>>> Mediobanca : TELECOM IT: SOMETHING IS MOVING RENZI / HOLLAND

yesterday we were hearing that the road-show in New-York with CEO S. Richard had just been cancelled. The CEO and the CFO have to stay in Paris. No details given by Orange......Yesterday night, the French President François Hollande and the Italian PM, Matteo Renzi, spoke in a press conference in Venice; Mr Hollande argues the aim of possible Orange-Telecom Italia merger must be “to have champions in Europe”, adding he spoke w/ Renzi about “what we could do, allow, on the industrial front”, suggesting partnerships, alliances between Italian, French cos. already exist in defense sector and same applies to telecommunications, “if we want to have an influence on this market, if we want to have the necessary size”. Finally, he stated that deciding majority, minority stakeholder is up to companies, what’s needed is “capacity to have an influence”. Mr Renzi added “we would be happy if a hub that can value the Latin, French-Italian culture could be created, but we need to let the market doing its part”.
View/Action As suggested in our last report on TMT sector (“A challenging year, some nice surprises ahead”, Jan. 15, 2016, attached) in the long term, we see the European telecom market as a single legal entity (as the EU Commission seems to have taken a more proactive stance on consolidation, given the investments needed to sustain innovation - fiber/5G): in this scenario, there would be room for just a few players. TI, supported by VIV as a core shareholder, could play a key role in this scenario (set to involve Vodafone, Liberty, DT, Orange and Telefonica). Having said that, we would add that cross-border deals could happen once consolidation is implemented on a country-specific basis. We reiterate our Outperfom on TIT, €1.32/sh TP.


Last report from the 15/01 attached

>>> What to look at today - 9th of March 2016

Dow-0.64% S&P-1.12% Nasdaq-1.26% Russell -2.40%
US Market closed lower after exagerated rebound, oil, basic materials & financials pushed the market lower. WTI crude ended its day lower by 3.8% at $36.48/bbl, energy -4.1%, materials space (-2.0%) followed energy on the leaderboard as the sector pulled back from its 3.0% gain so far in March. Meanwhile the heavyweight financial sector (-1.7%) followed the pair in the back of the pack. IBB-3.6%. Volume were in line with average. US After Hours BUFF +13%, BETR +11.2%, ADRO +8.8%,ZAGG -10.1% following earnings/guidance, AMRN+8% on agreement on litigation. Asian equity markets are generally lower with the exception of a modest bounce in Sydney, where ASX200 is up nearly 1pct in spite of the losses in mining and energy sectors. Shanghai Composite is leading the selloff among decliners. The cloud of soft China exports figures released overnight continues to hang over the investors mindset, and interestingly, PBoC has responded with a slightly weaker fix for the first time in 5 sessions. Comments from a cabinet researcher, who said the 2016 budget deficit rise will be driven mainly by tax cuts rather than a massive fiscal stimulus, is not helping expectations of a stronger policy response from Beijing. In Japan, PM Abe reiterated the govt would not consider new stimulus or an extra budget at this point, also defusing speculation of an early Parliament election this year. Stateside, Donald Trump had a good night in the Republican primaries with victories in Michigan and Mississippi. Hillary Clinton looked more vulnerable after a narrow loss to Sanders in Michigan - a state she was expected to win easily.

Nikkei -0.84% Hang Seng -0.39% Shanghai -2.10%

Eur$1.0976 CNH 6.5176 CNY 6.5148 JPY 112.56 GBP 1.4183 CHF 0.9980 RUB 72.44 WTI $36.70

S&P +0.18% EuroStoxx+0.3% Dax+0.3% SMI

Macro :
- Asian Stocks Slide Deepens on Global Growth Concern; Won Weakens
- Citigroup Warning on Trading Revenue Drags Down U.S. Bank Shares
- Chinese Firms Are Using Hong Kong to Hide Capital Flows: Chart

Keep an eye on :
- AENA SM : Aena, Ardian in Talks to Extend Alliance, El Economista Says
- ADEN VX : Adecco Says 2015 Performance Strong, Rev Matches Est, Div Beats
- BOKA NA : Boskalis 2015 Ebitda Beats Est.; Final Div. EU1.6 as Forecast
- EN FP : Orange Will Decide to Buy Bouygues Telecom or Not Within Weeks
- CO FP : Casino 2015 Trading Profit Misses Ests., Dividend Unchanged
- ACA FP : Credit Agricole Targets FY Net Above EU4.2b in 2019
- DPW GY : Deutsche Post 4Q Profit Beats Estimate; Forecast Reiterated
- DEXB BB : Dexia Seeks EU50M Reimbursement From EU Resolution Fund: Echos
- EDF FP : EDF Expects Return of 9.2% at Hinkley Point, Les Echos Says
- EOAN GY : EON 2015 Net Loss Exceeds Estimates, Confirms Dividend
- RACE IM : Ferrari AGM to Discuss John, Lapo Elkann Appointment to Board
- ITX SM : Inditex 2015 FY Ebitda EU4.7B; Est. EU4.73B
- MMB FP : Lagardere to Cut Up to 260 Jobs W/ Voluntary Departures: Figaro
- LSE LN : ICE Said to Start Lining Up Financing for LSE Bidding War
- SREN VX : Swiss Re Said to Be in Talks to Buy Prime Reinsurance From Citi
- VOW3 GY : VW Labor Boss Says U.S. Fines Threaten Jobs: Sueddeutsche
- VOW3 GY : VW CEO Doesn’t See Group Sales Slump Amid Diesel Scandal: NZZ

>>> Europe : Brokers Upgrades & Downgrades - 9th of MArch 2016

>>> Up
*CENTRICA RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN
*CRH RAISED TO BUY VS HOLD AT JEFFERIES
*GAMESA RAISED TO ADD VS SELL AT ALPHAVALUE
*GAP AIRPORTS RAISED TO OVERWEIGHT AT JPMORGAN
*HEINEKEN RAISED TO BUY VS NEUTRAL AT GOLDMAN
*RBS RAISED TO HOLD VS SELL AT BERENBERG
*SECHE ENVIRONNEMENT RAISED TO BUY VS HOLD AT SOCGEN
*SSE RAISED TO OVERWEIGHT VS UNDERWEIGHT AT JPMORGAN

>>> Down
*BURBERRY CUT TO HOLD VS BUY AT HSBC
*CRODA CUT TO NEUTRAL, REMOVED FROM CONVICTION LIST AT GOLDMAN
*TULLOW OIL CUT TO NEUTRAL VS BUY AT UBS

>>> Reiteration

>>> Initiation
*ADLER REAL ESTATE RATED NEW HOLD AT HSBC, PT EU11.5
*ADO PROPERTIES RATED NEW BUY AT HSBC, PT EU30.5
*EDF RATED NEW UNDERPERFORM AT JEFFERIES
*GRAND CITY PROPERTIES RATED NEW BUY AT HSBC, PT EU23

>>> Call

(CS) GLOBAL EQUITY STRATEGY: The gap between the div yield and the real bond yie

GLOBAL EQUITY STRATEGY: The gap between the div yield and the real bond yield remains at extremes; the performance of div yield as a style has followed bond yields, which we struggle to see rising significantly, and has OP buybacks as a style YTD. Div are very important, providing 67-85% of long-term returns and, in Europe, 96% of capital returns to shareholders, compared with 48% in the US. The key is identifying sustainability, with 45% of div in Europe from financials and commos and with div momentum at a 4-year low. We focus on companies with high CFROI®, high cover and which yield more than 3% (Senior, easyJet, Capita, ITV) and OP-rated companies that have grown div every year for the past 10 years (Imperial, Roche, Sanofi). European div futures seem too pessimistic.

>>> US After Hours Summary: BUFF +13%, BETR +11.2%, ADRO +8.8%,ZAGG -


After Hours Summary: BUFF +13%, BETR +11.2%, ADRO +8.8%,ZAGG -10.1% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: BUFF +13%, BETR +11.2%, ADRO +8.8%, NCS +5.7%, AMED +3.3%, REGI +2.9%

Companies trading higher in after hours in reaction to news: AMRN +8.3% (reached settlement terms to resolve the Amarin First Amendment litigation), VRX +1.3% (following report that it is mulling adding new Board members, including a Pershing Square executive).

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: ORIG -16.7%, DRYS -16.1%, ZAGG -10.1%, CERS -5.6%,

Companies trading lower in after hours in reaction to news:  FREE -22.0% (received Nasdaq listing determination; intends to request hearing), STEM -20.0% (announced that it intends to offer and sell common stock, Series A Warrants and Series B Warrants, in an underwritten public offering), UUUU -10.0% (intended to file overnight marketed unit offering), PLNT -9.2% (following unconfirmed headlines Spruce Point is out cautious on the name), AZUR -5.5% (delayed Q4 earnings release and conf call; co said it could exceed the permitted ratio of debt to adj. EBITDA contained in its credit facility as early as the end of Q1 of 2016, evaluating strategic alternatives), CMG -3.7% (following report of store shutdown amid continued norovirus concerns), ARCO -2.1% (Moody's downgraded Arcos Dorados' ratings to B1 with outlook negative).

>>> Asian Update

Asian Market Update: China leads decline as cabinet officials talk down stimulus expectations


***Economic Data***
- (AU) AUSTRALIA JAN HOME LOANS M/M: -3.9% V -3.0%E; biggest decline in 8 months
- (AU) AUSTRALIA MAR WESTPAC CONSUMER CONFIDENCE INDEX: 99.1 V 101.3 PRIOR, M/M: -2.2% V +4.2% PRIOR
- (NZ) NEW ZEALAND FEB RETAIL CREDIT CARD SPENDING M/M: 0.7% v 0.3%e; TOTAL: -0.1% v 0.6% PRIOR
- (JP) JAPAN FEB M2 MONEY STOCK Y/Y: 3.1% V 3.2%E; M3 MONEY STOCK Y/Y: 2.5% V 2.6%E
- (KR) South Korea Feb Bank Lending to Households (KRW): 644T v 641T prior
- (KR) South Korea Jan "L" Money Supply m/m: 1.1% v 0.4% prior; M2 Money Supply m/m: 1.1% v 0.0% prior

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -1.2%, S&P/ASX +0.7%, Kospi -0.1%, Shanghai Composite -2.9%, Hang Seng -0.6%, Mar S&P500 flat at 1,982

***Commodities/Fixed Income***
- Apr gold -0.6% at $1,255/oz, Apr crude oil flat at $36.51/brl, May copper -0.6% at $2.21/lb
- (US) Weekly API Oil Inventories: Crude: +4.4M v +9.9M prior; 3rd straight week of build
- GLD: SPDR Gold Trust ETF daily holdings fall 2.4 tonnes to 790.7 tonnes
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5106 V 6.5041 PRIOR; first weaker setting in 5 sessions
- (CN) PBOC to inject CNY15B in 7-day reverse repos
- (JP) BOJ offers to buy ¥450B in 5-10yr JGBs, ¥260B in 10-25yr JGBs and ¥180B in JGBs with maturity over 25-yr
- (AU) Australia MoF (AOFM) sells A$700M in 4.25% Bonds; avg yield: 2.53%; bid-to-cover: 2.81x

***Market Focal Points/FX***
- Asian equity markets are generally lower with the exception of a modest bounce in Sydney, where ASX200 is up nearly 1pct in spite of the losses in mining and energy sectors. Shanghai Composite is leading the selloff among decliners. In FX, USD majors were generally less volatile - USD/JPY traded in a 40pip range below 112.80, AUD/USD was down 20pips at the lows around 0.7410, and NZD/USD was down over 30pips below 0.6720 - 2nd straight day of declines going into tomorrow's RBNZ and the possibility of a more dovish central bank stance.

- The cloud of soft China exports figures released overnight continues to hang over the investors mindset, and interestingly, PBoC has responded with a slightly weaker fix for the first time in 5 sessions. Economists have digested some of the trade data, and there was little evidence of any silver lining. ANZ chief economist remarked that disappointing exports reflect weaker global trade while also discounting Lunar New Year seasonality, stating "exports fell deeper than expected in January and February combined, suggesting that Chinas external profile has worsened." Comments from a cabinet researcher, who said the 2016 budget deficit rise will be driven mainly by tax cuts rather than a massive fiscal stimulus, is not helping expectations of a stronger policy response from Beijing.

- Elsewhere in Asia, tensions on the Korean peninsula remain high. KCNA reported that Kim Jong Un has claimed the North has developed a miniaturized nuclear warhead, prompting talks between US State Sec Kerry and his China counterpart. South Korea Finance ministry's monthly report expressed ongoing concern related to low oil prices, Fed tightening, and China slowdown ahead of this week's BOK decision. Korea's rise in household loans was also said to be "above average", just as the BIS warned that Korea's household debt to GDP ratio has been the highest among emerging economies for 13 consecutive years. In Japan, PM Abe reiterated the govt would not consider new stimulus or an extra budget at this point, also defusing speculation of an early Parliament election this year.

- Stateside, Donald Trump had a good night in the Republican primaries with victories in Michigan and Mississippi. Hillary Clinton looked more vulnerable after a narrow loss to Sanders in Michigan - a state she was expected to win easily.

***Equities***
US equities / ADRs:
- BUFF: Reports Q4 $0.16 adj v $0.14e, R$265M v $259Me; +13.4% afterhours
- AVAV: Reports Q3 $0.27 v $0.05e, R$67.6M v $72.1Me; +6.6% afterhours
- PLNT: Spruce Point Capital's Axler discusses PLNT as a short idea - Harbor conf comments; -8.9% afterhours
- ZAGG: Reports Q4 $0.18 v $0.24e, R$78.6M v $82.2Me; -14.4% afterhours

- NTES: To Join the NASDAQ-100 Index Beginning March 16, 2016, replacing SNDK

Notable movers by sector:
- Industrials: CITIC Limited 267.HK -5.1% (impairment); Takata Corp.7312.JP -4.6% (said to consider restructuring)
- Technology: Shanghai Great Wisdom Co 601519.CN -5.0% (terminates restructuring plan)
- Materials: Rusal 486.HK -6.8% (Q4 result); Fortescue Metals Group FMG.AU -3.1% (response to ASX letter)

>>> US CloseDow-0.64% S&P-1.12% Nasdaq-1.26% Russell -2.40%


Closing Market Summary: Indices Pullback as Oil Falters

The S&P 500 snapped a five-day win streak on Tuesday as the U.S. market reacted to rekindled growth concerns out of China. Meanwhile, a tumble in oil prices, consolidation after the recent leg higher in the major averages, and the underperformance of the heavyweight financial sector (-1.7%) also contributed to today's decline. The Nasdaq Composite (-1.3%) settled behind both the S&P 500 (-1.1%) and the Dow Jones Industrial Average (-0.6%).

Equity indices started their day beneath their flat lines as a weaker-than-expected reading of China's February trade data weighed on the market. The report showed that exports fell 25.4% (consensus -12.5%; last -11.2%) while imports declined 13.8% (expected -10.0%; previous -18.8%). The headline figure showed that the country's trade surplus came in at $32.59 billion (expected $50.15 billion) against the previous month's reading of $63.29 billion.

Stocks climbed off their lows for the bulk of the trading day, but the rally in equities lost steam shortly after the Nasdaq 100 flashed a brief gain. After crude oil's pit session ended, the averages tumbled back towards their lows, reaching their lowest point in the last half hour of trade.

The energy sector (-4.1%) rounded out the leaderboard as a plunge in crude oil weighed on the sector. WTI crude ended its day lower by 3.8% at $36.48/bbl. Meanwhile, the broader energy sector trimmed its March advance to 5.3% as independent oil and gas names demonstrated relative weakness. To that point, Anadarko Petroleum (APC 41.14, -3.96) plummeted 8.8%, but still remains up 5.1% in the month of March.

The materials space (-2.0%) followed energy on the leaderboard as the sector pulled back from its 3.0% gain so far in March. Meanwhile the heavyweight financial sector (-1.7%) followed the pair in the back of the pack.

In the economically-sensitive financial sector, money center banks demonstrated relative weakness while Goldman Sachs (GS 151.60, -3.75) was the second worst performer in the Dow Jones. Life insurance companies underperformed today as MetLife (MET 41.78, -1.07) and Prudential (PRU 70.32, -1.81) fell 2.5% apiece. The two names have climbed a respective 4.5% and 4.6% in March, compared to the 3.8% advance in the broader sector.

The heavily-weighted technology (-0.8%) and consumer discretionary (-0.8%) spaces outperformed throughout today's session as large cap names continued to garner buying interest. Facebook (FB 105.93, +0.20) and Alphabet (GOOGL 713.53, +0.73) managed to recover from early weakness while Nike (NKE 59.81, +0.56) rebounded from yesterday's 3.3% decline.

Biotechnology weighed on the health care sector (-1.3%) as the iShares Nasdaq Biotechnology ETF (IBB 260.13, -9.63) surrendered 3.6%. The sub-group continues to show relative weakness with the ETF surrendering 21.5% since the beginning of 2016 while the broader sector has declined 7.1%.

Utilities (+0.8%), consumer staples (+0.3%), and telecom services (UNCH) were the only three sectors able to end the day in positive territory, as the groups benefited from an early and sustained safe haven bid.

The U.S. Dollar Index (97.19, +0.12) ended its day in positive territory as the euro returned its gain against the greenback while the yen trimmed its advance. The euro/dollar pair slipped 0.1% (1.1007) after falling from a session high of 1.1056. Meanwhile, the dollar/yen pair fell 0.7% to 112.64 after trading as low as 112.44.

The Treasury complex climbed higher to begin the session, but backed away from its high. The yield on the 10-yr note ended lower by eight basis points at 1.82%.

Today's participation was true to the recent average as more than 1.08 billion shares changed hands at the New York Stock Exchange floor.

There was no economic data of note released today.

Tomorrow's economic data will include the weekly MBA Mortgage Index and the January Wholesale Inventories Report (consensus -0.2%), which will cross the wires at 7:00 ET and 10:00 ET, respectively. 

  • Nasdaq -7.2% YTD
  • Russell 2000 -6.0% YTD
  • S&P 500 -3.2% YTD
  • Dow Jones -2.7% YTD

>>> US Gapping Up

Gapping up
In reaction to strong earnings/guidance: REN +25%, XNCR +14.5%, AMID+13.8%, URBN +8.8%, EGLT +7.4%, BNED +6.7%, PLX +6.5%, OMER +5.2%,THO +3.9%, ATRS +3.7%, SOL +3.4%, NEFF +3.3%, TEDU +3.2%, NEWT+1.9%, PLOW +1.8%, PCTI +0.9%, NX +0.6%, .

M&A news: SUNE +33.2% (Vivint Solar terminates merger agreement with SunEdison (SUNE)), VSLR +1%, TERP +15.3% (Vivint Solar terminates merger agreement with SunEdison (SUNE)), EYEG +7.9% (to acquire Jade Therapeutics; EYEG will pay Jade's liabilities and issued 765,728 shares of EYEG shares),

Other news: LEU +19.7% (announces it has signed new sales contracts in the last nine months; contracts have an aggregate value of ~$165 mln w/ deliveries through 2022+), SA +4% (updates independent mineral resource estimate for the Deep Kerr Deposit at its 100%-owned KSM Project in northwestern British Columbia), SCTY +3.8% (to work with Whole Foods Market (WFM) to install solar power systems on locations across the United States), RACE +3.1% (still checking), IMMU +1.1% (announces new patent concerning methods of use of the Company's proprietary anti-histone antibody), MTDR +0.9% (upsizes and prices 7.5 mln shares of common stock at for proceeds of ~$142.4 mln (upsized from 5 mln shares prior))

Analyst comments: PNRA +0.9% (upgraded to Overweight from Equal-Weight at Morgan Stanley)