Monday Report 06 May 2019 - Bordier & Cie · Karen Millen to manage payments made by Chinese...
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06 May 2019 Monday Report Economy Markets Swiss Market Equities Sentiment of traders Performances Today’s graph This document has been issued for information purposes. The views and opinions contained in it are those of Bordier & Cie. Its contents may not be reproduced or redistributed. The user will be held liable for any unauthorised reproduction or circulation of this document, which may give rise to legal proceedings. All the information contained in it is provided for information only and should in no way be taken as investment advice. Furthermore, it is emphasized that the provisions of our legal information page are fully applicable to this document and namely provisions concerning the restrictions arising from different national laws and regulations. Consequently, Bordier Bank does namely not provide any investment services or advice to “US persons” as defined by the Securities and Exchange Commission rules. Furthermore, the information on our website – including the present document – is by no mean directed to such persons or entities Bonds ABINBEV (Core Holdings) is due to report its Q1 2019 results this Tuesday. The consensus is for organic growth of 5.1% in sales and 7.9% in EBITDA… a solid performance! The recovery in South America (volumes and prices), and particularly Brazil, will help, while the US market is showing a slight improvement. ATOS (Satellites) is now listed separately from Worldline. The group has distributed 23.5% of the electronic payments operator to its shareholders and deconsolidated the remaining assets still in its possession (27.4%), now recognised as financial assets. All proposed resolutions were passed at the AGM on 30 April. We have removed LEGRAND from our Core Holdings on disap- pointing Q1 results and a price close to our fundamental value (€65), which we had downgraded notably due to increased volatil- ity in the share price. TOTAL (Satellites) is to buy Anadarko’s African assets for $8.8bn, subject to Occidental Petroleum acquiring Anadarko (offer pend- ing). This would add another 1.2bn barrels of reserves to the French group’s portfolio. WIRECARD (Core Holdings) has entered into a partnership with Karen Millen to manage payments made by Chinese tourists via Alipay. London-based Karen Millen (clothing and fashion accesso- ries) has 400 stores in 63 countries across six continents. Wirecard’s mobile digital payment (ePOS) solutions will be available to Chi- nese customers using any smartphone (Android or iOS). To be monitored this week: FSO March overnight hotel stays, SNB end April currency reserves, KOF April economic survey and SECO April unemployment statistics. The following companies are due to release figures: Datacolor, Schaffner, Oerlikon, Adecco, PSP Swiss Property, SIG Combibloc, Pargesa, Zurich Insurance, Molecular Partners, Schmolz+Bickenbach and Swiss Life. Stock market After another week of gains punctuated by very low US unem- ployment, this week looks set to be complicated after Trump put pressure on China over a trade deal, threatening further import tariffs very soon. Quarterly results and PMIs will be relegated to the sidelines. The renewed trade war will trigger profit-taking. Currencies Trump is threatening China with a 10-25% hike in import tariffs from this Friday. This is bad news for USD/CHF (1.016), USD/ZAR (14.48), USD/TRY (6) and stock markets. Rumours that Theresa May is 99% of the way towards securing a deal are very positive for GBP/USD (1.3125); target: 1.326. We expect a weaker USD at USD/CHF 1.0120 and subsequently 1.00, EUR/USD at 1.1325 and a firmer CHF at EUR/CHF 1.1280, provided the pair breaks through support at 1.1350. Our targets are $1,304/oz for gold and $65 a barrel for Brent. The Fed meeting showed that the central bank’s members are more dovish than the market. Moreover, the US president’s tweets over the weekend seriously dented hopes of a trade deal with China. Markets have thus lost – temporarily, at least – two major supports for risk appetite. Global equities gained 0.3% last week, 10-year sovereign yields rose 3-5 bps and corporate spreads held fairly steady. The US dollar index fell 0.5%, though this did not stop gold losing ground (down 0.5%). To be monitored this week: consumer credit and producer and consumer price indices in the US; Sentix confidence indicator and retail sales in the eurozone; and manufacturing and services PMIs in China. US statistics were a mixed bag. While the consumer confidence index rose from 124.2 to 129.2 in April, the ISM manufacturing and services PMI both disappointed, down from 55.3 to 52.8 and from 56.1 to 55.5 respectively. Real activity figures surprised to the upside: corporate America created far more jobs than expected in April (263,000), causing the unemployment rate to plummet to a 50-year low, and company orders picked up 1.9% (MoM) in March. In the eurozone, confidence indicators lost ground (with the business climate indicator down from 0.54 to 0.42 and industrial confidence down from -1.6 to -4.1), while the unemployment rate fell further than expected to 7.7% (March) and Q1 GDP growth was slightly higher than expected (0.4% QoQ; 1.2% YoY). Lastly, in China, manufacturing and services PMIs were both disappointing in April, down from 50.5 to 50.1 and from 54.8 to 54.3 respectively. As at 03.05.2019 26.04.2019 31.12.2018 SMI 9 741.99 0.18% 15.57% Europe Stoxx 600 390.37 -0.16% 15.62% MSCI USA 2 807.30 0.21% 17.78% MSCI Emerging 1 082.77 0.44% 12.11% Nikkei 225 22 258.73 0.00% 11.21% As at 03.05.2019 CHF vs. USD 1.0177 0.16% -3.13% EUR vs. USD 1.1188 0.22% -2.13% 10-year yield CHF (level) -0.38% -0.40% -0.24% 10-year yield EUR (level) 0.02% -0.02% 0.25% 10-year yield USD (level) 2.53% 2.50% 2.69% Gold (USD/per once) 1 281.04 -0.50% -0.02% Brent (USD/bl) 71.44 -0.75% 34.46% Source: Datastream Since According to the Fed, low inflation is a transitory phenomenon. With the market banking on the Fed being more proactive, this triggered a sell-off of sovereign debt. The primary market in IG bonds was very busy, with $21.3bn issued, weighing on spreads. The combined effect left the segment in negative territory, while high-yield continued to tighten, up almost 9% YTD.
Transcript of Monday Report 06 May 2019 - Bordier & Cie · Karen Millen to manage payments made by Chinese...
06 May 2019Monday Report
Economy Markets
Swiss Market Equities
Sentiment of traders
PerformancesToday’s graph
This document has been issued for information purposes. The views and opinions contained in it are those of Bordier & Cie. Its contents may not be reproduced or redistributed. The user will be held liable for any unauthorised reproduction or circulation of this document, which may give rise to legal proceedings. All the information contained in it is provided for information only and should in no way be taken as investment advice. Furthermore, it is emphasized that the provisions of our legal information page are fully applicable to this document and namely provisions concerning the restrictions arising from different national laws and regulations. Consequently, Bordier Bank does namely not provide any investment services or advice to “US persons” as defined by the Securities and Exchange Commission rules. Furthermore, the information on our website – including the present document – is by no mean directed to such persons or entities
Bonds
ABINBEV (Core Holdings) is due to report its Q1 2019 results this Tuesday. The consensus is for organic growth of 5.1% in sales and 7.9% in EBITDA… a solid performance! The recovery in South America (volumes and prices), and particularly Brazil, will help, while the US market is showing a slight improvement.
ATOS (Satellites) is now listed separately from Worldline. The group has distributed 23.5% of the electronic payments operator to its shareholders and deconsolidated the remaining assets still in its possession (27.4%), now recognised as financial assets. All proposed resolutions were passed at the AGM on 30 April.
We have removed LEGRAND from our Core Holdings on disap-pointing Q1 results and a price close to our fundamental value (€65), which we had downgraded notably due to increased volatil-ity in the share price.
TOTAL (Satellites) is to buy Anadarko’s African assets for $8.8bn, subject to Occidental Petroleum acquiring Anadarko (offer pend-ing). This would add another 1.2bn barrels of reserves to the French group’s portfolio.
WIRECARD (Core Holdings) has entered into a partnership with Karen Millen to manage payments made by Chinese tourists via Alipay. London-based Karen Millen (clothing and fashion accesso-ries) has 400 stores in 63 countries across six continents. Wirecard’s mobile digital payment (ePOS) solutions will be available to Chi-nese customers using any smartphone (Android or iOS).
To be monitored this week: FSO March overnight hotel stays, SNB end April currency reserves, KOF April economic survey and SECO April unemployment statistics.The following companies are due to release figures: Datacolor, Schaffner, Oerlikon, Adecco, PSP Swiss Property, SIG Combibloc, Pargesa, Zurich Insurance, Molecular Partners, Schmolz+Bickenbach and Swiss Life.
Stock marketAfter another week of gains punctuated by very low US unem-ployment, this week looks set to be complicated after Trump put pressure on China over a trade deal, threatening further import tariffs very soon. Quarterly results and PMIs will be relegated to the sidelines. The renewed trade war will trigger profit-taking.CurrenciesTrump is threatening China with a 10-25% hike in import tariffs from this Friday. This is bad news for USD/CHF (1.016), USD/ZAR (14.48), USD/TRY (6) and stock markets. Rumours that Theresa May is 99% of the way towards securing a deal are very positive for GBP/USD (1.3125); target: 1.326. We expect a weaker USD at USD/CHF 1.0120 and subsequently 1.00, EUR/USD at 1.1325 and a firmer CHF at EUR/CHF 1.1280, provided the pair breaks through support at 1.1350. Our targets are $1,304/oz for gold and $65 a barrel for Brent.
The Fed meeting showed that the central bank’s members are more dovish than the market. Moreover, the US president’s tweets over the weekend seriously dented hopes of a trade deal with China. Markets have thus lost – temporarily, at least – two major supports for risk appetite. Global equities gained 0.3% last week, 10-year sovereign yields rose 3-5 bps and corporate spreads held fairly steady. The US dollar index fell 0.5%, though this did not stop gold losing ground (down 0.5%). To be monitored this week: consumer credit and producer and consumer price indices in the US; Sentix confidence indicator and retail sales in the eurozone; and manufacturing and services PMIs in China.
US statistics were a mixed bag. While the consumer confidence index rose from 124.2 to 129.2 in April, the ISM manufacturing and services PMI both disappointed, down from 55.3 to 52.8 and from 56.1 to 55.5 respectively. Real activity figures surprised to the upside: corporate America created far more jobs than expected in April (263,000), causing the unemployment rate to plummet to a 50-year low, and company orders picked up 1.9% (MoM) in March. In the eurozone, confidence indicators lost ground (with the business climate indicator down from 0.54 to 0.42 and industrial confidence down from -1.6 to -4.1), while the unemployment rate fell further than expected to 7.7% (March) and Q1 GDP growth was slightly higher than expected (0.4% QoQ; 1.2% YoY). Lastly, in China, manufacturing and services PMIs were both disappointing in April, down from 50.5 to 50.1 and from 54.8 to 54.3 respectively.
As at 03.05.2019 26.04.2019 31.12.2018SMI 9 741.99 0.18% 15.57%
Europe Stoxx 600 390.37 -0.16% 15.62%MSCI USA 2 807.30 0.21% 17.78%
MSCI Emerging 1 082.77 0.44% 12.11%Nikkei 225 22 258.73 0.00% 11.21%
As at 03.05.2019CHF vs. USD 1.0177 0.16% -3.13%EUR vs. USD 1.1188 0.22% -2.13%
10-year yield CHF (level) -0.38% -0.40% -0.24%10-year yield EUR (level) 0.02% -0.02% 0.25%10-year yield USD (level) 2.53% 2.50% 2.69%
Gold (USD/per once) 1 281.04 -0.50% -0.02%Brent (USD/bl) 71.44 -0.75% 34.46%
Source: Datastream
Since
According to the Fed, low inflation is a transitory phenomenon. With the market banking on the Fed being more proactive, this triggered a sell-off of sovereign debt. The primary market in IG bonds was very busy, with $21.3bn issued, weighing on spreads. The combined effect left the segment in negative territory, while high-yield continued to tighten, up almost 9% YTD.
