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21 August 2017 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 AP MOLLER MAERSK (Satellites) is to sell its Oil & Gas division to Total in exchange for 3.76% of the French oil company ($4.95bn), which will also take on the target’s $2.5bn debt. The deal is ex- pected to close in early 2018, leaving AP Moller Maersk with a post-tax capital gain of $2.8bn. This is good news, though the group still has oil services assets – impaired in its interim financial statements – that are less easy to sell off. WIRECARD (Core Holdings) has reported excellent Q2 results and slightly upgraded its 2017 full-year outlook. Note that growth in transaction volumes (up 28%) was largely due to non-European transactions (up 49%), notably thanks to the acquisition in India. Note also new customer acquisition (+29%) and much stronger cash generation than previously (with operating cash flow up 35% in Q2 2017). The group should continue on its growth trend in the second half of the year. WPP (Satellites) is due to report its Q2 results on Wednesday, 23 August. Expectations are not very high. A number of factors could hamper organic growth: the slowing trend over the last few quar- ters (notably in the US), the loss of a few major contracts (AT&T, VW) and the end June cyber-attack that affected the group (shut- ting down a server for several days). However, we are banking on a better second half (the group should maintain its 2017 guidance). To be monitored this week: AFD July foreign trade and watch ex- ports and OFS Q2 secondary sector production, orders and sales. The following companies are also due to report their results: Met- all Zug, Bossard, Orior, Huber+Suhner, Emmi, Sunrise, Implenia, Komax, Perrot Duval, SPS and VAT. Stock market Like last week, this week is likely to be somewhat volatile, with markets once again looking to the White House and its political worries. Investors will have to wait for the end of the Jackson Hole conference for a clearer idea of central banks’ monetary policy after the summer break. Currencies The ECB said an overly strong euro poses a problem for exports, and Donald Trump said in an interview that he did not like an overly strong dollar. EUR/USD could fall as far as 1.1610 if it breaks through support at 1.1660; otherwise, the pair will trade in the range 1.17- 1.1850. The EUR/CHF range of 1.1250-1.1540 remains valid. USD is also weak because of Trump’s failure to keep his promises on tax; strong support at USD/CHF 0.9440. GBP remains bearish, and could reach GBP/USD 1.26. Gold reached $1,300/oz on Friday; our targets: $1,280, $1,267. The minutes of the last Fed meeting show that FOMC members are divided over the future inflation trend. However, the impact on markets and interest rates is low: 10-year yields are holding steady. The easing of tensions between North Korea and the US helped emerging assets (with equities up 1.6% and local currency sover- eign yields down 11 bps). Developed country equities receded slightly (down 0.3%), the US dollar gained 0.4% (dollar index) and gold fell by a similar amount, as one would expect. To be moni- tored this week: home prices (FHFA index), new and existing home sales, manufacturing and services PMIs and durable goods orders in the US; ZEW confidence indicator, manufacturing and services PMIs and consumer confidence in the eurozone; and Ifo index in Germany. US statistics released last week were fairly positive. In particular, retail sales rose by more than expected in July (up 0.6% MoM), and previous months’ figures were revised upwards. Consumer confi- dence (Univ. of Michigan) rallied to a higher than expected 97.6 (from 93.4) in August, bearing out this positive trend in consumer spending. Similarly, confidence among homebuilders (NAHB) has risen from 64 to 68 in August, rather than stabilising as expected. This makes up for disappointments in the sector, with housing starts and building permits down 4.8% and 4.1% MoM respectively in July. Industrial production fell short of expectations in July (up 0.2% MoM), as it did in the eurozone in June (down 0.6% MoM). Lastly, in China, activity slowed slightly, with retail sales up 10.4% YoY, investment up 8.3% YoY and industrial production up 6.4% YoY. As at 18.08.2017 11.08.2017 31.12.2016 SMI 8874.35 -0.11% 7.96% Europe Stoxx 600 374.20 0.56% 3.54% MSCI USA 2309.22 -0.65% 8.45% MSCI Emerging 1059.54 1.61% 22.88% Nikkei 225 19470.41 -1.31% 1.86% As at 18.08.2017 CHF vs. USD 0.9617 0.11% 5.68% EUR vs. USD 1.1751 -0.35% 11.41% 10-year yield CHF (level) -0.12% -0.18% -0.20% 10-year yield EUR (level) 0.34% 0.31% 0.11% 10-year yield USD (level) 2.20% 2.19% 2.45% Gold (USD/per once) 1'295.80 0.65% 11.95% Brent (USD/bl) 51.26 -1.08% -9.61% Source: Datastream Since In Argentina, Cristina Kirchner came second in ‘her’ province of Buenos Aires (in the mid-term senatorial primaries), confounding expectations. The political risk weighing on Argentinian asset prices has eased, as one would expect. At the fundamental level, in spite of weak exports, activity indicators point to strengthening economic momentum and should favour fiscal consolidation that is likely to moderate inflation in the medium term. Source: Thomson Reuters Datastream, 21.08.2017 United States Consumer Confidence (University of Michigan) vs Retail sales 2004 2006 2008 2010 2012 2014 2016 -15 -10 -5 0 5 10 15 20 25 50 60 70 80 90 100 110 Consumer Sentiment (Univ. of Michigan) Retail Sales (YoY), rhs
