The Fed, US earnings, Oil, MS Cross Asset Strategy, hundreds of European earnings.


Europe set for better start. AAPL rallied 7% after-hrs as Q2 beat. Asia higher as South Korean cons conf increased + helped by US earnings/housing data. Macro eyes on UK GDP + US FOMC rate decision after close.

AAPL: +5.1% – Apple 2Q EPS $12.30 vs est. $10.02. 2Q rev. $39.19b vs est. $36.87b. 2Q iPhone 35.1m units, est. 31.2m. 2Q iPad 11.8m units, est. 11.9m. 2Q Mac 4m units, est. 4.5m. 2Q iPod 7.7m units, est. 7m. Sees 3Q EPS ~$8.68, est. $9.96, Sees 3Q rev. $34b, est. $37.5b.
(I hope this will also boost Dialog Semiconductor)


On the Fed
This will drive the markets today. In the press conference, the message on should be of a softer economic outlook and slightly more hawkish stance. So could be negative for equities. Also yesterday’s housing data (once you adjust them for seasonality) pointed in that direction with boosted hoe sales and reduced inventory levels.
This is a two-day meeting (Apr 24-25) with three separate events planned for Wed 4/25 (12:30pmET FOMC communiqué release; 2pmET FOMC eco/FF forecast release; 2:15pmET Bernanke press conf).

On the US Earnings
So far 173 companies published their 1Q12 earnings and 135 of them beat estimates; 18 were in line and 20 below.
When compared to 1Q11, adjusted EPS for these 173 companies vs the entire S&P last year, EPS are up 7.36%.

On Oil
The oil price was and is still a key risk for global consumer spending this year, but things start to look better. US oil invesntories are at an 11 month high (summer reserves); production is still picking up all over the world (SA, Libya, Iraq, Canada, US).



MS (Peters & al.) Cross Asset Strategy
No Brainer?
Interesting Piece.
10year yields are really low and currently generate poor returns. In the US, Real Bond Yields vs the inverse of the Graham-Dodd PE (using inflation based 10y EPS series) currently suggest equities are around fair value and in theory this should imply that equities will outperform treasuries. This may not be the case now, as it all relates to the sustainability of the current high earnings. And, given the poor macro conditions, the political risks and market sentiment, it seems that it’s still a better option to chose govies over equities.
This team of MS strategists keep their cautious stance, still prefer credit over equities; prefer Asian equities over the rest and US over Europe. They’re bullish on USD vs EUR and cautious on commos.

Part 6 – The consequences of demographic changes

To be honest, I haven’t had time to read the report. But there some interesting facts on the first page:
The elevated boy/girl ratio could lead to increased crime levels. But greater competition in the marriage market may also support economic growth through greater incentives for saving, entrepreneurship and asset purchases.


Nightmare week for Angela Merkel as austerity bloc crumbles – Telegraph
Banks are on a eurozone knife-edge – FT



– Credit Suisse 1Q net SF44m vs est. loss SF297.9m; 1Q wealth management pretax SF406m vs est. SF439.9m; 1Q corp. & inst. pretax SF219m vs est. SF208.1m; Basel II.5 core tier 1 ratio increased by 1.1 pct pts to 11.8%, Basel II.5 tier 1 ratio increased by 0.4 pct pts to 15.6%; good start to 2012, began to see effects from steps announced in mid-2011 to evolve business model and cost structure and benefited from improved markets; ‘on track’ for cost saving targets
– Swedbank 1Q net SK3.43b vs est. SK3.05b; 1Q total income SK9.18b; 1Q net interest income SK5.21b; 1Q EPS SK2.21 vs est. SK2.72; 1Q ROE 14% vs est. 12.2%; 1Q core tier 1 ratio 15.9%; 1Q loan losses SK172m vs credit reversals SK972m; says macro economic outlook remains uncertain, planning for weak scenario and to focus on costs; net interest income will be positively affected by maturing state guaranteed funding
– BBVA 1Q net EU1b vs est. EU936.7b; 1Q net interest income rises 13.3% from year ago to EU3.6b; 1Q gross lending rises 3.4%; bad loans ratio stable at 4%
– Temenos 1Q rev. $100.3m vs est. $97.5m; confirms FY outlook, FY rev. to fall 5% to 6%
– Temenos Upgraded to Overweight vs Equalweight at Barclays; PT Cut 10% to CHF18 at Exane; Kept at Outperform
– Exor PT Cut 29% to EU17.5 at Exane; Kept at Neutral
– Nordea Raised to Buy at Deutsche Bank
– Bank of Ireland Cut to Neutral vs Outperform at Credit Suisse

– ASM International1Q sales EU311m vs est. EU321m; 1Q net EU6m, may not compare with est. adj. net EU17.6m (3 ests); sees back end segment sales increase in current qtr; sees front end segment sales down single digits in current qtr; sees “strong order intake”
– ABB reports 1Q net $685m vs est. $704.8m; 1Q Ebit $1.05b vs est. $1.04b; sales $8.91b vs est. $8.93b; orders $10.4b; basic EPS $0.30 vs est. $0.32; confirms long term targets; rev. in most early-cycle businesses to remain steady; overall demand to provide ample growth opportunities
– Abertis 1Q rev. EU888m vs est. EU888.5; 1Q Ebitda EU547m vs est. EU540.3m (3 ests); 1Q net EU517m, may not compare with net GAAP est. EU330.8m
– C.H. Robinson 1Q revenue $2.55b vs. est. $2.61b; net rev growth per business day about 1%; says truckload net revenue fell 1Q12 on cost per mile rising faster than price per mile and higher fuel
– SIEMENS reports 2Q results: rev. EU19.3b vs est. EU18.8b, new orders -13% to EU17.9b, net adj. EU1.1b vs est. EU1.2b; profit hurt by equity investment loss of EU640m at NSN; cuts forecast for FY12 net income on wind-related charges of EU278m at its power transmission unit; sees FY12 net at EU5.2b-EU5.4b vs EU6b before
– Atos posts 1Q rev. of EU2.2b; net cash of EU34m at the end of March; reiterates 2012 op. margin of 6.5%, “slight organic rev. growth” in 2012; sees free cash flow of about EU250m; sees 50% EPS increase for 2013
– Valeo 1Q sales EU3.03b vs est. EU2.75b Morgan Stanley, EU2.87b Deutsche Bank; reiterates February 22nd outlook for 2012 op margin in same magnitude as year earlier
– Vopak 1Q operating profit ex-items EU138m; 1Q occupancy rate 93%
– Peugeot 1Q sales EU14.3b vs. est. EU14.1b; Automotive sales -14%, Faurecia +8%, Gefco -4%, Banque PSA +6%; “difficult” competitive environment, with pricing pressure and weak markets in southern Europe, should last through 1H; says EU1b cost-cut plan and asset disposal plan are on track
– Societe Bic 1Q rev. EU445m vs est. EU421m; 1Q net EU57.5m vs est. EU55.8m; expects pace of net sales growth to slow down for the balance of year and will maintain level of profitability close to historical peak; sees FY consumer business growth slowing from 1Q level; sees FY ad, promotional business sales flat to slightly declining on comparative basis
– Electrolux 1Q sales SK25.9b, est. SK24.8b; 1Q oper. inc. SK943m vs est. SK825m; 1Q net SK561m vs est. SK483m; 1Q EPS SK1.96 vs est. SK1.72; sees 2H earnings to be stronger vs 1H
– Nexans forecasts decline in profitability of Transmission, Distribution and Operators segment for June 30th vs 1H 2011; transmission unit reported organic contraction of 6.1% in 1Q, hurt by slower than expected production rate of submarine high voltage cables; sees operating margin at ~3.5% at 1H
Overweight Arm holding, shares attractively valued, Barclays says; Overweight, over-reaction to in-line 1Q, says Morgan Stanley
– Umicore weakness after 1Q results a buying opportunity, says Barclays
– LUFTHANSA PT raised to EU14.35 vs EU14.25 at Morgan Stanley; Kept at Overweight; added to Best Ideas
– IAG PT Raised to EU2.45 vs EU2.3 at Morgan Stanley; Kept at Equalweight
– Continental PT Raised to EU92 vs EU90 at Morgan Stanley; Kept at Overweight
– Luxottica Kept at Overweight at Barclays ahead of robust 1Q
– Scania PT Raised 5% to SEK110 at Exane; Kept at Underperform
– Zodiac Aerospace PT Raised 9% to EU88 at Barclays after 1H; Kept at Overweight
– BHP Billiton PT Cut to 2,050p vs 2,350p at HSBC, Stays Neutral

– Statoil Fuel & Retail 1Q sales NK18.5b vs est. NK17.3b; 1Q net NK542m, est. NK595m; 1Q EPS NK1.81 vs est. NK1.98 ; says 1Q cost savings NK30m, cost savings to be NK450m by 2015
– Air Liquide 1Q rev. EU3.78b vs est. EU3.77b; Gas & services EU3.44b; Engineering & Construction EU178m; continues to aim for growth in net profit in 2012
– Renewable Energy Corp1Q sales NK2.14b vs est. NK2.07b; net loss NK209m vs est. loss of NK103m; says demand outlook highly uncertain but 2Q demand has been strong in Italy and Germany so far; sees continued growth in US and Asia markets
– BioMerieux 1Q sales EU362.8m; confirmed 2012 sales growth objective
– Solvay’s 2016 EU3b Ebitda target is too ‘optimistic,’ Nomura says
– Pfizer’s $11.85b proceeds from Nestle’s purchase of nutrition unit are better than expected and may be used to fund the acquisition of Bristol-Myers or Abbott Labs’ pharmaceutical spinoff, says Jefferies
– EDF may get a boost from frontrunner Francois Hollande’s backing off from a nuclear pact with the Greens
– ENI may sell a 5% stake in Galap Energia to Amorim Energia for €15.25/share
– Statoil may boost output from its Snohvit gas field in the Barents Sea to deplete reserves quicker and free up capacity as it prepares to develop other discoveries in the region
– AIR LIQUIDE PT raised to EU107 vs EU 100 at Morgan Stanley; Kept at Equalweight
– Wacker Chemie Cut to Neutral vs Buy at UBS
– Linde Cut to Underweight vs Equalweight at Morgan Stanley
– Enagas PT Cut to EU17.5 vs EU18.5 at Morgan Stanley; Kept at Overweight
– Grifols Cut to Hold vs Buy at Berenberg
– Elan PT Raised 3% to EU10 at Exane; Kept at Neutral

– SAP reports 1Q net EU444m vs est. EU476m; 1Q free cash flow rose 35% to EU2b; reiterates 2012 targets, says it is confident it can deliver 2Q and FY forecasts
– Ericsson reports 1Q sales SEK51b vs est. SEK52.71b; 1Q N.America sales down 3% Y/y to SEK12.8b; 1Q Networks sales down 18% Y/y to SEK27.3b; 1Q gross margin 33.3% vs est. 31.3%; 1Q net SK8.95b; 1Q adj. EPS SEK2.76 vs est. SEK0.58 (may not compare); reports SEK7.7b gain from Sony Ericsson stake sale
– VODAFONE may be made to pay in excess of Rs 20,000 crore – more than two and half times the tax amount the telecom major was ‘advised to withhold’ on its $11-billion deal with Hutchison in 2007 – by India
– Buy Pearson, UBS says after McGraw-Hill 1Q
– Lagardere Added to Europe Mid Cap 1 List at BofA; Valeo Removed
– STMicroPT Cut to EU5.8 vs EU6.5 at JPMorgan; Kept at Neutral; PT Cut to EU4.7 vs EU5 at ING after update
– Vivendi PT Cut to EU14.4 vs EU22.7 at Morgan Stanley; Kept at Equalweight
– TalkTalk Telecom Group Cut to Equalweight vs Overweight at Morgan Stanley
– KPN Raised to Neutral vs Sell at Citi

– LVmh has launched the Chinese-version of its editorial-only platform for Asian consumers, reports the WSJ
– Diageohas appointed JM Financial to advise on buying a minority stake in United Spirits, reports the Economic Times
– Delhaize PT Cut to EU35 vs EU54 at Morgan Stanley; Kept at Underweight
– Remy Cointreau PT Raised to EU75 vs EU55 at Morgan Stanley; Kept at Equalweight

– KONTRON reports 1Q rev. EU131.5m; 1Q Ebit EU4.2m; reiterates 2012 rev. of EU560m-EU590m with a “slight” increase of the Ebit margin
– Tieto 1Q net sales EU467.1m vs est. EU467.6m; 1Q net income EU32m vs est. EU29.6m; pretax profit EU39.6m vs est. EU25.7m; EBIT EU41.7m vs est. EU27.1m ; EPS EU0.45/shr vs EU0.19/shr year ago; keeps guidance, sees net sales growth of 0-2%, in line with market and sees FY EBIT ex-items above 2011 level of EU117.1m
– TOMTOM 1Q rev. EU233m vs est. EU235m; 1Q net loss EU2m vs est. profit of EU1.87m; repeats 2012 outlook
– Nord Gold Initiated at Buy at Jefferies; PT $8.50
– GenusPT Raised to 1360p vs 990p at Morgan Stanley; Kept at Overweight
– Perform, Zooplus and CDON Initiated at Neutral at Citigroup
– Delticom Initiated at Buy at Citigroup
– Imtech Cut to Underperform vs Neutral at Credit Suisse
– Wincor Nixdorf Cut to Neutral vs Buy at Goldman


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