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Monday Report 02 March 2015
Economy
Markets
Swiss Market
Recommended Stock Watch
US statistics were satisfactory overall. While existing home sales
were disappointing, down 4.9% in January, new home sales were
stable (up 481,000) and prices rose by more than expected (up
0.87% in December and 4.46% YoY). A disappointing Conference
Board consumer confidence index (down from 103.8 to 96.4) was
offset by the Univ. of Michigan’s measure, which rose from 93.6 to
95.4. Core inflation accelerated slightly, up 0.2% in January, reducing deflationary fears. Finally, durable goods orders perked up in
January (up 2.8%) and Q4 GDP growth was revised down by less
than expected, to 2.2%. In the eurozone, the money supply grew
strongly (with M3 up 4.1%) and the German Ifo index held steady
at a high level (106.8).
To be monitored this week: February PMI, OFS January overnight
hotel stays, OFS February consumer price index and SNB end
February currency reserves. Company news: 2014 results from VZ
Holding, Daetwyler, AFG, GAM, PSP Swiss Property, Swissquote,
Coltene, Kaba, Bossard, Newron, Panalpina, Bucher, Siegfried,
Autoneum, Swisslog, BC du Valais, SFS and Zehnder.
NOVARTIS has announced the finalisation of the deal negotiated
with GSK in April 2014, entailing the sale of vaccines to the latter and
the acquisition of the UK group’s oncology products. Sonova has
announced the acquisition of German company Hansaton Akustik
(a hearing solutions wholesaler with sales of €42m) to strengthen its
presence in the region. At the same time, the company is speeding
up the relocation of its assembly activities to the UK and China so
as to reduce its exposure to the Swiss franc.
Sentiment of traders
Stock market
Events this week will include various PMI figures around the world,
Thursday’s ECB meeting and US unemployment on Friday. At the
dawn of European QE and given current bond yields, we still see
no alternative to equities.
Currencies
Oil rose sharply last week from $60 to $63 a barrel and gold rose
from $1,197 to $1,219/oz; targets of $1,236 and even $1,245 are
possible. Janet Yellen (Fed) is in no hurry to raise interest rates,
and this could slow the dollar’s rise in the short term (this morning
EUR/USD: 1.1180; USD/CHF: 0.9550). If EUR/USD permanently
breaks through support at 1.11, the way is clear to parity. Caution:
the GBP/EUR pair has reached a seven-year high of 1.3750. Our
ranges: EUR/CHF: 1.0550-1.08; USD/CHF: 0.9440-0.9650.
Today’s graph
Consumer Confidence (Conference Board & University of Michigan)
160
140
140
120
120
100
100
80
80
60
60
40
40
20
1990
1995
2000
Consumer Confidence (Conference Board)
Consumer Sentiment (Univ. of Michigan)
ASML has announced that its partner TSMC (Taiwan) has topped
1,000 wafers in 24 hours using an EUV machine. This endurance
test is very positive for ASML, since it confirms a gradual improvement in EUV productivity and could prompt other players to place
orders.
ERICSSON has announced a partnership with Bridge Alliance to
create a software platform designed to facilitate the deployment
and control of services based on the Internet of Things for the
alliance’s 36 mobile operators, mainly based in Asia-Pacific, the
Middle East and Africa.
PUBLIC POWER CORPORATION (PPC) is Greece’s majority government-owned electricity company. The group has two thirds of
the country’s production capacity and owns the bulk of its electricity transmission and distribution networks. The share is massively
discounted relative to European energy suppliers, notably with a
P/B of less than 0.3x. Its price is inversely correlated with Greek
risk. We are banking on a squeeze on Greek 10-year yields, automatically triggering an upturn in the share price, and have added
PPC to our Satellite Recommendations, stressing its risky and
speculative nature.
PUBLICIS has announced the acquisition of South African agency
Epic Communications. The agency, which has 50 employees,
specialises in four areas: PR, digital, brand strategy and events.
Publicis is strengthening its presence in a country in which it has
already made a number of acquisitions.
WPP is strengthening its presence in sub-Saharan Africa. Its
GroupM network has announced that three of its agencies (MEC,
MediaCom and Mindshare) are to be located in Nairobi. WPP’s first
targets are Kenya and Ghana, still miniscule advertising markets
compared with South Africa, Egypt, Nigeria and Morocco (which
together account for c. 60% of the African market).
Performances
United States
160
A temporary agreement was confirmed between Greece and its
creditors, enabling European equities to gain some ground (up
2.6%) while US markets ended the week slightly down (down 0.3%).
Appetite for European assets was also reflected in the subsequent
decline in peripheral sovereign yields (IT: -24 bps; ES: 23 bps);
meanwhile, US yields fell 14 bps and emerging sovereign yields
24 bps. Against this backdrop, the dollar picked up (dollar index:
up 1%) and the price of oil rose by 1.4%. To be monitored this
week: ISM manufacturing and services PMI, employment report,
Fed Beige Book and trade balance in the US; unemployment, consumer price index, retail sales, ECB meeting and revised Q4 GDP
in the eurozone; and manufacturing and services PMI (HSBC and
official) in China.
2005
2010
2015
20
Switzerland
Since
SMI
Europe
USA
Emerging countries
Japan
20.02.2015
1.38%
01.01.2015
0.35%
Europe Stoxx 600
2.60%
14.50%
S&P 500
-0.27%
2.21%
MSCI Emerging
0.60%
3.55%
Nikkei 225
2.54%
7.72%
As at 27.02.2015
CHF vs. USD
0.9480
-0.40%
4.82%
EUR vs. USD
1.1217
-1.34%
-7.31%
10-year yield CHF (level)
-0.07%
-0.03%
0.31%
10-year yield EUR (level)
0.32%
0.37%
0.54%
10-year yield USD (level)
2.01%
2.14%
2.17%
Gold (USD/per once)
1'216.57
0.82%
2.55%
Brent (USD/bl)
61.06
1.39%
9.35%
Source: Datastream
Source: Thomson Reuters Datastream, 02/03/2015
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