HALISTER: Apple Supplier TSMC Sees Demand Weakening for Phones Above $500

Apple Supplier TSMC Sees Demand Weakening for Phones Above $500

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
AAPL US (Apple Inc)
2330 TT (Taiwan Semiconductor Manufacturing Co Ltd)
981 HK (Semiconductor Manufacturing International Corp)

People
C K Lu (Gartner Inc)
Chen Chen (SinoPac Financial Holdings Co Ltd)
Liu Te-Yin (Taiwan Semiconductor Manufacturing Co Ltd)
Steven Pelayo (HSBC Securities Asia Ltd)
Szeho Ng (BNP Paribas Peregrine)

To de-activate this alert, click here
To modify this alert, click here

UUID: 7947283

HALISTER1: A Brexit Vote Would Spur SPGB, Irish Spread Widening, UBS Says

A Brexit Vote Would Spur SPGB, Irish Spread Widening, UBS Says

(Bloomberg) -- If the U.K. votes to leave the EU, heightened risk-aversion is likely to result in wider peripheral spreads, UBS analysts including Nishay Patel write in client note.
  • Largest impact on spreads is likely to be on Ireland and Spain, the countries with the largest fundamental exposure to the U.K., while within the core markets, the Netherlands is the most exposed
  • Expect 10Y Italy-Germany yield spread to widen above 175bps, Spain to underperform Italy, 10Y Ireland-Germany spreads to widen above 90bps, and Netherlands to underperform Germany
  • Market concerns may dissipate relatively quickly were the European Council to indicate goodwill and determination to finish negotiations quickly and in a cooperative fashion, with a view to maintaining a high degree of integration with the U.K.
  • Brexit may trigger a knee-jerk drop in EUR/USD, but don’t expect material euro weakness as episodes of rising eurozone political risks have continually failed to weaken the single currency
    • While risk-aversion may pressure the CHF, would expect the SNB to move against currency strength
  • The longer-term impact would depend on whether a U.K. vote to leave leads to further EU integration or disintegration
    • The latter could trigger a substantial widening in spreads and the former would be supportive of higher bund yields and tighter spread
  • NOTE: Brexit would send pound down another 25%, favor U.K. large cap internationals, UBS said yesterday
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Nishay Patel (UBS Global Asset Management Japan Ltd)

To de-activate this alert, click here

UUID: 7947283

HALISTER1: IMF Growth Outlook May Re-Ignite Credit Bubble Concern: Analysis

IMF Growth Outlook May Re-Ignite Credit Bubble Concern: Analysis

(Bloomberg) -- Policy accommodation in response to economic weakness has been the bedrock of positive risk-asset performance in recent years. But in the continued absence of meaningful pickup in global growth, it may soon be difficult to reconcile robust risk-asset valuations with underlying fundamentals, Bloomberg strategist Simon Ballard writes.
  • In its latest World Economic Outlook, IMF says that while growth in EM and developing economies is still seen as driving global expansion in 2016, prospects across countries remain uneven and generally weaker than over the past two decades; gains in advanced economies are forecast to remain modest
  • The cautious IMF macro view may fuel questions about possible valuation bubble in speculative-grade credit
    • It may be increasingly difficult to justify current tight risk-asset valuations and compressed yield spreads on the basis of low interest rates alone
    • S&P data already shows U.S. trailing-12-month spec-grade corporate default rate widened to 3.8% in March -- the highest since 2010 -- and is expected to hit 3.9% by end of this year
  • Concerns could be exacerbated if a more hawkish outlook is factored into U.S. Fed policy assumptions over 2016/2017; speculative-grade risk positions are most susceptible to rising interest costs over time, creating significant uncertainty
    • More dovish outlook for ECB policy vs Fed, may again reiterate investor bias for outperformance of EUR risk assets compared to USD credit risk, albeit with weak macro likely to also favor up-in-quality investment strategies
  • Central Bank stimulus and open-ended liquidity can only justify tight corporate spreads over longer term if economic growth and corporate profitability flourish, an outlook that is now in doubt
    • Low interest-rate environment after the global financial crisis has encouraged investors to stretch into higher- yielding, higher-risk assets in order to maximize investment returns
    • The yield spread differential between a risk asset and its underlying government bond benchmark is supposed to be an indicator of implied default risk; the wider the spread, the greater the compensation an investor receives for accepting a heightened level of default risk in the portfolio
    • While loose monetary policy can facilitate corporate funding and minimize default risk, prolonged weak economic conditions eventually risk eroding corporate earnings, credit quality and the corp default-rate outlook
  • NOTE: Simon Ballard is a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

To de-activate this alert, click here

UUID: 7947283

HALISTER1: Swedish FSA Says Tax Investigation of Banks to Take Months

Swedish FSA Says Tax Investigation of Banks to Take Months

(Bloomberg) -- Swedish Financial Supervisory Authority Director General Erik Thedeen says the watchdog’s investigation into Swedish banks mentioned in leaked documents from a Panama law firm will take “months” to conclude.
  • Says regulator is looking at money laundering and assessing internal control in the banks and whether guidelines from management are followed throughout the organization
  • Says fines were already given to Nordea and Handelsbanken last year for breaching money laundering rules; if FSA in current investigation discovers issues similar to those that caused last year’s fines, it can’t sanction same thing twice
  • Says tax investigation won’t delay FSA decision on Nordea’s application to merge its Nordic subsidiary banks; FSA plans to make its decision on the bank’s plan by mid-May
  • Thedeen comments to reporters in Stockholm
  • NOTE: April 13: Nordea to Give Tax Authorities Full Account of Offshore Holdings
  • NOTE: April 13: Nordea Money Laundering Link to Panama Leaks Probed by FSA
  • NOTE: April 7: Panama Leaks Draw Warning From Sweden as Tougher Laws Considered
  • NOTE: March 21: Swedish FSA to Decide on Nordea Subsidiary Merger Before Summer
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
SHBA SS (Svenska Handelsbanken AB)
NDA SS (Nordea Bank AB)
SEBA SS (Skandinaviska Enskilda Banken AB)
SWEDA SS (Swedbank AB)

People
Erik Thedeen (Swedish Financial Supervisory Authority)

To de-activate this alert, click here

UUID: 7947283

HALISTER1: EUR Inflation Carry to Turn Highly Positive Over May: Citigroup

EUR Inflation Carry to Turn Highly Positive Over May: Citigroup

(Bloomberg) -- Expect EUR inflation carry to be significant over May and further enchanced with any upside final HICP suprise today, Citigroup strategists including Jamie Searle write in client note.
  • Expect HICP release for March at 11am CET likely to confirm the flash reading of -0.1% y/y, up from -0.2% in Feb
  • Consistent with HICPxT of 1.2% m/m, according to Citi’s economists
  • Reading will result in significantly positive carry over May, Boblei18 +60bp
  • Minor upside risk to inflation following yesterday’s surprise in France CPI
  • An upside surprise of 0.1% m/m in HICPxT will enhance the carry on Boblei18 by 5.3bp over May
  • Pricing this in, along with further gains in oil prices, has perhaps contributed to recent flattening of the breakeven inflation curve
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Jamie Searle (Citigroup Inc)

To de-activate this alert, click here

UUID: 7947283