(GS) GOAL : Europe Equities Upgraded to Overweight

2H outlook: Riskier recovery; near-term relief but risks remain

* Remain pro-risk as tail risks are easing
Following a very risk-friendly 1Q15, the second quarter was characterised by large drawdowns in risky assets and high volatility in equities, rates and credit. With an improving global growth outlook, improved prospects for the approval of the Greek bailout deal, and better China data, we remain pro-risk in our asset allocation. We upgrade our 3-month European equities view to Overweight, in line with our 12-month view. Valuations and fundamentals look more attractive with tail risks fading, at least near-term.

* Elevated volatility and less stable bond/equity correlation
Cross-asset volatility has been higher with the bond sell-off in May and risks from Greece and China. While Greek risks are fading, some Euro area political risks remain. And we expect rate volatility to remain elevated. This
is likely to result in a less stable equity/bond yield correlation. As a result, bonds are unlikely to be good risk-off hedges. We like shorts in US rates and long the US dollar against both the euro and yen as hedges for rate
shocks. Implied equity volatility has declined materially – we like puts on MSCI EM (in US$), for which implied volatility is comparably low.

* Four key macro drivers in 2H
(1) Europe, balancing better growth against political risks; (2) US growth recovery driving the first Fed rate hike; (3) commodity prices declining further; and (4) China macro and market volatility and broad EM pressures.

FT : Markets, data and official hints point to a rate rise

Markets, data and official hints point to a rate rise

Falling gold and rising wages strengthen the case for tightening soon

More than Greece, more even than the Shanghai stock market, the US interest rate cycle obsesses financial markets. The dollar retains a worldwide pre-eminence, both as a yardstick of value and the medium through which much of global finance is delivered. No part of the world economy can be indifferent to US monetary conditions.
Ever since US rates hit rock-bottom in 2008, there has been speculation about the return to normality. Now the evidence is beginning to accumulate — from markets, economic data and official hints — that the next few months could finally see a bend in the curve.

One augury can be found in the price of gold, which on Monday plumbed a five-year low of $1,088. As a monetary mechanism, bullion no longer matters as it did when central banks needed vaults full of it as their means of settlement. But gold still says much about sentiment. Its ascent to $1,900 per ounce tracked the collapse of investor confidence in the wake of banking and sovereign debt crises. Gold remained expensive for as long as the authorities appeared unable to restart growth. Now, whether it be inflation, financial contagion or economic weakness, investors are no longer as nervous, and consequently see less value in buying tonnes of an inert yellow metal.
Gold’s recent skittishness may partly stem from its own idiosyncrasies: the release of figures breaking down Chinese reserves came in unexpectedly low, for example. But other signs of confidence are unmistakable. In 2012, a protracted stand-off between Greece and the rest of the eurozone led to carnage in European bond markets. This time around, their response has been to shrug. There is a similarly sanguine reaction beyond China to its stock market gyrations. Even as the Shanghai Composite lost 30 per cent in value, the S&P 500 flirted with all-time highs, and a measure of market volatility reached its lowest point in two and a half years.
Economic reasons for delaying a rise are melting away. One is the persistence of low inflation. Central banks have been at pains to emphasise the difference between good deflation, which stems from a positive supply shock, and the bad kind, brought about by weak spending. The past year has been all about the first sort, as plummeting oil and other commodity prices have granted developed economies a helpful boost to their incomes. However much headline inflation is dragged down, such effects ought not to linger for more than a year or so.
Recent experience helps to dispel another reason for delay, which is the risk of low inflation feeding through into weaker wages. Faster growing economies are instead seeing pay rises returning to normal levels. As a result, signs that the oil price is slipping again ought to be interpreted as unambiguously positive for growth.
Lastly, in the US and UK there has been a gradual conversion to the merits of early action. While the Federal Reserve and Bank of England are not exactly racing one another to the first rate rise, their respective bosses show a newfound eagerness to discuss it. In speeches studded with caveats, Janet Yellen and Mark Carney each hinted at rates beginning to rise by the turn of the year. Both elevate data over dogma; Mr Carney described how the BoE needs to “feel its way as it goes”, echoing the approach of his US counterpart.
The era of zero interest rates has not proven kind to those fond of confident market forecasts. In light of this a little circumspection from central banks is understandable. But in recent weeks all of the straws in the wind have started to drift in the same general direction. A turn in the monetary cycle may at last be on the cards.

>>> Realia to be excluded from small cap index from 27 July as Soros and Slim pu

Realia to be excluded from small cap index from 27 July as Soros and Slim public tenders weighed

Realia will be excluded from the Ibex small cap index from 27 July as a temporary measure while public tenders from Carlos Slim and from George Soros’ controlled vehicle Hispania are weighed, Cinco Dias reported.

Both offers are for up to 100% of the company’s equity. Moreover, both offers fall below the current Realia share price. Slim is offering EUR 0.58 per share, a price 18% higher than that of Soros’ Hispania vehicle, the report said.

Hispania’s offer, however, has the support of Realia’s largest creditors: Fortress, King Street and Goldman Sachs. The three funds hold EUR 790m of the EUR 1bn debt load of the company, the report noted.

The Slim offer was made via Carso Inmobiliaria, as reported.

Cinco Dias, previously reported intelligence

(BFW) Switzerland June Watch Exports Rose 3.3% Y/Y

Switzerland June Watch Exports Rose 3.3% Y/Y
2015-07-21 06:08:33.491 GMT


By Kristian Siedenburg
(Bloomberg) -- Swiss watch exports rose 3.3% in
June from a year ago, the Federation of the Swiss Watch
Industry says in a statement.

* Total watch exports up 3.3% y/y; value CHF1.929b
*
* Wrist watches up 3.1% y/y; value CHF1.819b
* Hong Kong down 21.2% y/y; value CHF256.2m
* USA up 4.7% y/y; value CHF195.4m
* Italy up 24.9% y/y; value CHF149.7m
* United Kingdom up 34.8% y/y; value CHF122.1m
* Japan up 1.7% y/y; value CHF119.8m
* France up 24.4% y/y; value CHF118.2m


For Related News and Information:
For more information on Swiss economic releases: ECO SZ <GO>
For tickers on Swiss trade balance: ALLX SZTB <GO>
For a CHART comparing the percent change in Swiss watch exports (RED)
line to Switzerland’s GDP (GRAY) histogram click G ECO 42 <GO>


To contact the reporter on this story:
Kristian Siedenburg in Vienna at +43-1-513-266011 or ksiedenburg@bloomberg.net
To contact the editor responsible for this story:
Marco Babic at +41-44-224-4112 or mbabic@bloomberg.net
Mark Evans

(DB) Orange Downgrade to Hold - Nothing really new - comment on French Consolida

Call look opportunitisc ahead of summer and after a great performance...comment on French Consolidation and EM acquisitions.

..." We attribute a 40% probability to French mobile consolidation in the next 12 months, implying better mobile ARPU for Orange (we assume stable ARPU at E23.4, instead of a 9% fall to E20.4 by 2018) and higher margins (+0.5pp in 2016 and +1pp in 2017-18 to 41%, with an unchanged 40% terminal margin) and assume E1bn spent on 700Mhz spectrum auction..."

see note attached

WSJ : Qualcomm to Conduct Strategic Review, May Consider Breakup

Qualcomm to Conduct Strategic Review, May Consider Breakup

Chip maker may also look at returning more cash to shareholders after activist investor presses for change

Qualcomm Inc. is expected to conduct a sweeping strategic review that will look at the possibility of a breakup, among other options, after an activist investor pushed for change at the chip maker.

Qualcomm, the world’s largest maker of chips used in mobile phones, may announce it is considering that and other options—including returning more cash to shareholders—when it reports fiscal third-quarter results Wednesday, according to people familiar with the matter. The company’s plans are in flux and there is no guarantee it will make any such announcement then, the people cautioned.

The potential moves Qualcomm is expected to flag largely track suggestions the activist, Jana Partners LLC, has made since it revealed a stake of more than $2 billion in the San Diego company in April. Jana, an $11 billion New York hedge fund, has urged Qualcomm to explore a breakup, cut costs, repurchase shares faster and bring new blood to its board.

As part of its review, Qualcomm, which has a market capitalization of $104 billion, may also reshuffle its board and give Jana a say in adding independent directors, the people said.

A Qualcomm spokeswoman declined to comment, referring to the company’s statement in April in which it said it looks at its corporate structure from time to time but that earlier reviews have concluded shareholders are better off with the current configuration.

Steve Mollenkopf, Qualcomm’s chief executive, said around that time the company wasn’t pleased with its financial outlook and had initiated a “comprehensive review” of its cost structure. He said the company would report on the initiative when its reports results this week.

Any breakup of the company would likely separate Qualcomm’s chip-production business from its patent-licensing operation. The company, which has a market capitalization of $104 billion, gets about two-thirds of its roughly $26 billion in annual revenue from the chip business. But about two-thirds of its roughly $8 billion in yearly profit comes from royalties from the sale of smartphones that use technology it pioneered.

Should the company break up, it would be the latest technology giant to reshape itself amid lackluster results and disappointing share-price performance. This month, Hewlett-Packard Co. filed paperwork to split itself into two publicly traded companies. On Monday, PayPal Holdings Inc., formerly the online-payments arm of eBay Inc., began trading on its own.

Qualcomm has already taken steps to boost its stock price, which is down 14% this year. They include a $15 billion stock buyback announced in March, with $10 billion set to be repurchased in the next 12 months, a move Jana had called a good first step. Qualcomm stock fell by less than 1% on Monday to close at $63.79 on Nasdaq.

The company has forecast its per-share earnings for the quarter at 85 cents to $1, down from $1.44 a year earlier, and revenue between $5.4 billion and $6.2 billion, down from $6.8 billion—both below Wall Street expectations at the time.

The move to explore a wide range of options will likely be viewed as another successful activist push for Jana. Just weeks ago, food company ConAgra Inc. agreed to exit its struggling private-brands business, a move the hedge fund had advocated.

Qualcomm has seriously considered splitting into two for years, according to people familiar with the matter. About 15 years ago, the company announced a split and filed securities documents for the plan before scrapping it after signing several large licensing deals that eased concerns customers were growing wary of competing against both sides of Qualcomm.

While defending its current corporate structure, Qualcomm executives have said they regularly evaluate whether it makes sense to keep the chip and patent-licensing businesses together.

A proposed split would also come at a time of rapid consolidation among chip companies as they try to gain scale to better cope with rising semiconductor input costs.

So far this year, there have been $87.4 billion in announced semiconductor deals, according to Dealogic. That is more than the volume for any full year on record.

In early March, NXP Semiconductors NV agreed to buy Freescale Semiconductor Ltd. for $11.8 billion. Next, Avago Technologies Ltd. struck a $37 billion deal to buy Broadcom Corp.—the largest pure-technology deal ever. Then Intel Corp. agreed to purchase Altera Corp. for $16.7 billion.

Analysts at Arete Research Services LLP earlier this year said that a broken-up Qualcomm could enter the deal-making boom. The analysts estimated the chip-making business could have a market valuation of $74 billion, while the patent division could be valued at $87 billion and suggested an independent chip business could be attractive to suitors such as Intel.

>>> What to look at today - 21st of July 2015

Dow+0.08% S&P+0.08% NAsdaq+0.17% Russell-0.54%
US Market closed near the flat line after testing May high. Seven sectors ended the day with gains while energy (-1.3%), materials (-0.9%), and utilities (-0.5%) spent the session below their flat lines. The energy sector retreated alongside crude oil, which fell 1.6% to $50.40/bbl. Meanwhile, the growth-sensitive sector struggled throughout the session, widening its July loss to 4.5%, even afterHalliburton (HAL 40.75, +0.76) climbed 1.9% after reporting better than expected results. volume were light at 720mil shares...US After Hours SANM +11.4%, CNI +3.1%, BSX +2.3%, IBM -5.0%, HXL -2.7%, WERN -1.1% following earnings/guidance...QCOM +2.7% on on potential strategic review, possible breakup...Asia indices are mixed again in the absence of conviction in trading on Wall St or significant economic data. Shanghai Composite opened down by over 1% but has since come off those lows and approaching its midday break with an upswing above 4,000. PBoC official Sheng said the central bank would continued to maintain liquidity at a moderate level. To that end, in its latest OMO operation PBoC injected another CNY35B through 7-day reverse repos. Also of note, non-broker margin lenders in China had reportedly requested that clients sell off some of their stock holdings purchased with margin debt - further evidence regulators are looking to rein in some of the recent volatility fanned by runaway credit. The BOJ put out a set of meeting minutes, though this release was outdated relative to the more recent decision when the central bank cut its GDP and inflation forecasts. In its June 18th meeting, many members agreed the easing is having intended effects, though a minority also remarked the effects might be diminishing given the recent runup in JGB yields. FX traders interpreted that sentiment as boosting the possibility of more aggressive policy response, and USD/JPY rose some 10pips following the comments toward 124.40 - a 1-month high.

Nikkei +0.85% Hang Seng +0.75% Shanghai +1.12%

Eur$ 1.0815 JPY 124.45 GBP 1.5562 EURCHF 1.0436 RUB $57.0671 WTI $49.95 (-0.4%)

S&P +0.11% EuroStoxx +0.16% Dax+0.18% SMI+0.09%

Macro :
- Oil Slides Below $50 as Gold Holds Losses; Asian Stocks Advance
- Oil Guru Who Called 2014 Slump Sees Return to $100 Crude by 2020
- Greek Euro Exit Back on the Agenda Next Year, Economists Say
- Wheat Heads for Longest Slump in a Year as Harvest Progresses

Keep an eye on :
- AIR FP : EVA Airways to Acquire 24-26 Boeing or Airbus Passenger Planes
- ATLN VX : Actelion Raises Full-Yr Outlook; 1H Core Earnings Beat Estimate
- AKZA NA : Akzo Nobel 2Q Sales Beat Estimates, Says on Track for 2015 Goals
- AZM IM : Azimut Most at Risk Among Italy Asset Managers: MainFirst
- SAN SM : Santander to Close Vista Private Equity Fund: Expansion
- BON FP : Bonduelle Said to Plan Bid for GIS’ Green Giant: Reuters Link : http://reut.rs/1TNpsUh
- ZEX GY : Tom Tom: Bosch and TomTom partner on innovative mapping technology for automated driving
- BPTY LN : GVC Said to Consider Bwin.party Bid Without Amaya: Telegraph
- ENG SM : Enagas 1H Ebitda Misses, Net Beats; Regulated Sales Fall Y/y
- ENEL IM : Prosperity Capital Buys 5.18% Enel Russia From EBRD: Vedomosti
- RMS FP : Hermes 2Q Sales Beat Ests., Sees 1H Oper. Profit Down ‘Slightly’
- NHY NO : Norsk Hydro 2Q Underlying Net Income Beats Estimates
- NOVN VX : Novartis 2Q Net Sales, Core Oper Profit in Line; Keeps Forecast, Lifts Sales Forecast for Sandoz, Lowers for Alcon, CEO Sees Biosimilars Growing 20% to 30% Per Quarter, Profit Drops as U.S. Dollar Strength Erodes Sales
- OCI NA : OCI Materials preliminary bids due August; Taiyo Nippon Sanso among suitors - Deal Reporter
- ORA FP : Orange in Talks to Buy Four Bharti Airtel Units in Africa
- PINF IM : Pininfarina talks with Mahindra & Mahindra may be back on agenda - Il Messaggero
- PMO LN : Premier Oil Sees High Chance of Oil in Mexico Block: Director
- PSM GY : ProSiebenSat1 in Talks to Take Scout24 Stake: Handelsblatt
- RCO FP : Remy 1Q Sales Miss Ests., Confirms FY Target
- RNO FP : Renault Considers Selling Low-Cost Crossover in Iran: Reuters
- SAP GY : SAP 2Q Earnings In Line; Cloud Subscription Rev. Beats, May Enact ’Targeted’ Job Cuts in 2016, CFO Says
- SRT3 GY : Sartorius 2Q Adj. Ebitda EU63.6m vs EU46.2m
- TEL2B SS : Tele2 2Q Ebitda Slightly Below Est.; Keeps 2015 Forecast
- TRELB SS : Trelleborg 2Q Pretax Beats Est.; Sees 3Q Demand on Par W/ 2Q
- TSCO LN : Dunnhumby’s new data agreement with Tesco could lower sale price; talk of Tesco abandoning auction SKy News Link : http://bit.ly/1JtF3kL
- TOM2 NA : TomTom 2Q Sales, Ebit Beat Ests.; Keeps FY Outlook, Names CFO
- UNR1V FH : Uponor 2Q Sales, Profit Miss Ests.; Repeats 2015 Outlook
- VOW3 GY : LG Chem Denies Report on 6.9t Won of Battery Order From Audi
- ZAL GY : Zalando Says 2Q Rev. EU727m-EU738m vs Est. EU688m

>>> Europe : Brokers Upgrades & Downgrades - 21st of July 2015

>>> Up
*AB INBEV CUT TO NEUTRAL VS BUY AT NOMURA
*CONTINENTAL AG RAISED TO BUY FROM HOLD AT HSBC
*EVRAZ RAISED TO HOLD VS UNDERPERFORM AT JEFFERIES
*FERRAGAMO MOVED TO STRONG BUY VS OUTPERFORM AT RAYMOND JAMES
*ICADE RAISED TO BUY VS HOLD AT SOCIETE GENERALE, PT EU85
*SABMILLER RAISED TO BUY VS NEUTRAL AT NOMURA

>>> Down
*GECINA CUT TO HOLD VS BUY AT SOCIETE GENERALE
*JCDECAUX CUT TO HOLD VS BUY AT BERENBERG
*MAPFRE CUT TO REDUCE VS BUY AT NOMURA
*ONTEX CUT TO UNDERWEIGHT VS NEUTRAL AT JPMORGAN
*ROCKWOOL INTERNATIONAL CUT TO HOLD AT HSBC
*SMA SOLAR TECHNOLOGY CUT TO REDUCE AT HSBC
*STABILUS CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN

>>> PT Change


>>> Initiation
*AB INBEV RATED NEW BUY AT STERNE AGEE CRT, PT $147
*CITYCON REINSTATED NEUTRAL AT GOLDMAN
*DIAGEO RATED NEW BUY AT STERNE AGEE CRT, PT $137
*SILTRONIC RATED NEW NEUTRAL AT CITI, PT EU36
*TOD'S RATED NEW UNDERPERFORM AT RAYMOND JAMES, PT EU72
*TOWN CENTRE SECURITIES RATED NEW BUY AT LIBERUM, PT 355P
*ZALANDO RATED NEW BUY AT BAADER-HELVEA, PT EU40 (YESTERDAY)


>>> Call