(BarCap) Nokia& ALcatel - 2 catalysts down, many more to come

(BarCap) Nokia& ALcatel - 2 catalysts down, many more to come

Nokia and Alcatel-Lucent are marching towards the completion of their
combination, with two key catalysts achieved: 1) the material improvement in 2Q
fundamentals as compared to 1Q, particularly in terms of profitability and 2) the
confirmed sale of Nokia’s map division HERE. A large part of our rationale for
upgrading Nokia to Overweight shortly following the announcement of its plan to
acquire Alcatel-Lucent was that while the deal may create uncertainty for investors,
the numerous catalysts to come would prove very positive for shares. With two of
these catalysts now behind us, the natural question is of course… what next? We
think there continue to be sufficient positive catalysts over the coming year to
warrant reiterating Nokia as the Top Pick within our European Technology
Hardware coverage. We look for further pre-deal cost savings at Alcatel, the sale of
its submarine cable business, a likely Samsung IPR resolution by year-end and the
increased likelihood of early deal closure to contribute to share price appreciation
even ahead of closing. Once the deal is closed, we see the potential for initial but
material cost savings to be achieved in the first year and for material shareholder
returns. The combination of these factors leaves us viewing current valuation of
16x/12x 2016/17E as significantly undervalued for a company that we expect to
drive 20% CAGR in EPS and to return at least 5% of its market cap to shareholders
per year. We reiterate our Overweight rating

>>> What to look at today - 4th of August 2015

Dow-0.52% S&P-0.39% Nasdaq-0.25% Russell-0.66% VIX 12.56 (+3.63%)
US Market traded lower, closed below its 50d MA. chinese PMI pushed mkt lower, official Manufacturing PMI hit a five-month low (50.0; expected 50.2) while the Non-Manufacturing PMI improved to 53.9 from 53.8, representing a five-month high. eurozone economies reported Manufacturing PMI readings that were mostly better than expected while economic data from the U.S. contributed to the weakness in the stock market as Construction Spending (+0.1%; consensus 0.6%) and the ISM Manufacturing Index (52.7; consensus 53.7) missed expectations. energy sector (-2.0%) spent the entire session at the bottom of the leaderboard as crude oil fell 3.9% to $45.25/bbl. technology space (-0.5%) was pressured by large cap names with the likes of Apple (AAPL 118.44, -2.86), IBM (IBM 158.71, -3.28), and Hewlett-Packard (HPQ 30.02, -0.50) falling between 1.6% and 2.4%. Volume were in line with average at 800mil shares...US After Hours PLOW +11%, TNET -26%, CGNX -22%, AIG flat following earnings/guidance...Shanghai Composite has entered its midday break at the highs up 1.3% on further steps by Beijing to slow down the selloff. Securities regulators announced a revision to the rules on short selling whereby investors borrowing shares must wait one day to pay back loans - currently investors can do so on the same day - thereby reducing single day-trading momentum activity that exacerbates volatility. Separately PBoC injected another CNY50B into the system via 7-day reverse repos, while a press report citing BoCom chief economist called for more RRR reductions to boost liquidity. Japan : Labor cash earnings posted its biggest y/y decline in 5 years of -2.4%, while ex-inflation drop was even more severe at -2.9%. Expansion of monetary base is also slowing despite BOJ officials consistently maintaining they are prepared to adjust policy in response to economic developments. BOJ Dep Gov Iwata said further JPY weakness may not materialize as rate differentials shift with tighter Fed policy, since some of that adjustment may have already been factored in. Australian dollar is sharply higher in the session, first helped by better than expected economic data and then a more hawkish set of comments from the RBA in today's statement.

Nikkei -0.26% Hang Seng -0.10% Shanghai +2.08%

Eur$ 1.0945 JPY 124.01 GBP 1.5595 EURCHF 1.0613 RUB $63.7868 WTI $45.52 (+0.77%)

S&P Unch EuroStoxx-0.14% Dax -0.10% SMI -0.06%


Macro :
- Obama Climate Plan Squeezes Coal as China Fights Pollution
- New Nuclear Power Seen as Big Winner in Obama’s Clean Power Plan
- PBoC to inject CNY50B in 7-day reverse repos (12th consecutive injection)

Keep an eye on :
- AAPL US : Apple in Talks for MVNO Service in U.S., Europe: Bus. Insider
- ABLX BB : Ablynx Starts P2 Study of ALX-0061 for Treatment of Lupus
- AGS BB : Ageas Completes EU250m Buyback, Now Holds 4.14% of Own Stock
- AMAG AV : AMAG 2Q Net Income Falls 38% as Aluminum Prices Cut Into Profit
- ATL IM : Atlantia 1H Ebitda Matches Est.; Italy Traffic +1.7% Y/y
- SPR GY : Axel Springer 2Q Sales Up 7%, Cons. Net Down 11%; Confirms Goals
- CS FP : Axa 1H Net In Line; Underlying Profit Beats; On Track vs Targets
- AZN VX : AstraZeneca Loses Bid to Block Mylan’s Generic Copy of Nexium
- BMW GY : BMW Ebit EU2.53b; FY Forecast Confirmed
- BON FP : Bonduelle Says FY Revenue Above Target, Support Profit Target
- BOSS GY : Hugo Boss 2Q Sales Beat Ests., Adj. Ebitda In Line
- ACA FP : Credit Agricole 2Q Net Income Beats; CET1 Ratio +20bps to 13.2%, Takes EU350M Litigation Provision
- DBK GY : Deutsche Bank Said to Be Probed by DOJ on Russia Mirror Trades
- OLE SM : Deoleo 1H Net Loss Narrows to EU15.5 Million
- DSM NA : DSM 2Q Sales EU1.97b, Est. EU1.96b (3 Ests.); Confirms Outlook, Revises Impact of FX, Vitamin E Prices on 2015 Ebitda
- DSV DC : DSV 2Q Net Beats Ests., Outlook Raised, Will Buy Back Own Shares
- EUZ GY : Eckert & Ziegler Bebig 1H Net Loss EU2.92m vs EU967,000 Loss
- EVK GY : Evonik 2Q Adj Ebitda in Line With Estimates; Raises 2015 Outlook
- FPE3 GY : Fuchs Petrolub 2Q Strong, Positive Shr Reaction Expected: Baader
- LHN FP : LafargeHolcim to Begin Squeeze-Out for Remaining Lafarge Shares
- MONC IM : NY Post article on PETA targets companies producing goose down --> Link : http://bit.ly/1KO9uFm
- OERL SW : Oerlikon 2Q Sales CHF781m; Est. CHF783.2m; Sticks to Outlook
- PFV GY : Pfeiffer Vacuum 2Q Sales Beat, Ebit Misses; Outlook Confirmed
- RBS LN : U.K. Said to Sell About 5,2% (600mil) of RBS at 325p to 330p a Share: Sky
- RR/ LN : Rolls-Royce Says It Held ‘Constructive’ Talks With ValueAct
- SAL IM : Salini Impregilo 1H Net EU60.3m vs EU76.5m Y/y
- SMIN LN : ValueAct Said to Buy Smiths Stake, Warming to U.K. Industrials
- SDA1V FH : Sponda 2Q Revenue Beats Estimates
- VIE FP : Veolia seeks to sell its 50% in Transdev - Les Echos
- WAC GY : Wacker Neuson 2Q Sales Rise 16%, Profit Down 15%; Confirms Goals

>>> Europe : Brokers Upgrades & Downgrades - 4th of August 2015

>>> Up
*DMG MORI SEIKI RAISED TO HOLD VS SELL AT BANKHAUS LAMPE
*NOVATEK RAISED TO HOLD AT HSBC
*SULZER RAISED TO HOLD VS REDUCE AT HSBC

>>> Down
*COCA-COLA HBC CUT TO SELL AT GOLDMAN
*FRESENIUS SE CUT TO HOLD VS BUY AT HSBC
*STROEER MEDIA CUT TO HOLD VS BUY AT BANKHAUS LAMPE

>>> PT Change


>>> Initiation


>>> Call
>> Stock
*AIR FRANCE ADDED, DAIMLER REMOVED FROM HSBC EUROPE SUPER 10
*DIC ASSET, INDUS REMOVED FROM BANKHAUS LAMPE ALPHA LIST
*EVOTEC, MLP ADDED TO BANKHAUS LAMPE ALPHA LIST

NY Post : PETA targets companies producing goose down --> MONC IM Main name in E

NY Post : PETA targets companies producing goose down --> MONC IM Main name in Europe...Stock is trading on historical highs +76% YTD...

Feathers will soon be flying.
People for the Ethical Treatment of Animals, the advocacy group that has for years publicly battled manufacturers and retailers of fur coats, is quietly taking aim at its next big target, The Post has learned: goose down.
The geese, according to PETA, suffer greatly when their feathers are plucked.
“Down is a new topic for people to wrap their heads around,” said Anne Kellogg, a PETA spokeswoman. “What we’ve found is that consumers don’t know that birds are plucked live for their feathers.”
PETA said it recently struck agreements with a major hotel company that has agreed to stop using down-filled pillows and comforters in two of its national hotel brands, and with seven furnishing companies that have consented to offer synthetic-filled pillows and furniture cushions as an alternative to down cushions.
PETA did not identify the hotel chain.
Meanwhile, the nonprofit said it reached a deal with Big Five Sporting Goods, a chain with more than 400 stores in 11 Western states, to stop carrying down products, and with Coleman, the outdoor gear maker, to stop selling down-filled products.
PETA has been in negotiations with scores of companies during the past several years over this issue, becoming a shareholder in a dozen firms.
One of those companies, Lululemon, the yoga apparel company that also sells down-filled jackets, so far has refused to reach an understanding, PETA said.
Lululemon did not immediately respond to a query for comment.

>>> Asian Update

Asian Mid-session Update: AUD rallies on improved Australia retail sales and less dovish RBA


***Economic Data***
- (AU) RBA LEAVES CASH RATE TARGET UNCHANGED AT 2.00%; AS EXPECTED
- (AU) AUSTRALIA JUNE RETAIL SALES M/M: 0.7% V 0.4%E; 4-month high
- (AU) AUSTRALIA JUNE TRADE BALANCE: -A$2.9B V -A$3.0BE; 14th straight deficit
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 112.9 V 112.5 prior
- (JP) JAPAN JUNE LABOR CASH EARNINGS Y/Y: -2.4% (biggest decline in 5 years) V +0.9%E; REAL (EX-INFLATION) EARNINGS Y/Y: -2.9% V 0.0% PRIOR
- (JP) JAPAN JULY MONETARY BASE Y/Y: 32.8% (2-year low) V 34.2% PRIOR; MONETARY BASE END OF PERIOD: ¥325.7T V ¥325T PRIOR
- (NZ) NEW ZEALAND JULY ANZ COMMODITY PRICE M/M:-11.2% V -3.1% PRIOR
- (NZ) NEW ZEALAND JULY QV HOUSE PRICES Y/Y: 10.1% V 9.3% PRIOR; Biggest increase since Nov 2007
- (KR) SOUTH KOREA JULY CPI M/M: 0.2% V 0.2%E; Y/Y: 0.7% V 0.7%E; CPI CORE Y/Y: 2.0% V 2.0% PRIOR

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.2%, S&P/ASX +0.6%, Kospi +0.4%, Shanghai Composite +0.1%, Hang Seng -0.5%, Sept S&P500 flat at 2,090

***Commodities/Fixed Income***
- Dec gold -0.7% at $1,082/oz, Sept crude oil +0.7% at $45.47/brl, Sept copper -0.2% at $2.34/lb
- (CN) PBoC to inject CNY50B in 7-day reverse repos (12th consecutive injection)
- JGB: (JP) Japan MoF sells ¥2.19T in 0.4% (0.4% prior) 10-yr notes; Avg Yield: 0.400% v 0.513% prior; bid-to-cover: 2.84x (highest since Jan) v 2.62x prior
- (KR) South Korea sells 30-yr govt bond, avg yield at 2.680%

***Market Focal Points/FX***
- Australian dollar is sharply higher in the session, first helped by better than expected economic data and then a more hawkish set of comments from the RBA in today's statement. Retail sales hit a 4-month high, while trade deficit was lower than expected thanks to multi-month highs in export value of iron ore and coal, sending AUD/USD up some 30pips to $0.73. The exchange rate added another 40pips on RBA decision, as it removed a key phrase in the statement calling for "further AUD depreciation as both likely and necessary" in place of a much more neutral "currency is adjusting to declines in commodity prices." RBA was also a bit more upbeat on employment, noting "economy is associated with somewhat stronger growth of employment and a steady rate of unemployment over the past year." S&P/ASX was off its highs on the statement but still up 0.3% at 5,700, while the yield on Aussie 10-year rose some 3bps above 2.70%

- Shanghai Composite has entered its midday break at the highs up 1.3% on further steps by Beijing to slow down the selloff. Securities regulators announced a revision to the rules on short selling whereby investors borrowing shares must wait one day to pay back loans - currently investors can do so on the same day - thereby reducing single day-trading momentum activity that exacerbates volatility. Separately PBoC injected another CNY50B into the system via 7-day reverse repos, while a press report citing BoCom chief economist called for more RRR reductions to boost liquidity.

- Japan pursuit of a virtuous cycle is knocked for a loop with a notable disappointment in today's wage inflation data. Labor cash earnings posted its biggest y/y decline in 5 years of -2.4%, while ex-inflation drop was even more severe at -2.9%. Expansion of monetary base is also slowing despite BOJ officials consistently maintaining they are prepared to adjust policy in response to economic developments. BOJ Dep Gov Iwata said further JPY weakness may not materialize as rate differentials shift with tighter Fed policy, since some of that adjustment may have already been factored in.

***Equities***
US equities / ADRs:
- IDTI: Reports Q1 $0.31 v $0.29e, R$161M v $161Me; +8.8% afterhours
- CTRP: Reports Q2 $0.15 v -$0.03e, R$408M v $408Me; +4.0% afterhours
- DPLO: Reports Q2 $0.16 v $0.12e, R$808M v $737Me; +2.7% afterhours
- CYH: Reports Q2 $1.01 v $0.91e, R$4.88B v $4.98Be; Plans to Spin off 38 Hospitals and Quorum Health Resources; +1.2% afterhours
- MCHP: Reports Q1 $0.69 v $0.71e, R$534M v $556Me; -1.9% afterhours
- CAR: Reports Q2 $0.84 v $0.68e, R$2.17B v $2.26Be; -3.0% afterhours
- ALL: Reports Q2 $0.63 v $0.94e, R$8.98B v $7.88Be; -4.9% afterhours

Notable movers by sector:
- Consumer discretionary: Car Inc 699.HK -0.7% (issue notes); Lifestyle International Holdings 1212.HK +1.9% (H1 result); Japan Tobacco Inc 2914.JP -2.9% (H1 result)
- Consumer staples: Haoxiangni Jujube Co 002582.CN -3.8% (H1 result)
- Financials: China Vanke Co 2202.HK +1.6% (July result); Guangzhou R&F Properties 2777.HK -1.3% (July result); Hang Seng Bank 11.HK -0.3% (H1 result); Dalian Wanda Commercial Properties 3699.HK -1.5% (to close stores and exit karaoke); Bank of East Asia 23.HK -2.8% (H1 result); Beijing Capital Land 2868.HK -2.5% (July result); Suncorp-Metway SUN.AU +2.0% (FY15 result); CITIC Securities 6030.HK -1.7% (suspends short selling)
- Industrials: Anhui Ankai Automobile Co 000868.CN +0.4% (H1 result); CIMC Enric Holdings 3899.HK -9.2% (H1 guidance); Jiangling Motors Corp Ltd 000550.CN -3.4% (July result); Suzuki Motor Corp7269.JP +4.6% (Q1 result); Kia Motors Corporation 000270.KR +1.9% (July car sales); Hyundai Motor Co 005380.KR -0.4% (July car sales)
- Technology: Tencent 700.HK -1.3% (going private bid for Elong)
- Materials: Jiangsu Aucksun Co 002245.CN +1.1% (H1 result); Aluminum Corporation of China Limited 2600.HK -1.1% (investment in China Rare Earth)
- Energy: Shanxi Lanhua Sci-Tech Venture Co 600123.CN +0.6% (H1 result); Shanghai Taisheng Wind Power Equipment 300129.CN +3.3% (H1 result)
- Healthcare: Guangdong Zhongsheng Pharmaceutical Co 002317.CN +4.2% (H1 result)

>>> US After Hours Summary: PLOW +11%, TNET -26%, CGNX -22%, AIG

After Hours Summary: PLOW +11%, TNET -26%, CGNX -22%, AIG flat following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings:  PLOW +10.8%, IDTI +9.1%, ININ +8.9%, TREE +8.4%, TSRA +7.4%, QEP +7.2%, FIVN +6.7%, LMNX +4.3%, DPLO +2.3%, QLYS +1.8%.

Companies trading higher in after hours in reaction to news:  MUR +0.3% (Pres/CEO disclosed purchase of 15000 shares, worth total of $485.4K (transaction date today)), ISIS +1.8% (reports positive data from its Phase 3 study of Kynamro Focus FH, showing the trial met its primary endpoint of reduction in LDL-cholesterol).

After Hours Losers:

Companies trading lower in after hours in reaction to earnings:  TNET -26.4%, CGNX -21.7%, CHGG -7.0%, DENN -5.0%, TXRH -4.3%, BMRN -2.1%, MCHP -1.3%, SYKE -0.3%, AIG -0.1%.

Companies trading lower in after hours in reaction to news: PLUG -4.2% (files for ~7.89 mln share common stock offering by selling shareholders), IART -2.5% (announces a $200 mln public offering of its common stock), CORI -2.5% (announces an offering of 4 mln shares of its common stock), EIGI -2.4% (announces transition of CFO Tivanka Ellawala to working on e-commerce strategy initiatives; appoints Marc Montagner as new CFO, to take effect next month), CPF -1.3% (announces a secondary offering of ~5.54 mln common shares by ACMO-CPF and Carlyle Financial Services Harbor shareholders).

>>> US Close Dow-0.52% S&P-0.39% Nasdaq-0.25% Russell-0.66%

Closing Market Summary: Cyclical Sectors Lead Stocks Lower

The stock market began August on a defensive note with a retreat that sent the S&P 500 below its 50-day (2,099) moving average. The benchmark index was down as much as 0.8%, but narrowed its loss to 0.3% by the close, ending ahead of the Dow Jones Industrial Average (-0.5%).

Equities hovered near their flat lines during morning action after the overnight session saw more selling in China. To that point, the Shanghai Composite lost 1.1% after the official Manufacturing PMI hit a five-month low (50.0; expected 50.2) while the Non-Manufacturing PMI improved to 53.9 from 53.8, representing a five-month high.

Meanwhile, eurozone economies reported Manufacturing PMI readings that were mostly better than expected while economic data from the U.S. contributed to the weakness in the stock market as Construction Spending (+0.1%; consensus 0.6%) and the ISM Manufacturing Index (52.7; consensus 53.7) missed expectations.

Treasuries spiked after the release of today's economic data, which sent the 10-yr yield lower by four basis points to 2.15%, representing the lowest level since the start of June. That decline in yields was a supportive factor for the utilities sector, which gained 0.6%. Similar to utilities, consumer staples (+0.3%) and telecom services (+0.2%) posted gains while the health care sector (unch) settled just above its flat line.

As for cyclical sectors, financials (unch) ended ahead of the broader market while the remaining five growth-sensitive groups finished among the laggards. The energy sector (-2.0%) spent the entire session at the bottom of the leaderboard as crude oil fell 3.9% to $45.25/bbl.

Elsewhere, the top-weighted technology space (-0.5%) was pressured by large cap names with the likes of Apple (AAPL 118.44, -2.86), IBM (IBM 158.71, -3.28), and Hewlett-Packard (HPQ 30.02, -0.50) falling between 1.6% and 2.4%. High-beta chipmakers stayed ahead of the sector, but the PHLX Semiconductor Index still lost 0.3%.

Similar to technology, the industrial sector (-0.4%) struggled as losses among large cap names like Boeing (BA 143.69, -0.48), Caterpillar (CAT 77.26, -1.37), and General Electric (GE 25.87, -0.23) overshadowed relative strength in transport stocks. The Dow Jones Transportation Average added 0.3% with all five airline components posting gains thanks to lower fuel prices.

Today's participation was in-line with recent averages as 800 million shares changed hands at the NYSE floor.

Economic data included Personal Income/Spending data, ISM Index, and Construction Spending:
  • Personal income increased 0.4% for a second consecutive month in June after revisions reduced the originally reported May (0.5%) growth rate 
    • The consensus expected an increase of 0.3% 
    • Personal spending increased 0.2% in June after a downwardly revised 0.7% (from 0.9%) increase in May while the consensus expected an increase of 0.2% 
    • Wages and salaries increased 0.2% in June following a 0.4% increase in May. That gain was in-line with the May employment data, which showed a 0.2% increase in aggregate earnings 
  • The ISM Manufacturing Index fell to 52.7 in July from 53.5 in June while the consensus expected the index an increase to 53.7 
    • The July drop occurred despite improvements in most of the regional Federal Reserve manufacturing surveys 
    • Production growth remained strong, as the related index increased to 56.0 in July from 54.0 in June 
  • Construction spending increased 0.1% in June after an upwardly revised 1.8% (from 0.8%) gain in May while the consensus expected an increase of 0.6% 
    • Private construction spending declined 0.5% in June after increasing 1.7% in May 
    • Residential construction spending held up reasonably well in June, increasing 0.4% after increasing 0.9% in May 
    • Spending on nonresidential construction projects fell 1.3% in June after increasing 2.5% in May. Considering the strong growth reported in April (+4.9%) and March (+3.3%), the pullback in June was not particularly concerning 
Tomorrow's economic data will be limited to the Factory Orders report for June, which will be released at 10:00 ET (consensus 1.8%).
  • Nasdaq Composite +8.0% YTD 
  • S&P 500 +1.9% YTD 
  • Russell 2000 +2.3% YTD 
  • Dow Jones Industrial Average -1.3% YTD

>>> Veolia seeks to sell its 50% in Transdev - Les Echos

Veolia seeks to sell its 50% in Transdev 

Veolia intends to sell its 50% stake in transportation services provider Transdev, Les Echos reported, citing CEO of France-listed vendor Antoine Frerot.

The French-language daily said the group hopes to initiate the process by the year-end.

Frerot noted that the deal is pending on the sale of Transdev's troubled maritime transportation subsidiary SNCM. The Marseille commercial court will decide on the company fate on 25 September, the newspaper said.

Government-owned investment fund Caisse des depots et Consignations (CDC), which owns the other 50% in Transdev, has been keen on becoming the sole shareholder for years, Frerot said.

Les Echos

FT : Brazilian real: lower and lower

Brazilian real: lower and lower

Twenty-three per cent and counting.

That's the amount the Brazilian real has fallen against the US dollar this year after the currency took another sharp leg down on Monday.

The real was trading 1 per cent lower at 3.45 per dollar in early afternoon trading in New York, its weakest level since March 2003.

Although the real has struggled against the dollar for a better part of the last two years, the currency has come under renewed pressure in recent weeks as the commodity rout hit financial crisis levels and a fast growing domestic political crisis threatens to derail efforts to restore order to public finances.

Pressure on the currency has intensified after Standard & Poor's last week cut its outlook on Brazil's credit rating to negative - putting the country on the precipice of losing its hard-won investment grade status.

The outlook for Latin America's largest economy has also darkened as the country's economic malaise proves longer and deeper than previously expected.

The latest central-bank survey of 100 economists published on Monday showed that Brazil's gross domestic product is expected to contract 1.8 per cent this year, compared with a contraction of 1.4 per cent forecast just four weeks ago. Growth for 2016 has also been cut to just 0.2 per cent, down from the 1.8 per cent expansion forecast at the start of the year.