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Good morning,
Markets are called to open higher this morning. This is what's happening today:
Companies in Europe reporting results today:
Asian stocks fell for a second day as weaker growth in Chinese manufacturing and American payrolls added to evidence of a slowdown in the world’s two largest economies.
U.S. companies took on the fewest workers in seven months, a report showed yesterday, while manufacturing in China and the U.S. expanded at a slower pace in April. The Federal Reserve said it will keep buying bonds at a monthly pace of $85 billion while standing ready to raise or lower purchases as economic conditions evolve. The European Central Bank will cut interest rates to a record low today, according to a majority of projections by analysts.
A Purchasing Managers’ Index by HSBC Holdings Plc and Markit Economics fell to 50.4 from 51.6 in March. A separate gauge yesterday from China’s statistics bureau was 50.6. In the U.S., the Institute for Supply Management’s factory index slid to 50.7. A gauge of euro-area manufacturing activity due for release by Markit Economics today is likely to have fallen to 6.5, the lowest this year, according to a poll of economists.
The Fed left unchanged its statement that it plans to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and the outlook for inflation doesn’t exceed 2.5 percent. Fed Chairman Ben S. Bernanke is pressing on with his effort to boost employment as 11.7 million Americans remain jobless almost four years into the expansion.
Mario Draghi has stoked expectations that officials will deliver an interest-rate cut today even as they doubt its impact. The European Central Bank President said on April 4 he stands ready to act if Europe’s economic outlook worsens. After a month in which inflation plunged, economic confidence slumped and unemployment rose, 44 out of 70 economists in a Bloomberg News survey now predict the ECB will cut its benchmark rate by a quarter-point today to a record low of 0.5 percent.
With transmission of the ECB’s rates still hampered by the region’s debt crisis, the risk is that such a move will fail to revive the economy and take the central bank closer to exhausting its current armory. Draghi himself has voiced doubts about the effectiveness of further interest-rate cuts and board member Joerg Asmussen said last week there are limits to what the ECB can do.
Stock to watch: Facebook – Facebook Sales Top Estimates as Mobile Advertising Gains Ground
Facebook Inc.’s first-quarter sales topped projections, a sign that Chief Executive Officer Mark Zuckerberg is making headway in a drive to make more money from mobile advertising. First-quarter sales rose 38 percent to $1.46 billion, Facebook said in a statement yesterday. That compares with the average analysts’ estimate of $1.44 billion, according to data compiled by Bloomberg. Profit excluding certain items was 12 cents a share, compared with an average prediction of 13 cents.
Barclays Research – Facebook reported 1Q13 earnings that were slightly ahead of our estimates, as softer-than-expected advertising revenue was offset by strong Payments growth and slower-than-expected expense growth. FB’s mobile monetization story continues to improve, though it may be coming at the expense of desktop ad revenue, which was flat Y/Y. Our revenue estimates remain relatively unchanged, though our EBITDA estimates increase as we reduce our estimates for expense growth. We maintain our $30 target on the same 16x our 2014E EBITDA of $4,107M (vs $4,086M previously.)
For more information on Facebook or other stocks and bonds we follow, contact our offices on 25688688.
Good day and happy trading!
Kristian Camenzuli
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