IBM will continue divesting the more cyclical and commoditizing segments

Market Recap

DJIA -1.22%, Nasdaq -2.38% and S&P -1.58%

Nikkei +1.48%

WTI Crude Oil USD 44.87

Gold USD 940

USD/EUR 1.2711

U.S. stocks finish the day convincingly lower on average volume as investor’s digest as host of macro, political and corporate news.

U.S. News

Obama administration will require Citi to raise private capital and make changes to its board of directors.

Dell reported Q4 revenue USD 13.4bn vs USD 14.2bn cons, EPS ahead by 2c

IBM reiterated its 2009 guidance and will continue divesting the more cyclical and commoditizing segments

Safeway missed its earnings numbers due to FX headwinds and lower fuel sales.

GM reported a Q4 adjusted EPS $9.65 and said cash flow burn is significant in Q1 and the company is seeing February vehicle sales similar to January level.

European News

Thales reports FY2008 results in line, but give gloomy outlooks, sees 2010 worse than 2009.

Deutsche Telekom reports Q4 results slightly above and guidance are ok. The dividend is unchanged at 78c

Daimler has been named as potential buyer of the Opel plant in Eisenbach.

Telefonica will end its buy back program started in 2008.

Heineken could bid for AB InBev’s Czech Brewery.

Fortis and BNP talks are advancing in the right direction according to press comment.

ENEL plans to raise up to EUR 7bn in rights issue.

Boeing dropped plans to help Finmeccanica to built new cargo planes for the US army.

Several leading shareholders are likely to vote against the proposed £4.1bn rights issue of Xstrata.

Kudelski reports disappointing numbers and guidance.

RBS ‘s participation in the government’s asset protection program could cost the U.K. taxpayer £50bn. (FT)

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Talks between FORTIS and BNPPARIBAS on the right tracks

·         US and European markets not in phase : DJ -1.2%, S&P500 +1.6%, NASDAQ -2.4%, NIKKEI +1.5% et EUROSTOXX +2.8%and down by 2.1% right now.

·         PHARMA : under pressure yesterday as Obama is about to launch new measures not favourable to the sector. In the present climate any piece of bad news from a sector that has outperformed the market has a rapid and dramatic impact on the share prices.

·         GM : net loss of some 31 bn USD in 2008 and cumulative losses of 86 bn USD since 2005. Turnover was down 33% in 4Q 2008 only!

·         FORTIS : some comments in the Belgian press that talks with BNPPARIBAS are on the right tracks. The GM on March 6th in Utrecht has been cancelled and the vote on a few amendments has been postponed until April 26^th. Nice performance of the share YTD!

·         HOUSING MARKET US : Existing home prices fell 16% in 2008 against -5% in 2007 and -7% in 4Q 2008 only. Existing home inventories are equal to 10 months of consumption. We are approaching the bottom but we probably still need a few more months.

·         INFLATION : fell to 1% in Europe. Leading rates cut by the ECB in March more than probable.

·         VIX is slightly up at 44.7. Gold is stable at 944 USD per oz while oil (BRENT CRUDE SPOT) is up at 44.5 USD. The USD is edging up against the EUR at 1.266. CMS 10-2 years spread is somewhat higher at 1.40. The 5y CMS stands at 2.816 and the 3y at 2.379.

 

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UBS names former Credit Suisse CEO Oswald Gruebel as CEO

Market Recap

DJIA -1.09%, Nasdaq -1.14% and S&P -1.07%

Nikkei -0.04%

WTI Crude Oil USD 42.61

Gold USD 950

USD/EUR 1.2710

U.S. stocks finish 1% lower on average volume as poor macro data continues to plague the market and investors digest the Treasury’s plans to stress test the biggest banks.

U.S. News

First Solar said 2009 sales will be USD 1.9bn at most, missing the average estimate of USD 1.99bn

Fluor reported a profit of USD 1.04 a share in Q4, beating the average analyst estimate by 14%.

Salesforce.com said profit jumps 86% and expects to earn at least 54c in 2009.

Citi will sell its Redecard stake in a public offer.

Del Monte Foods reported numbers ahead of market expectations and guided 2009 EPS 64-68 vs street expectations of 59c

European News

UBS said it named former Credit Suisse CEO Oswald Gruebel as CEO, replacing Marcel Rohner.

Banque Sarasin reports mixed 2008 numbers.

Sulzer reports 2008 results in line. The dividend is unchanged at CHF 2.8. Guidance for 2009 is  mixed.

Allianz reports a FY08 net loss EUR 3.1bn and a light operating profit. Dresdner loss is larger than expected, but the story is over.

BASF reports Q4 sales EUR 14.3bn and plans to keep dividend stable for 2009

Deutsche Post reports numbers below market expectations and cut its dividend.

Randstad Q4 numbers are difficult to analyse due to write downs and inclusion of Vedior. Will pays no dividend for 2008 as market continued to decelerate.

Telefonica reports robust Q4 results and guidance for 2009 are in the range of the market expectations.

RWE said FY08 net income fell to EUR 2.56bn in line and guidance for 2009 will be at 2008 level.

Dexia reported a record Q4 profit loss on the sale of its U.S. bond insurance unit and provisions for declines in the value of mortgage-backed securities.

Areva reported last night a 21% decline in 2008 net income, worst than expected

GKN reports FY08 results above market expectations and says 2009 similar as 2008.

Philips could lower ist stake in LG Display (13.2% stake)

Microsoft sues TomTom over patents for car-navigation devices.

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Carrefour will bid for Russia's Seventh Continent super market chain

Market Recap

DJIA -3.41%, Nasdaq -3.71% and S&P -3.47%

Nikkei -1.46%

WTI Crude Oil USD 38.08

Gold USD 990

USD/EUR 1.2719

U.S. stocks get pummelled again to finish on their lows and in the process the S&P hits a new 12 year low.

U.S. News

Garmin reported in line numbers, declined to give 2009 guidance but said that it gained market share in Q4 and will continue to repurchase shares.

Campbell Soup reported Q2 EPS $0.65 ex-items as sales fell due to FX headwinds and inventory reductions at retailers. Co guided EPS growth to the high end of 5-7%.

AIG got bids from MetLife and Axa for a life-insurance unit spanning more than 50 countries.

JP Morgan cut the quarterly dividend to 5c from 38c.

European News

Carrefour will bid for Russia’s Seventh Continent super market chain.

Vivendi wins EUR 1.9bn in damages from Elektrim in Poland regarding their joint venture.

French carmakers are increasing production of some cars to meet rising demand triggered by the government decision to introduce incentives to scrap old cars for new.

3i Group said it invested USD 161m in Krishnapatnam Port Company.

Akzo Nobel reports USD 1.5bn loss for Q4 on ICI unit write down. Buy back programme is cancelled.

Telecom Italia’s board may cut dividend to reduce debt amid profit slump.

ADB reports disappointing margin but solid outlook. Sales are a touch better. Strong start in 2009, good visibility and solid order backlog.

Nestlé said water should stabilize in 2009, pressure in agricultural commodities not easing in 09.

TomTom reports FY08 revenue and EBIT slightly ahead.

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Microsoft: still be interested in a deal with Yahoo!

Market Recap

DJIA +3.32%, Nasdaq +3.90% and S&P +4.01%

Nikkei +2.65%

WTI Crude Oil USD 39.63

Gold USD 959.9

USD/EUR 1.2851

U.S. stocks took flight yesterday on the back of comment form Fed Chairman Bernanke and in the process halt a 6 day decline while volume picked up.

U.S. News

Word that Microsoft may still be interested in a deal with Yahoo! caught investor’s attention yesterday evening.

Marvel Entertainment reported Q4 EPS more than the average estimate of analysts survey.

Home Depot reported very good numbers.

Nordstrom reported good Q4 numbers

AIG said that it may need to convert preferred shares into common stock.

European News

RBS may not escape full nationalization with UK

Accor reports FY2008 in line with market consensus with sales EUR 7.74bn , EBIT  EUR 875m, but gives no guidance for 2009. The dividend is unchanged at EUR 1.65.

Theolia reports FY2008 sales number below market expectation.

Rhodia reports FY2008 numbers below expectation won’t pay final dividend and says no visibility for 2009.

Deutsche Telekom is planning a massive restructuring. The mobile and fixed-network divisions will merge.

SAP has failed to reach an agreement in Oracle’s USD 1bn copyright lawsuit accusing it of stealing software code

Henkel reports good 2008 results and sees organic sales growth higher than market in 2009.

Dutch regulator extended short selling ban until on financial stocks until June 1^st.

BBVA could sell its 5% Telefonica stake, getting nearly EUR 1bn in capital gains.

 

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Ben Bernanke not excluding a recession in 2010

·         A short-lived technical rebound again? : DJ +3.3%, S&P500 +4.0%, NASDAQ +3.9%, NIKKEI +2.7%, EUROSTOXX -0.7% and up 1.5% right now.

·         US ECONOMY : Ben Bernanke, the FED’s boss, is not excluding a recession in 2010 too if the financial system cannot find some serenity back. Such a scenario would make the present crisis the second worst in a century after the Great depression.

·         EUROPEAN BANKS : KBC, DEXIA (and others) have been under heavy pressure over the past sessions and went back and forth yesterday, making a hammer. This technical configuration often indicates a technical rebound. DEXIA will release final figure tomorrow and will provide us with more details about its strategy (split of the activities?)

·         VIX is significantly down at 45.5. Some profit-takings on gold at 952 USD per oz and the oil price is stable at 42.0 USD (Brent Crude Spot). The USD is down against the EUR at 1.286. The CMS 10-2 years spread is down at 1.37. The 5y CMS stands at 2.738 and the 3y at 2.317.

 

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The S&P500 and the DJ STOXX 50 are both back at the levels of early 1997

·         No rationality any more: DJ -3.4%, S&P500 -3.5%, NASDAQ -3.8%, NIKKEI -1.5%, EUROSTOXX -1.0% and down 1.4%right now.

·         STOCK MARKETS : the S&P500 and the DJ STOXX 50 are both back at the levels of early 1997. Who was talking about “decoupling” again? Correlation between those two indices on a weekly basis was 0.8 over the past 10 years and rose to 0.88 over the past 12 months. Diversification has never been so crucial and never been so difficult!

·         Middle East : Dubai is nearly bankrupt after all those years of real estate crazy expansion. Impossible to park your car at Dubai airport : all places have been used by expatriates rushing out of the country, leaving their car there. Abu Dhabi has injected 10 bn USD in this tiny country, undoubtedly with more control on what is going on over there.

·         BANKS : a contrasted session as some American and European banks were stable or rising and other under heavy pressure (KBC, DEXIA).

·         VIX is significantly up again at 52.6. Gold is still in favour at 990 USD per oz and the oil price is down at 40.0 USD (BFOE). The USD is up against the EUR at 1.274. 10-2 years spread is stable at 1.41. The 5y CMS stands at 2.768 and the 3y at 2.324.

 

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Pressure remains on banks due to the anticipation of potential nationalisations

·         Markets upside down on the day of options expiration : DJ -1.3%, S&P500 -1.1%, NASDAQ -0.1%, NIKKEI -0.5%, EUROSTOXX -4.9 and probably up at the opening.

·         BANKING SECTOR : In the US, pressure remains heavy on banks as investors anticipate a possible nationalisation of  “giants” like BANK OF AMERICA or CITIGROUP. In Europe, same situation as fears of major problems in the East European financial sector are mounting.

·         ASIA : Japan, China, South Korea (80% for their part) and 10 other Asian countries have decided to launch a pool of foreign currencies reserves in order to help their central banks fight possible speculation on their own currency.

·         MONEY MARKET : The premium banks charge one another for short term lending (Libor OIS spread) surge above 1% last week for the first time since early January. Banks are still very reluctant to relax credit conditions. It seems that confidence still has a long way to go and that the crisis could last at least till 2010.

·         VIX is up at 49.3. Gold is still in favour at 987.8 USD per oz as the oil price at 41.9 USD (BFOE). The USD is down significantly against the EUR at 1.30. 10-2 years spread is virtually unchanged at 1.39. The 5y CMS stands at 2.843 and the 3y at 2.393.

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BNP needs to improve offer on Fortis's Belgian banking and insurance units before negotiations can succeed

Market Recap

DJIA -1.34%, Nasdaq -0.11% and S&P -1.14%

Nikkei -0.54%

WTI Crude Oil USD 40.45

Gold USD 988

USD/EUR 1.2974

U.S. stocks fell again on options expiration Friday and the process the SPX has its worst week in 3 months. One again financials were in the spotlight.

U.S. News

Yahoo set to announce a reorganisation plan next week.

Citi may return to profit this year, Mills says. U.S. government may increase ownership.

Lowe’s reported Q4 EPS below market expectations and guided 2009 numbers lower.

General Motors and Chrysler more than double estimates of Canadian aid needs reports the FT. The two car makers have told the Canadian government they will need as much as C$10B in aid, more than double the estimate from three months ago.

European News

Wendel will take part in capital increase of Saint Gobain

BNP needs to improve offer on Fortis’s Belgian banking and insurance units before negotiations can succeed.

Daimler could push truck sales by introducing a bonus as those paid for cars.

UBS says US efforts to force disclosure would violate Swiss law.

Swatch says worst may be over for watch business, sees H2 rebound.

Belgacom chairman will get new 3 year term.

Enel buys 25% Endesa in hands of Acciona for EUR 11.1bn

RBS plans to cut costs by mores than £1bn, partly by scaling back investment banking. The bank could be split in two parts.

Banco Santander put on hold a sale of EUR1bn of bonds after sounding out investors last week.

Unilever CEO Paul Polman could reshuffle the management.

Anheuser Bush InBev has agreed to sell USA Labatt to an affiliate of private equity from KPS Capital Partners.

 

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UBS forced to disclose the names of 52'000 U.S. customers with secret Swiss accounts

Market Recap

DJIA -1.19%, Nasdaq -1.71% and S&P -1.20%

Nikkei -1.87%

WTI Crude Oil USD 39.18

Gold USD 976

USD/EUR 1.2570

U.S. stocks continue to crumble and yesterday’s catalysts were poor macro data, negative earnings from HP and another meltdown in financial stocks.

U.S. News

Whole Foods Market reported Q1 EPS above market expectations and gave very good guidance for 2009.

Sprint Nextel reported better than expected Q4 EPS and remained positive as they expect subscribership to improve in 2009.

Hewlett-Packard reported worst than expected Q1 EPS and guided down 2009 EPS. Results were affected by weak international sales and FX headwinds.

Prudential Financial was downgraded by Fitch to BBB from A-

European News

Lafarge reports FY2008 below market expectations, to sell EUR 1.5bn new shares in fully underwritten rights issue and proposes EUR 2/share dividend.

UBS said it will vigorously contest a U.S. civil lawsuit aimed at forcing it  to disclose the names of as many as 52’000 U.S. customers with secret Swiss accounts.

Saint Gobain reports 2008 numbers 3% below the market consensus and plans a EUR 1.5bn rights offering.

Club Med says Q1 sales increased 1.9%, helped by Asian growth, but global bookings down 4%.

Swiss Life reports FY 2008 net CHF 340m, to pay CHF 5 dividend.

RBS is looking to sell part or all of acquired ABN Amro operations.

Axa credit rating outlook revised to negative from stable by S&P.

Air France-KLM is considering deferring one or two of their A380a it has on order.

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BANKING SECTOR under pressure in Europe and the US

·         No comment :  DJ -1.2%, S&P500 -1.2%, NASDAQ -1.7%, NIKKEI -1.9%, EUROSTOXX -0.2% and down 2.9% right now.

·         HOUSING MARKET : In the US, even the Prime segment is facing  delinquencies as some 2.7% of those mortgage payers have 60 days or more delays for their financial obligations. This is a sign that all classes of the American society are affected and that that the credit crunch might not be over yet.

·         SAINT-GOBAIN : capital increase for 1.5 bn EUR in order to offset the negative impact of the crisis and the antitrust fine. You will get 2 new shares for 7 old ones at 14 EUR, a 50% discount to yesterday’s price. Not need to say that one has to be extra careful. LAFARGE is also going for a 1.5 bn EUR capital increase. Saint-Gobain is down 14% and Lafarge is down 1%.

·         BANKING SECTOR : under pressure in Europe and the US (fears of possible nationalisations in the US). BNPPARIBAS published relatively good figures (net result 3 bn EUR but dividend down to 1 EUR); not enough to support the share price.

·         ZEW : the leading component was significantly above the forecast figure (-6 vs -25 expected and -31 in January) while the current component was worse than expected (-86.2 vs -82 expected and -77.1 in January).

·         VIX is slightly down at 47.1. Gold is retreating somewhat at 975.5 USD per oz while oil is up at 40.8 USD. The USD is rising against the EUR at 1.259. 10-2 years spread is virtually unchanged at 1.38. The 5y CMS stands at 2.823 and the 3y at 2.40.

 

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