecasts initial Q1 GDP growth at 2.3% v Friday's advanced government figure of 1.9%
- VIX and Gold pop as investors look to offload risk
***US markets on close: Dow -0.6%, S&P500 -0.6%, Nasdaq -0.8%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Basic Materials
- Biggest gainers: AMG +4.8%, ADS +2.6%, WHR +2.4%, DG +2.4%, LM +2.3%
- Biggest losers: VAR -12.5%, RIG -7.1%, CHK -6.7%, RRC -6.6%, DO -6.5%
- At the close: VIX 11.9 (+1.3pts); Treasuries: 2-yr 1.20% (-1bps), 10-yr 2.48% (flat), 30-yr 3.08% (-1bps)
***US movers afterhours***
- SANM: Reports Q1 $0.75 v $0.66e, R$1.72B v $1.68Be; Guides Q2 $0.67-0.72 v $0.64e, R$1.68-1.73B v $1.66Be; +10.9% afterhours
- AEIS: Reports Q4 $1.06 v $0.81e, R$135.3M v $129Me- Guides Q1 $0.90-1.00 v $0.77e, R$141-151M v $125Me; Op margins 29-31%; +6.7% afterhours
- WERN: Reports Q4 $0.30 v $0.26e, R$518.8M v $509Me; Guides initial FY17 net CAPEX expenditures "$225-275M" vs $430M y/y; +5.8% afterhours
- IDTI: Reports Q3 $0.35 v $0.34e, R$176M v $178Me; Guides Q4 R$175M +/-$5M v $180Me; -4.4% afterhours
- GBX: Files to sell $125M 2024 convertible unsecured notes; -4.6% afterhours
- RMBS: Reports Q4 $0.16 v $0.16e, R$97.6M v $93.8Me; -5.4% afterhours
- TEVA: Confirms District Court Decision in COPAXONE® 40 mg/mL Patent Trial; to appeal court decision; -8.9% afterhours
- RRTS: Restates prior 2014-2016 period financial statements; -14.7% afterhours
***Asia Key economic data:***
- (JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%, AS EXPECTED; RAISES OUTLOOK FOR PRICES
- (JP) JAPAN DEC OVERALL HOUSEHOLD SPENDING Y/Y: -0.3% V -0.9%E
- (JP) JAPAN DEC JOBLESS RATE: 3.1% V 3.1%E; Job to applicant: 1.43 v 1.42e
- (JP) JAPAN DEC PRELIMINARY INDUSTRIAL PRODUCTION M/M: 0.5% V 0.3%E; Y/Y: 3.0% V 3.0%E
- (JP) JAPAN DEC VEHICLE PRODUCTION Y/Y: 4.2% V 6.6% PRIOR
- (AU) AUSTRALIA DEC PRIVATE SECTOR CREDIT M/M: 0.7% V 0.5%E; Y/Y: 5.6% V 5.4%E
- (AU) AUSTRALIA DEC NAB BUSINESS CONFIDENCE: 6 V 6 PRIOR; CONDITIONS: 11 (6-month high) V 6 PRIOR
***Asia Session Notable Observations, Speakers and Press***
- Tremors from US president Trump's broad-sweeping executive order on immigration curbs from 7 Middle East countries continue to be felt in the markets, as safe-haven JPY and Gold remain bid while Asian equities and US futures are under pressure. Obama-appointed Acting Attorney General Sally Yates has instructed DoJ attorneys not to defend the EO - one which has already been criticized by lawmakers of both parties, foreign leaders, tech and financials (Goldman) CEOs, and State Sec nominee Tillerson. In response, Pres Trump has fired Yates, proclaiming her to be "weak on borders and very weak on illegal immigration". Knee-jerk market response to the firing was to the downside, as the contentious stance could further polarize the anti-Trump protests and complicate the confirmation process for AG-nominee Sessions.
- Today's Bank of Japan policy decision was accompanied by continued resilience of economic data, as jobless rate remained at a low 3.1%, household spending decline was lower than expected, and industrial output m/m beat consensus. As speculated BOJ raised its GDP target for FY16, FY17, and FY18 to 1.4%, 1.5%, and 1.1% respectively, while maintaining inflation expectations. In the accompanying statement, BOJ also maintained its policy of interest rates at -0.1% and JGB purchases at ¥80T, but also extended its low-rate lending facility for financials and growth industries by a year. Finally, BOJ's Quarterly statement was notably more upbeat on inflation expectations, raising Outlook for prices to "increase from 0 to become slightly positive" vs prior "Y/Y CPI likely to be slightly negative or about 0%" thanks to diminished effect of low energy price.
- Australia's reporting season for output by mining and energy names was highlighted by Fortescue - company saw sequential rise in iron ore output and also affirmed FY17 shipments. CEO also noted improved demand in China steel sector, sending shares up by over 2%.
China
- (CN) S&P: China overseas buyers will face tougher regulatory and political hurdles this year
Japan:
- (JP) Japan Fin Min Aso: Critical to reach mutual agreement with US on FX; Expects economic recovery driven by domestic demand
- (JP) Barclays: BOJ likely to maintain its bond-buying duration when it unveils its Feb plans at 17:00JST - press
Australia/New Zealand
- (NZ) New Zealand RBNZ Gov Wheeler expected to make an announcement on his future "fairly soon" - financial press
***Asian Equity Indices/Futures (23:30ET)***
- Nikkei -1.6%, Hang Seng closed, Shanghai Composite closed, ASX200 -0.6%, Kospi -0.4%
- Equity Futures: S&P500 -0.3%; Nasdaq -0.3%; Dax -0.4%; FTSE100 -0.4%
***FX ranges/Commodities/Fixed Income (23:30ET)***
- EUR 1.0690-1.0710; JPY 113.25-113.85; AUD 0.7550-0.7570; NZD 0.7270-0.7300
- Apr Gold +0.6% at $1,204/oz; Mar Crude Oil -0.4% at $52.40/brl; Mar Copper -0.3% at $2.66/lb
- (KR) South Korea sells KRW1.1T 3-month bonds, avg yield 1.37%
***Asia equities / Notables / movers by sector***
- Consumer discretionary: NVT.AU Navitas Ltd -6.1% (H1 result); 6923.JP Stanley Electric Co +6.1% (9-month result); 9831.JP Yamada Denki -2.4% (9-month result speculation); 9022.JP Central Japan Railway Co -2.8% (9-month result)
- Industrials: 4005.JP Sumitomo Chemical +4.5% (9-month result); 000270.KR Kia Motors Corporation -3.3% (US sales speculation); 7261.JP Mazda Motor Corp -3.5% (FY16/17 result speculation); 7270.JP Fuji Heavy Industries Ltd -3.3% (Jefferies cuts rating); 6305.JP Hitachi Construction Machinery -4.5% (9-month result); 9064.JP Yamato Holdings Co -5.4% (9-month result); 4005.JP Sumitomo Chemical Co +4.3% (9-month result)
- Technology: 6758.JP Sony Corp -2.1% (share sales); 6502.JP Toshiba Corporation -2.7% (speculated to cut stake in Westinghouse); 6701.JP NEC Corp -16.1% (9-month result)
- Materials: ERA.AU Energy Resources of Australia -4.9% (prelim FY16 result); FMG.AU Fortescue Metals Group +2.7% (Q2 result); ILU.AU Iluka Resources -2.4% (Q4 result)
- Energy: TAP.AU Tap Oil -1.1% (Q1 result); 5020.JP JX Holdings -2.0% (earnings speculation); ORG.AU Origin Energy -2.1% (Q2 result)
- Healthcare: 2413.JP M3 Inc -4.9% (Sony sells stake); VRT.AU Virtus Health -17.7% (H1 result)
- Utilities: 9505.JP Hokuriku Electric Power -10.5% (9-month result)
Closing Market Summary: Stock Market Opens the Week LowerInvestors decided to err on the side of caution to open a week full of earnings reports and influential economic data. The S&P 500 finished the day lower by 0.6%, while the Nasdaq (-0.8%) closed just a tick below the benchmark index.
Equity indices faced broad-based selling pressure from the start of Monday's session, with many fingers pointing to President Trump's executive order, which suspended the U.S. refugee program and temporarily restricted nationals of seven countries--Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen--from entering the United States, as the driver of the bearish tone.
It is a defensible position, as that order has engendered some concerns about protectionism taking root and has detracted from the market's preferred policy focus of corporate tax reform, but the market will face a full event calendar this week, so some caution is warranted.
The Federal Reserve will release its latest policy statement on Wednesday, which, combined with Friday's release of the January Employment Situation report (consensus 170K), could build a case for a rate hike at the subsequent FOMC meeting. In addition, a full slate of quarterly reports awaits with Apple (AAPL 121.63, -0.32) scheduled to release its results after Tuesday's closing bell.
Today's risk-off tone was most apparent in the stock market while Treasuries finished the day little changed with the benchmark 10-yr yield remaining at 2.48%. The U.S. Dollar Index finished just below its flat line with a loss of 0.1%, masking the dollar's 1.2% decline against the Japanese yen (113.73). It is worth noting the Bank of Japan will release its latest policy statement overnight.
Nine of eleven spaces finished the day in negative territory. Countercyclical sectors populated the upper half of Monday's leaderboard, with consumer staples (+0.1%) eking out a slim gain. The consumer discretionary sector (-0.1%) was the best performer on the cyclical side, finishing just a tick from its flat line. Walt Disney (DIS 110.94, +1.64) underpinned the sector's performance, adding 1.5%, after the company's stock was upgraded to 'Overweight' from 'Equal-Weight' at Morgan Stanley.
The energy sector occupied the bottom spot on the leaderboard, finishing 1.8% lower after pressure on multiple fronts. On the earnings side, Enterprise Products' (EPD 28.45, -0.64) mixed earnings report was met with a downbeat response, pushing the company's stock lower by 2.2%. Crude oil also hurt the energy space, closing its trading day 1.1% lower at $52.62/bbl.
The top-weighted technology sector (-0.8%) finished a tick lower than the benchmark index with top components like Alphabet (GOOGL 823.83, -21.20), Microsoft (MSFT 65.13, -0.65), and Facebook (FB 130.98, -1.20) falling between 0.9% and 2.5%.
Today's economic data included December Personal Income/Spending and December Pending Home Sales:
- December personal income rose 0.3% while the consensus expected an increase of 0.4%. Meanwhile, December personal spending increased 0.5% while the consensus expected a reading of 0.4%. The November Personal Spending reading was left unrevised at 0.2% while November Personal Income was revised to 0.1% from 0.0%. Core PCE prices for December rose 0.1% ( consensus 0.2%), while the November reading was left unrevised at 0.0%.
- With spending rising faster than income, the drop in the personal savings rate suggests consumers were spending out of savings -- something that wouldn't typically be done unless it was out of necessity or consumers were feeling better about their income prospects.
- Pending Home Sales for December rose 1.6% while the consensus expected an increase of 1.3%. Today's reading follows a 2.5% downtick in November.
Tomorrow's economic data will include the fourth quarter Employment Cost Index consensus 0.6%) at 8:30 am ET, the November S&P Case Schiller Home Price Index (consensus 5.0%) at 9:00 am ET, January Chicago PMI (consensus 55.0) at 9:45 am ET, and January Consumer Confidence (consensus 112.5) at 10:00 am ET.
- Russell 2000 -0.3% YTD
- Dow Jones Industrial Average +1.1% YTD
- S&P 500 1.9% YTD
- Nasdaq Composite 4.3% YTD
NextRadioTV 51% stake selling to SFR
30 JAN 2017
NextRadioTV and SFR have announced that they have submitted an application to the Conseil Supérieur de l’Audiovisuel (CSA) for approval to enter into a new phase of their strategic partnership. At the end of that phase, it is SFR's intention to take over exclusive control of NextRadioTV. The plans have also already been submitted for approval to the Autorité de la concurrence (ADLC).
The implementation of this phase is the logical follow up to the partnership entered into in July 2015 and it reflects the changing national and international environment of the telecommunications and media industry.
The first phase has been successful, as it has enabled NextRadioTV to launch three new channels in just a few months: BFM Sport, BFM Paris and SFR Sport1, all of which are proving to be very successful.
Integrating NextRadioTV into the SFR Group, which is controlled by Altice, a dynamic and innovative international group, and a leader in telecoms and content, will encourage the launch of new projects and strengthen the capacity of existing channels.
Within SFR Group, Alain Weill will manage the scope of activities currently within NextRadioTV and SFR Presse. In addition, he will manage all the media activities of Altice Group.
Alain Weill, CEO of NextRadioTV, says: "The implementation over the last eighteen months of the first phase of our partnership with SFR has made me realize how much this merger makes sense. It enables us to meet the challenges that the media industry is facing today. Our common desire will become reality once the authorities have approved the integration of NextRadioTV into SFR."
Michel Combes, CEO of SFR says: "By investing more in channel production, SFR wants to assert its leadership in the fields of news, sports and documentaries. We will also be launching major series and film projects over the coming months."
SFR acquired a 49% stake in NextRadioTV in April 2016 at an enterprise value of EUR 741m, according to an earlier announcement. The piece said that SFR was advised by BNP Paribas, Rothschild & Cie and Ricol Lasteyrie then.