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IB Traders' Insight

Global market commentary from IBG traders and market participants.

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2014-04-24 03:22:41

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: Netherlands / Belgium

  • HEINEKEN (NL): Heineken 1Q Organic Consolidated Rev. Beats Ests. Heineken 1Q organic consolidated rev. up 3.4%, est. up 2.9% (median of 12).  1Q organic consolidated beer vol. up 1.5%, est. up 1.6% median of 11).
  • UNILEVER (NL): Unilever Revenue Growth Beats Estimates as Europe Stabilizes. Unilever, the maker of Magnum ice cream and TRESemme shampoo, reported first-quarter sales growth that beat estimates as demand stabilized in Europe and the company outperformed its markets in Asia and Latin America. Underlying sales gained 3.6 percent, London- and Rotterdam- based Unilever said today in a statement, compared with the 3.3 percent median estimate of 10 analysts surveyed by Bloomberg News. Growth slowed from the fourth quarter’s 4.1 percent. “We delivered good growth in the first quarter despite slowing markets and a tough competitive environment, further evidence that Unilever is now delivering consistently ahead of our markets,” Chief Executive Officer Paul Polman said in the statement. Unilever had already signaled that underlying sales growth would slow in the first quarter. Chief Financial Officer Jean- Marc Huet in January forecast a gain at the “low end” of 3 percent to 5 percent. Underlying selling volume in the quarter rose 1.9 percent, Unilever said, beating the 1.7 percent median estimate of nine analysts. Prices increased 1.6 percent, compared with the median estimate for a 1.5 percent gain. Unilever shares were little changed at 30.69 Euro in Amsterdam trading yesterday.
  • DUTCH BANKS (NL): Dutch Banks Must Add ~EU26.7b in Capital, Regulator Says. Dutch lenders need to add ~EU26.7b in capital by 2019 to meet requirements including Basel III rules, 4% leverage ratio and contributions to deposit-guarantee fund and resolution fund, Dutch central bank says in report.  Central bank says: Lenders need to add EU10.2b in core Tier 1 and additional Tier 1 capital to meet full Basel III requirements taking effect in 2019. Banks need to increase their additional Tier 1 instruments by EU7.8b to achieve 4% leverage ratio; largest part can be achieved by converting Tier 2 instruments. Based on current estimates, banks will have to pay EU2.4b to deposit guarantee fund, resolution fund by 2019. Dutch lenders also have to pay EU3b in bank tax; could be used in future to build European resolution fund. Lenders have to pay EU1b in 2014 related to rescue of SNS Reaal * In base case, with economy developing in line with recent central bank estimates and banks not experiencing capital market constraints, lenders can meet requirements while still lending to companies, households * Estimates are based on 3Q 2013 numbers.
  • NUTRECO (NL): Nutreco 1Q rev. up 8.4% to EU853.3m, vol. effect 10.7%. Animal nutrition 1Q rev. down 4.6%. Fish feed 1Q rev. up 27%. Process of exploring possible divestment opportunities of compound feed and meat business in Spain and Portugal taking more time than anticipated as seek a fair valuation. Sees 1H Ebita ex-items cont. ops. to be "clearly higher" than 1H 2013’s EU80.3m.
  • ASML (NL): 1Q rev. EU150.7m vs est. EU142.6m. 1Q adj. net EU32.5m vs est. EU23.3m. 1Q net income EU27m versus pro-forma EU1.41b Y/y, co. says in statement • Co. sees "low single-digit decrease" in 2Q rev. at constant currencies, says hard to forecast 2H. Sees "strong double-digit decrease" in 2Q order intake q/q, after "very high" 1Q intake.
2014-04-24 03:21:40

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: France

  • GDF SUEZ (FR): Suez Environnement Says Waste Improving After Profit Declines. Suez Environnement, Europe’s second-biggest water company by market value, reported a 2 percent fall in first-quarter profit and said the waste treatment business has improved. Earnings before interest, tax, depreciation and amortization fell to 552 million Euro ($763 million) from 564 million Euro a year earlier, the utility said today in a statement. That missed the 568 million euro average estimate of six analysts compiled by Bloomberg. “The slight improvement in the waste business seen at the end of last year has continued,” Chief Executive Officer Jean- Louis Chaussade said in the statement. Treated volumes rose 1.7 percent as the European economy “seems to be stabilizing.” The utility kept 2014 financial targets. Suez Environnement, which is 34 percent-owned by energy producer GDF Suez SA, together with larger rival Veolia Environnement SA, had seen demand for industrial waste collection slide after manufacturers reduced factory output amid the European economic slowdown. The utility said in February the drop “may have hit bottom” last year. Suez and Veolia compete in France for municipal waste and water services and globally for large treatment installations like desalination plants. Suez is seeking to expand in faster- growing places like China, India and North Africa and move into providing services for world-spanning industrial companies. The company had set a goal for organic growth for Ebitda this year of at least 2 percent, debt-to-Ebitda of about 3 times and free cash flow of about 1 billion Euro. Ebitda in 2013 was 2.52 billion Euro, lower than the target of 2.55 billion Euro. Chief Financial Officer Jean-Marc Boursier said in an interview in February that he has a “wish list” of possible targets for acquisitions and the company has financial flexibility to carry them out. Net financial debt was 7 billion Euro at the end of the quarter compared with 7.6 billion Euro at the end of 2013, according to today’s press release.
  • SCHNEIDER ELECTRIC (FR): Schneider Electric 1Q Sales Beat Ests.; Reaffirms 2014 Targets. Schneider Electric 1Q sales EU5.67b, up 7.7% y/y, vs est. EU5.40b. 1Q organic rev. up 2.5%. CEO says trends in 1Q in line with expectation at start of year. 1Q sales by division: Buildings & Partner +5.8% LFL, Industry organic growth of +6%, Infrastructure down -3.7% organically, hurt by double-digit decline in western Europe, and IT fell -3.4% organically. Expects 2Q to be hurt by “high comparison basis and slightly negative working day effect” of ~0.6 pt, with growth seen accelerating in 2H. Still sees low single-digit organic growth in 2014 rev., 0.4-0.8 pt improvement of adj. Ebita margin vs 2013 proforma level, ex-forex impact. Negative forex impact estimated at ~0.4 pt w/most of the impact concentrated in 1H.
  • TOTAL (FR): France’s Total SA expects the biggest share of its oil and gas output to come from Russia by 2020 and plans to stay there for the long haul despite recent tensions with the West over Ukraine, a top executive said. Total executives said they expect its production in Russia to soar to 400,000 barrels of oil equivalent per day (boe/d) by around 2020, almost doubling from 207,000 boe/d last year, thanks to its partnership with Russia’s Novatek and their giant Yamal LNG project in Siberia.
  • PERNOD RICARD (FR): Pernod 3Q Organic Sales Growth Misses Ests. Pernod Ricard 3Q organic sales unchanged, est. up 1.4% (median of 13). 3Q total rev. EU1.62b, est. EU1.66b. Confirms FY forecast: organic growth in profit from recurring ops. 1% to 3%. Asia/Rest of World sales impacted primarily by China where the decline exacerbated by destocking in 3Q as anticipated. 3Q Europe organic sales down 3%. 3Q Americas organic sales up 5%. 3Q Asia ROW organic sales down 1%. Operational efficiency programme Allegro project being gradually implemented.
  • AIR LIQUIDE (FR): Air Liquide 1Q Sales Meet Est., Confident Can Raise Net In come. 1Q sales EU3.73b vs est. EU3.75b. Says confident it can lift net income in 2014. Says full year profit growth assumes environment doesn’t worsen. Environment is notably favorable for electronics.
  • TECHNIP (FR): Technip 1Q Net EU67m vs Est. EU64.1m; Keeps 2014-15 Guidance. Ebitda EU180.6m vs est. EU168.6m. Subsea Ebitda EU107.3m, margin 10.6%; onshore/offshore Oifra EU85.9m, margin 5.9%. 1Q order intake EU2.8b; EU2.06b in subsea, EU723m in onshore/offshore. Backlog EU15.36b at end 1Q. Keeps guidance 2014 subsea revenue growth to between EU4.35b-EU4.75b, oper. margin of at least 12%; onshore/offshore revenue growth to between EU5.4b-EU5.7b, oper. margin 6%-7%.
  • DASSAULT SYSTEMS (FR): Dassault Systemes Receives CFIUS Confirmation for Accelrys. The Committee on Foreign Investment in the United States completed its investigation of the Accelrys acquisition and cleared the purchases. Yday: Dassault Systemes Extends Accelrys Offer for 4th Time until April 28. Earlier: Dassault Systemes 1Q IFRS Rev. Beats; Updates 2014 Outlook.
  • IPSOS (FR): Co. says 1Q revenue fell 4.5% to EU343.3m.
  • MICHELIN (FR): Co. says 1Q revenue fell 2.4% to EU4.76b.
2014-04-24 03:20:42

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: Spain/Italy

  • REPSOL (ES): Argentine Cabinet Chief Jorge Capitanich said an agreement to pay Repsol SA $5 billion in compensation for the expropriation of its controlling stake in YPF SA will open the door for increased energy investment. The proposed compensation plan, which was already approved by the Senate and is being voted on today by the lower house, would provide the Madrid-based energy company with $5 billion worth of government bonds and end international lawsuits over the 2012 takeover of YPF. "The bill will be converted into law today," Capitanich told a room full of business leaders during an hour-long speech at the Alvear hotel in Buenos Aires including Pan American Energy LLC board member Alejandro Bulgheroni. "It’s a very important step to have capital market access and multiply our efforts to explore for and develop oil and gas to achieve self- sufficiency."
  • CAIXABANK (ES): CaixaBank 1Q net profit EU152m vs EU335m a yr earlier, bank says.  Earnings compare with EU140m avg. est. in survey of 7 analysts. 1Q net interest income EU993m vs EU1b in 4Q, EU992m a yr earlier. Bad loans ratio 11.36% vs 11.66% in Dec.; decline is first since 4Q 2006, bank says. Basel III ratio 12.4%, fully-loaded 12.1%. Gross lending falls 2.8% from Dec.
  • BANCO SABADELL (ES): Banco Sabadell to publish 1Q earnings before market opens.
  • SACYR (ES): Sacyr to issue up to EU300m in convertible bonds or bonds exchangeable for existing shares; board also approves capital increase.
  • ASSICURAZIONI GENERALI (IT): Assicurazioni Generali sells EU1b 12Y T2 Subord Notes at MS +225.
  • SOGEFI (IT): Sogefi 1Q net loss EU6.3m vs EU7m profit Yr earlier.
2014-04-24 03:19:56

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: Scandinavian Region

  • WAERTSILAE (NORD): Waertsilae 1Q Net Beats Ests.; Orders Fall, Outlook Unchanged. Waertsilae 1Q net sales EU1.01b vs est. EU937m. 1Q order intake decreased 16% q/q to EU1.14b. EPS EU0.31 vs est. EU0.22. Ebit EU84m vs est. EU82.1m. Pretax profit EU81m vs est. EU76.2m. Net income EU62m vs est. EU42.7m. CEO says power plant customers postpone decision-making due to economic uncertainty, emerging mkt currency fluctuations. Keeps 2014 outlook; sees 2014 net sales growing 0-10%; Ebit margin ex-items ~11%. NOTE: 2 buys, 10 holds, 9 sells, avg. PT EU40.67.
  • BILLERUDKORSNAES (NORD): BillerudKorsnaes 1Q Profit Beats Est.; Sees Unchanged Demand. operating income SEK541m vs est. SEK504m. 1Q sales SEK5.41b vs est. SEK5.04b. Says demand, order situation expected to remain stable in 2Q for all business areas. Says avg. prices in local currency anticipated to stay on current level in 2Q. Target of SEK530m annual synergies, savings expected to be reached by end 2014.
2014-04-24 03:18:59

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: United Kingdom

  • ASTRAZENECA (UK): AstraZeneca 1Q Core EPS, Op. Profit Miss; Keeps FY14 Forecast. AstraZeneca still sees 2014 core EPS decline in the teens, low-to-mid single digit percentage decline in revenue at constant FX. 1Q core EPS $1.17 vs est. $1.21. 1Q rev. $6.4b vs est. $6.39b. 1Q core op. pft $1.95b vs est $2.07b. NOTE: April 23, AstraZeneca Still Compelling Investment After Recent Rally.
  • ANGLO AMERICAN (UK): Anglo 1Q Iron Ore Output Rises 10% to 11.3mt; Platinum Plummets. Export metallurgical coal production advances 31% to 6.1mt. Export thermal coal +14% to 7.9mt. Copper +18% to 202kt. Nickel +48% to 9.2kt. Platinum (equivalent refined) output drops 39% to 357k oz. Diamond output +18% to 7.5m carats.
2014-04-24 03:18:16

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: Switzerland

  • LONZA (CH): Lonza Says 1Q Performance Fully In Line With Company Expectation. Lonza says 2014 started with good momentum, leading to better performance than previous year, is delivering as expected on growth targets. Says 1Q FX impacts have been compensated by productivity improvements. Says Specialty Ingredients saw positive overall market demand in most areas, Pharma & Biotech saw an uptake in demand across all technologies and offerings. Strategic review process of Wood Protection business proceeding according to plan. Says on track to deliver revenue growth of ~5% and core Ebit growth of ~10% in 2014.
  • LOGITECH (CH): Logitech 4Q Gross Profit Rises; Keeps FY15 Guidance. Co. reports gross profit of $165m for three months ended March 31, up from $159m in the prior corresponding period, in results announcement on Business Wire. Co. confirms FY15 guidance for $2.16b in sales and $145m in non-GAAP operating income. 4Q GAAP operating income $7m, compared to a loss a year ago. 4Q non-GAAP operating income $23m.. .4Q net sales $485.3M, vs $469.1m a year ago.
  • SWISS LIFE (CH): Swiss Life shareholders approved all resolutions proposed by the board.
  • NOVARTIS (CH): Novartis AG’s first-quarter profit was little changed as weaker currencies in Japan and emerging markets weighed on sales, offsetting gains from newer products such as the Gilenya treatment for multiple sclerosis. Earnings excluding some items totaled $3.21 billion, or $1.31 a share, compared with $3.21 billion, or $1.30, a year earlier, the company said in a statement today. Novartis, which is based in Basel, Switzerland, and reports earnings in dollars, also was hurt by a strong Swiss franc. Analysts predicted profit of $1.31 a share, according to the average of 12 estimates compiled by Bloomberg. The results come two days after Novartis announced a series of deals that will reshape the company. Novartis agreed to buy GlaxoSmithKline Plc’s cancer-drug business for as much as $16 billion, sell most of its vaccines business to Glaxo for as much as $7.1 billion and sell its animal-health unit to Eli Lilly & Co. for $5.4 billion. Glaxo and Novartis also will form a consumer-health joint venture. Sales of newer medicines -- the company’s so-called growth products, which are those introduced in 2009 or later, or which have patents extending to at least 2018 -- climbed 17 percent to $4.3 billion. They accounted for 31 percent of pharmaceutical sales in the quarter. Novartis reiterated that sales this year will increase by a low to mid-single-digit percentage in constant currencies, and core operating income will rise more than sales. The forecast assuming Diovan faces generic competition in the U.S. at the beginning of the third quarter.
2014-04-24 03:17:22

Posted by
IB European Trade Desk
Contributor

Stocks

Market update: Germany

  • EVOTEC (DE): Evotec Gets First Milestone in Roche Biomarker Collaboration.
  • SUEDZUCKER (DE): Suedzucker Will Suggest Dividend Cut, CFO Tells Boersen-Zeitung. Suedzucker’s payout proposal to supervisory board in May to reflect current developments, Boersen-Zeitung cites CFO Thomas Koelbl as saying in interview. CFO says investors should expect significant reduction in dividend from year earlier: Boersen-Zeitung. Koelbl says mid-term policy is to pay 30%-40% of net income in dividend. Suedzucker could finance M&A deals worth EU1b-EU2b, Koelbl tells newspaper. CFO says co. looking at assets outside Europe, is interested in Brazil.
  • VOKSWAGEN (DE): Volkswagen China Studying Localization of Seat Brand.
  • AIXTRON (DE): Aixtron CEO sees no improvement of demand, FAZ says.
2014-04-23 15:26:27

Posted by
Andrew Wilkinson
Chief Market Analyst
Interactive Brokers
Contributor

Options

SodaStream volatility surges after Starbucks implicated in stake

Here’s an interesting update on our April 16 posting on Sodastream (Ticker: SODA), which popped that day following an unsubstantiated report from Israeli newspaper, Calcalist that the company had been in talks to sell a stake of at least 10% to a major US company. Last week shares in Sodastream jumped by 9% and have added a further 51.0% to $46.50 in Wednesday’s excitement. At the time we noted the shift in volatility skew as uncertainty lifted the cost of upside options faster than it did the cost of downside protection. Overall implied volatility stood at around 70% at the time. Now, one week later, Globes, another Israeli business website is offering support for the same story naming Starbucks (Ticker: SBUX) as the US party interested in a stake worth $1.1 billion in the fizzy-drinks maker. Such is the uncertainty that option sellers have pulled in their horns and pumped up associated volatility such that premiums on options expiring on Friday reflect implied volatility in excess of 100%. The first chart repeats last week’s news, while the second illustrates the elevated nature of implied volatility across strike prices ranging from 40.0 to 50.0. Shares in Starbucks are down 1.19% on the day to $70.31.

Elsewhere, shares in Keurig Green Mountain (Ticker: GMCR) are falling $4.24% to $94.59 reaching its lowest price in 10-weeks as investors fear the substitution effect may dilute the company’s brand. Keurig is developing a single-serve, do-it-yourself fizzy drink maker similar to that offered by Sodastream. While Keurig has already sold a 10% stake in itself to Coca-Cola (Ticker: KO), fears are rising that alternative fizzy-drinks solutions will hamper its sales outlook as the industry garners attention. Curiously our options scanners noted 1,650 bearish put options expiring in June changing hands at the 72.50 strike (23% below today’s trading price) at around 1.26 per contract.    

Chart 1– Sodastream skew jumped following the Calcalist story….

Chart 2– but no one is giving it away after the latest story from Israeli website, Globes

2014-04-23 15:12:36

Posted by
Andrew Wilkinson
Chief Market Analyst
Interactive Brokers
Contributor

Options

Apache calls in play

Shares in independent energy developer Apache Corporation (Ticker: APA) are extending gains and have moved 2.33% higher to $88.22 lifting the value of the company to its highest since January. The company has relatively few outstanding options contracts held by investors at just 111,000 lots. The surge in the share price is, however, leading to call option activity in Tuesday’s session with 19,000 contracts changing hands by 1:40pm. Bullish plays include call buying in the May expiration at the 87.5 and 90.0 strikes, while bulls are also positioning in the June 90.0 and 92.5 strikes. In the case of the June contracts respective call volume of 1,300 and 3,160 contracts is in excess of established open interest of 893 lots and just 34 lots ahead of today’s trading. Rising option implied volatility indicating growing uncertainty surrounding the stock has risen by 2.8% to 19.6% as a result of the surge in its shares. Several E&P names are higher in today’s session.    

Chart – Implied volatility on Apache rise as the company’s shares move without major catalyst

 

2014-04-23 12:19:01

Posted by
Waverly Advisors, LLC
Technical/Quantitative Market Research
Contributor

Stocks

Waverly Advisors Midday Update

Global Equity markets and commodity movers:

Equities

Japanese stocks (+1.3%), Spike: 1.4σ, Related tickers: EWJ

Singapore stocks (-0.6%), Spike: -1.3σ, Related tickers: EWS

Rates and Currencies

Euro / British Pound (+0.4%), Spike: 1.4σ, Related tickers: FXE, FXY

Aust Dollar / US Dollar (-0.8%), Spike: -2.1σ, Related tickers: AUD, FXA

Aust Dollar / Japanese Yen (-1.2%), Spike: -3.3σ, Related tickers: AUD, JPY, AUDJPY, FXA, FXY

Commodities

Sugar futures (+2.3%), Spike: 1.5σ, Related tickers: SB, SGG

Corn futures (+1.2%), Spike: 1.0σ, Related tickers: ZC YC

This list highlights large standard deviation moves using Waverly Advisors’ SigmaSpikes™ indicator—markets that are making significant moves today on a volatility-adjusted basis.

For more information about Waverly Advisors please click http://bit.ly/1mj1Toa.

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