YEAR AHEAD 2015 · debt. The ECB would have to expand its balance sheet by about 1.7 trillion euros...
Transcript of YEAR AHEAD 2015 · debt. The ECB would have to expand its balance sheet by about 1.7 trillion euros...
YEARAHEAD2015
CONTENTSECONOMICS France and Italy struggle as the UK posts surprise growth and Germany looks homeward.— Page 2
FINANCIALSCentral banks lean toward easing as assets pile up toward $11 trillion.— Page 44
COMMUNICATIONS A year for mobile ads, Star Wars, streaming content and Internet hardware.— Page 11
BLOOMBERG INTELLIGENCEAnalytical Team— Page 86
INDUSTRIALSDeflation, weak growth and trouble in the oil industry crimp demand.— Page 62
MATERIALSSlumping prices and demand roil metals markets; China sees glitter in gold.— Page 69
HEALTH CAREPayers confront drug-makers on pricesas biotechs seek thenext blockbuster.— Page 55
TECHNOLOGYSpending rises amid more outsourcing, cloud clashes and cyber attacks.— Page 77
MARKET OUTLOOK Deflation and falling profit forecasts dim spirits; dividends provide some cheer.— Page 8
CONSUMER Cheap gasoline leaves consumers more to spend at upgraded stores and online.— Page 20
ENERGY & UTILITIESFuel prices follow crude lower; Africa suffers as U.S. shale production increases.— Page 33
WELCOME TO BLOOMBERGINTELLIGENCE
Welcome to the Bloomberg Intelligence 2015 Outlook, which highlights key topics and trends that will define business and investing in the coming year.
The book includes analyses drawn from the work of more than 200 research professionals at Bloomberg Intelligence, the five-year-old research division of Bloomberg L.P. Embedded in this year’s outlook are four broad themes:
As 2014 ended, the market appeared to be discounting a benign environment where any interest rate increases would be modest. The Federal Reserve’s stated intent to raise rates contrasts with easing by the European Central Bank and China.
As tumbling oil prices compound deflation in the euro zone, full-blown easing is becoming more likely. This would widen the gap in economic cycles globally.
Lower oil prices are a double-edged sword for European economies. They add to the deflationary risk while providing a boost to consumer discretionary income. The choices that consumers make on spending or saving could significantly aid an economic recovery or leave Europe in stagnation.
The Ukraine conflict has wide ramifications for a European economic recovery. Concern about Iran’s nuclear capabilities and related sanctions may resurface at midyear.
Our team, led by senior analysts with an average of 15 years of experience, analyzes more than 130 industries, thousands of companies worldwide and major asset classes to help Bloomberg’s customers understand what is most likely to prosper or falter. Our interactive service makes 320,000 customers immediately aware of major events and new data so they can review information graphically, read related research and reach out to investment and corporate professionals as well as our analysts through curated chat rooms.
We hope you’ll enjoy reading what our analysts have found. Contact our team if you want to know more about what we offer.
Sincerely,DAVID [email protected]
DIRECTORS OF RESEARCHDAVID DWYER Global
DREW JONES Global Deputy
TIM CRAIGHEAD Asia
SAM FAZELI Europe, Mideast & Africa
PAUL SWEENEY North America
JULIE CHARIELL Government & Legal
NOEL HEBERT Credit
JOEL LEVINGTON Credit
CONTENT MANAGERS PATRICIA WILSON Global Product Manager
CHRIS ROGERS Global Content
GALEN MEYER Executive Editor
ECONOMIC OUTLOOKGLOBAL
For the first time since June 2006, the U.S. Federal Reserve will probably increase the target Fed funds rate in 2015, kicking off a long-term cycle of returning interest rates to a normal environment that will hold global ramifications.
Rising—yet still very accommodative— rates in the U.S. may come as welcome news, suggesting the country’s sluggish economic recovery is reaching escape velocity on improvements in business confidence and labor conditions.
Emerging-market economies that have grown dependent on cheap foreign capital to fuel growth got a preview of what higher U.S. rates may mean in 2013, when then-Chairman Ben Bernanke indicated the Fed might begin tapering its special asset purchases. That sent 10-year U.S. Treasury yields surging to 3 percent in September, almost double May’s levels.
Consequences were immediate. Higher Treasury yields triggered capital outflows from emerging markets, especially in economies with large current-account deficits, and resulted in sharply deteriorating growth prospects. From May to September 2013, the currencies of India, Brazil, Indonesia, Australia, South Africa and Turkey depreciated by more than 10 percent. South Korea experienced marginal appreciation, thanks in part to its large current-account surplus. Stability following the taper tantrum led to capital flowing back into emerging markets, creating a sense of complacency among policy makers.
Their economies will probably be caught off-guard by rising rates again in 2015.
China’s closed economy will be more insulated from the Fed’s tightening cycle than other emerging markets. Still, reform efforts and headwinds from past excesses in investment weigh on the outlook. The government will probably choose slower growth over extreme stimulus. The 2015 growth target may be reduced to 7 percent from 7.5 percent this year. The reform agenda set out at the end of 2013 remains unfinished with more work to do on interest-rate liberalization and capital-account opening. Stresses in the property and financial sectors counsel for a cautious pace on liberalization.
The European Central Bank will probably need to take additional action to reverse falling inflation expectations. The ECB may consider the inclusion of government debt in its private debt purchase program in the monetary union’s version of quantitative easing.
Policy makers have failed to take advantage of the recent period of stability —relative to the height of the euro crisis—to put the economy on the path to a lasting recovery. Many euro-area countries— including Italy, which has the world’s third-largest public debt market—are plagued by debt-to-GDP ratios that remain on unsustainable trajectories. The prolonged crisis may lead to pockets of market volatility next year inside and outside of Europe.
An unexpected recession in Japan and the results of a snap general election in December support Prime Minister Shinzo Abe’s plan to lift the economy out of its two-decade slumber. The Abenomics agenda is bold. Still, it may have come too late.
Japan faces severe demographic challenges—a quarter of its population is older than 65. It maintains a debt-to-GDP ratio of about 240 percent. The dollar’s strength against the yen, a by product of Fed tightening and Bank of Japan easing, will boost profits for Japanese businesses. The fear is that they pocket those windfall gains rather than investing them in ways that can boost growth. —
MIKE MCDONOUGHBloomberg Economist
As Rates Rise, It Will Be a Whole New Normal.
World GDP GrowthSource: Bloomberg
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analysts as of November 2014
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Annualized percentage increase Consensus estimate of 24
analysts as of November 2014
World CPI IndexSource: Bloomberg
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ECONOMIC OUTLOOKEUROPE
The European Central Bank appears poised to buy a broader range of assets next year to tackle low inflation.
The monetary authorities are likely to be forced eventually to purchase sovereign debt. The ECB would have to expand its balance sheet by about 1.7 trillion euros ($2.1 trillion) to introduce quantitative easing along the lines of the U.S. Federal Reserve.
The private debt market in the euro area is too small to meet that goal. It could provide the ECB with only about 1.2 trillion euros in purchases as long as the Governing Council wishes to refrain from owning a larger share of any market than the Federal Reserve currently holds of the U.S. Treasury market—20 percent.
ECB President Mario Draghi has already hinted at the possibility of purchasing government debt. “Unconventional measures might entail the purchase of a variety of assets, one of which is sovereign bonds,’’ he told lawmakers at the European Parliament on Nov. 17.
A first step may be purchases of corporate debt. That would provide 283 billion euros in additional assets using the 20 percent rule.
The ECB has already announced a goal to increase the size of its balance sheet by 1 trillion euros. The Governing Council said it aims for that total to consist mainly of the funds lent to banks through the targeted longer-term refinancing operations as well as purchases of asset-backed securities and covered bonds, even though those categories appear insufficient.
Inflation remains well below the ECB’s de facto target of 1.9 percent on an annual basis. The headline and core readings stood at 0.4 percent and 0.7 percent, respectively, in October.
Spare capacity in the economy is likely to prevent a significant rise. The level of real GDP has still failed to return to its pre-crisis peak. It is 2.2 percent below that figure.
Growth in the year ahead is likely to be too tepid to close the gap with output. The International Monetary Fund forecasts GDP to increase by only 1.3 percent in 2015.
The economy’s expansion will be constrained by weak credit extension. Loans to non-financial corporations, adjusted for sales and securitization, declined 1.8 percent year-over-year in September and the equivalent figure for households rose only 0.6 percent. A lack of demand is likely to cause those figures to remain subdued, though they may receive some boost from banks having put the ECB’s first comprehensive assessment behind them.
Such anemic growth probably will leave unemployment elevated. The current figure —11.5 percent—stands 1.3 percentage points above the Organization for Economic Cooperation and Development’s estimate of the non-accelerating inflation rate of unemployment.
Fiscal policy is unlikely to provide any help next year. The IMF forecasts that the general government cyclically adjusted primary balance will rise to 1.4 percent of GDP from 1.2 percent in 2014. The burden of boosting demand will be left to the monetary authorities. —
DAVID POWELLBloomberg Economist
The Burden Is on ECB to Boost Economy.
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Annualized percentage rate Consensus estimate of 59
analysts as of Dec. 4, 2014
Euro Zone GDP GrowthSource: Bloomberg
ECONOMIC OUTLOOKFRANCE
MAXIME SBAIHIBloomberg Economist
France: In Search of Lost Time.
In 2015, companies will fully benefit from this year’s introduction of a new tax credit. Yet the measure is too small and complex to fully invert a decline in French firms’ profitability that led to a record high level of bankruptcies in 2014. In 2015, new measures are necessary to reverse the multi-year investment decline that was extended in 2014.
On the fiscal front, the government already decided to pause its consolidation efforts. The resulting neutral fiscal stance will not weigh on growth. Instead, the authorities are timidly hinting at structural reforms to respond to repeated demands by euro-area partners and institutions. Their implementation remains doubtful and risky in a context of high unpopularity for the executive branch. —
France has endured a rocky year and 2015 doesn’t look much better. Growth will remain constrained by high unemployment and low investment. The only identifiable bright spots that may marginally improve activity are a weakening euro and a pause in fiscal consolidation.
Household consumption, the country’s historical growth driver, is likely to remain muted as the economy will once again fail to grow enough to significantly bring down the unemployment rate. The resulting low inflation rate could persist, especially if households continue to use rising real wages to increase savings rather than consumption. There’s no reason why this should change as surveys indicate that consumers remain worried by the near-term outlook. By contrast, external demand could benefit from continuous euro depreciation because French exports are particularly elastic in response to prices.
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French Unemployment RateSource: Bloomberg
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ECONOMIC OUTLOOKGERMANY
Germany realized this year that it’s not immune to the euro area’s woes. In 2015, external headwinds are likely to force the authorities to rethink their approach to fiscal and monetary policies.
Germany is often portrayed as the euro area star pupil with a record low unemployment rate, a high current- account surplus and sound public finances. All this could change as soon as next year because the export-driven economy continues to be affected by the Chinese slowdown and the sluggish growth in Europe where about two thirds of its exports flow.
A rebalancing toward more internal consumption will be key, particularly with new wage agreements favorable to employees. Whether the usually prudent German households decide to convert this into more consumption remains questionable. An investment boost is unlikely given private investors’ low confidence at the end of 2014. The protracted Ukraine crisis should continue to weigh on their mood.
The public sector could step up with an investment push, notably to make up for deteriorating infrastructure. The government has resisted demands from other euro-area members and international organizations to drop its 2015 balanced budget.
Weaker-than-expected growth in Germany and the region may force the government to adjust—and therefore ease—its fiscal policy. In this context, the Bundesbank also probably will have to moderate its resistance against the European Central Bank’s use of unconventional monetary policy tools. —
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MAXIME SBAIHIBloomberg Economist
Badge of Star Pupil Weighs on Germany.
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German Trade BalanceSource: Bloomberg
ECONOMIC OUTLOOKITALY
The contraction of Italy’s economy is set to continue as the labor market and investment conditions deteriorate further. With no sign of a year-end rebound in activity, the country’s 2015 economic and political outlook is worsening.
A final GDP release confirmed that Italy has entered a recession—the third in seven years—with output contracting in the second and third quarters. The economy remains constrained by stalled household consumption, mainly because of high unemployment that reached a record 13.2 percent in October. Consumer confidence has plunged, erasing the boost that followed the appointment of a new prime minister in February.
On the supply side, investment dropped for the third consecutive quarter, extending a worrying downward trend. Investment spending is at the lowest level since 1996, down 29 percent from the pre-crisis peak.
MAXIME SBAIHIBloomberg Economist
Recession Takes Hold of Italy Again.
Only a reversal of the adverse unemployment and investment trends might steer Italy sustainably off the recessionary path.
The Italian economy is showing no sign of bouncing back, yet economists surveyed by Bloomberg still expect growth next year. The consensus forecast for 2015 GDP growth is 0.5 percent year-over-year, after several downward revisions in recent months. Further revisions may push consensus toward the zero mark.
Persistent economic weakness is also likely to increase political risk next year. While Prime Minister Matteo Renzi still enjoys a relatively comfortable approval rate, more citizens are losing patience with the euro as a currency. The Five Star Movement recently started a petition to hold a binding, nationwide referendum next year on a euro exit.
The relapse into recession might help them reach their goal. —
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ECONOMIC OUTLOOKU.K.
This year economists have had to explain why, after a long period of slow growth, the British economy suddenly expanded so fast. The reasons behind it are likely to support the recovery in the coming year, yet much rests on whether productivity growth resumes and whether risks crystallize.
The seeds of this year’s recovery were sown a year or so earlier. Central Bank action in the U.K. and the rest of Europe made cheap funding available to banks, easing credit conditions and lessening uncertainty. Global commodity prices stabilized, causing inflation to fall back, and confidence rebounded.
Growth of 3 percent in 2014, as seems likely, is not to be sniffed at given what is happening elsewhere. One problem: It comes at the expense of growth in years to come. GDP would not be much higher now than at this time last year were it not for rising employment—and there is a limited supply of those willing to work.
For the U.K. economy to post a decent growth rate without stoking inflation, Britons will have to get better at their jobs, not just create more of them. This has been the problem ever since the financial crisis began and U.K. output per hour worked is no higher now than in 2007.
There are tentative signs of a productivity growth revival: GDP expanded in the third quarter while employment growth slowed and wages, which are determined by productivity gains, picked up a little.
An orderly slowdown in the rate at which slack is absorbed, together with modest gains in productivity, would see the U.K. economy expand by 2.6 percent in 2015 and 2.4 percent the year after. Unemployment would soon approach its long-term natural rate of about 5 percent and, aided by low inflation, real wage growth would return in a form people recognize, reaching 2 percent over the next year or so.
That scenario would be consistent with the Bank of England lifting interest rates toward the middle of the year and tightening gradually thereafter. Interest rates are likely to remain below historical norms for years to come, both because the natural rate is lower and fiscal austerity necessitates monetary accommodation. —
JAMIE MURRAYBloomberg Economist
U.K. Growth Hinges on Productivity Gains.
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MARKETOUTLOOK
U.S., European Gap Widens on Russia, Oil, Emerging Markets Rout
Europe Telecom P/E Multiples Boast Biggest Expansion in 2014
MARKET OUTLOOK
EQUITIES 9
MARKET OUTLOOK
EQUITIES 10
European Bank Payouts Set to Surge in 2015 as Telecoms Slow
EU Economic Gloom Spells Deeper Cuts to Profit, Sales Estimates
COMMUNI- CATIONS
COMMUNICATIONSEntertainment M&A Simmers on DreamWorks, MSG as Pay-TV Merges
TV Advertising Hits Weak Spot as Viewers, Budgets Shift Online
ENTERTAINMENT 12
COMMUNICATIONS
ENTERTAINMENT 13
Star Wars ‘Force’ Awakens $11.8 Billion Record 2015 Box Office
HBO, CBS Fly Over-the-Top, Walk Content-Distribution Tightrope
COMMUNICATIONSMobile Ad-Measurement Progress May Disrupt Google Dominance
Instant-Messaging’s Rapid Expansion Boosted by Engagement, M&A
ENTERTAINMENT 14
COMMUNICATIONS
ENTERTAINMENT 15
Automated Online Ad-Buying Helps Internet Lure TV Dollars
Google, Facebook Hardware Ambitions Amplify on Digital Content
COMMUNICATIONSEU Telecoms May Get Boost From Data, Regulation, Emerging Markets
European Telecom Industry Capital Spending to Remain Elevated
TELECOMMUNICATIONS 16
COMMUNICATIONS
TELECOMMUNICATIONS 17
Europe’s Carriers Will Get Ready to Spend on Spectrum Auctions
Consolidation Drive Set to Keep European Telecom Deals Alive
COMMUNICATIONSEU Pay-TV Key Revenue Drivers Are Broadband and Multi-Play
European Cable Margins Climbing, Even With Marketing Pressure
CABLE & SATELLITE 18
COMMUNICATIONS
CABLE & SATELLITE 19
Cable 2015 Cash Flows Supported by Decline in Capital Intensity
EU Pay-TV Trails Stoxx After 5 Years of 200%-Plus Outperformance
CONSUMER
CONSUMERRussia Auto Demand May Be Muted as Sanctions, Oil Cut GDP Growth
Europe Leaning on Credit, Scrapping Faces Auto Demand Dearth
AUTOS 21
CONSUMER
AUTOS 22
U.K. Leads Europe Autos Into 2015 as Key Countries Stay Sluggish
Small Crossovers May Spark Vehicle Demand Renaissance in Europe
CONSUMERPrimark, Zara, Boss Amplify Spending on Stores to Keep Shoppers
Mobile to Push Online to Bigger Share of European Apparel Retail
RETAIL 23
CONSUMER
RETAIL 24
Rapid Online Gains Spur Europe Retailers to Competitive Internet
European Retailers Boost Spending, Online Still Requires Capital
CONSUMERLuxury Goods Growth to Slow to 3.5% in 2015 as Asia Normalizes
Affordable Accessories Buoy Luxury as High-Priced Clothing Flags
LUXURY GOODS 25
CONSUMER
LUXURY GOODS 26
Luxury Goods’ 25% Superior Online Sales Growth the New Must-Have
Currency Impact a Sensitive Topic for Luxury Makers, Shoppers
CONSUMERGlobal Beverage Sales May Increase 2% to 3% Annually to 2018
Global Beverage Margins May Be Bolstered by Manageable Costs
BEVERAGES 27
CONSUMER
BEVERAGES 28
Beverage Spending May Stay Flat Even Amid Higher U.S. Confidence
Wine Sales Outpace Beer and Spirits to Spur Home Alcohol Sales
CONSUMEREurope Food Deflation Persists on Slow Economy, Stifles Margins
EU Food Packers Forced Deeper Into Emerging Markets for Growth
FOOD 29
CONSUMER
FOOD 30
Sluggish West Europe Packaged Food Sales Abrogate Global Gains
EU Food Maker Sales, Adjusted EPS Set for Forex Recovery in 2015
CONSUMERClick & Collect May Spread as Food Retailers Seek Online Profits
Aldi, Bim, Biedronka Outpace Rivals by Catching Consumer Spirit
FOOD RETAILING 31
CONSUMER
FOOD RETAILING 32
Convenience to Dwarf Discount, Online as Supermarkets Shrink
Rise in Home Alone Shoppers Set to Fuel Convenience Store Sales
ENERGY& UTILITIES
ENERGY & UTILITIESAre North American Integrated Oil Companies Relics of the Past?
Integrated Oil Model Trumps Independents During Times of Stress
INTEGRATED OIL 34
ENERGY & UTILITIES
INTEGRATED OIL 35
Iran Oil Unlikely to Flood Markets in 2015 Even If Sanctions End
Oil Majors’ Surging Capex May Force Higher Crude Prices in 2015
ENERGY & UTILITIESIntegrateds’ Dividend Coverage May Be Resilient After Oil Drop
More U.K. Fracking Protests May Be Ahead as Shale Support Wanes
EXPLORATION & PRODUCTION 36
ENERGY & UTILITIES
EXPLORATION & PRODUCTION 37
U.S. Shale Oil Robs West Africa of Major Crude Oil-Export Market
Iran Gas Shipments to EU May Take Five Years After Sanctions End
ENERGY & UTILITIESWeak Demand, Overcapacity Prominent in EU Refining Space in 2015
Cheaper West African Crude May Be More Attractive to EU Refiners
REFINING & MARKETING 38
ENERGY & UTILITIES
REFINING & MARKETING 39
Total, BP Refining Margins May Fade in 2015 as Capacity Returns
Fuel Prices in Europe Follow Crude Plunge, May Remain Low in 2015
ENERGY & UTILITIESSolar Energy Demand Surge Is Anticipated on U.S., China Policy
Wind Energy Installs May Increase as China, U.S. Review Subsidy
ALTERNATIVE ENERGY 40
ENERGY & UTILITIES
ALTERNATIVE ENERGY 41
California May Spark Utility-Scale Battery Energy-Storage Demand
U.S. Exports, Cellulosic Fuel Output Offer 2015 Biofuel Growth
ENERGY & UTILITIESEurope Power Demand to Resume Growth in 2015 as Economy Improves
RWE, Fortum Margins to Fall, Centrica Gain as Hedges Rolled Over
UTILITIES 42
ENERGY & UTILITIES
UTILITIES 43
E.ON, GDF Suez Gas Costs May Fall Within Six Months on Crude
Enel, GDF Suez Gas-Fired Power Plant Utilization May Stabilize
FINANCIALS
FINANCIALSEU Bank $365 Billion Sovereign-Loan Switch May Turn Tide for ECB
Bank AT1 Issuance Set to Flourish in 2015 Following $65 Billion
COMMERCIAL BANKS 45
FINANCIALS
COMMERCIAL BANKS 46
Draghi $800 Billion Target Key for 2015, Deflation Threat Grows
Asset Purchase Program, December LTRO Key to Euro GDP in 2015
FINANCIALSGlobal Investment Banks Seek Cyclical Revenue, Profit Recovery
Central Bank Assets of $11 Trillion and Growing May Pose Risk
INVESTMENT BANKS 47
FINANCIALS
INVESTMENT BANKS 48
Global Bank Too-Big-to-Fail Regulation May Drive Higher Costs
Legal Risk Extends for Global Banks, Though Costs May Fade
FINANCIALSExchange Volumes Are Dependent on Return of Price Volatility
Recovery From Spain to Dubai May Boost $219 Billion of IPOs
EXCHANGES 49
FINANCIALS
EXCHANGES 50
Dark Pools Battle Exchanges for $24 Trillion Stock Market Share
Shanghai-Hong Kong Stock Connect Paves Way for Asian Exchanges
FINANCIALSCyber Attack, Terrorism, Climate Change Top Emerging Risks
Reduced Mortality Rates Raise Demand for Managing Longevity Risk
INSURANCE 51
FINANCIALS
INSURANCE 52
Swelling Cyber Attack Risk Is Driving Wider Insurance Coverage
Dry Spell for Catastrophe Bonds May Give Way to Renewed Activity
FINANCIALSEuropean Insurers Face Critical Year as Solvency II Enforced
Controversial G-SII Capital Charges Set to Be Determined in 2015
INSURANCE 53
FINANCIALS
INSURANCE 54
Deflation Concerns Spark EU Insurers’ Japanese Scenario Concerns
Advanced Car Technology May Spur 10% Motor Claims Drop by 2025
HEALTHCARE
HEALTH CARELarge Pharma’s Innovation Will Be Key Yardstick in 2015 Strategy
J&J Remicade Biosimilar in Europe First to Test Extent of Threat
PHARMACEUTICALS 56
HEALTH CARE
PHARMACEUTICALS 57
Drug Price Tug-of-War Likely in 2015 as Payers Flex Their Muscle
Make or Break for Some Drugs With Major Outcome Trials in 2015
HEALTH CAREWill the Biotech Industry Indexes Be Able to Sustain Growth?
Biotech IPOs May Be in for Another Strong Year If Economy Holds
BIOTECHNOLOGY 58
HEALTH CARE
BIOTECHNOLOGY 59
Biotech Industry Catalysts Galore, Yet Which Will Bear Fruit?
Biosimilars ‘Patent Dance’ Suits to Clarify Timing, Legal Costs
HEALTH CAREDefibrillator Sales May Continue to Decline for Medtronic, Peers
U.S. Orthopedic Growth May Continue to Rise, Aid Zimmer, Stryker
MEDICAL DEVICES 60
HEALTH CARE
MEDICAL DEVICES 61
Medical-Device M&A at 10-Year High May Offer Spoils to Onlookers
Edwards, Medtronic Heart Valves May Propel Sales Growth in 2015
INDUSTRIALS
INDUSTRIALSIndustrials Sales Pressured as Smaller Oil, Gas Spending Slips
Weaker Oil May Leave Shale-Driven Industrial Equipment Unharmed
INDUSTRIALS 63
INDUSTRIALS
INDUSTRIALS 64
Industrials Price Pressure May Intensify as Input Costs Decline
Weak Growth, Deflation Take Industrial Demand From Bad to Worse
INDUSTRIALSNorth America Leads Machinery Sales Forecast With Europe a Risk
Mining Capital Spending Cuts Are Cushioned by Parts, Services
MACHINERY 65
INDUSTRIALS
MACHINERY 66
Global Farm Equipment Demand May Stay Weak on Low Grain Prices
North America 7% Growth to Lead Construction Equipment Demand
INDUSTRIALSFalling Fuel Prices May Trim Airline Costs; Whither Competition?
Europe’s Slowdown Weakens Airline Pricing Power, Euro Hurts
AIRLINES 67
INDUSTRIALS
AIRLINES 68
Short Haul Provides No Haven for European Airlines on Yields
European Airlines Struggle to Profit Overseas Amid Overcapacity
MATERIALS
MATERIALSCopper Markets Expect New Mines, Smelters and China Buying
China Copper Output May Rise in 2015 on Capacity, Higher Charges
METALS & MINING 71
MATERIALS
METALS & MINING 72
Nickel Deficit by 2020 Is Inevitable Even If Indonesia Ban Ends
China May Turn to Stronger Aluminum Markets Overseas Next Year
MATERIALSIron Ore Prices Plunge 42% With More Record Supply Coming
China Steel Capacity May Peak in 2015 as Cuts Finally Take Hold
METALS & MINING 73
MATERIALS
METALS & MINING 74
China Gold-Mine M&A Spree May Accelerate on Metal-Price Slump
China’s Hong Kong Gold Imports Reach Five-Month High Before Holiday
MATERIALSFertilizer’s Future Hangs on Asian Government Subsidies, Tariffs
Petro Chemical Returns Reallocated by Oil Flows in Slow-Growth World
CHEMICALS 75
MATERIALS
CHEMICALS 76
Chemicals Earnings Outlook Brings Deja Vu, Yet This Time With Low Oil
Specialty Chems May Be Reshaped by M&A as Diversifieds Dissolve
TECHNOLO GY
TECHNOLOGYAmazon, Google, Microsoft Cloud Price War Squeezes Smaller Peers
License Revenue of Software Vendors Will Remain Under Pressure
SOFTWARE 78
TECHNOLOGY
SOFTWARE 79
Emerging Analytics Software Providers to Create More Competition
Cybersecurity Spending May Ramp Up in 2015 as New Threats Emerge
TECHNOLOGYPC Stability May Spread From Corporations to Consumer
Amazon-Led Cloud Model Promotes Hardware Commoditization
COMPUTER HARDWARE 80
TECHNOLOGY
COMPUTER HARDWARE 81
Solid-State Drives, Cheap Hard Disks Polarize Storage in 2015
Larger Phones, PC Use Leaves Tablets Stuck in the Middle
TECHNOLOGYWearables Hype Will Be Put to Test With Apple Watch Next Year
Game On for Sony, Microsoft as Titles to Fuel Console Sales Jump
CONSUMER ELECTRONICS 82
TECHNOLOGY
CONSUMER ELECTRONICS 83
4K, Bigger Panel Sizes, Falling Prices Likely to Boost TV Demand
China LCD Makers Play for $50 Billion Market With New Capacity
TECHNOLOGYApple’s Larger iPhones Raise Ante in Premium Smartphone Segment
Xiaomi, Lenovo Geographic Expansion Threatens Entrenched Vendors
MOBILE PHONES 84
TECHNOLOGY
MOBILE PHONES 85
IOS, Android Jockey for Position in Nascent Internet of Things
Emerging Analytics Software Providers to Create More Competition
DIRECTORS OF RESEARCHDAVID DWYER Global Research
SAM FAZELI European Research, Pharmaceuticals
PAUL SWEENEY North American Research, Media and Internet
TIM CRAIGHEAD Asia Research, Gaming and Lodging
NOEL HEBERT Credit Research, Consumer
JOEL LEVINGTON Credit Research, Industrials
JULIE CHARIELL Government, Legal and ESG Research
DREW JONES Global Research Deputy
ANALYSTSECONOMY & STRATEGYMICHAEL McDONOUGH Chief Economist
THOMAS ORLIK Economics
DAVID POWELL Economics
CARL RICCADONNA Economics
JOSH WRIGHT Economics
COMMUNICATIONSERHAN GURSES Telecom and Media, Europe
PRAVEEN MENON Internet Media
GEETHA RANGANATHAN Media, North America
PAUL SWEENEY Media and Internet, North America
ALEX WISCH Telecom and Media, Europe
CONSUMERDEBORAH AITKEN Luxury Goods, Food and Household Products
CHARLES ALLEN Retail, Europe
TIM CRAIGHEAD Gaming and Lodging
BLOOMBERG SENIOR ANALYSTS & ANALYSTS
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TOMASZ NOETZEL Banks, Europe
JENNIFER RAY European Financials
KAPILAN THEIVENTHIRAMPILLAI Banks, Europe and Middle East Exchanges, Global
JONATHAN TYCE Banks, Europe and Latin America
ALISON WILLIAMS Banks, North America Investment Banking and Asset Managers, Global
HEALTHCARESAM FAZELIPharmaceuticals
ASTHIKA GOONEWARDENE Pharmaceuticals
JASON MCGORMAN Healthcare Services and Medical Devices
INDUSTRIALSHEENAL PATEL Industrials, Europe
BRIAN MILLER Gaming and Lodging
KENNETH SHEA Food and Tobacco
KEVIN TYNAN Automotive
ENERGY & UTILITIESPHILIPP CHLADEK Oil and Gas, Europe
ANDREW COSGROVE Oil and Gas Services, Coal
JAMES EVANS Renewable Energy
WILLIAM HARES Oil and Gas, Europe
ELCHIN MAMMADOV Utilities, Europe
VINCENT PIAZZA Oil and Gas, North America and Integrated Oils, Global
FINANCIALS EDMOND CHRISTOU Insurance, Europe
CHARLES GRAHAM Insurance, Europe
RENE LEJEUNE KING Banks, Europe
JOHNSON IMODE Industrials, Europe
KAREN UBELHART Industrials and Machinery
MATERIALSSONIA BALDEIRA Construction Materials
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