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The Tottering Titan

01 March 2018 by pdonnat

The largest advertising group in the world, WPP Plc, released today its preliminary results for 2017 and its 2018 expectations. The stock was limit down -15% in the morning. As the CEO Martin Sorrell writes in the company report, ”the major factors influencing this performance were probably the long-term impact of technological disruption and more the short-term focus of zero-based budgeters, activist investors and private equity than, we believe, the suggested disintermediation of agencies by Google and Facebook or digital competition from consultants.”. As reported in a former grapple in August, the same Martin Sorell was already blaming share buyback and the lack of investment in advertising. Today is not a day of recognition of the real challenge for WPP, a frontal fight with the new titans: Google and Facebook. For a long time, the CDS, was a “good” BBB credit. With more than 800MEuros open interest (visit OTCStreaming) for more than 6BEuros outstanding debt, the CDS was active today and we shall look at the data tomorrow to confirm the interest in the synthetic market. The 5Y CDS premium is closing 10% wider at 70bps. The European credit market is eventually recovering from its ECB-induced coma.