In its « Risk Reversal » Europe 2018 outlook report, Exane BNP Paribas recommends to keep a value bias and prefer Oil & Gas, Travel & Leisure, Healthcare, Telecoms, Banks and Insurance sectors. Continuer la lecture de « In 2018, Stay Away from Cyclicals – Exane »
Societe Generale‘s CEO Frederic Oudea did not impress the markets with his 2020 strategic plan. Shares only gained 0.3% on Nov 28. Continuer la lecture de « Societe Generale: Market Not Impressed By Strategic Plan »
« Global earnings look set to deliver double digit growth this year, at 12%, the best since 2010. The strength was broad based, with all the key regions contributing, and largely driven by Cyclicals and commodities. As base effects are turning less favorable, the question is whether earnings will remain a support for equities into 2018. »
This is the opening statement and a rather bullish intro to a report published today by JPMorgan’s strategists Mislav Matejka, Emmanuel Cau, Prabhav Bhadani and Aditi Balachandar. Continuer la lecture de « JPMorgan Expects Double Digit Earnings Growth in 2018 Globally »
MSCI Europe has 6% left to rise next year, according to Morgan Stanley’s equity strategists for Europe. That forecast is based on a 9% EPS growth, thanks to better GDP numbers and oil price forecasts, according to a report date Nov 26.
So far, 2017 returns have been good for US equity investors. 2018 won’t repeat that, according to Morgan Stanley’s strategists in a report published today. Continuer la lecture de « Expect More Volatility in the US Equity Market – Morgan Stanley »
Morgan Stanley keeps a bullish call on equities in cross asset 2018 outlook published today, but ups government bonds to « Equal-Weight » and lowers credit to « Underweight ». Timing will be tricky. The bank also prefers EM debt. Continuer la lecture de « Morgan Stanley Favors Equities in 2018, Ups Bonds »
This is a bit « old » (Sept 19, 2017), but Goldman published a series of research papers on 5 European countries (France, UK, Germany, Italy, Spain) where they have a broad look at the economy and have a couple of CEOs and their own analysts/economists comment on the trends in macro/business. Continuer la lecture de « Vital Stats on the French Equity Market – Goldman »
Company Name : Experian Plc
Nb of shares : 924.2m
Last close : GBP15.52
Market Cap : GBP14.3 bn
Sector : Business Services (information services) Continuer la lecture de « Focus/Stock: Experian Plc »
Investors are getting nervous about inflation. Per BofAML « Flow Show » weekly report released today, TIPS recorded their 3rd highest weekly inflows (chart) while getting out of High Yield ($9.8 bn outflows over past 4 weeks). With $1.2bn, it’s one of the highest level of inflows since Nov 2016.
2 useful tables from Deutsche Bank that give a view on fundamental trends and valuation ratios for several market places + a deep dive into European markets (geographies/sectors/size).
The bank expects the Stoxx Europe 600 to be about flat over 2018, before contracting by 19.5% in 2019, in part due to the anticipation of a US slowdown by 2020. By 2 years time, the European market should endure a krach. Continuer la lecture de « SocGen Bearish On European Equities Going Into 2019… »
Altice seems to be in a precarious financial conditions and has lost the faith of investors. Shares have lost 48%, mainly due to the deteriorating KPIs and financial indicators at SFR.
At a recent conference, Patrick Drahi took the helm to try to calm investors but so far, little results. And brokers seem to have conflicting views.
To comfort Altice, ABN Amro’s analysts have issued a « Buy » recommendation on the shares, but not all are convinced. The same day, Credit Suisse also published a report with a Neutral rating, which comes a couple of days after BofAML downgraded the stock.
Here are their arguments.
(DISCLAIMER: This information is not an investment recommendation. It is just given as an information, not an advice. You need to do your own due diligence to see if an investment fits in your Investment Policy Statement, provided you have one).
From Neal McLeod and team at UBS:
« Our base case: a benign growth and policy backdrop…
We’re forecasting global growth to stabilise at 3.8% (China to slow from 6.8% to 6.4%), the export rebound to slow somewhat, inflation to pick up modestly, the Fed to hike rates three times by end 2018 (from now), US Treasury yields to grind higher to 2.7%, Asia ex Japan currencies to be flat (in equity market cap terms) versus the USD and the Yen to weaken to 122.
Continuer la lecture de « UBS Sees MSCI Asia ex-Japan and TOPIX at 790 and 2,100 Respectively End-2018 »
Per Nick Nelson’s report date Nov 13:
« We recalibrate our top-down earnings model as it had been persistently underestimating the turn in operational leverage. We now see 10% EPS growth in 2018. Consensus estimates are 8.9%, but adjusting for the average upward bias, underlying « true » consensus may be as low as c.2%. We see modest P/E re-rating to 15.7x from 15.0x currently. For the FTSE 100, we are more conservative and target 7,900 end-2018 (c.6% upside). »
« Upside risks: Equities re-rate to previous cycle peak valuations. This would point to c.33% upside from the current levels. European corporates re-gear to US levels. US investors return (net buying peaked in May). European M&A picks up, currently running c.30% below the US. Effective French labour market reform. »
« Downside Risks: Rates and bond yields rise too sharply. But a gradual move would likely be manageable – Europe has very little Tech (6% of index) and a large amount of positively rate sensitive Financials (c.25% of index). Significant Euro strength, on our forecasts (EUR/USD 1.25 end 2018) this is manageable. Higher volatility / political risks in Spain and Italy. »
Jan Loeys has been working as the head of asset allocation for JPMorgan, where he has spent 31 years. He was famously known for the « JPMorgan View » report, published every Friday.
I couldn’t retrieve the apparent last note published but Zerohedge did, so here are some quotes from the full text that you can find there. Continuer la lecture de « Interesting Lessons from Jan Loeys »
US equity market could continue its run next year with the risk that investors fall into euphoria. Continuer la lecture de « Merrill Lynch Sees S&P 500 at 2,800 end 2018… With Some Risks »
2017 has been a pretty good year for credit investors so far, and this might continue providing inflation doesn’t accelerate too much, according to Bank of America Merrill Lynch credit strategists. Continuer la lecture de « Credit : Merrill Lynch cautiously optimistic for 2018 »
Per Bank of America Merrill Lynch report published Nov 21:
« Altice shares have lost 50% of their value post results, while the CDS on the holding have increased by 300bps. Management took action with: 1/ the resignation of the CEO and the return of Patrick Drahi to full control of operations, 2/ admission of poor execution in France, now the #1 focus, and 3/ a priority on debt reduction, involving noncore assets and towers disposals. However, ATC also significantly rebased its midterm expectations on France. Although the steps taken should comfort credit holders, we think the case for the equity is balanced, with long term upside on execution, content monetization and domestic consolidation, but unclear valuation support on our reduced forecasts, and a recovery that remains largely dependent on external competitive forces. Unlike Glencore in 2015, we don’t see material valueenhancing options to drive mid term outperformance and downgrade to Neutral with a PO of €11. Our credit analyst Nick MacDonald is positive on the credit »
And leverage has been building up since the global financial crisis, contrary to most belief. So if you think the streak of bad luck Altice has been facing recently is just a one-off, think again. Continuer la lecture de « Leverage Sets the Stage for the Next Crisis »
Why is it important and can one estimate it ? Continuer la lecture de « What’s an Economic Moat? »
For the first time since 2010, world economic growth is surprising to the upside and its strength should continue according to GS’s chief economist Jon Hatzius.
2017 has been good for US equities, but most of the performance is related to the technology sector… Valuation are stretched but could continue to be so for a while, as long as macro/monetary backdrop is supportive.
From Barclays US Equity Strat team: Continuer la lecture de « US Equities: The Cycle Is Still Well Oriented – Barclays »
We’ve started receiving outlooks for 2018 and there seem to be some dispersion in brokers’ expectations. Continuer la lecture de « 2018 is going to be very interesting »
Over the last 8-9 years, financial assets have had a good run, but now valuations look stretch and expected real returns are low. Continuer la lecture de « Where is the Cycle? What Should My Asset Allocation Look Like? »
For a Monday morning, Kepler Cheuvreux’s strategist Christopher Potts had a nice wake-up call for investors, recommending them to Underweight Europe and EM and go Overweight US and Japan… Continuer la lecture de « Sell When You Can – Kepler Cheuvreux »
Getting a decent return from a diversified portfolio is getting more difficult by the year. According to Morgan Stanley’s calculations, « a traditional 60/40 equity/bond USD portfolio will see 4.2% per annum over the next decade, while the same in EUR fares only slightly better at 4.7%, and GBP at 4.9%; only the JPY 60/40 portfolio sees above-average expected returns, driven by elevated equity risk premiums. »