15 December 2014 Monday Report

Monday Report 15 December 2014
Economy
Markets
Swiss Market
Recommended Stock Watch
Confidence among US SMEs continued to improve in November,
up from 96.1 to 98.1. Retail sales were also up more than expected
(+0.7%), buoyed by household confidence (University of Michigan),
which climbed to 93.6 (vs. 88.8 in October), its highest level since
the end of the great recession. Finally, inflationary pressures remained weak, import prices fell 1.5% in November (down 2.3%
YoY) and producer prices rose 0.2% (up 1.4% YoY). In the eurozone,
industrial production was disappointing in October (up 0.1%). In
China, official statistics were in line with expectations, with investment up 15.8% YoY, retail sales up 11.7% and industrial production
up 7.2%.
To be monitored this week: OFS November producer and import
prices, KOF winter 2014 forecasts, December ZEW indicator, SECO
updated economic forecasts, AFD November foreign trade, FH
November watch exports and OFS October construction price
index. Company news: 2013/14 results from Intersport PSC and
Axpo and H1 2014/15 results from Perrot Duval.
NOVARTIS (PLUS) on Friday released positive data on Cosentyx for
psoriasis vs. J&J’s Stelara, confirming its positioning as the future
benchmark treatment for this indication. SWISSCOM (PLUS) has
acquired Veltigroup, one of French-speaking Switzerland’s leading
IT services companies alongside IBM and HP. The company, which
has 480 employees, will allow Swisscom to offer a full range of IT
services to medium-sized business customers.
Sentiment of traders
Stock market
Oil and Greece have spoilt the party, sending govt. bond yields,
which seemed to be perking up last Monday, through the floor. Equity
indices are testing key support levels and caution is required. Note
the FOMC meeting this Wednesday and futures and options maturities on Friday. Low visibility: we are going neutral in the short term.
Currencies
The SNB would like a weaker CHF, but the EUR/CHF pair remains
in the range 1.20-1.2055. This is not surprising in a very worried
market (oil at $61; Ukraine). We expect the USD to be stable or
slightly bullish this week, with support at around USD/CHF 0.953
and resistance at 0.9815. We are more cautious on the euro (EU unemployment; strikes in Italy/Belgium), which could see a return to
around EUR/USD 1.225. Note also that the AUD has fallen sharply
to $0.824 (terrorist activity in Sydney).
Today’s graph
Consumer Confidence (Conference Board & University of Michigan)
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
1990
1995
2000
Consumer Confidence (Conference Board)
Consumer Sentiment (Univ. of Michigan)
ACCOR (Satellite recommendation) has signed a strategic agreement with Huazhu (China’s leading hotel group) in the budget
and midscale segments. Accor will receive a 10% shareholding in
Huazhu in exchange for 10% of its upscale offering in China. The
deal will give Accor access to China’s biggest hotel pipeline (2,000
hotels) and Huazhu’s 47 million members: a growth accelerator!
ERICSSON (PLUS) has had imports into India of smartphones made
by Chinese player Xiaomi blocked after filing a complaint in India
for non-payment of royalties. Ericsson is becoming more aggressive in this area as it seeks to more effectively monetise its patent
portfolio.
PRO7SAT1 (Satellite recommendation) has announced that its
SVoD (subscription video on demand) subsidiary Maxdome has
signed an agreement with Spiegel TV to supply local documentaries and reports. In the face of international players (like Netflix
and its ilk), local content acts as a differentiating factor and thus a
foundation for success.
ENERGY SECTOR (negative view): the International Energy Agency has further cut its global oil demand forecasts for 2015, to 93.3m
barrels a day – below current production levels – vs. 93.5m previously and 92.4m for 2014e. Russian consumption, in particular, is
expected to decline.
WIENERBERGER (newly rated MINUS): a robust recovery in activity
remains a distant prospect, and tension in Eastern Europe is a risk
factor. The share is still undervalued, but no longer as glaringly as
it was in 2013.
Performances
United States
160
The fall in oil prices accelerated further (down 9.5%). The resulting
volatility contaminated other asset classes: equities lost 3.6% (MSCI
World) and Europe was hit harder (down 5.8% because of the risk
of early elections in Greece), while yields on high-yield bonds rose
45 bps and those on sovereign emerging debt rose 102 bps (in local currency), mainly because of weaker currencies (RUB: -4%; BRL,
MXN and ZAR: -2.5%). Fortunately, yields on dollar-denominated
emerging sovereign debt did not rise. To be monitored this week:
industrial production, NAHB index of confidence among homebuilders, housing starts, building permits, CPI and FOMC meeting
in the US; manufacturing and services PMI in the eurozone; Ifo
index in Germany; and HSBC manufacturing PMI in China.
2005
2010
2015
Switzerland
Since
SMI
Europe
Europe Stoxx 600
-5.82%
0.70%
USA
S&P 500
-3.52%
8.33%
Emerging countries
MSCI Emerging
-4.80%
-6.41%
Japan
Nikkei 225
-3.06%
6.63%
05.12.2014
-3.45%
01.01.2014
8.44%
As at 12.12.2014
CHF vs. USD
0.9638
1.45%
-7.72%
EUR vs. USD
1.2462
1.34%
-9.56%
10-year yield CHF (level)
0.27%
0.30%
1.09%
10-year yield EUR (level)
0.63%
0.78%
1.94%
10-year yield USD (level)
2.10%
2.31%
3.01%
Gold (USD/per once)
1 222.88
2.33%
1.24%
Brent (USD/bl)
62.08
-9.53%
-44.27%
Source: Datastream
Source: Thomson Reuters Datastream, 15.12.2014
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