(MS) European Strategy : European stocks for the Global Investor

We think 2015 could be the first year since 2006 in which European equities outperform global equitymmarkets, as performance is boosted by the followingmdrivers:

* Euro-area economic momentum is likely to rebound on the back of the sharp easing of financial conditions due to the fall in the euro, bond yields and the oil price;
* The ECB’s QE program should boost EPS growth by weakening the currency and lowering European corporates’ interest expenses. Partly as a consequence of these factors, we expect European EPS growth this year to be stronger than that in the US for the first time since 2008;
* There is still a significant risk premium priced into European equities: the price to book relative to global markets remains close to a 20-year low and the equity risk premium relative to that in the US is about 100bps higher than suggested by fundamentals;
* Investors are still bearishly positioned on Europe, but fund flows are starting to improve.

We highlight European companies that our analysts believe offer a strong franchise and attractive valuations relative to global peers. Of these, BMW, IAG, RyanAir, Deutsche Post, Eurotunnel, Publicis, Philips, IHG, AXA, Prudential and UBS are OW-rated by our analysts and are in sectors where we are overweight.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: NKA -8.1%, FCN -4.1%, EVEP -3.7%, RYAAY -1.0%

Select metals/mining stocks trading lower: GFI -1.7%, GDX -1.6%, ABX -1.4%, AU -1.2%, NEM -0.7%

Other news: RSH -22.2% (RadioShack and hedge fund investors are considering plans to bankruptcy auction, according to reports), PSTI -11.3% (announces significant new finding from its Phase I/II muscle injury trial; stock had been trading higher all last week), NKA -8.1% (announces suspension of common unit distribution ), CMRX -4% (Brincidofovir will not be considered in further clinical trials in ebola virus disease), EVEP -3.7% (announces reduction of quarterly distribution to $0.50 per unit, prior was $0.77), HART -1.8% (disclosed that it recently determined that it will need additional development and testing within its ongoing preclinical large-animal model testing of the HART-Trachea)

Analyst comments: ANF -2.2% (downgraded to Sell from Hold at Evercore ISI), GOLD -1.4% (downgraded to Neutral from Buy at UBS), GES -1.1% (downgraded to Sell from Hold at Evercore ISI), DFT -1% (downgraded to Neutral at Macquarie), ARR -0.9% (downgraded to Underperform at Credit Suisse), CYS -0.7% (downgraded to Underperform at Credit Suisse)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: HIHO +15.9%, FLWS +7.7%, LII +2.8%, SYY +1.9%, NMM +1.4%, XOM +0.5%

M&A news: CRH +4.8% (Holcim (HCLMY) and Lafarge (LFRGY) announce a project to sell assets to CRH for an enterprise value of EUR 6.5 bln in the context of their planned merger)

Select oil/gas related names showing strength: SDRL +4.1%, STO +3.7%, TOT +2.7%, LINE +2.5%, SSL +2.4%, OAS +1.5%, OXY +1.5%, RDS.A +1.1%, HAL +1%, RIG +0.9%

Other news: MCP +20.9% (reported that rare earth production in the fourth quarter of 2014 at its Mountain Pass, California facility increased y/y and nearly doubled that of the preceding quarter), CAMT +12.1% (selected by a leading semiconductor manufacturer as the supplier of choice to provide systems for defect detection and metrology of advanced packaging applications), FRO+10.4% (provides capital update), ZGNX +9.6% (receives FDA approval of new formulation of Zohydro ER), NBG +9.1% (Greece PM speech over wkend implying cooperation with EU), BLUE +8.1% (FDA grants "Breakthrough Therapy Designation" to LentiGlobin for treatment of beta-thalassemia major), GST +6.8% (announces 87% increase in proved reserves), KMDA +5.5% (reports additional data from its open-label Phase 1/2 trial of IV Alpha1-Proteinase Inhibitor--Human), SANW +5.1% (files for ~13.3 mln share common stock offering by selling shareholders), EXXI +4.4% (still checking), AMD +4.3% (positive Barron's mention), BGMD +3.8% (receipt of favorable NASDAQ Listing Determination; exchange granted its request for continued listing), CTSO +3.5% (FDA approval to commence initial U.S. cardiac surgery study), SN +2.6% (Q4 daily avg. production at high end of guidance), MYL +2.1% (Theravance Biopharma and Mylan partner to develop and commercialize a novel LAMA compound), ALLT +1.9% (launches cloud access optimization solution with Microsoft (MSFT) Office 365 Support ), RDUS +1.7% (initiated with a Buy at BofA/Merrill),GPRO +1.0% (Chairman/CEO Nicholas Woodman discloses 44.9% stake in the company), CNI +0.8% (announces plan to buy back 1.2 mln shares through a private agreement), SHPG +0.8% (Vyvanse capsules becomes first and only treatment approved by the FDA for adults with moderate to severe binge eating disorder)

Analyst comments: DEG +2.5% (upgraded to Buy at Jefferies), DECK +2.2% (upgraded to Buy at Goldman), M +1.7% (initiated with a Buy at Evercore ISI), FUN +1.3% (upgraded to Buy at Goldman), CAM +0.5% (upgraded to Overweight at Barclays)

(BFW) Finmeccanica Ready to Take Control of Avio Space: Sole Website

BFW 02/02 12:44 *FINMECCANICA READY TO TAKE CONTROL OF AVIO SPACE: SOLE WEBSITE
BN 02/02 12:44 *FINMECCANICA READY TO TAKE CONTROL OF AVIO SPACE: SOLE WEBSITE
Finmeccanica Ready to Take Control of Avio Space: Sole Website
2015-02-02 13:02:08.588 GMT


By Chiara Vasarri
(Bloomberg) -- Finmeccanica may address Avio Space after
dealing with transport business sale, Il Sole 24 Ore reports on
website, citing unidentified officials familiar with matter.
* After gaining control of Avio Space, Finmeccanica may sell
minority stake to French group yet to be identified: Sole
* Renzi govt in favor of purchase: Sole
* NOTE: Cinven currently owns 81% of co., while Finmeccanica
has 14% stake
* NOTE from July 2, Italy Pushing Finmeccanica on Avio Space
Control: Defense Min
* NOTE from Jan. 27, Finmeccanica Raises 2014 Targets; Sees
Profit Up 20% Through ’16


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Chiara Vasarri in Rome at +39-06-4520-6325 or
cvasarri@bloomberg.net
To contact the editors responsible for this story:
Jerrold Colten at +39-02-8064-4261 or
jcolten@bloomberg.net

>>> US Early premarket gappers

Early premarket gappers

Gapping up: MCP +15.2%, ZGNX +7.4%, FRO +7.4%, NBG +7.3%, CRH +5.8%, EXXI +5.4%, SN +5.2%, SDRL +4.7%, STO +4.5%, AMD +3.1%, LINE +2.5%, DECK +2.4%, SSL +2.3%, OAS +2.3%, PBR +2.2%, APA +2.2%, RDS.A +2.1%, OXY +2.1%, SLB +2%, ALLT +1.9%, HAL +1.8%, COP +1.8%, SAP +1.6%, CVX +1.6%, RIG +1.5%, APC +1.3%, SHPG +1.1%, BHP+1%

Gapping down: PSTI -12.1%, GENE -3.2%, TEF -2.7%, ANF -2.2%, GFI -1.7%, CCL -1.3%, DEO -1.3%, GWPH -1.3%, GDX -1.3%, DEO -1.3%, AU -1.3%, GOLD -1.1%, RYAAY -1%, NVS -1%, ABX -0.7%, NEM -0.7%

WSJ : Germany Sees No Need to Scrap Troika in Overseeing Greek Turnaround

Germany Sees No Need to Scrap Troika in Overseeing Greek Turnaround
The Role of the ECB, the EU and the IMF Can’t Be Unilaterally Changed Says Berlin

BERLIN—A spokeswoman for Chancellor Angela Merkel said Monday the German government sees no need to abolish the role of the so-called “troika” of inspectors from the ECB, the European Commission and the International Monetary Fund, which collectively help oversee Greece’s financial turnaround after its international bailout.

“In the [German] government there is no indication that it shouldn’t be retained,” government spokeswoman Christiane Wirtz said at a news conference.

Greece’s new finance minister, Yanis Varoufakis, has said Greece will no longer talk to the troika of inspectors, which has imposed economic overhauls on Greece since 2010.

Berlin said on Monday, however, the work of the troika is written into agreements, like the eurozone’s permanent bailout facility, the European Stability Mechanism, and “these things can’t just be changed unilaterally,” according to finance ministry spokeswoman Marianne Kothe.

The German government’s comments follow a report in German daily Handelsblatt that European Commission President Jean-Claude Juncker may change the way creditors negotiate with Greek officials by reforming the troika and potentially ending its official visits to Greece.

A Commission spokesman declined to “engage in any speculation or discussion on what might happen at some point” on Monday, but noted that Mr. Juncker has said in the past that the troika should be replaced by a more democratic instrument in the future.

Alexis Tsipras, Greece’s newly elected prime minister, will visit Brussels on Wednesday.