G.I. Job

GLOBAL EQUITIES RESEARCH

Nearly 6 million U.S. Nonfarm payrolls jobs have been lost in the past year, but the tsunami of job destruction seems to be finally petering out. The government will report today the July labor market. Economists surveyed by Bloomberg expect that only 328,000 jobs were lost in Nonfarm payrolls basis, significantly lower than the 467,000 lost in June. July's data could look better than the job market really was, just as June's were worse. The data have been distorted in the past few months by the timing of the automakers' plant shutdowns. Temporary plant closings that typically occur in July instead happened in May and June this year. The improvement is not expected to come from a material change in labor market fundamentals, but rather from a quirk in the seasonal adjustment process that has also led to an exaggerated drop in initial jobless claims. Labor demand could also revive faster and more vigorously than most expect, as businesses are so lean that they will be forced to re-hire workers not long after they start to see healthier demand. The European Central Bank unanimously left rates on hold at 1.00% on Thursday as was widely expected. In the accompanying press conference ECB President Trichet noted that interest rates were appropriate and that economic activity was likely to remain weak despite some signs of stabilization within the economy. Trichet also said that he saw recovery into 2010. Commenting on non-standard monetary policy, Trichet said that these measure would be quickly unwound once the macroeconomic environment improved. The ECB did not discuss whether rates were at their lowest level. On currencies, Trichet continued to stress the importance of a strong USD policy. Consumer prices in the Eurozone fell more than forecast from minus 0.1 per cent in June to minus 0.6 per cent last month, the European Union's statistics office said last week. This left consumer prices well below the ECB's annual target of close to but below two per cent. But Trichet said the ECB believes that inflation will return to positive rates later in the year as economic growth slowly starts to gain traction. Meeting in London, the BoE's nine-member monetary policy committee left rates on hold at a record low of 0.5% but moved to top up its so-called quantitative-easing program by £50 billion. This brought the BoE's quantitative easing program to £ 175 billion. The 2Q09 earning season continue to outperform. So far, 71.9% (317 over 441) of the companies in the S&P 500 have reported positive surprises. With –18.48% of negative earning growth, results resume to be better. At the beginning of July, analysts were betting for a 34% earning fall. In the past week, Goldman, RDQ Economics, Deutsche Bank and UBS have raised their growth forecasts for the second half of the year. Fresh details about the popularity of the U.S. government's clunkers program, which gives car owners a rebate for trading in their gas guzzlers, plus details on low inventories in last week's second-quarter GDP report, triggered many of those upgrades. The recession and recovery is starting to look more V-shaped. ECONOMIC DATA WITH IMPACT UK PPI Outpout core – July (08.30 GMT) : exp + 0.1% / prev –0.8% German Industrial production MoM – June - (10.00 GMT) : exp +0.50 / prev +3.7% US Nonfarm Payrolls – July – (12.30 GMT) : exp –328 K / prev –467 K POSITIVE IMPACTS UMICORE : H1 turnover €3.38 bn (€3.11 bn) / Rebit €49.5 m (€47 m) / Saw signs of recovery in some businesses TELIASONERA said that Turkey's unlisted Cukurova group has been ordered to give the firm Turkcell shares at a value of $3.1 bn / An arbitration tribunal has estimated the lost value for TeliaSonera would be $1.8 bn if the shares are not delivered… Story not over… SWISSCOM :Fastweb reported Q2 revenue €474m (460m exp) with Ebitda of €143.5m (141.2m exp) / Confirmed its guidance for the year / Swisscom is expected to report is own results Aug. 12… LOGICA : H1 revenue €1.9bn (1.88 bn e) / Adj. Op. £127m (120m e) / H1 div. 1p (1.15p exp) /Adj. Op. mgin maintained at 6.8% AVIVA’s plan to sell part of its Dutch Delta Lloyd unit through an IPO could raise about £855m (FT) UNIPOL : H1 Gross Premium €4.95bn (in line) / Pre-Tax Profit €106.4m (€129m exp) / CR 100.6% UBS : U.S. government officials are due to hold a teleconference about settlement talks between the U.S. and Switzerland regarding a lawsuit demanding the names of 52k UBS clients suspected of using Swiss secrecy laws to evade taxes at 13:45 UKT NEGATIVE IMPACTS PEUGEOT : S&P cut its credit ratings on Peugeot to junk territory, saying low automotive demand in Europe would continue to weigh on the auto maker's already-weak profitability… ALLIANZ : Q2 revenue €22.2bn (€21.9bn e) / Operating €1.8bn (In Line) / Solvency 159% / Disappointing CR of 98.9% (97.7% exp) but expects improvement in H2 / Strongly capitalized / Prepared for continued challenging markets / Able to benefit from market upturn SOC GEN’s former head of CIB resigned after the French stock market regulator’s opened a probe into possible insider trading / The AMF also opened sanction proceedings against a non-executive director at the bank, who sold €40m of SocGen shares in Jan. 2008, weeks before the bank announced a €2bn write-down on its exposure to US subprime mortgages and €4.9bn of losses from the alleged rogue trades of Jérôme Kerviel / Mr Mustier and Mr Day both denied the insider trading allegations K+S : Fertiliser maker Intrepid Potash reported Q2 results slightly below exp. / CEO said : “potash sales volumes continue to be at reduced levels as dealers showed greater hesitancy to refill their inventories and to take on price risk during the Q2” FUGRO : 2H1 sales €1.035bn (1.06bn e) / Ebit €176.6m (177.6m e) / Backlog €931m / Sees lower margin than 2008 with same sales AIR FRANCE reported a 3.3% drop in passenger traffic in July (-5.8% last quarter) with load factor +0.7points to 85.1% / However, cargo unit still showed a 17.2% drop in traffic, with stable load factor of 64% EADS (Minor) : AirAsia has deferred the delivery of 8 A320 aircraft to 2014 from 2010 as the existing low-cost terminal is unable to support its fleet expansion. ALLIED IRISH BANK had its LT counterparty A credit rating retained on CreditWatch by S&P, which said “further capital support may be needed if the bank is to maintain capitalization at a level that is consistent” with the current rating… FIAT : S&P affirmed its "BB+" long-term rating on the group's debt, removed the rating from CreditWatch but kept its outlook at negative. TRADING IDEAS BUY DEUTSCHE BANK / TOTAL / GSZ / EXXON / NEW MONT MINING on reversal head & shoulder BUY AHOLD to play closure above soon BUY YAHOO on double bottom possibility BUY TOTAL / SELL BP // BUY GENERALI / SELL ALLIANZ // BUY BASF / SELL LINDE // BUY CARREFOUR / SELL L OREAL BUY INTEL / SELL TEXAS // BUY LAS VEGAS SANDS / SELL STARWOOD HOTELS // BUY VISA / SELL MASTERCARD // BUY EXXON / SELL CHEVRON BROKER METEOROLOGY SOLARWORLD RAISED TO EQUALWEIGHT FROM UNDERWEIGHT BY MORGAN STANLEY HANNOVER RE RAISED TO NEUTRAL FROM UNDERWEIGHT BY HSBC UNICREDIT RAISED TO OVERWEIGHT FROM NEUTRAL BY HSBC FRANCE TELECOM RAISED TO OVERWEIGHT FROM NEUTRAL BY JP MORGAN LADBROKES RAISED TO NEUTRAL FROM SELL BY GOLDMAN SACHS KPN STARTED AT BUY BY ING GAZPROM CUT TO NEUTRAL FROM OVERWEIGHT BY HSBC NOVO NORDISK REMOVED FROM PAN-EUROPE BUY LIST BY GOLDMAN SACHS NOVO NORDISK CUT TO NEUTRAL BY UBS SWISS RE CUT TO UNDERWEIGHT FROM EQUALWEIGHT BY MORGAN STANLEY CGG VERITAS CUT TO UNDERWEIGHT FROM EQUALWEIGHT BY BARCLAYS TELECOM ITALIA CUT TO NEUTRAL FROM BUY BY BANK OF AMERICA - MERRILL LYNCH RENEWABLE ENEGY CUT TO UNDERWEIGHT FROM EQUALWEIGHT BY MORGAN STANLEY S&P CUT RATING ON PEAUGEOT TO JUNK DATA WTI : 71,6 (0,46 %) Eur/$ : 1,4365 (0,13 %) $ /Yen : 95,36 (-0,02 ) 10 Yr US : 3,77 ( 1,63 bp) 10 Yr Euro : 3,37 ( 3,5 bp) Indices : US close ; Europe close SOX : -1,32 %;-1,14% S&P :-0,56 %; -0,27 % DOW: -0,27%; -0,10 % NAS :-1,00%; -0,50% DJ Stoxx US Sectoral Indices : US close ; Europe close BASIC MATERIALS : -0,73 %; -0,43 % ENERGY : -0,90 %; -0,97 % FINANCIAL : -0,63 %; 0,49 % HEALTHCARE : -1,07 %; -0,85 % TECHNO : -0,85 %; -0,60 % TELECOM : -1,11 %; -1,44 % INDUSTRIAL : 0,04 %; 0,40 % UTILITIES : 0,07 %; -0,07 % TO BE COMING Today Results :Allianz / Fugro Hypo Real Estate / Logica / Dividend : Events : Monday Results : Clear Channel Dividend : Events: Tuesday Results : Adecco / Friends Provident / Geberit / Intercontinental Hotels / Renewable Energy / International Power / Applied Materials Dividend : Applied Materials ($0.06) / Wyeth ($0,3) Events : Wednesday Results : BHP Bilitton / E.On / ING / TUI Travel trading statement / Lanxess / Sara Lee Dividend :BT Group (GBp 1,222222) / Northumbrian Water (GBp 9,444444) / Wal-Mart Stores($0,2725) Events: Heinz AGM / Xilinx AGM Thursday Results :Aegon / RWE / Premiere AG / SalzfitterTUI AG / Estee Lauder Dividend : Events:Prudential analyst meeting ECONOMIC DATA PREVIEW Today in the United-States, watch the release of the The Labor Department Employment report for July due at 13.30 GMT. Changes in Nonfarm payroll are expected to contract by 328 000 following 467 000 in June. The jobless rate would climb at 9.6 % from 9.5 % or the highest level since June 1983. In Germany, have a look at the Industrial Production (11.00 GMT) for June expected to slightly rose 0.5 % after a 3.7 % rise in May. From a year earlier, the Industrial Production is expected to contract at a slower pace by 17.5 % from –17.9 % the previous month. ECONOMY United States: the weekly initial jobless claims fell The US initial jobless claims fell more than estimated. The application decline by 38 000 to 550 000 the week ended August 1st. It is the fifth straight week that claims are below 600 000. The consensus expected claims to drop to 580 000 following But the pace of job cut isn’t slowing fast enough to keep unemployment from rising. The number of continuing claims increased by 69 000 to 6, 31 million the week ended July 25. The Labor Department will probably report this Friday payrolls that fell by 325 000 workers after dropping by 467 000 in June. Euro zone: the ECB left its key interest rates unchanged As expected the ECB kept its benchmark interest rate at the record low of 1 %. The ECB’s President Jean-Claude Trichet said that “ “The information and analysis that have become available since the last ECB decision confirm our view that the current rates remain appropriate. Annual inflation rates are expected to remain temporarily in negative territory before turning positive later this year.” Looking further ahead, “inflation is expected to remain in positive territory, while price pressures are expected to remain subdued. Price expectations remain firmly anchored. Confidence may also improve more quickly than currently”. Jean-Claude Trichet added that “ there are increasing signs that the global recession is bottoming out. He didn’t exclude bumpy roads. or contradictory signs” about the recovery.” The Bank of England today said it will increase its bond purchase program to 175 billion pounds the central bank left its key interest rate at 0.5 percent. Germany: the factory orders surged in June The German factory order unexpectedly surged in June to their biggest increase in two years. The orders climbed again 4.5 % in June (an only 0.6 % increase was expected).. The increase in June was driven by an 8.3 % surge in export orders This report adds to evidence that the Europe’s largest economy is emerging from recession.