TheChek News Flow

Yen Moves on Kuroda’s Old Words

An interview with Bank of Japan Gov. Kuroda that moved the yen turns out to be from mid-June.

BBC Radio 4 isn’t exactly known for moving markets. Then again, with investors on tenterhooks about central banks everywhere, why not? The British radio service, usually the domain of arty and intellectual takes on the world, broadcast a radio documentary on Thursday exploring the ideas behind extreme monetary policy, hosted by the journalist Martin Wolf.

In it, Bank of Japan Gov. Haruhiko Kuroda doused water on hopes that he was on the verge of even more extreme monetary policy. “No need and no possibility for helicopter money,” said Mr. Kuroda.

The yen, which has been weakening on expectations that the helicopter engines were starting to turn, strengthened more than 1% when the comments trickled out. The BOJ next meets July 28 and 29.

The program, which doesn’t mention when the interview took place, wasn’t meant to be a last minute bit of signaling from Mr. Kuroda before next week’s meeting. It was conducted in mid-June, according to BBC Radio 4 Producer Sandra Kanthal. What he said isn’t so different from comments he made in April to The Wall Street Journal.

Mr. Kuroda is famous for head faking markets, denying in January that he would use negative rates days before launching them. So perhaps he’s being coy about what the BOJ might do at its next meeting. But investors shouldn’t get too excited about that either.

“The basic idea of helicopter money is to combine fiscal policy with monetary policy. Again, as you know in developed countries, basically fiscal policy is decided by the government and the parliament, while monetary policy is decided and implemented by the central bank, which is independent from the government. I think this institutional setting has been made learning from the long, somewhat turbulent history of central banking and public finance in those countries. So I don’t think at this stage we should abandon this institutional setting. No need and no possibility for helicopter money.

“At this moment, the Bank of Japan has three options with quantitative and qualitative easing, with negative interest rates. Because if necessary we can expand quantity, as well as further change and expand quality and also we can further deepen into negative territory of the interest rates imposed on part of the current account deposits by commercial banks. So we have a very powerful policy framework and I don’t think there is significant limitation of further easing monetary conditions in Japan if necessary.”

ExxonMobil [NYSE: XOM] will next week meet with the shareholders of USD 2.4bn takeover target InterOil [NYSE: IOC] following the withdrawal of Oil Search’s [ASX: OSH] rival offer, a person briefed on the situation and an investor said.

Earlier Thursday Oil Search said it does not intend to submit a revised offer for InterOil, which is developing a major LNG project in Papua New Guinea. This follows notification on 18 July from InterOil that it had received a ‘Superior Proposal’ from ExxonMobil and intended to change its recommendation and enter into agreement with the US major.

The person said Exxon’s USD 45 per share scrip offer plus contingent resource payment is an improvement on the USD 40.25 p/s Oil Search scrip bid which had already been well received by InterOil shareholders. Exxon’s share offer has the added benefit for InterOil’s US retail shareholders of being from the same country and from a company with a highly liquid stock.

Retail shareholders are thought to hold around 20% in InterOil. This has dropped 5-10 percentage points since Oil Search’s offer. Hedge funds are estimated to make up around 15% of the register.

Since InterOil announced on 18 July its intention to change its recommendation in favour of Exxon’s bid about 8% of its stock has traded, the bulk being driven by merger arbitrage hedge fund buying.

Shares in InterOil are trading above the USD 45 p/s share bid factoring in the offer’s CRP component. The scheme meeting for Exxon’s offer is likely to be held in the second half of September. The person said no new material information will emerge when InterOil files its deal documents later today (Thursday).

This news service has reported that the structure of Exxon’s offer is similar to Oil Search’s and that PNG regulatory obstacles are not considered likely as the government is keen to see the companies develop their PNG hydrocarbon assets.

InterOil declined to comment. Exxon was unable to comment immediately.

BofAML

* ALSTRIA - Oaktree Capital places 10.7m shrs @ EUR 12.20/shr; JP sole.......

HOCHSCHILD - Q2 prodn of 10.2Moz silver equivalent, +28% QoQ & +67% YoY+7-10%

WEIR - Should rally on the back of Komatsu to acquire Joy Global deal.....+3%

ASHTEAD - URI (+9% aft-hrs) revised rental outlook up from -3-4% to -2-3%.+3%

BRITVIC - Sales 5% ahead of BAML, Org Sales growth of -0.7% v us -0.6%..+2-3%

DRILLISCH - Pre-release. Good KPIs, no financials, guidance confirmed...+2-3%

METSO - Strong. Orders €761m are a 2% beat. Sales €671m 1% below cons...+2-3%

TEMENOS - Q2 revenues 153.8m (vs C142) and licences 47.8m (vsC39.8).....+2-3%

UNILEVER - 2Q/1H first take reassuringly +ve. Op margin +50bps v +30bps...+2%

NORSK HYDRO - Big beat. EBIT 20% ahead of cons driven by metal division...+2%

PGS - Beat with Rev of USD183m, 5% ahead whilst EBITDA of 69m, 32% ahead..+2%

ACTELION - Positive. Sales +4%, core earnings +4.6% and EPS +10% v cons.+1-2%

HERMES - Guides that H1 EBIT margin will be 1% higher than last year....+1-2%

UNIBAIL - Shopping centre LFL income 3.8%, consistent with the prior yr.+1-2%

WERELDHAVE - Inline with direct result per share €1.77. FY guidance reit+1-2%

ABB - Positive. Strong margins 12.7% v 11.9% cons & stable China.SI 2.7%+1-2%

PUBLICIS - Q2 org growth +2.7% v +1.7% cons, driven by digital act......+1-2%

MINERS - Copper +0.45%, Iron Ore +2% with BHP OZ -0.1%, RIO OZ +1.35%.....+1%

DAIMLER - Beat as per pre-announcement, new details on cash look solid....+1%

AO WORLD - Operations on track to meet prior FY guidance. Stock been weak.+1%

CLOSE BROS - Slight beat. Book growth a couple of percent better than BAML+1%

ROCHE - Sales flat, core op profit +4% v cons and Core EPS +4% v cons.....u/c

SWATCH - Op profit CHF353, -54%, mid-point of guidance provided last week.u/c

OMV - Vols and margins inline, but refinery utilisation rate much lower...u/c

SSE - Main message all unchanged since FY results in May. EPS guide same..u/c

YARA - EPS miss. Q2 EPS 6.4 v 6.7 cons. Energy costs revised up in H2.....u/c

TELE2 - Mixed. Group revs +1.4% beat, EBITDA -2.2% miss on higher costs...u/c

HALMA - Progress inline so nothing too surprising, expect a FX tailwind...u/c

BABCOCK - Good start to the yr, trading looks inline with expectations....u/c

LAND - Divi +9.9% for the yr. Highlighting conservatively positioned BS...-1%

SWEDBANK - Loan losses and capital offset by the pre provision beat.....-1-2%

DASSAULT SY - Mixed. Q3 rev inline, 2.3% beat at EBIT. Guidance reit'd..-1-2%

SKF - Miss. Q2 org growth -4% v -3.2% cons and adj profit is 6% light...-1-2%

ICP - Looks ok but asset gathering slowing slightly. Had decent bounce..-1-2%

DAILY MAIL - Underlying Q3 rev growth for the quarter of 1% on last yr....-2%

WILLIAM HILL - CEO Henderson steps down, CFO to act as interim CEO......-2-3%

RYANAIR - Negative read over from LHA warning and EZJ disappointment....-3-4%

EASYJET - Yields -7.5% for the Qtr vs cons -5%. Expect cons to fall more..-5%

LUFTHANSA - Warning. Expect cons d/gs of c.14%. Short interest at 16%...-7-8%

CS

ABB +1% 8% op profit beat, but orders light

Actelion +2% H1 sales 2% beat, guidance raised

Air France -3-4% Negative read from Lufthansa profit warning

Akzo Nobel -1-2% CS dowwngrade to NEUTRAL (Underlying volume growth)

AO World +1% UK Business has performed well, on track with L/T strategy

Ashtead +3% Peer United Rentals +8% after-hours on good numbers

Atlas Copco +1-2% Positive read - Komatsu to acquire JOY GLOBAL for $28.3

Babcock M/P AGM trading update inline with market expectations

Britvic +1% Q3 revs £346.3m vs cons 343.8m, outlook inline

Daily Mail +1-2% Outlook for full year in line with current estimates

Daimler M/P No's inline with pre-release - Q2 revenues 1% miss

Danske Bank UNCH Q2 net 1.5% light, NII is 3% above, CET1 15.8% 50bps light

Dassault Avi M/P No's mixed, confirms 2016 guidance

Drillisch +3% Budget subscriber adds 238k

Easyjet -5-7% Revenues per seat -7.5% YOY, No guidance for FY2016

ENI -1% Positive update on arbitration against GasTerra

Galenica R To Buy Relypsa For $1.53b

Hermes +4-5% Sales in stores +8% in Q2 (CSe +6%)

Howden Join +1-2% LFL revenues +5.2% for the first 4 weeks of period

ICP M/P Trading update inline with market expectations

Land Secs -1% AGM statement cautious, business uncertainty to persist

Leonteq +2-3% Revenues inline, net a decent beat

Lufthansa -5-10% Profit warning -increasing political/economic uncertainties

LVMH +1% Said to be in talks to sell DKNY and DKI brands

Millicom -2-3% Sales $1.57b vs cons $1.58b, lowers FY capex guidance

Miners +1% Copper +0.30%, Brent +0.55%, Iron Ore +1.90%, China +0.94%

Metso +4-5% Q2 Net sales 1.5% miss, EBITA 16% beat

Norsk Hydro +3-4% CS double upgrade to OUTPERFORM and positive numbers

Prem Foods -1% Q1 group sales +1.9% but more own label than branded

Publicis +1% H1 Rev EU 4.75b est EU 4.72b

Rieter +3-4% H1 sales 2% ahead, order inrate 11% ahead, outlook inline

Roche UNCH H1 Sales CHF 25b est CHF 24.8b, confirms outlook

Sandvik +1-2% Positive read - Komatsu to acquire JOY GLOBAL for $28.3

SKF -2-3% Q2 net sales 2% miss, op profit 12% miss

South32 +1% Production numbers inline with market expectations

SSAB -1% Numbers mixed but outlook for 2016 unchanged

SSE M/P Numbers inline with market expectations

Swatch +2% H1 inline with pre-release

Swedbank -1-2% 3% beat at bottom line, CET1 at 23% looks 80bps light

Tate & Lyle +2-3% 1Q profit ahead, debt lower

Tele2 +2% Revenues and EBITDA a small beat

Technip +1% Awarded MSA for SCT&E LNG’s Monkey Island project

Temenos +3% EBIT ahead of cons, expects high-end of the 2016 guidance

Thule +1% Sales SEK1.8b vs cons 1.77b

United Utils -1% CS downgrade to NEUTRAL (No upside without M&A)

Unibail +1-2% NAV 189 vs CS at 189.83, France has performed well

Unilever +1% 2Q Underlying Sales Growth 4.7%; Est. 4.5%

Will Hill -2% CEO Henderson stepping down, CFO to be interim CEO

Yara -1-2% Adj Ebitda 3,936 vs CS at 4,033, Benefit from gas prices

Zooplus +1% Sales 221.m vs cons 213.33m

MF

*ABB-Sales 8.68b(8.82),Ebita 1.106b(1.02),Margin +100bp's............U/C 

*LUFTHANSA-Cuts f/c for FY Adj Ebit to below prior yr,H1 raised......-5% 

*ACTELION-Rev 1.18b(1.16),EPS 4.05(3.9),Uptravi FY est raised........+1.5% 

*NORSKE HYDRO-Rev 20.4b(19.9),Net Inc 1.95b(1.32),Ebit 1.62b.........+2% 

*SWATCH-Sales 3.72b(3.86),OP 353m(543),Co sees stronger H2...........+0.5% 

*KORIAN-Rev 1.47b(1.465),Confirms 2016 sales targets.................+1% 

*TEMENOS-Rev 153.8m(142.3),Ebit 38.7m(35),EPS 42c(37.5),o/l +ve......+3% 

*DASSAULT SYSTEM-Sales 754m(752),EPS 57c(565),Q3 ok,buys CST.........+0.5% 

*SWEDBANK-NI 6.27b(5.53),Net Com Inc 2.8b(2.76),NLL 538m(340)........+1% 

*DANSKE-NII 5.5b(5.3),Inc 11.54b(11.3),Net 4.26b(4.32),CET 15.8%.....-1% 

*DAIMLER-Ebit 3.97b(3.4),Rev 38.6b(38.9),Confirms guidance...........+1% 

*LEONTEQ-Op Inc 119.3m(117.5),Ebt 38.4m(31.7),Exp 80.9m(86.3)........+1% 

*RIETER-Sales 436.9m(434.4),Ebit 15.7m(19.3),FY Sales/Pft down.......+1% 

*TELE2-Sales 6.67b(6.59),Ebitda 1.09b(1.11),Keeps FY outlook.........-1% 

*PUBLICIS-Rev 4.75b(4.72),Net 381m(396),Sees no Brexit impact........+2% 

*RIETER-Orders 501.7m(457),Sales 436.9m(438),Ebit 15.7m(19.5)........+1% 

*ROCHE-Sales 25b(24.8),EPS 7.74(7.64),OP 9.85b(9.47),o/l ok..........+1% 

*ADVA OPTICAL-Rev 157.2m(150.7),Net 9.81m(4.83),Q3 Rev looks +ve.....+5% 

*KRONES-Sales 788.2m(797),Net 36m(40),Orders 780m(781),o/l ok........-2% 

*ZOOPLUS-Sales 221m(213.3),Sales driven by segment feed +35%.........+2% 

*SKF-Sales 18.4b(18.7),OP 1.88b(2.13),Q3 demand lower vs Q2..........-2% 

*MEDA-Sales 5.02b(5.06),Ebitda 1.58b(1.66),Mylan bid EU approved.....-0.5% 

*UNILEVER-Sales Grth 4.7%(4.5),Vol Grth 1.8%(2.4),Rev 26.3b(26.6)....+1% 

*YARA-Ebitda 3.96b(4.17),Net 3.07b(3.09),Ebitda 3.96b,EPS 11.23......-2%

*EASYJET-Q3 Rev 1.196b(1.22),Load Factor 92%,passengers 20.2m........-6% 

*METSO-Sales 671m(681),Order Intake 761m,Ebita 77m,mining stable.....+2%

Regional QMIs in Recovery, Value is the main Beneficiary, Take Profits in low Volatility & Momentum

pointing to the ‘recovery’ phase of the cycle. Globally and across the regions

our strongest style conviction during this phase, is to be overweight Value

stocks. In contrast, the risk/reward towards Momentum and low Volatility

stocks now appears to be diminishing and is overall unattractive based on

lofty valuations, extreme investor positioning and less negative macro signals.

* This quarterly Global Style Investing product aims to capture the views of our

regional quant teams. Our style selection framework relies on growth, inflation,

liquidity and sentiment indicators and uses both long-term trends and their 2nd

derivative to identify where are we in the business cycle? The cycle indicator is

referred to as the Quantitative Macro Index (QMI) and is the key input for style

positioning. Additionally, we examine style performance, style valuations,

style characteristics and style stock screens within this note.

* This quarter there is universal agreement across the QMI signals and the 2nd

derivative in macro data is improving. Asia Pac/ GEM is showing significant

strides in its QMI and is now bordering the expansion phase. In the USA and

Europe signals have been mixed and more muted but on balance have also

improved during the past quarter and equally recommend the recovery phase.

* In this phase, our back-tested results suggest long deep Value and more

cyclical/ higher risk styles (small Caps/ high beta). Typically, low Volatility,

Quality, Momentum and Growth act as reliable shorts. The consensus view

across the regions is to be long Value and rotate out of Momentum and low

Volatility stocks.

* Momentum and Low Volatility stocks look very, very expensive in the USA

and Europe reflecting investors' uncertainty for the economic growth backdrop,

the aftermath of the EU referendum, a sharp decline in global bond yields and

general nervousness about the high levels of stock market indices, but this now

appears to be the crowded trade. Valuation of Growth stocks appear less

stretched in the USA and Europe after a major derating in H1, in contrast

Growth stocks look expensive in Asia Pac following a healthy P/E expansion.

Universally, Value stocks appear cheap versus their own history and relative to

both Momentum and low Volatility.

* The stretched and extreme valuation spread of Momentum & low Volatility

versus Value, leads us to believe a significant rotation towards Value is highly

likely. See pages 14-17 for screens of attractive USA, European and Asia

Pac stocks by each style group and where we perceive to be greater

downside risks.

Dow+0.19% S&P +0.43% Nasdaq +1.06% Russell +0.77%

Macro :

- Citadel Said to Hire 17 Portfolio Managers From Visium: WSJ

- Brexit Unlikely to Affect EU Finances, Moody’s Says

- Brexit May Mean ‘Re-Rationalization’ of Climate Policy: Teyssen

- ECB Must Keep Buying Govt. Bonds After March 2017: BoA ML’s Moec

Keep an eye on :

- ABBN SW : ABB 2Q Operational Ebita Beats Estimates

- ABI BB : AB InBev Said to Win U.S. Antitrust Approval for SABMiller Deal

- ATLN VX : Actelion Core 2Q Net Revenue, Core EPS Beat Estimates

- AAD GY : Amadeus Fire 1H Sales Rise 1.6%; Sees 2016 Ebitda Falling

- POP SM : Banco Popular Prepares Plan for Up to 3,000 Lay-Offs: Expansion

- BETSB SS : Betsson 2Q Roughly in Line; Seen Uplift in Active Customers

- BMPS IM : Paschi NPL Sales Plan Will Be Assessed by ECB Today: Sole

- BP/ LN : BP Planning U.K. Oil Terminals, Pipeline Stake Sale: Telegraph

- CNE LN : Cairn Energy Said to Be ‘Victim’ of HSBC Currency Frontrunning

- DAI GY : Daimler 2Q Revenue in Line, Cars Margin Lower

- DAI GY : Daimler Says Acquiring Athlon Car Lease for EU1.1b

- DASNKE DC : Danske 2Q Net Misses Estimates; Outlook Maintained

- DSY FP : Dassault Systemes 2Q Non-IFRS Sales, EPS Beat Estimates

- DSY FP : Dassault Systemes to Buy CST for EU220m Cash; Sees 2H Growth

- DRI GY : Drillisch 2Q Oper. Cash Flow EU71.8m vs EU14.2m Y/y

- ELIOR FP : Elior Group to Buy U.K.’s Waterfall Catering Group

- ENEL IM : Tiscali in Deal With Enel for Broadband Network; Shares Up 11%

- ENGI FP : Engie Said to Offer Exploration Assets in Europe-to-Africa Exit

- ENI IM : GasTerra Has Commenced Arbitration Procedures Against Eni

- HSY US : Pershing Square Questions HSY’s Future Growth Re Mondelez: Call

- HIK LN : Hikma Says U.S. Regulatory Approval of Colchicine Upheld

- INTC US : Intel 3Q Rev. View Midpoint Tops Est.; 2Q Adj. EPS Beats

- KORI FP : Korian Says 1H Rev. Rises 16%, Confirms FY Sales Target

- KRN GY : Krones 2Q Sales Rise 3%, Net Down 4.5%; Confirms 2016 Outlook

- LHN VX : French Parliamentary Report Clears Lafarge of Funding IS: Figaro

- LHA GY : Lufthansa Cuts Forecast for Adj. Ebit 2016 to ‘Below Prior Yr’

- MC FP : LVMH Quashes Report Vuitton Designer Ghesquiere Could Leave Soon

- MC FP : LVMH Said to Be in Talks to Sell DKNY, DKI: New York Post

- MLNX US : Mellanox Technologies 3Q Revenue View Midpoint Misses Estimate

- UG FP : PSA’s Poissy Plant to Idle Because of Brexit, Le Figaro Says

- PSM GY : ProSieben: BlackRock Plans Addl Voting Rights Within Next 12 Mos

- PUB FP : Publicis CEO Says He’s ‘Quite Optimistic’ on Full Year, Publicis CEO Says 3Q, 4Q to Be Worst Hit by Account Losses

- RIEN SW : Rieter 1H Sales in Line With Estimates, Ebit Below

- ROG VX : Roche CEO Says Confident Co. Will Meet Full-Year Targets

- SAABA SS : Saab 2Q Operating Profit Misses Estimates; Keeps 2016 Outlook

- SBS GY : Stratec Sees Average Sales Growth of About 6% for 2016, 2017

- SLIGR NA : Sligro Sees Growth In Both Markets at Gradual Pace in 2016

- THULE SS : Thule 2Q Underlying Ebit, Net Sales Beat Ests.

- TIT IM : Niel Owns Options On Less Than 5 Percent Of Telecom Italia

- TEMN SW : Temenos 2Q Non-IFRS Rev. Rises 16%, Co. Confirms FY Outlook, Expects to Achieve High End of FY Guidance

- UL FP : Unibail-Rodamco 1H Recurring EPS on Track for Top of FY Guidance

- VOLVB SS : Volvo Cars 1H Operating Profit Triples to SEK5.59b on XC90 SUV

*ANTERO RESOURCES CORP RAISED TO OUTPERFORM AT ROBERT BAIRD

*ARM HOLDINGS RAISED TO MARKET PERFORM AT BERNSTEIN

*GRAND CITY RAISED TO BUY VS NEUTRAL AT GOLDMAN

*LEG IMMOBILIEN RAISED TO NEUTRAL VS SELL AT GOLDMAN

>> Stock

*NOKIA ADDED TO CONVICTION BUY LIST AT GOLDMAN