(Barcap) Carrefour : Spanish Upside

* Carrefour Spain on the right track: Carrefour’s 2Q performance in Spain seemingly
marked a turning point as like-for-like sales were positive in both food and non-food.
Thanks to its multi-format strategy, adapted non-food offer and strong execution, we see
Carrefour as well positioned to take advantage of the improving economic environment in
Spain. Given that Carrefour’s cost structure in this country is lean, we believe that its
operating leverage is significant and we do not see any reason why its operating margin
could not gradually return to pre-crisis levels (4-5%). We expect the 1H results (due 31
July) will show evidence of Carrefour’s margin potential in Southern Europe thanks also to
lower operating losses in Italy (we include our 1H preview in this note).

* The story is not over in France: Even though Carrefour’s 2Q performances were
admittedly a touch below our expectations, we expect the performances will improve in
2H partly thanks to easier comps and the ongoing remodeling programme. Although
DIA’s restructuring includes risk factors and we forecast Carrefour’s operating profit in
France will decline in both 1H and FY15 partly due to DIA France’s estimated €70mn
losses, we think DIA’s performance offers further upside potential in the future. We
remain confident that Carrefour could raise DIA’s sales densities, which are the lowest in
the French food retail sector (€3,100 per sq m per annum vs a minimum of €4,500 for
Carrefour’s existing convenience store formats in France.

* Overweight rating reiterated with a price target of €34.50: We raise our EPS forecasts
by an average of 2% to factor in our more upbeat outlook on the group’s Spanish
performances. We now expect consolidated operating profit of €2.52bn for this year, in line
with the company’s guidance, leading to double-digit EPS growth. Although Carrefour will
likely continue to face headwinds in emerging markets, we believe it still offers an attractive
risk/reward trade-off, while there are still potential positive catalysts ahead (recall that
Carrefour announced that it might contemplate an IPO of its Brazilian division and/or its
Carmila real estate unit at some point). Carrefour is trading on a FY16E P/E of 15.5x vs
16.8x for the European sector average and 15.8x for its most comparable peer Casino.

(BofA-ML) Flow Show - $8.3bn inflows Equities in Flows

>>> Asset Class Flows
- Equities: $8.3bn inflows (note divergence between $10.5bn ETF inflows and $2.1bn mutual fund outflows)
- Bonds: $1.1bn inflows (ends 5 straight weeks of outflows)
- Precious Metals: $0.4bn outflows (3 straight weeks)

>>> Equity Flows
- Japan: big $5.0bn inflows (inflows in 20 out of past 21 weeks); largest inflows since Apr’14
- Europe: $3.0bn inflows (9 straight weeks)
- EM: $6.8bn outflows (largest in 5 weeks)
- US: $5.2bn inflows ($7.4bn ETF inflows vs $2.3bn mutual fund outflows)
- Note that flows to high “yield” beginning to roll-over and show signs of fatigue


>>> Fixed Income Flows
- Chunky $2.3bn outflows from IG bond funds (largest since Dec’13)
- First inflows to HY bond funds in 6 weeks ($1.3bn)
- $0.5bn outflows from EM debt funds (outflows in 7 out of past 8 weeks)
- Big $2.6bn inflows to govt/tsy funds (largest since Feb’15)
- 6 straight weeks of outflows from municipal bond funds (modest $0.3bn)

>>> What to look at today - 17th of July 2015

Dow +0.39% S&P +0.80% NAsdaq +1.26% Russell +0.66%
US Market closed Higher. Mkt was up all day on greek vote & Better earning in the US (INTC & NFLX)...GS & C didn't helped as the stock were mixed after better earnings. Large cap technology components like Apple (AAPL 128.51, +1.69), Google (GOOGL 601.78, +17.82) and Microsoft (MSFT 46.66, +0.90) climbed between 1.3% and 3.1% while Intel alternated between gains and losses before settling higher by 0.7%. On the downside, the materials sector (-0.3%) spent the day in negative territory amid broad weakness while the energy sector (+0.1%) was able to stay in the green even though crude oil fell 1.0% to $50.91/bbl. Volume were in line @ 723mil shares. US After Hours HTZ +14.3%, GOOG +11.2% {NSN NRLP2U6KLVR4<Go>}, MDRX +10.1%, AMD +2.1%, SWI -10.0%, CYT -9.0% following earnings/guidance...After another volatile week, Shanghai Composite is posting solid gains on what had previously been a terrible trading day (Friday) in recent weeks. With a near 2% rally, Shanghai Composite is now unchanged from last Friday's close heading into the break. After yesterday's growth downgrade for China and the region by the ADB, today's comments from World Bank were more upbeat, indicating the country's economic fundamentals are sound. China Securities Finance (CSF) continues to provide liquidity, with reports of the entity having received a credit facility of CNY2T from banks. Going into Friday's formal vote in Germany's Bundestag lower house of parliament, a resounding majority of conservative lawmakers had reportedly voted in favor of starting talks on the Greek bailout. Reports suggest this gives Chancellor Merkel the mandate to proceed to negotiations. Separately, Greek Finance Minister also confirmed earlier speculation that banks will reopen on Monday after the ECB lifted the cap on ELA lending, though separate reports indicated the daily ATM withdrawal limit would be unchanged at €60 per day. The yield on the Greek 10-year continued to come off its recent highs, falling over 80bps toward 11%.

Nikkei +0.22% Hang Seng +1.15% Shanghai+2.79%

Eur$ 1.0880 JPY 124.06 GBP 1.5636 EURCHF 1.0415 RUB $56.9495 WTI $50.90(-0.02%)

S&P -0.04% EuroStoxx +0.11% Dax +0.03% SMI +0.23%

Macro :
- Germany Offers Verdict on Greek Aid After Draghi Endorsement

Keep an eye on :
- ABG/P SM : Citigroup Announces Placement of 4.17% of Abengoa Class B Shrs, placed @ €2.80 (-3.1% disc)
- AF FP : Air France to Merge Regional Units Under Hop! Brand: Echos
- ATO FP : *ATOS, SIEMENS SEEK WAYS TO EXTEND THEIR ALLIANCE
- BETSB SS : Betsson Says 2Q Revenue Up 14% to Highest Quarterly Figure Ever
- BIM FP : BioMerieux 2Q Sales Rise 18%; Confirms Organic Revenue Forecast
- BPTY LN : 888 Agrees to Buy Bwin.Party in Deal Valued at 104.09 Pence/Shr
- BC IM : Cucinelli 2Q Sales Beat Ests., Sees ‘Beautiful’ 2015
- DTE GY : *DISH TALKS TO BUY T-MOBILE SAID TO STALL ON STRUCTURE, PRICE
- ERICB SS : Ericsson 2Q Sales Beat, Gross Margin Misses Ests.
- GIVN VX : Givaudan 1H Ebitda Beats Estimates, Confirms Outlook
- IPN FP : Ipsen Wins FDA Approval for Treatment of Upper Limb Spasticity
- L1OA GY : Lloyd Fonds Mulls Capital Increase, Boersen-Zeitung Reports
- NOVOB DC : Novo Nordisk Gets FDA Approval for Injection Product
- ORA FP : Orange Espana to Begin Trading in 2017: Expansion
- ORK NO : Orkla 2Q Operating Revenue NOK7.7b vs Est. NOK7.5b
- SAABB SS : Saab 2Q Operating Profit Misses Est.
- SCHA NO : Schibsted 2Q Net Income Beats Estimates, Reiterates Rev Target
- TKA AV : Telekom Austria 2Q Sales, Ebitda Beat Ests.; Rev. Outlook Cut
- TLSN SS : TeliaSonera 2Q Ebitda Beats Est.; Keeps 2015 Outlook
- VIRB FP : Virbac 2Q Rev. EU221.1m vs EU185.8m Y/y
- VOLVB SS : Volvo 2Q Sales Beat Est., Volvo’s Renault Trucks Wins EU500M Canada Army Contract: Echos
- WRT1V FH : Waertsilae Adjusts Ship Power Ops Due to Weak Market; Sales Beat
- ZC FP : Zodiac May Relocate Equipment to Continue Production: Reuters

>>> Europe : Brokers Upgrades & Downgrades - 17th of July 2015

>>> Up
*ALTICE RAISED TO BUY VS HOLD AT HSBC
*CENTRICA RAISED TO BUY VS HOLD AT HSBC
*COM HEM RAISED TO HOLD VS SELL AT BERENBERG
*CGG RAISED TO OVERWEIGHT AT JPMORGAN
*HENDERSON GROUP RAISED TO HOLD AT JEFFERIES

>>> Down
*CREDIT SUISSE CUT TO HOLD VS BUY AT DEUTSCHE BANK
*FRESENIUS SE CUT TO NEUTRAL AT GOLDMAN
*FF GROUP CUT TO REDUCE VS BUY AT KEPLER CHEUVREUX
*JD WETHERSPOON CUT TO REDUCE VS NEUTRAL AT NOMURA
*OCADO CUT TO NEUTRAL VS BUY AT UBS
*RESTAURANT GROUP CUT TO NEUTRAL VS BUY AT NOMURA
*SWEDBANK CUT TO SELL AT NORDEA
*TERNA CUT TO REDUCE VS HOLD AT HSBC

>>> PT Change


>>> Initiation


>>> Call
>> Stock
*ORANGE REITERATED CL AT GOLDMAN (note attached)
>> Sector
*AUTO SECTOR UPDATE : JUNE DATA AT GOLDMAN (PREFER PSA<FCA & DAI) (Note attached)

>>> Asian Update

Asian Mid-session Update: Equities rally into the weekend as Greece confirms banks will reopen


***Economic Data***
- (NZ) NEW ZEALAND JUN ANZ JOB ADVERTISEMENTS M/M: -0.6% V -0.6% PRIOR
- (AU) Australia May Conference Board Leading index m/m: +0.2% v -0.3% prior
- (KR) South Korea Jun PPI Y/Y: -3.6% v -3.5% prior; 11th month of decline
- (US) MAY NET LONG-TERM TIC FLOWS: $93B V $30.0BE; TOTAL NET TIC FLOWS: $115B V $106.6B PRIOR

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.2%, S&P/ASX flat, Kospi -0.7%, Shanghai Composite +1.7%, Hang Seng +1.0%, Sept S&P500 flat at 2,116

***Commodities/Fixed Income***
- Aug gold flat at $1,143/oz, Aug crude oil +0.4% at $51.13/brl, Sept copper flat at $2.52/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 707.9 tonnes
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥425B in 3-5yr JGBs, ¥240B in 10-25yr JGBs, and ¥140B in 25yr+ JGBs
- (AU) Australia MoF (AOFM) sells A$800M in 1.75% 2020 Bonds; avg yield: 2.3636%; bid-to-cover: 3.95x
- USD/CNY: PBoC sets yuan mid point at 6.1192 v 6.1173 prior setting; weakest Yuan setting since Jun 8th
- (US) Weekly Fed Balance Sheet Total Assets for week ending July 15th: $4.49T v $4.48T prior; M1 y/y change: 7.2% v 7.4% prior; M2 y/y change: 5.8% v 5.9% prior

***Market Focal Points/FX***
After another volatile week, Shanghai Composite is posting solid gains on what had previously been a terrible trading day (Friday) in recent weeks. With a near 2% rally, Shanghai Composite is now unchanged from last Friday's close heading into the break. After yesterday's growth downgrade for China and the region by the ADB, today's comments from World Bank were more upbeat, indicating the country's economic fundamentals are sound. China Securities Finance (CSF) continues to provide liquidity, with reports of the entity having received a credit facility of CNY2T from banks.

Going into Friday's formal vote in Germany's Bundestag lower house of parliament, a resounding majority of conservative lawmakers had reportedly voted in favor of starting talks on the Greek bailout. Reports suggest this gives Chancellor Merkel the mandate to proceed to negotiations. Separately, Greek Finance Minister also confirmed earlier speculation that banks will reopen on Monday after the ECB lifted the cap on ELA lending, though separate reports indicated the daily ATM withdrawal limit would be unchanged at €60 per day. The yield on the Greek 10-year continued to come off its recent highs, falling over 80bps toward 11%.

In FX, NZD/USD was once again the most active among USD majors, rising nearly 40pips toward 0.6540, although the move was considered to be corrective after a steep decline this week to 6-year lows. Analysts with Westpac are particularly aggressive in expectation of further RBNZ easing, forecasting 125bps in additional cuts to 2.00% with possibility of a 50bp move. AUD/USD was up just over 10pips above $0.7410, while USD/JPY traded in a 20pip range above 124. USD will likely see more volatile trading in early US hours with the release of the US CPI data.

***Equities***
US equities / ADRs:
- HTZ: Reports Q1 -$0.15, R$2.45B (v prelim Rev $2.44B given on 5/14) - quarterly filing; +13.7% afterhours
- GOOGL: Reports Q2 $6.99 v $6.76e, R$14.35B v $14.2Be; +12.2% afterhours
- AMD: Reports Q2 -$0.23 v -$0.16e, R$942M v $957Me; +2.7% afterhours
- SLB: Reports Q2 $0.88 v $0.79e, R$9.01B v $9.12Be; +1.4% afterhours
- MAT: Reports Q2 +$0.01 v -$0.05e, R$989M v $1.0Be; +0.4% afterhours
- SWI: Reports Q2 $0.52 v $0.46e, R$119.1M v $123Me; -9.5% afterhours

Notable movers by sector:
- Consumer discretionary: Tongkun Group Co Ltd 601233.CN +5.7% (H1 guidance); Vinda International 3331.HK -1.6% (H1 result)
- Financials: Industrial Securities 601377.CN +3.2% (H1 result); Dongxing Securities Co 601198.CN +3.9% (H1 result); Everbright Securities Co 601788.CN +7.3% (H1 guidance); China Merchants Land 978.HK +3.8% (H1 guidance)
- Industrials: Chongqing Gangjiu Co 600279.CN +4.0% (H1result); Samsung Heavy Industries 010140.KR -12.7% (Q2 result speculation)
- Technology: TSMC 2330.TW +2.2% (Q2 result); Sharp Corp 6753.JP -3.5% (Q1 result speculation)
- Materials: China Nonferrous Metals 1258.HK -9.4% (H1 guidance); Lynas Corp LYC.AU +6.6% (quarterly result)
- Energy: Santos Ltd STO.AU -0.3% (Q2 result)

>>> US After Hours Summary: HTZ +14.3%, GOOG +11.2%, MDRX +10.1%, AMD

After Hours Summary: HTZ +14.3%, GOOG +11.2%, MDRX +10.1%, AMD +2.1%, SWI -10.0%, CYT -9.0% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: HTZ +14.3%, GOOG +11.2%, MDRX +10.1%, TESS +3.4%, AMD +2.1%, CE +1.4%, SLB +1.3%, RECN +1.2%, MAT +0.2%

Companies trading higher in after hours in reaction to news: HTZ +14.3% (completed financial restatement; provided FY15 business outlook; expects Hertz Equipment Rental Corporation separation to be completed in Q2 of 2016), FBRC +3.3% (Voce Capital Management disclosed 5.1% passive stake in 13G filing; Voce has engaged in discussions with management), RECN +1.2% (announced that effective as of August 31, 2015 Donald B. Murray will retire from his position as Executive Chairman and will remain Chairman of the Board)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: SWI -10.0%, CYT -9.0%, ANGO -3.3%, EDGW -2.0%

Companies trading lower in after hours in reaction to news: DSCO -17.8% (announced an underwritten public offering of units; size not disclosed), TROV -11.2% (to sell shares of its common stock in an underwritten public offering; size not disclosed), BLRX -2.2% (filed for $75 mln mixed securities shelf offering), ESV -1.6% (ConocoPhillips confirmed a notice of termination for the three-year ENSCO DS-9 drillship contract)

>>> US Close

Closing Market Summary: Nasdaq Composite Leads Stocks Higher

The stock market finished Thursday on a higher note with the Nasdaq Composite (+1.3%) and S&P 500 (+0.8%) posting solid gains while the Dow Jones Industrial Average (+0.4%) ended the day closer to its flat line.

Equity indices spiked at the start, responding to overnight strength in the futures market. Shortly after yesterday's close, Intel (INTC 29.90, +0.21) and Netflix (NFLX 115.81, +17.68) reported better than expected results, which led to a surge in Nasdaq futures in particular.

Earnings notwithstanding, Nasdaq and S&P 500 futures received a second boost after the Greek parliament voted 229-64-6 in favor of austerity measures that will allow bailout negotiations to continue with the country expected to receive EUR86 billion in rescue funds. Furthermore, the European Central Bank, which held a policy meeting today, raised the country's allowance to Emergency Liquidity Assistance by EUR900 million, which will pave the way for Greek banks to open as soon as Monday.

As the U.S. opening bell approached, the focus shifted back to earnings with Citigroup (C 58.59, +2.13) and Goldman Sachs (GS 211.18, -1.78) reporting better than expected results. However, Goldman Sachs spent the day in negative territory, snapping its five-day streak. Still, the financial sector (+1.0%) ended among today's leaders, but Goldman's relative weakness kept the Dow under pressure.

Likewise, UnitedHealth (UNH 124.93, -0.93) also pressured the Dow despite reporting better than expected results. The stock narrowed its loss to 0.7% by day's end after being down as much as 3.1% following yesterday's record close. Furthermore, UnitedHealth pressured the health care sector (+0.5%), but hospital names also weighed. For instance, Community Health (CYH 60.99, -1.42) and Universal Health (UHS 141.25, -1.18) lost 2.3% and 0.8%, respectively, after Keybanc Capital Markets downgraded both listings to ‘Sector Weight' from ‘Overweight.' Biotechnology, however, picked up the slack with iShares Nasdaq Biotechnology ETF (IBB 395.67, +4.91) climbing 1.3%. That strength, combined with a solid showing from the technology sector (+1.3%) kept the Nasaq ahead of the broader market throughout the day.

Large cap technology components like Apple (AAPL 128.51, +1.69), Google (GOOGL 601.78, +17.82) and Microsoft (MSFT 46.66, +0.90) climbed between 1.3% and 3.1% while Intel alternated between gains and losses before settling higher by 0.7%. Other chipmakers struggled, evidenced by the PHLX Semiconductor Index, which eked out a modest gain (+0.2%).

Overall five sectors ended ahead of the broader market, but only two cyclical groups displayed relative strength while consumer staples (+1.0%), telecom services (+1.4%), and utilities (+1.5%) outperformed on the countercyclical side.

On the downside, the materials sector (-0.3%) spent the day in negative territory amid broad weakness while the energy sector (+0.1%) was able to stay in the green even though crude oil fell 1.0% to $50.91/bbl.

Treasuries displayed losses during overnight action, but a morning recovery returned the benchmark 10-yr yield to unchanged by the close (2.35%).

Today's participation was a bit lighter than yesterday with 723 million shares changing hands at the NYSE floor.

Economic data included Initial Claims, NAHB Housing Market Index, and Philadelphia Fed Survey:
  • The initial claims level declined to 281,000 for the week ending July 11 from a downwardly revised 296,000 (from 297,000) while the consensus expected a decline to 283,000 
    • The four-week moving average increased to 282,500 from 279,250, which is the first time that the four-week moving has surpassed 280,000 since the end of April 
    • The continuing claims level decreased to 2.215 mln for the week ending July 4 from a downwardly revised 2.327 mln (from 2.334 mln) while the consensus expected a decrease to 2.285 mln 
  • The NAHB Housing Market Index for July rose to 60 from 59 while the consensus expected the index to hold at 59
  • The Philadelphia Fed's Business Outlook Survey declined to 5.7 in July from 15.2 in June while the consensus expected a drop to 12.5 
    • There was a general softening in manufacturing conditions across all areas with four out of the nine survey subcomponents contracting in July 
    • The Shipments Index declined to 4.4 in July from 14.3 while Employment conditions were notably weak 
      • The Number of Employees Index turned negative, falling from 3.8 in June to -0.4 in July 
      • The Average Employee Workweek Index dropped to 4.0 from 4.7 
Tomorrow, June CPI (consensus 0.3%) and June Housing Starts (consensus 1.12 million)/Building Permits (expected 1.15 million) will be reported at 8:30 ET while the preliminary reading of the Michigan Sentiment Index for July (consensus 96.5) will be released at 10:00 ET.
  • Nasdaq Composite +8.3% YTD 
  • Russell 2000 +5.4% YTD 
  • S&P 500 +3.1% YTD 
  • Dow Jones Industrial Average +1.6% YTD

>>> Ferrari : Amedeo Felisa, 69, reputed CEO of Ferrari since 2008, would be wil


According to the attached article, Amedeo Felisa, 69, reputed CEO of Ferrari since 2008, would be willing to leave the

company in September 2015 since he wouldn’t like the way the new chairman Sergio Marchionne manages the company.


We know that Mr Felisa played a key role in re-launching Ferrari together with former chairman Luca di Montezemolo.

Mr Felisa – a mechanical engineer who did not take part in the 2014 fight between Marchionne and Montezemolo - is

reportedly very appreciated by Sergio Marchionne, new Ferrari chairman since October 2014.


We know that Mr Felisa was recently asked to remain at Ferrari for another couple of years. The news of his step down

could have clearly negative consequences at a time when FCA plans to IPO a 10% Ferrari stake in October 2015 and

distribute the remaining 80% stake to FCA shareholders in Q1 2016.


We remind you that we value the Ferrari stake around EUR 5.3 per FCA share; our current target price when excluding

any M&A premium is EUR 16.8.