Goldenman

Big day today with some major corporate news (Nokia, Goldman, Citigroup) to be released over the trading day, as well as macro events such the Jobless Claims which improved last week, the CPI which will tell that deflation is not the focus for now and regional industrial sentiment surveys which will tell that the little ISM manufacturing weakness (although still reflecting a 3% growth) was just a blip after the fantastic rise from the previous months.
Interesting comments from Intel Ceo which fills an already very full glass on a macro front. Indeed there was a lot of doubts that firms were reinvesting, and the Intel data tend to show they are. Intel did (and still does) profit from a back to school effect, and Intel is doing 80% sales with PC makers. Optimistic economists kept on saying that corporate did freeze investments after Lehman ‘s bankruptcy, and there is now a need to unfreeze just to replace some old fashion products. As such, firms will be happy to profit from the new Windows 7 version. The upshot here is that you don’t need exuberant investments to make the economy run on its own at this stage, and precisely this is what seems to be happening. In which case, you could nearly say that the stimuli which supported the world, through low yields and mortgage rates, with a direct boost on the car sector during the summer, is reaching other sectors and spilling over to the overall economy which already the households resilient consumption was reflecting. The virtuous circle is on track, which doesn’t mean things are great looking yet, but we remain confident it will keep on improving, especially with Obama now really focusing on the employment so much his political success depends on it, and fears the risk to lose the Senate election in November 2010.
Both the Retail Sales data and JP Morgan are predicting some brighter days for the equity indices and the economy. Indeed the equity rise did front run some possibly increasing fundamental macro background, which seems to happen, and might not stop for a while, not even talking about a possible increasing upside spiral. The Retail Sales survey kept showing that US households consumption is much more resilient than most economists, including ours, were expecting, with or without car incentives. This reflects the successful officials easy quantitative policies, which not only is bringing confidence back but is spreading to every sectors. The recovery seems to be much ahead of schedule in that case, after the manufacturing sector pick up, business investments seems to be increasing, as well as consumption. What comes behind is … hiring. Might take some time, but looking good. Next important macro event the industrial capacity utilisation on Friday which we want to rise, meaning over all business worldwide is increasing.
Even Europe is doing fine which BASF, ASML and Philips earnings reflected. No wonder, as August’s euro-zone industrial production figures provided further evidence that the recovery in the industrial sector pulled the region out of recession in the third quarter. Although the monthly gain in production of 0.9% was a bit weaker than hoped on the basis of the country data already released, upward revisions to previous months’ data mean that production has now risen for four consecutive months. What’s more, were it now to stagnate in September, this would give a gain over Q3 as a whole of something close to 2%, a vast improvement on Q2’s 1% fall. This in turn should boost GDP growth by something like 0.7% relative to Q2’s 0.2% fall. So barring sharp downturns in other sectors like services, growth should be comfortably positive in Q3.
Minutes of the FOMC meeting of September 22nd-23rd were released yesterday. The committee agreed that the incoming data and information received from business contacts suggested that economic activity had picked up following its severe downturn. Many participants thought an economic recovery was under way. Since August they have revised up their projections for H2 2009 and for subsequent years (Change in real GDP is expected to range between 2.0 % and 3.0 % in 2010, 3.5 % and 4.8 % in 2011). A number of factors were expected to support growth over the next few quarters: activity in the housing sector was evidently rising and house, and house prices had apparently stabilized or even increased; consumer spending seemed to be in the process of leveling out; report from business contacts and regional surveys were consistent with firms making progress in bringing inventories into better alignment with sales and with production stabilizing or beginning to rise in many sectors; the outlook for growth abroad has also improved, auguring well for U.S. exports; and financial markets have continued to improve over the past several months.
Carry trade is roaring, sending the dollar sharply down (1.4960 EUR/USD, 0.9223 AUD/USD intraday high this morning) and bursting major asset prices up: oil price rose to $75.96 /bbl this morning, while gold price soared to a record high of $1070.80 /oz yesterday. Equity markets followed the move on the upside: the DJIA closed above 10,000 while the S&P 500 index closed at 1,092.02 up 1.75 % yesterday. Half an hour before the close, the Nikkei was up 1.60 %. Other Asian markets were mixed. U.S. index futures were flat this morning: DJIA +0.02 %, S&P 500 +0.01 %, Nasdaq 100 -0.07 % (05.45 GMT). European markets could take a breather early in the session before gaining strength later.

ECONOMIC DATA WITH IMPACT

NOKIA : Q3 Results at 11:00 UKT / Conf Call at 13:00 UKT / Should not impact more than Nokia but just in case there was a positive surprise, Nokia is known to be struggling
GS : Q3 Results at 12:30 UKT / Conf Call at 14:00 UKT
CITIGROUP : Q3 Results at 13:00 UKT / Conf Call at 16:00 UKT
Jobless Claims (13h30 UK time) expected 522k from previous 521k / still bad levels but last week improvement was welcome, some more would be cheered / interesting although volatile and weekly data
CPI (13h30 UK time) expected 0.2% from previous 0.4% // ex food & energy 0.1% from previous 0.1% // minor asCPI is not the focus for now / one thing for sure, the deflation concept will be put aside for the next 6 months due to the energy prices rise and its base effect
Empire Manufacturing index (13h30 UK time) expected 17.5 from previous 18.88 / minor today but both regional surveys suggest the ISM weakness was just a blip
Philadelphia Index (15h UK) expected 12 from previous 14.1 / minor today
IBM + GOOGLE : Q3 Results after close

POSITIVE IMPACTS

ROCHE : Q3 sales SFR12.39bn (SFR 12.18bn exp) / Tweaked upward its forecast for FY sales to grow "well ahead" of the market, from just "ahead" of the market / Confirmed EPS targets (?) / Sees higher sales of Tamiflu, at SFR2.7bn this year (from SFR2bn before)
XSTRATA announced that it has no intention to make an offer for Anglo American / Continues to assess a range of alternative growth options / Confident in xstrata's standalone prospects
SIEMENS might sell its hearing-aid unit to investors or float it on the stock market for aroung €1bn (FTD) / Separately, as already rumoured, SIEMENS will acquire Israel’s Solel Solar Systems for between $250m and $400m (Handelsblatt)
EDF : VATTENFALL is eyeing a possible multi-billion pound investment in the U.K.'s nuclear power industry & would be considering acquiring a stake in EDF’s project to construct 4 new reactors in the U.K. (The Times)
PUBLICIS expects to outperform the market this year & next, and passed a low point in June (CEO) / He added that the market will remain negative at least until next summer, and will only turn positive in the H2 2010, thx to favourable basis for comparison
ING : Oversea Chinese Banking Corp agreed to acquire ING’s private banking assets in Asia for about $1.46bn
BNP could buy life insurance company Dexia Epargne Pension, a unit of Dexia, for around €100 m (La Tribune)
KPN announced the sale of SNT Netherlands and SNT Belgium to Fortis Private Equity Netherlands /

NEGATIVE IMPACTS

H&M : September SSS -8% (-7% exp) / Total sales up 1% (+2% exp)
CASINO : Q3 sales €7.12bn (7.17bn exp) / France sales of €4.50bn (€4.53bn exp) / Confirms 2009-10 targets / Plans to implement around €1 bn asset divestment plan by end-2010
LLOYDS : UK chancellor Alistair Darling is considering buying new shares worth up to £5bn in LLOYDS (The Guardian) / However, the FT wrote that the Treasury officials have insisted that the Government will not underwrite LLOYDS's planned rights issue…
SAP : Oracle unveiled a new line of software to be introduced next year making it more compelling than products from SAP (Analysts)
SUEDZUCKER : Q2 sales €1.54 bn (1.49bn exp) but operating €90.7 m (95m exp) / Sees FY operating at around €400 m (413m exp)
PREMIER FOODS sales up 1% in Q3 (up 3% in first 9 months) / Expectations for the FY remain unchanged
SABMILLER : Lager sales on an organic basis, down 1% compared to the prior year / Half year financial performance in line with exp.
BHP Billiton and RIO TINTO have scrapped a plan to jointly market ore from a planned Australia joint venture

TRADING IDEAS

BUY IBERDROLA / EON /ARCELORMITTAL on double bottom possibility
BUY FRANCE TEL / EDF / ROYAL DUTCH / ENI to play upside trend
SELL GSZ to play Head & Shoulder possibility

BUY ALSTOM / SELL SIEMENS // BUY AHOLD / SELL UNILEVER // BUY BAYER / SELL AKZO // BUY EON / SELL RWE // BUY QUALCOMM / SELL JUNIPER

BROKER METEOROLOGY

INTESA SANPAOLO RAISED TO BUY FROM HOLD BY DEUTSCHE BANK
SANDVIK RAISED TO BUY FROM HOLD BY RBS
UNICREDIT RAISED TO BUY FROM HOLD BY DEUTSCHE BANK
MITCHELLS&BUTLERS RAISED TO NEUTRAL BY GOLDMAN SACHS
OGK RAISED TO BUY FROM NEUTRAL BY UBS
VESTAS RAISED TO BUY FROM NEUTRAL BY UBS
GAMESA RAISED TO BUY FROM NEUTRAL BY UBS
YARA RAISED TO EQUALWEIGHT FROM UNDERWEIGHT BY MORGAN STANLEY
HENKEL RATED NEW BUY BY CITIGROUP
SANTANDER ADDED TO EUROPE 1 LIST BY BANK OF AMERICA – ML
METRO RAISED TO OVERWEIGHT FROM NEUTRAL BY JP MORGAN
BASF RAISED TO OUTPERFORM FROM NEUTRAL BY CREDIT SUISSE
SCHNEIDER ELECTRIC RAISED TO OVERWEIGHT BY MORGAN STANLEY
OLD MUTUAL RAISED TO BUY FROM NEUTRAL BY BANK OF AMERICA – ML
PIRELLI STARTED AT OVERWEIGHT BY MORGAN STANLEY

ALLIANZ CUT TO NEUTRAL FROM BUY BY BANK OF AMERICA – ML
SWISS RE CUT TO UNDERPERFORM FROM NEUTRAL BY BANK OF AMERICA - ML
M6 CUT TO EQUALWEIGHT FROM OVERWEIGHT BY MORGAN STANLEY
EDP RENOVAVEIS CUT TO SELL FROM NEUTRAL BY UBS
K+S CUT TO UNDERWEIGHT FROM EQUALWEIGHT BY MORGAN STANLEY
SWISS RE CUT TO UNDERPERFORM FROM NEUTRAL BY BANK OF AMERICA – ML
CENTRAL EUROPE TELECOMS CUT TO UNDERPERFORM BY HSBC
LATIN AMERICA TELECOMS CUT TO UNDERPERFORM BY HSBC
HEALTHCARE CUT TO UNDERPERFORM BY HSBC

DATA

WTI : 75,9 (1,13 %)
Eur/$ : 1,4951 (0,17 %)
$ /Yen : 89,42 (-0,17 )
10 Yr US : 3,42 ( 0,93 bp)
10 Yr Euro : 3,23 ( 6,3 bp)

Indices : US close ; Europe close
SOX : 1,37 %;0,79%
S&P :1,76 %; 1,26 %
DOW: 1,47%; 1,15 %
NAS :1,51%; 1,23%

DJ Stoxx US Sectoral Indices : US close ; Europe close
BASIC MATERIALS : 2,32 %; 1,91 %
ENERGY : 1,81 %; 1,42 %
FINANCIAL : 3,18 %; 2,20 %
HEALTHCARE : 1,45 %; 0,47 %
TECHNO : 1,45 %; 1,40 %
TELECOM : 0,05 %; 0,30 %
INDUSTRIAL : 2,48 %; 1,76 %
UTILITIES : 0,44 %; 0,16 %

TO BE COMING

Today
Results :Carrefour / Accor / Suedzucker / Nokia / Pearson / SABMiller trading statement / Baxter International / Tandberg / Suedzucker / Google / Roche / AMD / Wyeth / Citigroup / Goldman Sachs (BMO) / Safeway / Google / IBM / Coca Cola
Dividend :
Events :Procter & Gamble shareholders meeting

Friday
Results : Atos Origin / Bank Inter / Gazprom / Bank of America - ML / General Electric / Halliburton / Sony - Ericsson
Dividend : Santander TBA
Events: British Oncology Pharmacy Association Annual Symposium

Monday
Results : LVMH sales (AMC) / Sulzer sales / Soitec / Transgene / Apple / Texas Instrument (AMC) /
Dividend :
Events : Abengoa EGM

Tuesday
Results : PPR sales / Ahold trading statement / Iberdrola Renovables / ST Micro (After US close) / Swedbank / Yara International (BMO) / Xtrata / San Disk / Caterpillar (BMO) / American Express / Bank of New York Mellon / Du Pont de Nemours / Pfizer / Coca Cola Co / Lockheed Martin / United Health / Yahoo ! / UnitedHealth / United Technologies / Omnicom / SanDisk / Zain
Dividend :
Events: Soc Gen end of subscription time / Abengoa EGM

Wednesday
Results :Iberdrola / Fiat / Valeo / Alpha Laval / Cadbury : Skandinaviska Enskila Banken / Swedbank / Tele 2 / Boeing / US Bancorp / United Tech Home Retail / eBay / Wells Fargo / US Bancorp / Biogen / Elan / Altria
Dividend : BAE Systems (GBp 7,111111) / British Sky Broadcasting (GBp 11,22222) / Hays ( GBp 4,388889)
Events:

ECONOMIC DATA PREVIEW

Watch in the United-States the Consumer price index for September (13.30 GMT). After stabilizing in July, consumer prices rose by 0.4% in August and dropped by 1.5%YoY. For September, prices should rise by 0.2% led by the slight increase in commodities and by the economic recovery in the United States. The rate will slightly dropped to -1.4%YoY. The core index (excluding food and energy) should increase by 0.1% in September and by 1.4%YoY.

Watch in the Euro area the Consumer price index for September (10.00 GMT). Consumer price index are expected to rise by 0.1% in September (prior +0.3%) led by the slight recovery in the Euro area. From a year ago prices are expected to decline for a fourth consecutive month at -0.3% YoY deepening the deflation.

ECONOMY

United-States: Retail sales declined less than expected
After dropping by 0.2% in July stopping two consecutives months of increase, US retail sales rose by 2.2% in August. Mainly led by the end of the cash for clunkers program, retail sales declined by 1.5% in September. Nevertheless this drop remained under the consensus expectations at -2.1% and retail sales ex auto and ex gas remained consistent at receptively +0.5% and +0.4%. These data are confirming that consumption is progressively back in the United-States and we expect the GDP to rise by +3.0% (annualized) at the third quarter. Its important to bear in mind that household consumption account for 70% of the GDP in the United-States.


United-States: Fed Minutes
“In their discussion of the economic situation and outlook, meeting participants agreed that the incoming data and information received from business contacts suggested that economic activity had picked up following its severe downturn; most thought an economic recovery was under way. Many participants noted that since August, they had revised up their projections for the second half of 2009 and for subsequent years. A number of factors were expected to support growth over the next few quarters: Activity in the housing sector was evidently rising, and house prices had apparently stabilized or even increased; consumer spending seemed to be in the process of leveling out; reports from business contacts and regional surveys were consistent with firms making progress in bringing inventories into better alignment with sales and with production stabilizing or beginning to rise in many sectors; the outlook for growth abroad had also improved, auguring well for U.S. exports; and financial market conditions had continued to improve over the past several months.”


Euro area:Industrial production rise in August
Euro area industrial production rose for a fourth consecutive month by 0.9% in August. This rise trend is confirming the recovery in the industrial sector and more generally the slight economic rebound as shown by the PMI manufacturing index reaching 49.3 in September and by the economic sentiment (the best leading indicator of the Euro area GDP) rising in September for a fourth consecutive month. Looking at the breakdown capital goods rose by 1.1% (prior -1.6%) confirming the rebound of investment, and durable goods rose from 0.6% in July to 5.3% in August. Meanwhile from a year ago industrial production remained weak at -15.4% (prior -15.9%). These encouraging monthly industrial production data should boost the GDP at the third quarter which should rise by 0.7% after dropping by 0.2% at the second quarter. Nevertheless it is important to bear in mind that the recovery in the Euro area remained weak and fragile and it could not support to many bad news as a rise of energy prices, an increase of the ECB refi rate or a lasting strong euro.