Investment Rating - The report maintains a positive outlook on Agency MBS, with a raised total 2024 mREIT demand forecast to $20 billion from an initial $0 billion, indicating a favorable investment environment [31][38]. Core Insights - Agency MBS tightened this week due to a dovish FOMC press conference and weak economic data, resulting in rates falling by approximately 20 basis points across most of the stack [2][4]. - The market is currently pricing in slightly more than three rate cuts this year, which is expected to relieve some pressure on bank deposits and make MBS more attractive to FX-hedged buyers [2][4]. - mREITs added about $7 billion in Agency MBS in Q2, driven by capital raises and slightly higher leverage, indicating strong demand in the sector [31][38]. - The report highlights a trend of increasing "servicing-released" loans, where the servicing is sold at issuance, and emphasizes the importance of selecting loans serviced by known slower servicers for better protection [2][11][21]. Summary by Sections Agency MBS Overview - Mortgages tightened this week, with rates falling by around 20 basis points due to dovish signals from the FOMC and weak economic data [2][4]. - The BoJ's recent actions have not yet made MBS attractive to long-term investors, but a steepening of the US curve could provide support [2][7]. Market Dynamics - The shift in the loan seller landscape has increased the share of retail loans sold as servicing-released, which complicates the analysis of TPO share [11][21]. - Money manager inflows have been robust, with a notable shift back to index funds from active managers [7][8]. mREIT Activity - The top six mREITs added close to $7 billion in Agency MBS in Q2, with AGNC leading the way by adding $3 billion [31][32]. - mREITs are currently holding a significant portion of their Agency MBS in higher coupon categories, which allows them to meet dividend targets but also exposes them to convexity risk [31][35]. Rate Projections - The report discusses expectations for primary rates, projecting a modest decline of 20 to 60 basis points, depending on various market conditions [40][42]. - The analysis indicates that significant changes in the market would be required for primary rates to drop into more favorable levels for refinancing [40][42].

Investment Rating - The report maintains an Underweight recommendation on Telefonica [8]. Core Insights - Altice International's sale of Teads to Outbrain is valued at approximately $1 billion, with Altice receiving $725 million at close and $105 million in convertible preferred equity, indicating a strategic shift [3][4]. - Bouygues reported H1 results with total revenues up 1% year-on-year, but telecom revenues fell short of estimates, leading to a reaffirmation of FY24 guidance [3][4]. - Cellnex's Q2 results showed a 6% revenue increase from its tower business, with EBITDAaL growing by 7.8% year-on-year, reflecting operational efficiency [4][5]. - Digi announced the acquisition of Nowo Communications for €150 million, expanding its mobile and fixed client base [4]. - Inwit reported Q2 revenues of €257 million, up 8.2% year-on-year, driven by CPI-linked price increases and new service developments [4]. - Liberty Global's financial policy focuses on shareholder value, with plans for share buybacks and a commitment to maintaining a leveraged credit group [5]. - Telecom Italia's Q2 results were slightly ahead of expectations, with a focus on its ServCo business and a target to reduce net leverage to below 2.0x by year-end 2024 [8]. - Vodafone launched a tender offer and €500 million senior issue to reduce debt, following the completion of its Vodafone Spain divestment [8]. - Wolters Kluwer reported a 6% organic revenue increase in Q2, with a reaffirmation of FY24 guidance [9]. Summary by Company - **Altice International**: Sale of Teads valued at ~$1 billion, strategic portfolio review nearing completion [3]. - **Bouygues**: H1 revenues rose 1% y/y, telecom revenues fell short, FY24 guidance reaffirmed [3][4]. - **Cellnex**: Q2 revenue growth of 6%, EBITDAaL up 7.8% y/y, operational efficiency noted [4][5]. - **Digi**: Acquisition of Nowo Communications for €150 million announced [4]. - **Inwit**: Q2 revenues of €257 million, up 8.2% y/y, driven by new service developments [4]. - **Liberty Global**: Focus on shareholder value, plans for share buybacks, maintaining leverage [5]. - **Telecom Italia**: Slightly ahead of expectations in Q2, targeting net leverage <2.0x by YE24 [8]. - **Vodafone**: Launched tender offer and €500 million senior issue for debt reduction [8]. - **Wolters Kluwer**: 6% organic revenue growth in Q2, FY24 guidance reaffirmed [9].

North America Equity Research 02 August 2024 J P M O R G A N AER / AL Earnings Takeaways (+DUBAEE/AVOL/GALCLD) Downgrading AER Credit to N From OW (Equity Remains OW) More of the same for lessors reporting yesterday and today – OEM delays (both airframes and engines) amid strong global demand (at least for replacement aircraft) are creating covetable positions for the leasing community who are reextending leases (in the case of AER, it remains >80%) at attractive rates. But it appears equity investor patien ...