Monday Report 19 October 2015

Economy

Markets

Swiss Market

Recommended Stock Watch

US statistics were mixed: SME confidence rose to 96.1 (up 0.2 pts)
and weekly new unemployment claims fell to 255,000. Retail sales
were up only 0.1% in September; industrial production declined
(down 0.1%) and the Feds Beige Book confirmed this modest
growth between mid-August and early October. Core inflation
increased slightly in September (up 0.2% MoM; up 1.9% YoY) and
household confidence recovered (see graph). In the eurozone, new
vehicle registrations once again rose (up 9.8% in September). In
China, imports were disappointing (down 17.7% YoY) while exports
declined by less than expected (down 1.1% YoY). Weak inflation
(+1.6%) means the authorities have room for manoeuvre. Figures
released this morning show growth of 6.9% in Q3, with industrial
production up only 5.9% but consumption up 10.9%, illustrating
the current transition.

To be monitored this week: AFD September foreign trade/watch

exports, BAK Basel autumn forecasts and KOF forecasts for Swiss
tourism. In company news, the following are due to release their
results: Ems-Chemie (9M sales), Actelion (Q3 results), GAM (Q3
interim statement), Panalpina (Q3 results), Temenos (Q3 results),
Gurit (9M results), ABB (Q3 results), Inficon (Q3 results), Gottex
Fund (Q3 trading update), Logitech (Q2 results), Micronas (Q3
results), Roche (9M sales), Schindler (9M results) and Financire
Tradition (Q3 sales).
Ems-Chemie (NR) this morning reported nine-month sales up 4.3%
at CHF 1.45bn. Management has confirmed its FY 2015 guidance.
Credit Suisse (NR) is to present its Q3 results as well as the outcome
of a review of its strategy. A number of articles in the Sunday papers report speculation over a capital increase, expansion outside
Switzerland and a new cost-cutting programme.

Sentiment of traders

Stock market
After a barely positive week, indices opened higher this morning
in spite of a mixed Chinese GDP report. This will be a busy week
for results with, in no particular order, SAP, Daimler, IBM, Google,
Microsoft, Amazon, Philips and Axa due to report, plus the ECB
meeting on Thursday and European and US PMIs. We remain positive.
Currencies
The euro has corrected vs. the dollar at 1.1340 after testing resistance at 1.1495. The forex markets attention is focused on this
Thursdays ECB meeting, which could leave the door open for an
increase in economic stimulus at the next meeting in December.
This could trigger profit-taking on the euro. The Swiss franc remains
firm: EUR/CHF 1.0830; USD/CHF 0.9540. Our ranges: EUR/USD:
supp. 1.1170, res. 1.1495; USD/CHF: supp. 0.9416, res. 0.9805;
GBP/USD: supp. 1.5365, res. 1.5527.

Todays graph
Consumer Confidence (Conference Board & University of Michigan)

25
20

120

15
100

DEUTSCHE BANK (Satellites) is continuing with its restructure,

having this weekend announced a number of changes in top management as well as a far-reaching reorganisation of its operating
divisions. In particular, the investment bank is to be split in two,
with an equities specialist notably taking the helm at the markets
division. Following last weeks 6bn goodwill write-down, this second press release suggests that a radical strategic overhaul could
be announced on 29 October.
ERICSSON (Satellites) is to acquire one of its suppliers, Ericpol, a
software developer in Poland and Ukraine. Ericpol has been developing software products for telecoms services with Ericsson for 20
years. The deal, while negligible for Ericsson, is a clever strategic
move to keep talent in house.
PEUGEOT (Satellites) saw its global vehicle sales decline by 1.3%
in September after falling 10.3% in July and 1.5% in August. Note
the groups encouraging performance in Europe (sales up 5.5%,
with a positive price mix), which accounts for 60% of sales and 70%
of profits.
RELX Group (Core Holdings) has held a conference attended by
some 300 librarian customers of Elsevier (the groups scientific,
technical and medical publishing arm). The topic of Golden Open
Access is attractive: it leaves business publishers with significant
room for manoeuvre in the production of scientific and medical
research. RELX should see its revenue growth accelerate in 2016.

Switzerland

Since
SMI

Europe

Europe Stoxx 600

0.09%

6.01%

USA

S&P 500

0.90%

-1.25%

Emerging countries

MSCI Emerging

0.69%

-9.52%

Japan

Nikkei 225

-0.80%

4.82%

5
0

60

-5
40

-10
2002
2004
2006
2008
Consumer Confidence (Conference Board)
Consumer Sentiment (Univ. of Michigan)
Retail Sales (YoY), rhs

2010

2012

2014

2016

-15

09.10.2015
0.41%

01.01.2015
-2.98%

As at 16.10.2015

10

80

20

ALSTOM (Satellites): on announcing the companys Q3 results,

General Electrics CEO said he believed the takeover of Alstoms
energy businesses would be completed imminently. We remain
convinced that once the value of this transaction has crystallised,
the implied market value of the residual business (Transport) represents an unjustified discount.

Performances

United States
140

After several very turbulent weeks, last week was rather quiet,
with a positive bias. Global equities put on 0.7% (MSCI World)
and emerging equities gained 1.4% (MSCI EM). The decline in the
dollar (dollar index: -0.3%) as a result of the fall in US yields (with
US 10-year yields down 8 bps) enabled gold to recover (up 1.7%).
Volatility in the commodities segment remains high, with the price
of oil down 5.9% while copper held steady. To be monitored this
week: confidence among homebuilders, housing starts, building
permits, existing home sales and FHFA House Price Index in the
US; ECB meeting, consumer confidence and flash PMIs (manufacturing and services) in the eurozone. Chinese figures released
today should provide some reassurance as to the performance of
the worlds second-largest economy.

CHF vs. USD

0.9513

1.16%

4.46%

EUR vs. USD

1.1377

0.20%

-5.98%

10-year yield CHF (level)

-0.22%

-0.18%

0.31%

10-year yield EUR (level)

0.55%

0.62%

0.54%

10-year yield USD (level)

2.02%

2.10%

2.17%

Gold (USD/per once)

1'182.28

2.14%

-0.34%

Brent (USD/bl)

49.32

-5.93%

-11.68%

Source: Datastream

Source: Thomson Reuters Datastream, 19/10/2015

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