EUR 100.00 For Business Accounts Only

IBERIAN DAILY 17 JANUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: CAIXABANK.

MARKETS YESTERDAY AND TODAY

Europe flatlining
It was a mixed bag in European markets, where the most noteworthy aspect was the ECB’s meeting minutes, which left the door open to a change in monetary policy. Within the Euro Stoxx, the best-performing sectors were once again defensive ones like Utilities and Real Estate, whereas Autos and Pharma led the losses. On the macro side, in Germany, December’s final inflation figure confirmed the preliminary 1.5% YoY data. In the US, December’s core retail sales rose more than expected, suggesting dynamic 4Q’19 growth in private consumption, although vehicle and department store sales continue to fall. From the rest of the data, weekly jobless claims once again fell, January’s Philadelphia Fed improved more than expected and the NAHB real estate confidence index for January fell less than expected. As for the Fed, Trump once again complained about the dollar’s strength, backing K. Warsh as a replacement for J. Powell. In China, the 4Q’19 GDP remained at 6.0% YoY, as expected, whereas December’s both retail sales and industrial output recovered more than expected. In US business results, PPG Industries came in below expectations, Bank of New York was in line and Morgan Stanley beat expectations.
What we expect for today
Euro zone indices would open with gains of +0.5%. Currently, S&P futures are trading unchanged (the S&P 500 closed +0.39% higher vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 12.32%). Asian markets are trading with mixed results (Japan +0.45% and Hong Kong -0.10%).
Today in the euro zone we will learn December’s final inflation, in the UK December’s retail sales and in the US December’s industrial production, housing starts and building permits and January’s preliminary U. of Michigan consumer confidence. In US business results, CSX Corp, among others, will release its earnings.

COMPANY NEWS

CAIXABANK, BUY
According to the press, CABK would have initiated talks with the unions to offer a voluntary early retirement plan for 376 employees maximum (around 1% of its workforce) in Teruel and Barcelona, regions that were excluded from the restructuring carried out in 2019, which meant a reduction of 2,023 employees. Positive news. According to our estimates, this measure could mean a reduction of around € 30 M in the cost base (-0.8% BS(e)) with some € 150 M of gross restructuring costs (-5% of Net Profit’20 BS(e)) and around -7% in CET1, currently 11.7%). This confirms, in our view, that CABK maintains its commitment to control and reduce costs.