US Earnings. Europe. Greece. Spain. JPM View.


Europe set for slight higher start as investors generally shrugged off Spanish worries and disappointing US GDP Friday. ILO warns of deepening jobs crisis. Merkel calls for bigger role of European Investment Bank in planned European growth initiatives.

“This is like the Titanic. If there’s a sinking here, even the first-class passengers drown.”
José Manuel García-Margallo, Spanish Foreign Minister, speaking about the crisis in Spain and the euro area on April 27, 2012.


On Europe
It’s happening now. All the European heads are now tilting their speeches towards more growth and less austerity, but with a strong fiscal backbone. The ECB meeting will be held this week in Barcelona and I expect Draghi to sound cautious again and may hint to further easing even if an LTRO is out of the picture.

On Greece
Greek elections are happening next Sunday. The polls suggest that the two parties supporting the current government and program lead in the poll. If this is not the case, Greece may give up the reforms, the program, Europe and the Euro… This is important. Even more important than the French elections.

On Spain
The governments and the banks are actively trying to find a solution via a “bad bank”. Spain’s government and its banks are discussing a new scheme to segregate problematic property loans into one or more asset management companies to relieve the burden on struggling lenders, according to officials and bankers. (

On US Earnings
40% of the S&P 500 companies have reported their Q1 numbers so far and 78% beat the EPS consensus expectations (70% at the sales level). Average earnings growth is 17.8% and 7.1% at the sales level.


JPM (Loeys) The J.P. Morgan View
The paradox of austerity
• Asset Allocation
–– The shallowness of the correction in risk assets and the lack of a convincing reason to go short will likely pull investors back in, creating further upside over coming months.
• Economics –– Data are tracking a mild deceleration of global growth in Q2, driven by excess inventories. Solid consumption data are telling us this slowdown should be temporary and are setting us up for better growth in H2.
• Fixed Income –– Flat duration, bearish on Euro area peripherals.
• Equities –– The reporting season is delivering significant positive surprises in both the US and Europe.
• Credit –– We move to marketweight EM $ sovereigns overall although NEXGEM sovereigns offer a good investment opportunity.
• Foreign exchange –– BoJ easing should keep USD/JPY in low 80s.
• Commodities –– Central bank buying still supporting gold.



– Erste 1Q pretax EU487.1m vs est. EU458m; 1Q net income EU346.5m vs est. EU302m; 1Q provisions EU580.6m vs est. EU562m

– Standard Chartered’s Ugandan unit said full-year profit in 2011 climbed 35% after loans and advances grew

– Mapfre is interested in new acquisitions in Turkey, says Bloomberg

– Credit Suisse’s catastrophe insurance unit plans a London IPO, says the FT

– BNP Paribas and Deutsche Bank may be downgraded to A2 by Moody’s, while Lloyds, RBS and UBS may end up toward the lower-end with A3 ratings, Citi says

– DNB Cut to Equalweight vs Overweight at Morgan Stanley

– Willis Group Cut to Neutral vs Buy at Citi




– Oerlikon 1Q sales SF961m vs est. SF979m; 1Q Ebit SF152m; sees ‘upside potential’ for 2012 outlook

– Daimler recalls certain 2012-2013 model trucks due to a brake malfunction; its Mercedes-Benz brand may regain its position as the world’s second-largest luxury cars constructor in 2015, after losing it to Volkswagen’s Audi

– Siemens wants to keep 25% to 50% of Osram, says Bloomberg

– BALFOUR BEATTY has won a contract to build a rail terminal capable of handling the longest trains in the UK

– Short Sell Vestas Wind Systems on 3 month view, Credit Suisse says; PT cut to DK40 vs DK50, reiterates Underperform



– Total expects to halt leak in UK North Sea by plugging the well with mud, in an operation likely to start next week

– Repsol YPF is said to weigh sale of 10% stake in its Brazilian unit, worth ~$2.2b, reports El Economista

– Glaxosmithkline’s bid undervalues Human Genome Sciences, reports the Sunday Times

– Actelion’s experimental lung drug, Macitentan, has met the main goal of a late-stage clinical trial

– ASTRAZENECA Raised to Neutral vs Underweight at JPMorgan; Raised to Buy vs Hold at Jefferies

– Arkema Rated New Outperform at Credit Suisse, PT EU93




– Deutsche Telekom has agreed to raise employee wages by 6.5% over two years following a mediation process, according to Bloomberg

– Portugal Telecom has a ‘solid financial situation,’ its CEO says

– Nokia is in advanced talks with Permira to sell Vertu, the world’s most expensive phone brand, for ~EU200M

– BSkyB Raised to Buy vs Neutral at Citi



– AB InBev 1Q organic rev. growth 6.2% vs est. 6.6%; 1Q adj. Ebitda $3.552b vs est. $3.599b; 1Q adj. EPS $1.05 vs est. 94c; FY12 outlook is ‘essentially unchanged’

– Danone’s CEO says that like-for-like sales growth will probably be close to 5% in 2Q, slowing down from 6.9% in the previous three months

– Adidas says that ‘commercial irregularities’ discovered at Reebok India may cost up to €125 million; raises its FY forecast as its India restructuring is accelerated



– Acerinox 1Q net EU29.4m vs est. EU39.9m

– Nemetschek 1Q revenue EU41.6m; net EU4.3m; sees 2012 revenue increase to ~EU180m

– SNB posts 1Q loss of CHF1.7b; losses on foreign currency positions amount to CHF2.6b

– 3i Group is preparing to sell women’s fashion retailer Hobbs Ltd. for as much as £250 million, reports the Sunday Telegraph

Buy Hikma, as selloff offers a compelling entry point, Jefferies says; PT 860p

– YIT Raised to Strong Buy vs Buy at Swedbank


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