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09 April 2018 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 INGENICO (Core Holdings) has rallied following takeover rumours. Atos/Worldline was reported in the press to be preparing a bid for the group. Other names were also cited: Worldpay, Wirecard, Verifone and NCR. While Atos remains the most credible group at the moment, the timing does not look great (Atos is participating in the offer for Six Payment services in Switzerland) and the payment terminals division is a problem. L’OREAL (Core Holdings) is due to report its Q1 2018 sales this Wednesday evening. According to Nielsen, market share and sales trends from January to March show strong performance in the US. A favourable base effect, investment in marketing, and product launches are all bearing fruit in this market, alongside a healthy Chinese market. The consensus is for organic sales growth to have accelerated to 5.5% in Q1 2018, vs. 4.8% at end 2017. NOVARTIS (Core Holdings) has announced that it is to acquire gene therapy specialist AveXis for $8.7bn. The acquisition is in line with the group’s strategy, bolstering the licence agreement entered into with Spark at the beginning of the year. The deal will dilute operating profit slightly (by c. 1%, linked to investment in R&D) in 2018 and 2019, but will be ‘significantly’ earnings-positive from 2020 onwards. TECHNIPFMC (Satellites): Aramco’s CEO has announced that the group has entered into an $8-10bn agreement with Honeywell and TechnipFMC covering petrochemical projects. No further details at this stage. WIRECARD (Core Holdings) has nailed down its agreement with Crédit Agricole. CA will now use Wirecard’s platform to put in place (from 2019) an omnichannel payments offering (both in-store and mobile). While CA covers 30% of the traditional merchants market, it is lagging behind in e-commerce and is having to rely on the German group’s technology. To be monitored this week: SECO March unemployment statistics and SNB Confederation borrowing. In company news, we are expecting 2017 results from Burkhal- ter, H1 results from Barry Callebaut, H1 sales from Bossard and Givaudan, and March air traffic statistics from Flughafen Zürich. Stock market US markets (down 1.4%) and European markets (up 1.39%) played see-saw last week. We will be keeping an eye on US PPI and CPI figures and European industrial production and trade balance. Re- sults season is due to kick off at the end of the week with US banks. Although a rally is possible, we are not optimistic. Currencies Strong support for EUR/USD at around 1.22 (this morning: 1.2275). A return to around 1.2475 is possible, otherwise 1.1910. We fear the market is too short USD/CHF (this morning: 0.96) and risks ris- ing to 0.9850 if resistance at 0.9670 is broken; support: 0.9525. The EUR/CHF range remains unchanged at 1.1650-1.18. We expect gold to rise, with an initial target of $1,335/oz or even $1,356/oz; support: $1,307/oz. The succession of US protectionist threats and of countermeasures announced by China, their main target, dictated day-to-day risk appetite and fuelled volatility. Global equities lost 0.6% (down 1.4% in the US and up 1.1% in Europe); credit risk was not directly affected, with spreads remaining unchanged. Gold benefited (up 0.7%), while oil prices fell 3.7%. To be monitored this week: SME confidence (NFIB index), import, producer and consumer prices, Fed minutes and consumer confidence (Univ. of Michigan) in the US; industrial production, economic confidence (Sentix indicator) and trade balance in Europe; and producer and consumer price indices, trade balance and money supply in China. US statistics released last week, while not bad, tended towards being disappointing. The ISM manufacturing PMI fell from 60.8 to 59.3 in March, while its services counterpart fell from 59.5 to 58.8. Note that the ‘prices paid’ component rose from 74.2 to 78.1. The economy added ‘only’ 103,000 new jobs in March, falling short of expectations (185,000), but hourly wages accelerated slightly, up 0.3% in the month (up 2.7% YoY). Lastly, vehicle sales exceeded expectations, rising to 17.4m annualised. In the eurozone, unem- ployment fell to 8.5% (from 8.6%) in February, while retail sales ad- vanced 0.1% (up 1.8% YoY). In China, leading economic indicators dropped off somewhat, though remaining in expansionary territory (> 50): the manufacturing PMI (Caixin) fell from 51.6 to 51 and its services counterpart from 54.2 to 52.3. As at 06.04.2018 30.03.2018 31.12.2017 SMI 8671.04 -0.80% -7.58% Europe Stoxx 600 374.82 1.07% -3.69% MSCI USA 2482.40 -1.37% -2.44% MSCI Emerging 1161.97 -0.76% 0.30% Nikkei 225 21567.52 0.53% -5.26% As at 06.04.2018 CHF vs. USD 0.9610 -0.35% 1.41% EUR vs. USD 1.2262 -0.30% 2.11% 10-year yield CHF (level) -0.01% -0.05% -0.13% 10-year yield EUR (level) 0.50% 0.50% 0.42% 10-year yield USD (level) 2.78% 2.75% 2.41% Gold (USD/per once) 1'332.39 0.68% 2.22% Brent (USD/bl) 67.50 -3.70% 1.34% Source: Datastream Since High-yield bonds were in demand last week, with positive perfor- mances in both EUR and USD. In Europe, the announcement of the sale of a majority stake in Hellenic Petroleum triggered a sharp fall in Greek sovereign yields (with 10-year yields down 30 bps). The oil company had just reported record net profit of €372m for 2017. In the East, new US sanctions targeting Russian interests put heavy downward pressure on Russian assets. Source: Thomson Reuters Datastream, 09.04.2018 United States Hourly earnings (1Q MAV, YoY in %) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -2 0 2 4 6 8 -2 0 2 4 6 8 Total Private Manufacturing Goods producing Business services Construction
