LIVE MARKETS-Watch TIPS to position yourself on equities

* STOXX 600 up 0.4%, nears record
* CAC 40 on Nov 2000 highs, DAX dips
* Unilever shines on sales beat, buyback
* Banks top gainers

April 29 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com

WATCH TIPS TO POSITION YOURSELF ON EQUITIES (1121 GMT)
While there is an increasing consensus that a temporary
spike in post-pandemic inflation will not hurt equities much,
analysts assess how worried they should be about yields.
As policy rates are those which matter, it will depend on
what kind of inflation Fed will tolerate before withdrawing
stimulus.
Credit Suisse analysts say yields in Treasury
Inflation-Protected Securities (TIPS) are driven by the Fed. The
central bank will remain very dovish to reach maximum
employment.
They say the Fed is ready to tolerate a core CPI rising to
around 3%. In such a scenario, they add, it makes sense to
overweight equities structurally until inflation hits 3%,
overweight value in Europe, and overweight cyclicals (they do
this via financials increasingly).
This does allow investors to focus on value growth (semis,
industrial gases, spirits, testing comps).
But what if real yields rise?
It will be positive for the dollar, negative for gold and
equities. Credit Suisse analysts say each 50 basis points on
TIPS take 6% off the fair value.
Besides, a TIPS rise is positive for banks but slightly
negative for non-financial cyclicals; value tends to outperform.
The chart below shows U.S. TIPS yields falling while nominal
yields are roughly stable.
(Stefano Rebaudo)
*****


TRAVEL & LEISURE: FLIRTING WITH FREEDOM, KISSING THE
INDEX(1104 GMT)
While much of the world is facing restrictions, Europe's
travel and leisure index has hit another record high.
It is fair to say that pandemic winners such as casino games
maker Evolution Gaming, at fresh highs, are greatly supporting
the index.
A mix of cheap valuations, supportive policies and
expectation for pent-up demand -- once people can go out -- is
doing the rest.
"Given the opportunity we're probably all going to go out
and consume more than we would have otherwise," says Amundi's
Kasper Elmgreen.
"It's gonna happen at a time where rates are low, and it's
easy to borrow money, policy continues to be very supportive,
people continue to have the furloughs".
This sounds like the perfect package for the travel and
leisure space, however, it still has to pass the summer test,
with delays in the reopening having the potential to derail
entire Southern European economies.
"For some sectors when reopening happens matters quite a
lot," Elmgreen says.
Investors are carefully looking for any sign from the space.
So here is the calendar of Europe's travel and leisure index
until the end of May.
Date RIC Event Name
20-May Half Year 2021 Easyjet PLC Earnings
Release
17-May Full Year 2021 Ryanair Holdings PLC
Earnings Release
12-May Half Year 2021 Tui AG Earnings Release
07-May Q1 2021 InterContinental Hotels Group
PLC Trading Statement Release
07-May Q1 2021 International Consolidated
Airlines Group SA Earnings Release
03-May Full Year 2021 Trainline PLC Earnings
Release
29-Apr Q1 2021 Flutter Entertainment PLC
Trading Statement Release
29-Apr Q1 2021 Deutsche Lufthansa AG Earnings
Release

"What the airlines for example are telling us is that they
are standing by with super high flexibility, if things improve
tomorrow, they can put a lot of airplanes in the air at a short
notice," Elmgreen says.
Overall, there is a general consensus that people will
travel less for business but more for leisure.
For the broader leisure space, even if much of the COVID-19
restrictions are lifted in H2, summer clouds are still on the
horizon.
"It will clearly take time for consumers to return to their
usual habits," says Richard Saldanha at Aviva Investors.
"Long-term, for those companies that managed to weather the
pandemic, the outlook may be brighter, especially when one
thinks of pent-up demand for holidays abroad and leisure
experiences".

Here are the list of companies, which have already provided
some guidance and/or Q1 results:
Evolution Gaming tops forecast as pandemic boosts online
casino games
'Anything with a view': Whitbread eyes staycation bump after
$1.4 bln loss
French hotel group Accor expects strong summer after weak Q1

Francaise des Jeux (FDJ): Q1 revenues up 5.2% versus last
year at 538 mln euros
Ladbrokes owner suffers as shop closures eclipse online
boom
EasyJet sees Europe open for travel from late May


(Joice Alves)
*****



COVID NO LONGER A TOP CONCERN… NOW DEBT AND BUBBLE (1030
GMT)
Here is a list of credit investors' top worries, which might
give interesting clues about the future of financial markets.
BofA survey on credit investors signals that the top concern
switched from the pandemic to debt sustainability.
Now it's 'bubble' and 'bonds' that are causing "investor
angst," as a record 17% says debt is their primary concern.

BofA analysts highlight that Italy's debt forecast surpasses
the previous 1920 peak in 2021, 40% of countries have record
debt/GDP levels at their highest since 1993, and France
experienced a 2.5 standard deviation jump in debt last year, a
more significant surge than for the periphery.
Then, who relies on the ECB?
Investors think that the central bank intends to slow not to
cap interest rates rise, while 23% of the survey admits "they
don't know what the ECB is trying to achieve."
State-backed lending has become so essential in Europe that
it's hard to see how these policies can easily be stopped.
Investors remain bullish on low defaults in '21, with almost
80% of investors expecting bankruptcies to stay low this year
due to these unique backstops.

(Stefano Rebaudo)
*****




POST-PANDEMIC INFLATION: NO HARM FOR EQUITIES (0925 GMT)
Should or shouldn’t stock markets be worried about
post-pandemic inflation?
According to UBS analysts, who continue to be positive on
stocks, a spike in consumer prices is a “potential source of
volatility” but not a “major threat for equities.”
Let’s see why.
A price rise could “unsettle some investors, and so we
advise being prepared for volatility ahead,” UBS analysts say.
But, it will not trigger any increase in policy interest
rates as the Fed and the ECB continue to say they will tolerate
inflation above their 2% targets for some time.
“The Fed actually wants an inflation overshoot to make up
for the previous undershoot,” they add.
Higher input prices will not be “a headwind for earnings” as
in an environment of strong consumer demand, “we expect revenue
growth to help offset the drag of input costs.”
Meanwhile, they “don’t see strong evidence of broad-based
wage pressures.”
Several prominent consumer goods companies, including
Coca-Cola and Whirlpool, have also indicated in recent earnings
calls that prices will rise, UBS analysts recall.

(Stefano Rebaudo)
*****



OPENING SNAPSHOT: NOKIA, UNILEVER, SHELL, TOTAL (0750 GMT)
European shares started the day on the right foot, with the
STOXX 600 index getting closer to fresh highs after
Fed's dovish remarks and another better-than-expected batch of
earnings results.
The pan-European index is up 0.4% with travel and leisure
and telecom leading the pack.
The telecom space has gained support by strong quarterly
results from Finnish network equipment maker Nokia,
whose shares are up about 13%.
Consumer goods giant Unilever is up 3% as a pick up
in home cooking and a strong economic recovery in China led to
better-than-expected Q1 sales. The company also announced a
share buyback programme up to 3 billion euros.
Other major companies reporting strong earnings today
include London-listed Royal Dutch Shell, which raised
its dividend by 4% and France's energy company Total,
which reported first-quarter earnings close to pre-pandemic
levels.

(Joice Alves)
*****



MORNING BID: BULLS GET FRESH WIND AS NOT YET TIME TO TAPER
(0710 GMT)
"It is not time yet," to begin discussing any change in
policy, Fed chairman Jerome Powell said. Soon after, President
Joe Biden began his pitch to Congress for a $1.8 trillion
infrastructure project. That coupled with forecast-beating Q1
results from Facebook and Apple were sufficient fuel for the
bulls.
Some analysts did describe the Fed's language as tiptoeing
towards a discussion about weaning the economy off crisis-era
stimulus; U.S. 10-year yields are a touch higher but the dollar
has dug in near two-month lows. All in all, equity futures are
higher -- the Nasdaq by almost 1%.
There could be further downside in store for the dollar --
data also showed this week the U.S. goods trade deficit at $90.6
billion is the highest ever and while Q1 growth may be revealed
later on Thursday at a blistering 6.1%, it could well be the
top. As European vaccinations gather pace and with ECB president
Christine Lagarde predicting a rapid rebound, it might be time
for the dollar to take a bit of respite.
On that note, watch out for German Q1 GDP and inflation
releases.
The earnings season continues meanwhile, bringing
double-digit rebounds albeit from year-ago troughs. Standard
Chartered posted a forecast-beating 18% rise in quarterly
pre-tax profit lifting its Hong Kong-listed shares more than 2%.
Dividends and buybacks are back with a vengeance too --
Shell upped dividends by 4% -- the second increase since
slashing them at the start of 2020 -- while Unilever announced a
a $3.6 billion buyback. This is on the heels of monster buyback
programmes announced by Alphabet and Apple.

Key developments that should provide more direction to markets
on Thursday:
- Airbus posted higher first-quarter core earnings; Unilever
beat quarterly sales forecasts; Nokia beat Q1 forecasts
- UK Nationwide house prices;
- German jobless/German prelim CPI/HICP
- German flash GDP Q1
- ECB's de Guindos speaks 0730 GMT
- Fed speakers: NY Fed's John Williams 1800 GMT
- U.S. Q1 GDP, weekly jobless claims
- U.S. earnings: Bristol Myers-Squib, Merck, ConocoPhillips,
McDonald, Caterpillar, Newmont, Domino’s, Mastercard, Amazon,
Gilead sciences, First Solar

(Sujata Rao)
*****





SUPPORTED BY BIDEN AND THE FED (0619 GMT)
European stock futures are in positive territory as the U.S.
government and the Fed reiterated their pledge to support the
U.S. economy.
President Joe Biden proposed a new $1.8 trillion plan in a
speech to a joint session of Congress on Wednesday, pleading to
raise taxes on wealthy Americans to help pay for his "American
Families Plan."
Fed Chair Jerome Powell repeated it's not time yet to change
its dovish monetary policy despite a more optimistic view on the
economic recovery.

(Stefano Rebaudo)
*****