US equities finished higher on Monday. From opening lows equities rose throughout the day as successive headlines suggested progress towards a deal to end the government shutdown/debt ceiling quarrel. Earnings season pace picks up this week with focus on finance and tech. Most sectors were higher led by healthcare +0.66%; only telecom (0.68%) and utilities (0.58%) were lower. Gold and crude were both higher. Bond market was closed. Asian markets rose on the prospect that US lawmakers will strike a deal to lift the nation’s borrowing limit and avoid a potential debt default by the world’s largest economy… Markets in Singapore, Indonesia, Malaysia and India were shut for national holidays.
Asian markets rose this morning. While Singapore, Indonesia, Malaysia and India were shut for national holidays.
European shares are expected to hit a two-week high, mirroring gains on Wall Street and in Asia, on rising optimism that U.S. lawmakers would soon agree on a deal to re-open their government and avoid a possible debt default.
Watch today : German Zew, Eurogroup Meeting, UK CPI, US Empire Svy
VG1 futures: Looks like opening around the 2980 resistance. Short-term supports today are at 2956 then 2942. Resistances at 2980 then 3044
Now this is my favourite reading of the year! The Outside Magazine buyer’s guide. The Winter edition is out! It’s available on ipad, on the net (via Zinio).
You can see last year’s reviews here: http://www.outsideonline.com/outdoor-gear/winter-buyers-guide
Stournaras Denies Asmussen Assertion of Major Greek Fiscal Gap
Letta Mixes Tax Cut With Rigor in Post-Berlusconi Italian Budget
Germany’s CDU and SPD Reach Agreement on Euro Policy, RP Says
BOE’s Cunliffe Says U.K. Not in Grip of Housing-Market Bubble
Swiss Re Said to Consider Sale of U.S. Life Insurance Assets
GSW Recommends Shareholders Accept Deutsche Wohnen’s Offer
Ex-RBS Trader in U.K. FX Probe Said to Be JPMorgan’s Usher
Alstom-Led Group Signs $5.1b South African Rail Order
BMW Mulls Boosting Electric-Car Capacity on Demand for i3
Balda Says CEO Mueser Stripped of Duties Amid U.S Investigation
Clariant Sells Detergents Unit to ICIG for $63 Million
Kuehne & Nagel 3Q Net Income Misses Estimate, Confirms Forecasts
Schindler 9M Orders Received Rises 7%, Rev Increases 6.2%
Senate closes in on deal to reopen US government: The deal, which had yet to be finalised, would raise the debt ceiling until early February, reopen the government until January and include a mechanism to force lawmakers into longer-term budget discussions. But there were still doubts about whether an agreement would pass in the House of Representatives, where conservatives have insisted that any deal include further spending limits. Congress has until midnight on Wednesday to extend the debt limit. (Financial Times) (NYT)
“China’s foreign-exchange reserves rose last quarter by the most in more than two years… Reserves were a record $3.66 trillion at the end of September, the People’s Bank of China said yesterday in Beijing, up from $3.5 trillion in June. The median projection was $3.52 trillion in a Bloomberg News survey of seven economists.” (Bloomberg)
Tech-related precious metals, Rhodium, ruthenium and iridium, tumble: The price slide for all three in recent months points to weaker demand from the high-tech industries that use them. (Financial Times)
Rio Tinto produced a record amount of iron ore, usually its most profitable business, in the third quarter after pressing ahead with a controversial expansion of its huge operation in Western Australia’s Pilbara region. Rio said it mined 53.5mn tonnes of iron ore, which was in line with analyst expectations. (FastFT)
The European Commission warned Italy to seek its approval before pressing ahead with a proposed €300m capital increase for Alitalia involving the country’s state-owned postal services group. Brussels’ statement came after International Airlines Group urged the commission to stop Alitalia benefiting from a capital injection by Poste Italiane. (Financial Times)
US Earnings (from GS US Weekly Kicskstart) Information investors will and will not receive next week to guide portfolio strategies for 4Q.
Every investor assumes a deal will be reached to raise the debt ceiling. Instead, portfolio managers are seeking clues for how the economy is performing given the absence of data releases from the federal government that typically serve that purpose. Fortunately, 3Q earnings season has started and during the next three weeks nearly 70% of the S&P 500 will report results. While earnings are always important at the micro level, the vacuum in macro data should raise the signal value of company-level information.
The key to a successful 3Q earnings season is faster sales growth. S&P 500 firms grew sales by just 1% year/year in 1H 2013. Consensus expects 5% year/year sales growth in 3Q 2013. Our 3Q earnings preview identified 20 stocks that will account for 50% of the expected revenue growth for the S&P 500. Three of these firms will report next week (UNH, GOOG and VZ).
With margins effectively flat for the past three years, an acceleration in revenues is essential to drive EPSgrowth in 2H 2013 and into 2014. Forward P/E multiples have jumped by 14% YTD to 14.7x, in line with our year-end forecast multiple and a modest premium to our estimate of fair value, so earnings growth will likely be required for stocks to rise further.
This week 69 firms that generate $1.7 trillion of annual revenues and represent 23% of the equity cap of the S&P 500 will report earnings.
A total of 21 Financials firms will report next week including Citigroup (C), Bank of America (BAC), American Express (AXP), US Bancorp (USB), Blackrock (BLK), and Morgan Stanley (MS), along with many regional banks. Other key companies scheduled to report include Coca-Cola (KO) and Pepsi (PEP) within Consumer Staples; Johnson & Johnson (JNJ), Abbot Labs (ABT), and UnitedHealth Group (UNH) in Health Care; and Schlumberger (SLB) and Kinder Morgan (KMI) in Energy. Industrials firms releasing results will include CSX Corp (CSX), Danaher (DHR), General Electric (GE), and Honeywell (HON). Bellwether Information Technology stocks reporting next week include Intel (INTC), IBM (IBM), eBay (EBAY), and Google (GOOG) along with 5 other firms in the sector
European Earnings (Barclays)
While only a small sample so far, it is quite telling that despite the manic depression of earnings expectations heading into Q3 results, only 52% have topped revenue estimates (on aggregate missing expectations by 40bps). On the earnings side, the number of companies beating expectations plunged to its lowest since Q12009
Publicis Groupe (MS, Rossi) Weighing the effects
The market’s mixed reaction to the announced PUB merger reflects the lack of clarity on key issues like risks, timing and execution of synergies, capital allocation and FCF growth profile. We explore three key areas of interest at this stage: rationale; risks and opportunities; and financials.
Solid 3Q13 expected: We are forecasting PUB will print +4.2% organic growth in 3Q on Wednesday this week. In line with consensus last seen at +4.3%
Goldman makes plenty of ratings changes as they roll forward their targets to 2015 estimates.
ASHTEAD GROUP RAISED TO OVERWEIGHT AT NEUTRAL AT JPMORGAN
BAUER RAISED TO BUY VS NEUTRAL AT GOLDMAN
CSR RAISED TO NEUTRAL VS SELL AT UBS
DAIMLER RAISED TO BUY VS REDUCE AT KEPLER CHEUVREUX
DASSAULT SYSTEMES CUT TO UNDERWEIGHT VS NEUTRAL AT HSBC
DEUTZ RAISED TO NEUTRAL VS SELL AT GOLDMAN
DOMINO PRINTING SCIENCES CUT TO NEUTRAL VS BUY AT GOLDMAN
GEORG FISCHER CUT TO SELL VS NEUTRAL AT GOLDMAN
GRAFTON GROUP CUT TO SELL VS NEUTRAL AT GOLDMAN
INTESA CUT TO REDUCE VS HOLD AT BANCA AKROS
KIER GROUP CUT TO SELL VS NEUTRAL AT GOLDMAN
KINGSPAN GROUP CUT TO NEUTRAL VS BUY AT GOLDMAN
KONECRANES RAISED TO BUY VS NEUTRAL AT GOLDMAN
NEOPOST CUT TO SELL VS NEUTRAL AT GOLDMAN
OXFORD INSTRUMENTS CUT FROM CONVICTION BUY AT GOLDMAN
PALFINGER RAISED TO NEUTRAL VS SELL AT GOLDMAN
RENISHAW CUT TO NEUTRAL VS BUY AT GOLDMAN
ROCKWOOL INTERNATIONAL CUT TO NEUTRAL VS BUY AT GOLDMAN
SCHOELLER-BLECKMANN CUT TO NEUTRAL VS BUY AT GOLDMAN
STORA ENSO RAISED TO BUY VS NEUTRAL AT GOLDMAN
TREVI FINANZIARIA RAISED TO BUY VS NEUTRAL AT GOLDMAN
UBI CUT TO REDUCE VS HOLD AT BANCA AKROS
UPM-KYMMENE RAISED TO BUY VS NEUTRAL AT GOLDMAN
VISCOFAN CUT TO NEUTRAL VS BUY AT GOLDMAN
WACKER NEUSON RAISED TO NEUTRAL VS SELL AT GOLDMAN
WILLIAM DEMANT CUT TO NEUTRAL VS BUY AT GOLDMAN
ZURICH INSURANCE RAISED TO NEUTRAL VS UNDERWEIGHT AT JPM…