A bullish outlook in the US and Europe

MARKET OUTLOOK

- US: US markets had another bullish week, driven by mergers and acquisitions activity as well as good corporate earnings and better than expected Q1 non farm productivity and unit labour costs data. Shares from the commercial, telecom services, capital goods and software led the advance while stocks from retailing, cons. durables and food and staples retailing lost ground. Technically, the current race should continue as daily indicators remain bullish, calling for a further advance.

- EUROPE: European markets had a mixed but positive week. The Cac, Dax, the AEX and the FTSE all enjoyed strong gains, while there was a very slight advance for the MIB and the Eurostoxx and, finally, a strong bounce on Friday on the Ibex. Sectors like basic resources, construction and materials, media and food and beverage ended in the green as sectors like technology, telecommunications and chemicals dropped lower. Technically, the bias should remain positive as indicators are well oriented, pleading for a bullish scenario.

COMPANY PREVIEW

Cisco Systems (USD 27.91 ; 3.26% ; CSCO ; CSCO.O)

On Tuesday, Cisco Systems is seen reporting its 3Q earnings. 3Q 07 EPS is seen at $0.33 ($0.24 last year), while sales are expected to reach $8.75bln ($7.32bln). Last month, the Co infringed two patents belonging to Telcordia Technologies and would have to pay $74.6m of amendment. In other news, in March, Cisco agreed to take over WebEx Communications for $3.2bln and is now waiting for foreign regulatory approvals.

BNP Paribas (EUR 87.54 ; 1.77% ; BNP ; BNPP.PA)

In Europe, BNP Paribas may release Q1 07 earnings on Wednesday. Last year, net income reached E2.01bln, while operating income climbed to E2.83bln. In May BNP Paribas acquired a stake in Innocap Investment Management, a subsidiary of the National Bank of Canada, and therefore formed a joint venture offering hedge fund managed accounts. This joint venture will allow BNP Paribas to strengthen its capabilities in structuring fund derivatives products, while completing its global alternative fund offering.

News Corp (USD 21.87 ; -4.25% ; NWS/A ; NWS-A.N)

News Corp. is expected to post 3Q 07 EPS of $0.27 ($0.26 last year) on revenue of $6.73bln ($6.19bln) the same day. The Co has recently made a $5bln offer, or $60 per share, for Dow Jones. Whether News Corp. succeeds in acquiring Dow Jones or not, calendar 2008 EPS growth is seen tracking well ahead of expectations. The market is currently estimating that News Corp. can achieve compound annual growth in its EPS of over 17% between fiscal 2007-2012, with fiscal 2008 growth of over 20%.

ENI (EUR 25.12 ; 2.41% ; ENI ; ENI.MI)

Thursday, ENI may announce 1Q net income of E2.4bln (E2.97bln a year ago). According to ENI's CEO, P Scaroni, after the acquisition of Dominion Resources' exploration and production assets in the Gulf of Mexico, the Co is now looking for stronger targets. Earlier, in April, ENI bought 102 service stations in eastern Europe from Exxon Mobil to expand its retail sales network in the region.

AIG (USD 70.85 ; 1.01% ; AIG ; AIG.N)

Still on Thursday, American International AIG US is to deliver 1Q EPS of $1.54 ($1.29 last year). On 3 May 2007, AIG Global Investment Group acquired Viva's 65% stake in Novator for BGN2.112bln, or BGN11.25 per share, which includes the recently proposed dividend of BGN0.55 per share. The deal is believed to be the largest private M&A transaction in Bulgaria to date.