TheChek News Flow

MADRID, Dec 17 (Reuters) - Spanish builder and service company ACS ACS.MC is planning to sell public cleaning and waste disposal unit Urbaser which is worth around 2.5 billion euros ($2.7 billion) including debt, the Expansion financial newspaper reported on Thursday, citing sources.

ACS declined to comment on the report.

The sale is being handled by BBVA and Societe Generale and the proceeds will go toward reducing the builder's debt, the newspaper said.

ACS's net debt stood at 3.9 billion euros at the end of September.

Asian investment and sovereign funds have expressed interest, Expansion said.

ACS shares were up 1.7 percent at 27 euros per share in early trade while Spain's benchmark IBEX 35 index .IBEX was up 1.5 percent.

hiked rates by 25 bp. It was a “dovish hike”: the statement, the forecasts and the press

conference underscored a gradual pace of hikes ahead. However, as we also anticipated,

it wasn’t dovish enough to “dovetail” with rate market expectations of only two hikes

next year. The dot plot continued to show that the Fed expects to hike by 100bp next

year, which is much slower than history but still well above market expectations (Chart

1). At the same time, the statement’s more optimistic tone was welcomed by the equity

market.

It is hard to hike and “hug” the bond market at the same time. The FOMC statement is

directed not only to financial markets but to the American public. The Fed needed to be

clear why—after so many years—it is finally hiking. Moreover, we think the Fed would

not be hiking unless it expects more to come. If Fed’s message is too dovish, it could

raise doubts about why they are hiking in the first place.

In our view, there were three key messages in the statement. First and foremost, the

Committee is confident about achieving both sides of their dual mandate. Specifically,

“the Committee judges that there has been considerable improvement in labor market

conditions this year, and it is reasonably confident that inflation will rise, over the

medium term, to its 2 percent objective.” Second, they recognized “the time it takes for

policy actions to affect future economic outcomes.” This explains why they are hiking

before inflation has actually picked-up. Third, they presented a unified front. Among the

voters, three members had expressed reservations about hiking today, but none of the

three dissented. Presumably few non-voting hawks did not support the move, but even

they conceded some ground by lowering their forecasts for rate hikes next year.

Yellen mind control

The press conference not only gives the Chair a chance to flesh out the statement in

more detail, it gives the press a chance to question the decision. This can create an

interesting dichotomy where the prepared comments lean in one direction while the

answers to questions lean in the other direction. In September, Yellen wasn’t able to

focus attention on the FOMC’s decision as a tactical delay, as many of the questions

were about “why didn’t you go” and “what has changed in terms of your priorities.” In

defending why the Fed didn’t hike, Yellen ended up sounding very dovish. Now that the

Fed finally has hiked, the questions today were variations on “why did you go now”?

Yellen thus ended up sounding somewhat more hawkish than her main message of a

very patient Fed that intends to raise rates gradually and only as the economic outlook

supports further moves.

• The Fed hiked but the statement was about as cautious as they could make it. Only gradual increases good enough for equities.

• The dot plot points to 4 hikes in 2016 and 17. Fixed income markets say less. For equities the key is that growth continues.

• European equity markets have bounced off Monday's lows and we think they are good value going into 2016.

We said in our note on Monday that it was more important for equity markets what

Yellen said than what she did. A rate hike was baked in. For equity markets the concern

was all about the pace of tightening. By tweaking the language in the statement the Fed

told us they were going to be careful and they particularly highlighted the “shortfall of

inflation from 2%”. They said “economic conditions will evolve in a manner that will

warrant only gradual increases in the federal funds rate”.

Fed expectations of future rate hikes were little changed, with the “dot plot” showing 4

hikes in both 2016 and 2017. The fixed income markets think the Fed will tighten less,

with two hikes priced for each year instead. Our economists are somewhere in between.

Fixed income markets did sell off modestly on the move, with 2 year yields up around

3.5bp at the time of writing. That is pretty modest in the context of this being the first

Fed hike in almost a decade.

For equity markets gradual tightening by the Fed is ok providing growth continues. So if

the Fed is right and growth continues to be reasonably solid then that is normally not a

problem for equity markets. Indeed, they tend to continue to perform well in the initial

stages of Fed tightening. It only becomes a problem for equities if it looks like the

tightening is starting to threaten growth.

In our note on Monday we said European markets were getting oversold and we would

be buyers on further weakness. Post a further sharp sell-off on Monday, which seemed

to be triggered by concerns about the US high yield market, European equities bounced

strongly. Whilst there are concerns about US high yield and low oil prices, we think the

former is idiosyncratic rather than systemic and the latter eventually good news as it

supports growth. As such we believe the recent pullback leaves European equities

attractively valued going into 2016. They continue to offer attractive yield in comparison

with other asset classes, the ECB is expected to keep monetary policy easy throughout

2016 and European growth should continue to improve. That is not a bad combination

for the asset class.

*AMADEUS RAISED TO OVERWEIGHT AT MORGAN STANLEY

*ASOS RAISED TO BUY VS HOLD AT PEEL HUNT

*BWIN.PARTY UPGRADED TO BUY FROM HOLD AT GOODBODY

*DOMINO’S PIZZA RAISED TO BUY VS HOLD AT BERENBERG

*GFK RAISED TO BUY VS HOLD AT BANKHAUS LAMPE

*HELLA RAISED TO BUY, GKN REINSTATED AT BUY AT GOLDMAN (Note attached)

*ISRAEL CHEMICALS RAISED TO NEUTRAL VS SELL AT GOLDMAN

*MAN GROUP RAISED TO OUTPERFORM AT MACQUARIE

*UBS RAISED TO HOLD VS SELL AT BANKHAUS LAMPE

*SWISS RE RAISED TO BUY VS HOLD AT JEFFERIES

*WACKER CHEMIE RAISED TO EQUALWEIGHT AT MORGAN STANLEY

*X5 RETAIL RAISED TO BUY VS HOLD AT HSBC

>>> Down

*ARCADIS CUT TO HOLD VS BUY AT ING; PT REDUCED TO EU21 VS EU28

*COLOPLAST CUT TO NEUTRAL VS BUY AT BOFA

*ERG CUT TO NEUTRAL VS BUY AT CITI

*ETALON CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE

*H&M CUT TO SELL VS HOLD AT SOCGEN

*KUMBA IRON ORE CUT TO SELL VS NEUTRAL AT GOLDMAN

*LSR CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE

*MMK CUT TO SELL VS BUY AT GOLDMAN

*PETS AT HOME CUT TO HOLD VS BUY AT BERENBERG

*RWE CUT TO UNDERPERFORM AT RBC CAPITAL

*SEVERSTAL CUT TO SELL VS NEUTRAL AT GOLDMAN (YESTERDAY)

>>> PT Change

>>> Initiation

*AL NOOR HOSPITALS RATED HOLD AT HSBC; WAS RESTRICTED

*CAPITA REINSTATED BUY AT DEUTSCHE BANK, PT 1270P

*CAPITAL STAGE AG RATED NEW REDUCE AT ODDO

*GVC RATED NEW BUY AT GOODBODY

*GYM GROUP RATED NEW OVERWEIGHT AT BARCLAYS, PT 237P

*HALDEX RATED NEW BUY AT NORDEA

*MCCARTHY & STONE RATED NEW NEUTRAL AT GOLDMAN; PT 272P

*SMA SOLAR TECHNOLOGY RATED NEW NEUTRAL AT ODDO

>>> Call

>> Stock

*MARKS & SPENCER EXITS HSBC EUROPE SUPER 10 PORTFOLIO

*METRO ADDED TO HSBC EUROPE SUPER 10 PORTFOLIO

Dow+1.28% S&P+1.50% Nasdaq+1.52% Russell+1.51% VIX 17.86 (-14.75%)

Nikkei +1.59% Hang Seng +0.41% Shanghai +1.56%

Eur$ 1.0862 CNY 6.4819 JPY 122.31 GBP 1.4958 CHF 0.9953 RUB$ 70.67 WTI $35.46(-0.17%)

S&P -0.25% EuroStoxx

Macro :

- Billionaire Sam Zell Says Recession Likely in Next 12 Months

- Fed Rate Hike Should Not Derail Global Stock Markets: Barclays

- Yellen Voices Economic Optimism as Fed Begins Gradual Tightening

- Hong Kong Raises Base Rate After Fed, Sees Potential Outflow

- Bond Traders to Fed: Your Rate Forecasts Are Still Too Ambitious

- U.K. Loses $24 Billion a Year to Tax Fraud, Watchdog Says

- UAE Central Bank raises Certificate of Deposit (CDS) Rate by 25bps (in line with Fed move due to currency peg)

Keep an eye on :

- ABG SM : Abengoa Banks Offer EU120m, Require Plants Sale: Confidencial

- ABG SM : Spain Regulator to Investigate Abengoa Accounts: Confidencial

- ACS SM : ACS Hires Soc Gen and BBVA to Find Buyer for Urbaser: Expansion

- AIR FP : Carlyle, KKR Said on Short List for Airbus Defense Ops: Reuters http://reut.rs/1MhfTX6

- AF FP : Air France-KLM CEO Is Considering a Referendum, Le Figaro Says

- CS FP : AXA Boosts Qrf Holding; BNP Paribas Investment, Capfi Cut Stakes

- ENX FP : Euronext Halts Own Shares Pending Ruling on Capital Requirements

- GAM SM : Gamesa Wins Contract in India to Build 100-Mw Facility for Tata

- GLPG NA : Galapagos, Gilead in Partnership to Develop Filgotinib for RA

- GBF GY : Triton to Bid for Bilfinger Water Business, FAZ Reports

- KER FP : Kering to Pay EU1.50/Shr Interim Div. on Jan. 25

- SAP GY : ORCL Numbers +3% on guidance after hours

- SKISB SS: Skistar 1Q Pretax Loss Narrows as Sales Increase

- STAN LN : StanChart, DBS to Partner on Ledger Technology for Trade Finance

- TIT IM : Brazil’s Oi Said to Make Merger Offer for Tim as Soon as January

- FP FP : Total in Talks with Yemen Govt as Contract Deadline Looms: Union

- UBSN VX : UBS Sees 4Q Costs of CHF272m for Repurchase of Some Debt, Bond