HALISTER1: Buy GGBs on Dips as May Be Included in ECB QE This Year: BofAML

Buy GGBs on Dips as May Be Included in ECB QE This Year: BofAML

(Bloomberg) -- While there are a number of reasons to be pessimistic on Greece, recommend buying GGBs on dips as the country is on the path toward inclusion in the ECB’s QE program, Athanasios Vamvakidis, strategist at BofAML, says in interview.
  • Political instability in Greece is clearly a risk in the short-term as the govt has a very slim majority in parliament, and it could collapse if it tries to get approval for pension reforms and a new tax regime for farmers
  • There is though a fundamental difference compared to the past; as long as a govt, this one or another one, concludes the review, it’s likely GGBs will be included in the ECB QE program by the end of this year, which is very bullish for Greece
    • The best case for Greece this year is inclusion in QE this summer, the worst case scenario is by the end of the year; no matter how you see it, the end game is inclusion in QE
  • From this point of view, Greece looks better than the rest of the periphery; Ireland and Cyprus are also good cases because they have implemented their programs
    • Less bullish on other periphery countries; may see another rally if the ECB manages to surprise investors in March but that would be a rally to sell
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)
1004Z GA (Hellenic Republic)

People
Athanasios Vamvakidis (Merrill Lynch International)

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HALISTER: Anglo American Rally, Takeover Talk Belie Rising Short Interest

Anglo American Rally, Takeover Talk Belie Rising Short Interest

(Bloomberg) -- Anglo American, the FTSE 100’s second-most shorted stock, has climbed 60% in the past two weeks, the biggest 10-day rally on record, boosted by a rebound in metals prices, M&A speculation and an update from the CEO.
  • The rally in commodities was fueled by a 2.6% drop in the dollar index on lower expectations of further Fed tightening
  • Following gains in mining shares, Investec said on Feb. 5 that while largely reflecting short covering, advance is also partly investors trying to determine an equity value for heavily-indebted companies
SHORT INTEREST:
  • Anglo American has the highest short interest in the Stoxx 600 Basic Resources index, at 18.9% of shares out, according to Markit data; followed by ArcelorMittal at 12.3%, Glencore at 8.4%
    • The percentage of shares out has risen to 18.9% from 13% on Jan. 25: Markit
  • Odey Asset Management increased its short by 2.5m shares on Feb. 4 after covering it last week by 2.32m shares
    • Key Group decreased its short position by 1.42m shares to 0.87%
PRICE MOVES:
  • Anglo American was the biggest Stoxx 600 Basic Resources gainer in the 10 days to Feb. 5 close, followed by Glencore up 30%, Antofagasta up ~20%
  • Commodities strength resulted in a gain of 11% for the Stoxx Basic Resources index for last 10 sessions
  • 10-day move in metals: Platinum up 9.5%, Gold up 6.9%, Iron Ore up 8.9%
RIGHTS ISSUE:
  • Second-largest holder Coronation Fund Partners said co.’s cost-cutting plans are “not aggressive enough,” ruled out investor bailout, Sunday Times reported on Feb. 7
  • Jan. 7: Public Investment Corp., Anglo’s biggest shareholder, said company should only ask investors for more money after first exploring all expense-reducing alternatives available
  • Jan. 6: Schroders, one of Anglo American’s biggest investors, urged the board to resist mounting pressure to tap shareholders for cash
M&A TALK:
  • The FT market report on Feb. 5 noted speculation that Anglo may consider a more formal tie-up with South32, which has been reported to be among the bidders for Anglo’s $1b-valued Brazilian phosphates and niobium business
    • Jan. 13: BHP Spinoff South32 said interested in $1b Anglo sale
  • Daily Mail market report noted takeover talk surrounding Anglo American last week
  • Jan. 27: Anglo American mulls sale of Brazil nickel assets: Globe & Mail
  • Co. mentioned as a possible takeover target in the Bloomberg M&A survey on Jan. 26
RELATED:
  • Anglo American Sees 2016 Being Tougher Than 2015, CEO Cutifani Says
  • South African Mines Minister Says Anglo Sales to Happen Soon
  • Anglo Platinum Sees More Price Pain as It Halts New Projects
  • ArcelorMittal to Raise $3b Capital, Sees $4b Debt Reduction
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
AAL LN (Anglo American PLC)
MT NA (ArcelorMittal)
ANTO LN (Antofagasta PLC)
BHP AU (BHP Billiton Ltd)

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UUID: 7947283

HALISTER1: UBS WM Less Bullish on Sovereign Bonds; PGBs Are The Exception

UBS WM Less Bullish on Sovereign Bonds; PGBs Are The Exception

(Bloomberg) -- While there’s still some potential upside in EGBs, there’s quite a bit of downside risk after the tightening in 2015, UBS Wealth Management analyst Thomas Wacker says in interview.
  • Most of the bonds of double A and single A-rated countries will only achieve small excess returns which even a low single-digit widening could erase, making it almost impossible to outperform bunds
  • A failure of the ECB to meet the high market expectations for more easing in March could trigger a sharp correction, Wacker wrote earlier in client note dated Feb. 4
  • While the carry trade in BTPs and SPGBs was successful during QE, spreads could widen enough to offset the potential excess return as soon as the end of ECB QE comes into focus
    • 12 months from now it’s likely we’ll see more spread differentiation and stronger spread moves for those countries with ongoing issues, such as Spain, if QE is over with
  • The only exception in the periphery is Portugal where there has been a remarkable underperformance and there has been some kind of settlement on budget talks, suggesting the issue may be off the table for a while
    • Even in Portugal, there remains a concern among investors that if the country loses its IG status it could be excluded from QE and spreads could widen
  • Favor corporate debt which wouldn’t be impacted as much by a change in the policy backdrop
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Thomas Wacker (UBS Asset Management Japan Ltd)

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HALISTER1: BGOV Bill Summary: Senate Version of H.R. 757, North Korea (1)

BGOV Bill Summary: Senate Version of H.R. 757, North Korea (1)

Alert: HALISTER1
Source: BGV (Bloomberg Government)

Tickers
32663Z US (United States Senate)
1025708D US (Senate Committee on Foreign Relations)

People
Addison McConnell (United States Senate)
Cory Gardner (United States Senate)
Justin Amash (United States House of Representatives)
Robert Corker (United States Senate)
Robert Menendez (United States Senate)

Topics
BGOV Defense
BGOV Finance
BGOV Legislation

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UUID: 7947283

HALISTER1: Pimco Favors Italy as Spread Widening Offers Opportunity to Buy

Pimco Favors Italy as Spread Widening Offers Opportunity to Buy

(Bloomberg) -- The spread widening into peripheral bond market is opportunity to add to some existing positions as current nervousness is excessive compared with fundamentals, Nicola Mai, sovereign analyst at Pimco, says in a phone interview.
  • Pimco still favors Spanish and Italian bonds
  • It’s hard to predict how long the bond market volatility will last but move is probably part of general risk-off environment rather than related to any specific change in fundamentals
    • Quantitative easing from ECB and euro-zone recovery are still in place while lower oil prices play in favor of economy
  • NOTE: BTP/Bund widest since July, attempts to narrow gap with FTSEMIB
  • NOTE: Pimco has $1.43t of assets under management as of Dec. 31, 2015, according to its website
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
21429Z US (Pacific Investment Management Co LLC)
2539Z GR (European Central Bank)

People
Nicola Mai (Pacific Investment Management Co LLC)

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UUID: 7947283

HALISTER: Pfizer Names New Executives to Lead Units After Allergan Deal

Pfizer Names New Executives to Lead Units After Allergan Deal

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
PFE US (Pfizer Inc)
AGN US (Allergan plc)

People
Albert Bourla (Pfizer Inc)
Brenton Saunders (Allergan plc)
Geno Germano (Pfizer Inc)
Ian Read (Pfizer Inc)
John Young (Pfizer Inc)

Topics
Who's News - People
Management Changes

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UUID: 7947283