EU COMMUNICATIONS: Telecom Italia Reportedly Explores Elimination Of Savings Shares
Dec-27 13:16
TITIM
TITIM had previously indicated they would explore their use of savings shares (entitling the holder to a share of net profit but no voting rights) after the NetCo deal. Seems like cash flow visibility/flexibility would benefit though the reports are light on detail for now and the move should likely be seen as a step towards resuming ordinary dividends.
- Reuters sources that reporting that TITIM is seeking to engage with shareholders to streamline its equity structure by eliminating savings shares.
- The report outlines confidentiality agreements with Vivendi and CDP to discuss the plans, aiming to minimize shareholder rejection risks.
- Article again notes the CVC-Vivendi talks but doesn’t offer anything new with TITIM and CVC declining to comment. The TITIM short end has widened since the talks were reported.
- Management also considering integrating two Luxembourg-based holding companies that TITIM uses to issue debt into the parent company.
- With just over 6bn savings shares outstanding at a current price just under 30c, the savings shares have a capitalisation of EUR ~1.7bn which would imply a ~0.5x hit to 9M24 leverage before any premium is considered. A 100% buyback isn’t a likely option though, with a conversion to ordinary shares a more logical approach in our view (as was proposed in 2015 but rejected by shareholders) due to the smaller cash outflow required (the conversion would likely be accompanied by a smaller, one-off cash payment).
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CROSS ASSET: U.S. Tsy & Equity Market Operating Hours Over Thanksgiving
Nov-27 13:15
Market operating hours over Thanksgiving given below:
- Cash Tsys: Wednesday November 27: Full session, Thursday November 28: closed, Friday November 29, shortened session closing at 14:00 NY/13:00 Chicago.
- Tsy futures: Wednesday November 27: Full session, Thursday November 28: goes into pre-open (early close, no settlement) at 13:00 NY/12:00 Chicago, Friday November 29: Early close at 13:15 NY/12:15 Chicago
- Cash equities: Wednesday November 27: Full session, Thursday November 28: Closed, Friday November 29: early close at 13:00 NY/12:00 Chicago
- Equity futures: Wednesday November 27: Full session, Thursday November 28: goes into pre-open (early close, no settlement) at 13:00 NY/12:00 Chicago, Friday November 29: Early close at 13:15 NY/12:15 Chicago
US DATA: Core PCE Seen On Track To Overshoot Median FOMC Forecast - 1000ET
Nov-27 13:08
- Released today at the unusual time of 1000ET, Bloomberg consensus sees core PCE inflation at 0.3% M/M in October after the 0.25% M/M in September.
- We see unrounded estimates looking for a slightly ‘low’ 0.3%, with a median of 0.28% in the below table.
- From some of the more detailed estimates, Nomura expect small downward revisions of only 1bp to both Aug and Sept readings, whilst TD Securities see their estimate of 0.27% M/M for core PCE including a 0.39% M/M increase for supercore.
- Powell on Nov 14: “Estimates based on the consumer price index and other data released this week indicate that total PCE prices rose 2.3 percent over the 12 months ending in October and that, excluding the volatile food and energy categories, core PCE prices rose 2.8 percent.”
- Revisions do indeed look like they’re expected to be small then, seeing as a 0.28% M/M increase without any revisions would translate to 2.80% Y/Y after the 2.65% in September.
- We'll have a crude idea of revisions in the Q3 release that follows shortly beforehand at 0830ET as part of the second Q2 national accounts release.
- Importantly, whilst these upward base effects into year-end were already known, recent run rates would have continued to firm. A 0.28% M/M (again, assuming no revisions for a basic illustration) would see a three-month run rate of 2.8% after 2.3% in Sept and recent lows of 1.9% in Jul-Aug. Alternatively, and smoothing some recent noise, the six-month would inch a tenth higher to 2.4%.
- The latest trends are also, notably, leaving core PCE inflation on track to overshoot the median FOMC forecast of 2.6% for Q4 from the Sept SEP, revised down from June’s 2.8%. For a purely indicative exercise, a 0.28% M/M increase in Oct followed by two 0.20% readings would see 2.9% Y/Y in Q4, in line with the (presumably) most hawkish members considering the FOMC range of 2.4-2.9% for Q4.
US DATA: GDP Revisions And Scope For Core PCE Rounding Surprise – 0830ET
Nov-27 13:06
The second release for Q3 national accounts comes at 0830ET along with jobless claims and preliminary durable goods amongst others. It will include revisions for real GDP growth and its breakdown along with the first estimate for GDI.
- Bloomberg consensus doesn’t see a reason to diverge from the 2.8% annualized for real GDP growth flagged in the advance release, another robust quarter after the 3.0% in Q2.
- The advance release indicated that domestic demand played a greater role than was the case in Q2 (adding 3.6pps to quarterly GDP growth vs 2.8pps in Q2) and we’ll look to see if that’s still the case after revisions. Private consumption (seen unrevised at 3.7%) can give a quick idea here with what’s currently estimated to have been its strongest quarter since 1Q23.
- We also watch for the first release of Gross Domestic Income in Q3. Recall that GDI growth had been notably lagging GDP growth before a large shift higher in the comprehensive revisions in September, something that multiple FOMC members have since noted.
- The quarterly data will also show revisions for core PCE inflation. No material revisions are expected (seen staying at 2.2% annualized after 2.8% in Q2) although it can easily round lower with the latest rate actually 2.16%. We’ll touch more on the subsequent monthly PCE released, unusually released at 1000ET today, in the following re-upped bullet.
