Saturday, October 1, 2016

Closing of Wall Street : return of the rise ; Deutsche Bank could avoid the worst… –

( — In 48 hours, the financial markets are passed by all the states, subject to the effect of rumors contradictory about the financial health of Deutsche Bank. The u.s. Stock market has finished higher Friday, the last day of September and the 3rd quarter of 2016, after the information according to which the “DB” may finally see its u.s. fine reduced by 14 Bn$ 5.4 Bn$ , according to the agency ‘AFP’.

at the close, the Dow Jones resumed Friday 0,91% 18.308 points, while the broad index S&P 500 has gained 0.8% to 2.168 points, and that the Nasdaq Composite climbed 0.81% to 5.312 points. In Europe, the european index EuroStoxx 50 ended on a positive note (+0,34%).

Over the past week, the three us indices were able to garner increases of 0.25%, 0.2% and 0.1%, while the month of September (statistically the worst month of the year on Wall Street ended on a note mixed : 0.5% for the DJIA, which was 0.1% for the S&P 500, but +1.9% for the Nasdaq.

The third quarter posted growth rather significant 2.1% (DJIA), FOR 3.3% (S&P 500), and even 9.7% for the Nasdaq. Finally, since the beginning of the year, all three indices now earn respectively 5%, 6% and 6%.

The fine, Deutsche Bank could be reduced by 14 Bn$ 5.4 Bn$

On the foreign exchange market, the dollar weakened after the information on a reduction of the fine, Deutsche Bank, whose woes had caused weakness of the euro in the morning. Friday night in New York, the euro was up 0.16% to 1,1243$ after falling up to 1,1153$ in the beginning of the session. Oil has continued its progression, the barrel of WTI crude ending up 0.86% to 48,24$ on the Nymex (futures contract in November), bringing its rebound to 8.5% on the week thanks to an agreement reached Wednesday by Opec in Algiers.

On the bond markets, the yield on the T-Bond 10-year-old has gained 3 basis points to 1.59%, but it declined 3 bps from the last 5 sessions (1,62% last Friday). Finally, the volatility, as measured by the Vix index, has plunged 10.3% 12,57 Friday, after flamed Thursday of 15.6%.

This week, the markets have been subject to a strong volatility in the series Deutsche Bank, but also by the unexpected announcement of agreement of Opec, Wednesday, on a reduction in oil production of the cartel is approximately 750,000 barrels per day. Moreover, two indexes of u.s. consumer confidence came out much better than expected these past few days, seeming to reinforce the prospect of a rate hike from the Fed, probably in December.

bank stocks, which had been attacked on Thursday, they rebounded in the hope that Deutsche Bank will finally have the financial means to pay the fine imposed in respect of his illegal activities during the crisis “subprime”. According to the agency ‘AFP’, the German bank would be close to an agreement 5.4 Bn$ with the Department of US justice, instead of the 14 us$ Bn raised since mid-September.

The title (ADR) Deutsche Bank listed on the Nyse has soared Friday of 14% (after a fall of 6.7% on Thursday), the strongest increase daily since 5 years!!! By ripple effect, the financial sector as a whole has rebounded. The action Goldman Sachs was taken over by 1.4% (after 2.7 per cent on Thursday), while JP Morgan Chase has gained 14% (after 1.6%) and Bank of America has returned 3.2 per cent (after -1,4%).

Frankfurt, as Deutsche Bank has started the day in a free fall of 9%, falling to a new historic low of 9.90 euros, before the resumption and finished up 6.4% to 11,57€. The title, however, loses about 50% since the beginning of the year, the markets are worrying about the slow pace with which the first German bank to restructure to reduce its risk profile.

While Deutsche Bank is one of the european banks less well capitalized, some analysts fear that its problems don’t spread to other financial institutions, raising the specter of a bankruptcy of the Lehman Brothers. Such a catastrophic scenario seems, however, very unlikely, taking into account the lessons learned from the 2008 crisis, say most experts. They point out that both the German government and the ECB would not take the risk to let Deutsche Bank fail.

u.s. consumer confidence climbs, inflation approaching 2%

in The United States, the macro-economic indicators of the day were rather encouraging for the economy, despite a stagnation in household spending in August. Thus, consumer sentiment measured by the University of Michigan came in higher than expected at 91.2 in September, against a consensus of 90.1 and a previous reading of 89.8 in August. Tuesday already, another consumer confidence index, the Conference Board, has jumped unexpectedly, from 101,8 in August 104.1 in September, its highest level since the summer of 2007 !

household incomes rose 0.2% in August compared to July, but the personal consumption expenditure stagnated, while the consensus expected a 0.2% rise, after a gain of +0.4% in July. Finally, the price index and “core-PCE (excluding food and energy) increased 0.2% compared to July and reached 1.7% year on year, nearing the goal of 2% of the Fed.

on The side of values, the values of the distribution have benefited from the announcement of an improvement in consumer sentiment across the Atlantic. Distributors Wal-Mart and Kroger have won respectively by 1.9% and 0.6%.

Among the cuts the more noticed, the title Cognizant, which has plunged by 13.4%. The technology services provider has announced the departure surprise of its president Gordon Coburn. In addition, the group revealed it had discovered, during an internal investigation of the anomalies on certain payments made in India. These payments may have violated the ” Foreign Corrupt Practices Act u.s. laws or other laws. Cognizant continues its internal investigation and says it is also working with the Department US of Justice and the SEC (Securities & Exchange Commission), the policeman in the u.s. financial.

The group admits that it is not for the moment able to assess the potential impact of this case on its earnings, cash flow or financial position.

Several companies have announced better than expected results, like Costco, which jumped 3.4%. For its 4th fiscal quarter, the distributor has made a net profit of 779 Million and$ 1.77 per title, against$ 767 Million and$ 1.73 per share a year earlier. The consensus was of$ 1.73 in eps. Revenue rose 2% to 35.7 us$ Bn . Excluding the impact of gasoline and foreign exchange effects, sales in the US comparable would have increased by 2%.

in addition, McCormick (+2,6%), the group of Maryland active in the production and distribution of spices, condiments or products of flavor, has released its results for the third quarter. The benefits are 127.7 M$ ($ 1 per share), compared to$ 97.6 Million ($ 0.76 per share) a year before. The adjusted eps spring to$ 1.03 . The sales rise of 3% to 1.09 billion usd . Analysts had been pencilling in average eps quarterly$ 0.94 , on revenues of 1.09 billion usd . On the year, the group is now targeting an eps of between 3,75 and 3,79$ , against a previous range of 3.68/$ 3.75 for .

Finally, Qualcomm (+1.5%) is in negotiations for the possible acquisition of the manufacturer of microchips european NXP Semiconductors (+6,1%), according to the Wall Street Journal’. The american giant, the leading manufacturer of processors for mobile devices, would even be willing to put 30 Bn$ on the table for this acquisition. The WSJ, which based its information on an anonymous source, says that an agreement could be found between the two groups in the next two or three months… For memory, NXP had put the hand on Freescale last year for the sum of 12 billion$ . Boosted by these rumors, as Qualcomm had already climbed 6.3% on Thursday on Wall Street, while NXP had soared almost 17%.

— ©2016,


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