FT Fast : Ocado jumps 16% on Amazon tie-up report

Ocado jumps 16% on Amazon tie-up report

Ocado shares have jumped by 16 per cent this morning after the Daily Mail’s market report cited “rumours in the City yesterday” that “Amazon may be about to deliver a tie-up with Ocado.”

For some time, Ocado has been looking into striking a deal with another international grocer to allow it to expand abroad and escape its dependence on the UK middle classes. But yesterday, shares in fact fell by more than 4 per cent. There has been no statement by Ocado to the Takeover Panel, and none is thought to be imminent.

A spokesperson for the UK grocery company declined to comment.

The shares have dropped more than 56 per cent since they hit an all-time high in 2014.

(EXane) Deutsche Telekom - Special Sit

Why revisiting the Deutsche Telekom case now ?
Because the 01/29/16 completion of its swap of a 50% stake in EE for an about
€7.5Bn block of BT Group shares could be just the start :
- DT will become BT’s largest shareholder with a 12% stake
- BT deal could prove to be the first of a number of boundary effects in 2016
In a nutshell
 The acquisition of BT shares will further expand the proportion of DT’s sum-ofthe-
parts that has an independent market value
the listing of Scout24 and the acquisition of the Stroeer stake are also helpful in
this respect
 DT is directly and indirectly facing 2 significant events :
- the Q2 US airwave auction ,whose outcome will theoretically reopen the
M&A window for T-Mobile US
- the Ofcom investigation into BT Openreach which has significant
implications for competition in the UK and the potential for closer
integration of DT and BT
 Speculation around a DT stake increase or bid for BT would probably increase if :
- DT monetised some or all of its T-Mobile US stake
- any steady commercial and financial outperformance of BT Group

>>> America's Cash Flow Negative Energy Companies Have $325 Billion In Debt Amon

America's Cash Flow Negative Energy Companies Have $325 Billion In Debt Among Them
{http://www.zerohedge.com/news/2016-01-18/these-are-cash-flow-negative-energy-companies-us-total-debt-325-billion}

With the topic of distress among U.S. oil and gas exploration and production companies becoming more important with every passing day that oil not only continues to drop, but certainly fails to rebound to levels that allow US energy companies to return to a cash flow positive state, we would like to show just how much debt is at stake.
To do that, drawing inspiration from a tweet by J Pierpont Morgan, we have conducted a quick CapIQ sort through all US energy companies - both public and private - that have at least $100 million in annual revenue, and whose EBITDA less CapEx was a negative number in the LTM period.
To be sure, this gives listed companies the benefit of not only higher EBITDA in the early quarters when the drop of oil was not as severe, but also of oil price hedges. As such as the true negative cash flow going forward assuming no rebound in the price of oil for the foreseeable future will be far worse as the benefit of the base effect dissipates with every passing quarter and as oil price hedges, which have so far cushioned the oil price blow, are unwound.
Here are the results:
  • There are roughly 80 U.S. companies that had $100mm in LTM revenue and that had negative FCF or EBITDA less CapEx.
  • The combined market cap of these 80 companies is just shy of half a trillion dollars.
  • The combined Total Enterprise Value of these 80 companies is $775 billion.
  • The combined debt of these 80 companies is $325 billion.
None of these companies are bankrupt, yet. As a reminder, putting as many of these companies out of business, and thus slashing non-OPEC oil production (as OPEC forecasted in its latest bulletin earlier today), is the primary motive behind Saudi Arabia's relentless pumping spree.

There is just one problem with the Saudi plan: even assuming all of these companies file Chapter 11, all that would happen is their debt would be wiped out, with the existing creditors getting the equity keys, and becoming the new owners of streamlined, debt-free corporations. This would means that the All In Cost Of Production would plunge as no debt payments would have to be satisfied with the free cash flow. Meanwhile, the entire existing E&P infrastructure would still be in place and ready to pump as before.
This means that after the default and debt-for-equity deluge, US shale would be able to pump even more at far lower breakeven costs, forcing Saudi Arabia to overproduce for even longer ultimately shooting itself in the foot when its reserves run out!
Of course, none of this is any comfort for those who have exposure to the pre-petition debt, which may explain why various regional Feds are suddenly so very defensive when it comes to US banks and other lenders who are on the hook when the default tsunami finally hits.

>>> The Fed Responds To Zero Hedge: Here Are Some Follow Up Questions

The Fed Responds To Zero Hedge: Here Are Some Follow Up Questions


Over the weekend, we gave the Dallas Fed a chance to respond to a Zero Hedge story corroborated by at least two independent sources, in which we reported that Federal Reserve members had met with bank lenders with distressed loan exposure to the US oil and gas sector and, after parsing through the complete bank books, had advised banks to i) not urge creditor counterparties into default, ii) urge asset sales instead, and iii) ultimately suspend mark to market in various instances.
Moments ago the Dallas Fed, whose president since September 2015 is Robert Steven Kaplan, a former Goldman Sachs career banker who after 22 years at the bank rose to the rank of vice chairman of its investment bank group - an odd background for a regional Fed president - took the time away from its holiday schedule to respond to Zero Hedge.
This is what it said.
We thank the Dallas Fad for their prompt attention to this important matter. After all, as one of our sources commented, "If revolvers are not being marked anymore, then it's basically early days of subprime when mbs payback schedules started to fall behind." Surely there is nothing that can grab the public's attention more than a rerun of the mortgage crisis, especially if confirmed by the highest institution.
As such we understand the Dallas Fed's desire to avoid a public reaction and preserve semantic neutrality by refuting "such guidance."
That said, we fully stand by our story, and now that we have engaged the Dallas Fed we would like to ask several very important follow up questions, to probe deeper into a matter that is of significant public interest as well as to clear up any potential confusion as to just what "guidance" the Fed is referring to.
  • Has the Dallas Fed, or any other members and individuals of the Federal Reserve System, met with U.S. bank and other lender management teams in recent weeks/months and if so what was the purpose of such meetings?
  • Has the Dallas Fed, or any other members and individuals of the Federal Reserve System, requested that banks and other lenders present their internal energy loan books and loan marks for Fed inspection in recent weeks/months?
  • Has the Dallas Fed, or any other members and individuals of the Federal Reserve System, discussed options facing financial lenders, and other creditors, who have distressed credit exposure including but not limited to:
    • avoiding defaults on distressed debtor counterparties?
    • encouraging asset sales for distressed debtor counterparties?
    • advising banks to avoid the proper marking of loan exposure to market?
    • advising banks to mark loan exposure to a model framework, one created either by the creditors themselves or one presented by members of the Federal Reserve network?
    • avoiding the presentation of public filings with loan exposure marked to market values of counterparty debt?
  • Was the Dallas Fed, or any other members and individuals of the Federal Reserve System, consulted before the January 15, 2016 Citigroup Q4 earnings call during which the bank refused to disclose to the public the full extent of its reserves related to its oil and gas loan exposure, as quoted from CFO John Gerspach:


    "while we are taking what we believe to be the appropriate reserves for that, I'm just not prepared to give you a specific number right now as far as the amount of reserves that we have on that particular book of business. That's just not something that we've traditionally done in the past."
  • Furthermore, if the Dallas Fed, or any other members and individuals of the Federal Reserve system, were not consulted when Citigroup made the decision to withhold such relevant information on potential energy loan losses, does the Federal Reserve System believe that Citigroup is in compliance with its public disclosure requirements by withholding such information from its shareholders and the public?
  • If the Dallas Fed does not issue "such" guidance to banks, then what precisely guidance does the Dallas Fed issue to banks?
Since the Fed is an entity tasked with serving the public, and since it took the opportunity to reply in broad terms to our previous article, we are confident that Mr. Kaplan and his subordinates will promptly address these follow up concerns.
Finally, in light of this official refutation by the Dallas Fed, we are confident that disclosing the Fed's internal meeting schedules is something the Fed will not object to, and we hereby request that Mr. Kaplan disclose all of his personal meetings with members of the U.S. and international financial system since coming to office, bo

>>> What to look at today - 19th of January 2016



From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: Jan 19 2016 08:02:20
Subject: >>> What to look at today - 19th of January 2016
US Market Closed for Martin Luther King Day.
Asian indices are in rally mode and US futures portend an upbeat return for markets from a long weekend. China economic data points whiffed across the board, boosting speculation of expanded PBoC easing in time for the extended Lunar New Year holiday early next month. Q4 GDP came in at 1.6% V 1.8%E q/q and 6.8% V 6.9%E y/y. For 2015, GDP slowed to a 25-year low of 6.9%, even though services component rose to 50.5% v 48.2% in 2014 and consumption marked 66.4% of total economy vs 51.2%. Fixed asset investment slowed to a new multi-year low, with property investment growth slowing to v +1.3% prior and new construction falling y/y by -14.0%. Industrial Output growth slowed below 6% after last month's bounce, with power generation component back in the red at -3.7% v +0.1% prior. The initial reaction to China data was pronounced risk-off, but expectations of more easing in the pipeline have trumped the fears of a deeper slowdown. China Stats Bureau head said China will step up reform on supply side even with the economy in "reasonable" range, also warning that some industrial companies would slow further in 2016. BOJ Gov Kuroda reiterated the central bank will do whatever it takes to achieve price target and that there were no issues with JGB liquidity. Econ Min Amari also reiterated cabinet position that the economy is solid and the volatility in Japan equities was due to external factors.

Nikkei +0.55% Hang Seng +1.42% Shanghai +3.12%

Eur$ 1.0872 CNH 6.6017 CNY 6.5793 JPY 117.87 GBP 1.4281 CHF 1.0076 RUB$ 78.90 WTI $29.53 (+0.37%)

S&P +0.97% EuroStoxx+1.47% Dax +1.55% SMI +1.19%

Macro :
- China’s Economy Grows 6.8% in 4Q Y/y; Est. 6.9%
- China GDP Misses Forecast for First Time Since Early 2013
- ECB’s Villeroy Says European Recovery on Track, Stimulus Working
- Merkel Said to Meet With Car Execs on E-Mobility: Handelsblatt
- Oil Price Rebound Seen After 2H; 7 Cos. Raised, 6 Cut: Canaccord

Keep an eye on :
- ABBN SW : ABB could initiate sale of Power Grids later in the year - Dagens
- ABG SM : Abengoa Bondholders to Provide at Least EU60M: El Economista
- AC FP : Starwood Capital, Fosun Said to Weigh Ascendas Hospitality Bids
- ADEN VX : Adecco has liquidity for large buys; share buy back possible if targets not found (Wtach Hays & MPI)
- AF FP : French Shared Plane Services Outlawed in Current Form, DGAC Says
- BLT LN : BHP May Cut Fiscal 2017 Capex View to $5b From $7b: Deutsche
- BMPS IM : Paschi CEO Confirms Bank’s Financial Stability After Shares Drop
- BMPS IM : Paschi, UniCredit Say ECB to Review Their Bad Loans
- BP IM : Banco Pop., Carige Say ECB to Conduct Analysis on NPLs Strategy
- ACA FP : Credit Agricole Said to Eye Capital Boost by Selling Bank Stakes
- ACA FP : Credit Agricole Restructuring Would Embed EPS Dilution Risk: KBW
- HEN3 GY : Henkel Still Plans Major Acquisitions, Bagel-Trah Tells Paper
- INW IM : Inwit admits two bidders to due diligence - Carlo Festa Blog
- EGL PL : CMVM Announces Temporary Ban on Mota-Engil Short Selling
- OCDO LN : Amazon could bid for company
- UG FP : Opel’s Zafira Exceeded Emission Limits in French Tests: Echos
- RNO FP : Opel’s Zafira Exceeded Emission Limits in French Tests: Echos
- RNO FP : To recall 15,000 Cars - Reuters
- RSA LN : Allianz and AXA rumoured to be eyeing RSA - Daily Mail
- RIO LN : Rio Tinto 4Q Iron Ore 100%-Basis Output 87.2mt; Est. 91mt, Sees Up to 24% Boost to Mined Copper Output in 2016
- SOW GY : Software 4Q Operating Earnings 92.2m Euros Vs 88.4m Euros Y/Y
- UCG IM : Paschi, UniCredit Say ECB to Review Their Bad Loans
- UQA AV : Uniqa Sees Significantly Lower 2016 Result on Spending, Outlook
- VOW3 GY : Ex-FBI Head Freeh to Assist Volkswagen: Suedddeutsche Zeitung
- VOW3 GY : VW to Adhere to Selling Diesel Cars in U.S.: RedaktionsNetzwerks

(Exane) Casino Upgrade to Neutral - Rally Still Underperform

Hands Thai’d: the Big C-ell off begins

Casino: increasingly pressured, break-up valuation increasingly relevant…
Casino's leverage is elevated, profits pressured, its IG credit-rating ‘on watch’. With c.20% equityto-
EV the situation is precarious. Yet, Casino owns strategic assets. The more profits and the
equity are pressured, the closer to crystallising a break-up we shift. With EUR56/s of ‘break-up’
SOTP and EUR46/s for ‘shrinking back to France’, value signals are emerging.

Shifting from U/P to Neutral…but plenty of risk remains. EUR39 TP (from EUR48)
There remains plenty of risk - the ‘mark-to-market SOTP’ is EUR22, CDS >500bp and EM assets
aren’t in-vogue. Yet, the more the capital markets pressure Casino, the more likely assets are sold.
Capturing readily saleable disposals - the Asian assets - we derive a EUR39 TP and upgrade our
rating to Neutral. TP and EPS cuts relate to removing French property gains and swap liabilities.

Big C disposal – just the beginning?
Selling Big C, your best asset, rarely makes sense long-term but in raising cEUR3bn it would
reduce Casino’s leverage c.1 turn. A 16% eps dilution and increased profit volatility are negatives
but leverage is what most impairs Casino’s equity. However, with leverage still 3x debt/EBITDA,
and earnings visibility very low, the announced disposal plans may not fix the balance-sheet.

Time to consider global retreat?
Casino could ‘tough it out’, but the Brazilian economy faces near and mid-term challenges.
Unwinding complex holding structures and finding buyers for electronics businesses may be
problematic. However leading grocery market positions in Brazil and Colombia have strategic value
– a LATAM exit can’t be ruled out, with Walmart the obvious buyer. Based on our attributed breakup
values, this would significantly deleverage Casino.

Rallye – reiterate U/P, EUR9 TP (from EUR20)
With more flexible funding Rallye could wear a Casino dividend cut and hang-on in expectation of
LATAM rebound. However, even in a Casino break-up, Rallye’s debt looks elevated, reiterate U/P.

>>> Ocado : Amazon rumoured to have engaged advisers for Ocado bid - report



From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: Jan 19 2016 08:38:46
Subject: >>> Amazon rumoured to have engaged advisers for Ocado bid - report
Amazon rumoured to have engaged advisers for Ocado bid 

Amazon (Nasdaq:AMZN), the Seattle, Washington-headquartered internet retailer, is rumoured to have mandated advisers to work on a takeover approach to the UK-based grocery-delivery company Ocado (LON:OCDO), The Daily Mail reported. An unidentified market source was quoted describing Ocado as a “perfect fit” for Amazon.

Amazon is keen to provide a full UK-wide grocery-delivery offering and acquiring Ocado at its current share price would be less expensive than trying to expand its own limited-range Pantry delivery service, the report noted. Ocado’s shares ended the day’s trading at 242.5p on 18 January, giving the business a market capitalisation of GBP 1.5bn (USD 2.1bn).

Neither Amazon nor Ocado wished to make any comment, the item reported.

Daily Mail