>>> Weekly Update

Weekly Market Update: Greek and Ukraine Hopes Reignite Risk Appetite

US equity indices roared higher this week, buoyed by decent corporate earnings and abetted by the absence of significant bad news. US rates rose as improving risk appetite pushed the 10-year US Treasury yield back above 2% for the first time in nearly a month. In Europe, the Russians and the Ukrainians signed another ceasefire agreement in Minsk, which in outline provides a route to decelerate the conflict in eastern Ukraine but still faces a rough period of implementation. Negotiations continued all week between the EU and Greece, appearing to approach some sort of agreement a couple of times but without concluding a final deal. The five-year lows in Chinese CPI inflation data further strengthened expectations for more PBoC intervention in the New Year in China. The S&P500 climbed to new all-time highs on Friday, up 2% on the week, while the DJIA rose 1.1% and the Nasdaq surged 3.2%.

The two US data highlights of the week were the JOLTs jobs report and the retail sales data. The December JOLTS job openings report - Fed Chair Yellen's favorite gauge of employment demand - topped expectations and climbed 181K from November to a total of 5.03M, its highest level since 2001. The US January retail sales report was not encouraging: the 0.8% decline followed the 0.9% slide in December (which was the biggest drop in a year). Slowing automobile sales was part of the story, as was less expensive gasoline. However, ex automobiles and fuel sales gained a mere 0.2%, less than expected.

Fed officials were out in force prepping the market for inevitable rate hikes. The hawks pressed hard for tightening. Richmond Fed President Lacker said June looks right for the first rate hike, and that data showed liftoff should occur even earlier. The Dallas Fed's Fisher said he lobbied for rate lift off in March, but "lost that argument." The Philadelphia Fed's Plosser took issue with the 'patient' language introduced in the December statement, warning that the new verbiage could tie the FOMC's hands. One of the key thresholds for policy is judging when the economy has reached full employment, or the 'natural' rate of unemployment. Fed Governor Powell asserted that the natural rate of unemployment may have dropped to 5% or lower, echoing recent comments by more moderate officials Rosengren and Kocherlakota, while the current 5.7% level of unemployment underestimates the amount of slack in the economy.

German Chancellor Merkel and French President Hollande made an unheralded trip to Moscow in a last ditch effort to restore the ceasefire agreement in Ukraine. They convinced Russian President Putin to sign on to a new agreement that echoes the failed Minsk ceasefire signed last September, calling for Russian forces to return control over the Ukraine/Russia border to Kiev, and requiring both sides to pull back heavy weapons and exchange captives. The agreement is effective at midnight Kiev time on Saturday, but it remains to be seen if the ceasefire will hold and open a path toward resolving the year-old Ukraine crisis.

There was an excess of sound and fury over the Greece situation this week, with European and Greek negotiators at the Eurogroup and the leaders' summit reiterating their incompatible positions. Athens reportedly rejected a 3-6 month extension of the current bailout and EU officials rejected Greece's request for a new deal. Despite the rhetoric both sides are continuing technical discussions through the weekend and most observers expect a deal will be ultimately be reached that allows Greece to stay in the Euro Zone. Meanwhile Greece bank deposit outflows kept increasing, forcing the ECB to lend another €5B to the Greek Central Bank under the ELA to keep the nation's financial system liquid.

Analysts were waiting for the Danish central bank to cut interest rates again or possibly drop the euro peg at this week's scheduled meeting, but events elsewhere in Scandinavia overtook them. Sweden's Riksbank unexpectedly cut its key interest rate from 0% to a record low of -0.1% and also launched its own QE program. The Riksbank pledged to buy $1.2 billion in government bonds, warning there was a risk inflation would stagnate. Sweden's annual inflation rate in January stood at -0.3%.

Brent rose back above $60 this week and WTI spent most of the week above $50 as crude prices cautiously moved higher. Some analysts assert that crude prices have bottomed for good, but others aren't so sure. Goldman Sachs's chief commodities researcher told CNBC that oil could test $40/bbl in the next 6 months, possibly dipping down toward $35/bbl. The CEO of independent oil trader Vitol warned that crude prices could resume a downward trajectory as US stockpiles keep growing despite the significant idling of drilling capacity.

On Tuesday, shares of Apple closed at just over $122 each, making the firm the first publicly-quoted US firm to achieve a market capitalization of more than $700 billion. Apple CEO Cook made remarks at a tech conference, noting that his company would buy about $850 million of power from a new First Solar plant, guaranteeing that all of its California facilities ran completely on solar power.

In earnings, Pepsico beat expectations, hiked its dividend and added a big chunk to its stock buyback. Time Warner turned in a solid quarterly report but warned investors on the conference call that subscription revenue growth would slow this year. Shares of Tesla tanked after the firm disappointed with a quarterly loss and disclosed various difficulties with production, new models and the strong dollar. Cisco soared on signs the turnaround is starting to take hold, with earnings strong, guidance good and emerging markets inching back to growth. Like other many other consumer product names, Kellogg said FX and weak sales hurt the bottom line.

Expedia reached a deal to buy Orbitz Worldwide for about $1.3 billion in cash, at $12/share, a 24% premium to the prior close. With the transaction, Expedia will gain not only Orbitz and its business-focused travel sites, but also CheapTickets and HotelClub. Note the deal comes just two weeks after Expedia snapped up Travelocity for $280 million.

China's January CPI dropped to 0.8% from 1.5% in December, while PPI dropped to -4.3% from -3.3% prior. Officials said the big decline in CPI was mostly due to lower food prices. PPI has marked its 35th straight month in the red. Economists said the PBoC is now likely to lower deposit rates and deliver another RRR cut sometime in the first half of the year. The PBoC's open market operations injected a net total of 205 billion yuan this week, its fourth consecutive week of liquidity injections and its biggest infusion in more than a year. The January trade data was likewise worrisome, featuring the biggest y/y decline in imports in more than five years and a marginal drop in exports. On Friday, January new yuan loans rose to a five-year high going into next week's Lunar New Year, in part making up for soft demand for credit in December, even as M2 money supply hit multi-year lows of 10.8%.

In Japan, Finance Minister Aso attempted to defuse press speculation that, even under the optimal economic scenario, the government will be unable to achieve primary fiscal balance by FY20 despite the benefits of lower oil prices and weaker yen. Aso acknowledged the "extremely severe" state of Japan finances in promising not to waiver in implementing the next consumption tax hike in 2017. In the meantime, investor demand for JGBs remains lukewarm, with the yield on the benchmark rising to a 2-month high above 0.4% after another underwhelming auction on Friday. Looking ahead, market focus will turn to Japan Q4 GDP on Sunday evening, expected to return to expansion after two quarters of decline.

>>> US close Dow+0,26% S&P+0,41% Nasdaq+0,75% Russell+0,56%

Closing Market Summary: S&P 500 Sets Fresh Record High

The stock market finished a strong week on an upbeat note with the S&P 500 (+0.4%) setting a fresh closing record high at 2,096.99. The benchmark index posted a weekly gain of 2.0% while the Nasdaq Composite (+0.8%) outperformed to end the week higher by 3.2%.

Equity indices climbed out of the gate after the futures market received an early morning boost from a better than expected Eurozone Q4 GDP reading (+0.3%; expected +0.2%) that was largely driven by a 0.7%
quarter-over-quarter
expansion in Germany (expected 0.3%).


Meanwhile, Greece was not a focal point on Friday, but Eurogroup chief Jeroen Dijsselbloem did say he is "very pessimistic" that Monday's meeting can produce a concrete solution as Greece maintains high ambitions despite limited possibilities.

Six of ten sectors finished in the green with cyclical groups setting the pace, which was the case throughout the week. The energy sector jumped 2.0% to extend its weekly advance to 2.6% thanks to a rally in crude oil. WTI crude advanced 2.9% to $52.67/bbl and held its ground through the release of the latest Baker Hughes U.S. rig count, which revealed a decline of 98 to 1358, representing the 10th consecutive weekly decline.

Another commodity-linked group—materials (+0.9%)—rallied behind miners and steelmakers. Rio Tinto (RIO 49.37, +2.22) surged 4.7% after reporting better than expected results, boosting its dividend 12.0% to $2.15/share, and adding $2 billion to its buyback authorization. As for steelmakers, ArcelorMittal (MT 11.20, +0.74) jumped 7.1% despite reporting a Q4 loss. The broader Market Vectors Steel ETF (SLX 35.20, +1.14) gained 3.4%.

Elsewhere, the top-weighted technology sector (+0.7%) began among the laggards, but ended in a position of relative strength. The influential group finished the week in the lead, up 4.3%, with Apple (AAPL 127.08, +0.62) tacking on 0.5% to extend its weekly gain to 6.9%. Chipmakers kept pace with the sector, sending the PHLX Semiconductor Index higher by 0.7%.

Also of note, the financial sector (-0.1%) lagged throughout the day and its underperformance caused the S&P 500 to make a brief afternoon appearance in the red. However, other sectors held their own through the intraday slip, which in turn, helped the market springboard to a fresh high just ahead of the close.

Meanwhile, countercyclical sectors struggled, but health care (+0.5%) caught up to the market during afternoon action. On the flip side, consumer staples (-0.5%), telecom services (-0.1%), and utilities (-1.6%) settled in the red. Notably, shares of Kraft (KRFT 64.42, -1.75) lost 2.7% after concerns regarding potential currency headwinds overshadowed better than expected results.

Treasuries spent the day in a steady retreat, sending the 10-yr yield higher by five basis points to 2.03%.

Today's participation was below-average, which was the case throughout the week. Only 744 million shares changed hands at the NYSE floor (50-day average 835 mln), which likely reflected some caution ahead of a long weekend, which is expected to include the implementation of a Russia-Ukraine ceasefire on February 15. Despite the scheduled truce, the past two days featured reports of increased clashes in the contested rail hub city of Debaltseve.

Economic data was limited to Import/Export Prices and the advance reading of the Michigan Sentiment Index:
  • Export prices, excluding agriculture, decreased 2.1% in January after decreasing 1.2% in the prior reading 
    • Excluding oil, import prices fell 0.7%, which followed last month's 0.1% decline 
  • The University of Michigan Consumer Sentiment Index declined to 93.6 in the preliminary February reading from 98.1 in January while the consensus expected an increase to 98.3 
    • Despite the large and unexpected decline, the sentiment level is the same as it was in December 
    • The Current Conditions Index declined to 103.1 in February from 109.3 in January while the Expectations Index dropped to 87.5 from 91.0 
Bond and equity markets will be closed on Monday for Presidents' Day. On Tuesday, the Empire Manufacturing Index for February will be released at 8:30 ET while the February NAHB Housing Market Index will be reported at 10:00 ET.
  • Nasdaq Composite +3.3% YTD 
  • S&P 500 +1.9% YTD 
  • Russell 2000 +1.6% YTD 
  • Dow Jones Industrial Average +1.1% YTD 

See détails of synergies between numericable and bouygues



----- Original Message -----
From: LAURENT CHEKROUN
At: 13 févr. 2015 18:55:43


Find attached Exane report talking of potential synergies between Alice and Bouygues telco
----- Original Message -----
From: LAURENT CHEKROUN (MAKOR SECURITIES LLP)
To: LAURENT CHEKROUN
At: 22 janv. 2015 10:25:37

* Short-term risks to the nice ‘market polarisation’ scenario
Consensus is that, in fixed-line, Orange and Numericable will take the superfast segment and leave the ADSL low-end to Bouygues; whilst in mobile Iliad will remain a low-end underdog, leaving incumbents in peace in the 4G segments. In our view, this rosy scenario will be disrupted in the coming quarters: 1) Iliad will not stay idle – we expect new commercial initiatives, both in mobile and fixed-line, to grab SFR’s ADSL customers and to cap Bouygues’ inroads; 2) in mobile, the 4G quality gap in favour of Orange and Bouygues will go as Iliad and SFR beef up networks.

* Consolidation remains the end game – Hardly a surprise for anyone
The end-game remains Numericable-SFR acquiring Bouygues Telecom. Renewed competitive pressure would actually increase the chances that Martin Bouygues welcomes an offer by Patrick Drahi. We see synergies of EUR9bn and Bouygues Telecom going for EUR7.5bn.

* Numericable-SFR downgraded to (=) from (+) – Target price upped to EUR45 vs. EUR35
Everybody loves Numericable-SFR and so do we. We have hiked our forecasts (revenues and margin) and our Bouygues synergies number - to arguably bullish levels - but fail to see upside. The good news on rapid delivery of SFR synergies is out, but the risk of Iliad striking back is not.

* Iliad (+) retaking the initiative – Target price upped to EUR220 vs. EUR210
Iliad remains the fastest growing stock in the sector. We have hiked our 2015e EBITDA estimate thanks to faster progress in the mobile network rollout. Consolidation is a key catalyst ahead.

* Bouygues (+): 2015 a pivotal year for Bouygues Telecom – TP upped to EUR34 vs. EUR33
Not for the faint-hearted given the earnings risk on French construction, but upside remains assuming that pragmatism prevails on a Telecom sale - and we believe it will.

* Orange (=): a well know story – TP upped to EUR14 vs. EUR12
Solid earnings for sure, but wholesale headwinds will increase and the valuation is full.

>>> US oil rig count declines for 10th straight week

US oil rig count declines for 10th straight week

The US oil rig count is still falling.

The number of rigs drilling for oil in the US has declined for the tenth straight week — falling by 84 in the week to February 13.

There were 1,056 rigs drilling for oil in the US, according to Baker Hughes, the oilfield services company that publishes the weekly count.

The decline in the rig count comes as oil prices have more than halved since their mid-June high as weak demand and a rising production take their toll.

Before the release, Brent prices, the global oil standard, climbed 3.6 per cent to $61.39 a barrel, while WTI prices, the US marker, gained 3.4 per cent to $52.96 a barrel.

The latest figures may be well received by those in the market trying to find a bottom in oil. A decline in rigs has raised hopes that crude production is declining.

Volatility, as measured by the CBOE Crude Oil Volatility Index which calculates price swings using options on an exchange traded security that tracks daily WTI price movements, has climbed 13 per cent so far this year.


North American Oil, Natural-Gas Rig Count for Feb. 13 (Table)
2015-02-13 18:03:47.917 GMT


By Stephen Rose
(Bloomberg) -- Following is a table detailing the
number of oil and natural-gas rigs operating in North America,
according to Baker Hughes Inc.
*T
================================================================================
Feb. 13 Feb. 6 Weekly Weekly Year Yearly Yearly
2015 2015 Change Percent Ago Change Percent
================================================================================
North America 1,740 1,837 -97 -5.3% 2,388 -648 -27.1%

Fwd: (Exane) French Telco - Numericable SFR Dwg to Neutral, ILD, EN & ORA TP upg


Find attached Exane report talking of potential synergies between Alice and Bouygues telco
----- Original Message -----
From: LAURENT CHEKROUN (MAKOR SECURITIES LLP)
To: LAURENT CHEKROUN
At: 22 janv. 2015 10:25:37

* Short-term risks to the nice ‘market polarisation’ scenario
Consensus is that, in fixed-line, Orange and Numericable will take the superfast segment and leave the ADSL low-end to Bouygues; whilst in mobile Iliad will remain a low-end underdog, leaving incumbents in peace in the 4G segments. In our view, this rosy scenario will be disrupted in the coming quarters: 1) Iliad will not stay idle – we expect new commercial initiatives, both in mobile and fixed-line, to grab SFR’s ADSL customers and to cap Bouygues’ inroads; 2) in mobile, the 4G quality gap in favour of Orange and Bouygues will go as Iliad and SFR beef up networks.

* Consolidation remains the end game – Hardly a surprise for anyone
The end-game remains Numericable-SFR acquiring Bouygues Telecom. Renewed competitive pressure would actually increase the chances that Martin Bouygues welcomes an offer by Patrick Drahi. We see synergies of EUR9bn and Bouygues Telecom going for EUR7.5bn.

* Numericable-SFR downgraded to (=) from (+) – Target price upped to EUR45 vs. EUR35
Everybody loves Numericable-SFR and so do we. We have hiked our forecasts (revenues and margin) and our Bouygues synergies number - to arguably bullish levels - but fail to see upside. The good news on rapid delivery of SFR synergies is out, but the risk of Iliad striking back is not.

* Iliad (+) retaking the initiative – Target price upped to EUR220 vs. EUR210
Iliad remains the fastest growing stock in the sector. We have hiked our 2015e EBITDA estimate thanks to faster progress in the mobile network rollout. Consolidation is a key catalyst ahead.

* Bouygues (+): 2015 a pivotal year for Bouygues Telecom – TP upped to EUR34 vs. EUR33
Not for the faint-hearted given the earnings risk on French construction, but upside remains assuming that pragmatism prevails on a Telecom sale - and we believe it will.

* Orange (=): a well know story – TP upped to EUR14 vs. EUR12
Solid earnings for sure, but wholesale headwinds will increase and the valuation is full.

(BN) Tycoon Drahi Said to Prepare for Bouygues Telecom Takeover


Tycoon Drahi Said to Prepare for Bouygues Telecom Takeover
2015-02-13 17:51:14.614 GMT


By Manuel Baigorri, Matthew Campbell and Francois de Beaupuy
(Bloomberg) -- Cable billionaire Patrick Drahi’s Altice SA
is stepping up plans for a potential takeover of mobile carrier
Bouygues Telecom, setting the stage for more consolidation in
France’s telecommunications industry, according to people
familiar with the matter.
Drahi’s media and telecom group is examining the financial
and regulatory obstacles to a transaction with France’s third-
largest wireless provider, and advisers to the two companies
have held informal discussions about a potential deal, the
people said, asking not to be identified discussing a private
matter. Altice believes a transaction is feasible and could pass
muster with authorities and French politicians, they said. No
formal offer has been made and Altice could still decide against
proceeding with a bid, they said.
Discussions of a takeover of Bouygues Telecom by Xavier
Niel’s Iliad SA stalled last year over valuation disagreements,
with owner Bouygues SA seeking as much as 8 billion euros ($9.1
billion) for the asset, people familiar with the matter said in
June. For Drahi, an acquisition of Bouygues Telecom would be
Altice’s third multi-billion dollar deal in a year, after it
acquired French mobile-service provider SFR and then agreed in
December to buy Portugal’s biggest carrier from Oi SA.
A spokesman for Luxembourg-based Altice declined to comment
on what he referred to as rumors. A spokesman for Paris-based
Bouygues declined to comment, referring to an October statement
that the company is implementing a stand-alone strategy in a
market with four operators.

‘Natural Buyer’

Altice Chief Executive Officer Dexter Goei said in November
that Altice would be the “most natural buyer” for Bouygues
Telecom.
A combination of SFR with Bouygues Telecom under Altice
would create a new national leader in France with more than 30
million wireless customers, supplanting Orange SA, according to
data compiled by Bloomberg Intelligence. It would also reduce
the country’s number of wireless networks to three from four,
following similar moves in Germany, Ireland and Austria.
Drahi’s advisers believe competition concerns can be
resolved in part because French officials supported a 2014
proposal to merge Bouygues Telecom and SFR, then owned by
Vivendi SA, one of the people said. However, limiting job losses
would be a key concern for politicians in France’s barely-
growing economy, making integration a delicate challenge should
a deal proceed, the person said.
Bouygues Telecom reported 2013 earnings before interest,
taxes, depreciation and amortization of 880 million euros and
Ebitda of 538 million euros in the first nine months of 2014.
European carriers are merging as costs rise for high-speed
networks and the pace of smartphone adoption slows, putting
pressure on profits. In the U.K., BT Group Plc this month agreed
to acquire wireless leader EE Ltd. for about $19 billion.

For Related News and Information:
Iliad-Bouygues Telecom Deal Said Stymied by $4 Billion Gap
Billionaire Drahi to Buy Oi’s Portuguese Assets for $9.1 Billion
Billionaire Drahi to Buy Vivendi’s SFR in $23 Billion Deal
Top Deal Stories: DTOP<GO>
Bloomberg Industries: BI TELC <GO>
Top Technology Stories: TTOP <GO>

--With assistance from Dinesh Nair in London and Jacqueline
Simmons in Paris.

To contact the reporters on this story:
Manuel Baigorri in London at +44-20-3525-4457 or
mbaigorri@bloomberg.net;
Matthew Campbell in London at +44-20-3525-8684 or
mcampbell39@bloomberg.net;
Francois de Beaupuy in Paris at +33-1-5365-5051 or
fdebeaupuy@bloomberg.net
To contact the editors responsible for this story:
Kenneth Wong at +49-30-70010-6215 or
kwong11@bloomberg.net;
Aaron Kirchfeld at +44-20-3525-8830 or
akirchfeld@bloomberg.net
Elizabeth Fournier